It seems like today everyone wants to measure their business processes. If it cannot be measured, it is not important. In general that is not a bad practice because all businesses whether they are multinational corporations or Mom and Pop corner stores needs to know at least a few basics about their business to determine if they are doing well or are about to go bankrupt. But the fact is that many newly minted MBAs focus so much on counting everything that can be counted, that they lose sight on the long term goals of the business or trends of the industry. Often this is a lack of keeping an eye on large scale business trends and being aware of how customer tastes and purchases are changing. Then when business drops off, they scramble to find other reasons for why the business is failing. This is what I mean by being too concerned with counting the beans rather than what the beans mean.
Not too long ago, one of the top businesses many people tried to get into was renting movies through local brick and mortar video stores. Demand was growing as people moved from VHS tape machines to watch their movies to DVD discs. The number of available movies grew. Total rentals were up. Profits were up. Some movies made more from DVD sales than box office sales. What could possibly go wrong? Then it seemed like the bottom dropped out of the market as first local Mom and Pop stores closed and then the chains began to close. Did people stop watching movies at home. No. If anything people watch more movies than ever. The difference is in the way people get their movies. Most TV cable companies and even Satellite companies now provide movies on demand. You can rent movies from many local libraries for free. Some of the big online retailers like Amazon provide movies on demand. Why get into your car to drive down to the local video store, look for a video (only to find the last copy has already been rented), bring home an alternate movie that you really did not want to see but felt you had to get to justify your drive to the store, watch the movie, and then rush back to the store just before it closes to return the movie on the last day it is due. Stores missed the convenience factor that has taken over the market. While counting their beans, they missed the fact that their beans were changing.
A similar argument can be made for bookstores. At one time, the only way to reasonably get the latest best seller or a technical reference book was to go down to your local book store to buy the paper version of it. It was not all that long ago that every mall had at least one bookstore. Now many malls do not even have one dedicated book store. Many small bookstores have closed shop because they could not compete with the large chains. Then some of the large chains even started to fail. Some tried to counter the trend by adding lounge areas where you could grab a book and read a bit of it before deciding to buy it. Some added cafes. Some included live music on select nights. But sales still continued to fall. Again the driving factor was ordering books on line could often be accomplished from the comfort of your living room chair and you could get the book delivered. Some libraries also added home delivery of ordered books. But I believe one of the big game changers here was the introduction of digital book readers. Sure the early ones were bulky, heavy and limited to monochrome text and little to no graphics. But these quickly evolved until today the quality of digital books displayed on light weight tablets and even phones rivals the quality of printed books. Sure many people still like the feel of a real book in their hands, but as the ebook versions of popular best sellers came down in price and more technical books became available in digital form, the demand for digital books has grown. I confess that in the past two years, I have not bought a single paper book, but I have purchased at least two dozen digital books, often at 50% of the cost of the paper versions, and I could download them to my device immediately. Many classic books are available free and at least my public library has been ‘loaning’ digital copies of books on-line for several years now so I do not even have to go into the library anymore.
Both of these examples clearly show the demand for the end product growing yet the distribution method for these products have changed dramatically. Some libraries understand what the change has meant and they have adapted to it. Clearly, they understand what the beans mean. Others who have been too busy counting the number of patrons or the average number of books borrowed or the total size of their collection have lost track of what the beans (reading books) really means to the public.
How is your business adapting. Are they busy counting the beans in the current month, quarter, or year? Or do they spend time trying to understand and predict where their business I going in the next year, 5 years, or even 10 years. Are they preparing for that future or do they assume that tomorrow will be the same as today and success is simply counting their current sales, profit margin, customers, etc. I’m sure you could look at other industries and make similar analogies. What is happening to newspapers and magazines, professional photography, or even education? Is the method of delivery of your product or service changing? Do you really think you will be doing the same job in 5, 10, or 15 years? Knowing which beans matter and which can be ignored might be a more valuable skill than merely counting those beans. Many people have made careers counting beans or having others count their beans for them. In the meantime, other organizations more interested in what the beans meant have surpassed them and will (if not already) threaten their existence. Some express surprise when companies or industries fail. Others express surprise when new companies they never heard of before succeed. But now you know the real reason why companies succeed and fail. After all, any simple computer (or average math student) can count your beans. But can a computer program tell you which beans matter the most for your future or your company’s future?
Remember to come out to SQL Saturday Tampa this Saturday. C’ya next time.