Category Archives: Business

“Too many of us who start down the path of [career] compromise will never make it back. Considering the fact that you’ll likely spend more of your waking hours at your job than in any other part of your life, it’s a compromise that will always eat away at you.”

– Clayton Christensen, “How Will You Measure Your Life?”

Are you doing the work that you want to be doing? I’ve recently been considering different ways of thinking about careers and work, and I have started to formulate a small philosophy I am dubbing the concept of highly-leveraged impact. In short, it speaks to the multiplicative effect the work of one person can have on many people, ideally in strongly positive ways. It is composed of two key factors: reach and impact.

Reach
The number of people affected by the work performed.
Impact
The net effect (positive or negative) the work performed has on the lives of other people.

What is leverage?

When these two components, reach and impact, can be combined, a significant leveraging effect can exist that would truly impact people’s lives. What is leverage? As a quick refresher and as an (over-simplified) analogy, consider the leveraging effect of money in real estate. If a real estate investor with $20,000 in available capital purchases a property worth $100,000, using a bank loan to finance the remainder of the purchase price, and sells it a year later for $150,000, he or she would stand to have made about $50,000 ($150k – $80k back to the bank – $20k initial investment). The investor did not have $100k to make the original purchase, but by leveraging the bank’s capital, was able to amplify the net effect of the $20,000 into a 150% gain.

What if you could do the same with your personal time, skills, and work? This is the idea that I am exploring through highly-leveraged impact. With the two components of reach and impact, we can analyze the idea in a quadrant format. In each quadrant below I’ve identified different examples (not exhaustive, and certainly not applicable in all scenarios), examined through the lens of the high-tech sector, that with which I am most familiar.

Major disclaimer: the concept of highly-leveraged impact is NOT intrinsically tied to the value of a job, and is by no means a concept through which to judge one’s worth. Someone working in a high-reach, high-impact position is not by nature worth more than someone in a low-reach, low-impact position, or vice-versa. This philosophy is only appropriately applied to fulfilling one aspect of a person’s internal motivations and desires.

Reach
High II. Many tech companies: Instagram, Farmville, Snapchat, etc. IV. Medical device companies, leading a charitable org, educational innovations, pharmaceuticals
Low I. Internal IT operations III. One-on-one tutoring, small scale humanitarian work
Low High
Impact

Let me give a brief explanation of each quadrant:

Quadrant I:

In the bottom left quadrant, that of low reach and low impact, I identified internal IT operations. In such positions, the work done typically reaches a relatively small number of individuals (often not even the entire population of the company), and while it does help those affected do their jobs better or easier, it doesn’t represent a critical change in their lives.

Quadrant II:

In the second quadrant (high reach, low impact) one might find many technology companies. Technology, by virtue of its extremely scalable nature, is able to reach an extraordinary number people very easily, and at relatively low cost. Therefore it fulfills one side of the reach/impact equation. However, it also can be used as an avenue of pushing low impact solutions: for example, Farmville. (Or in the specific instance of Farmville, maybe even negative societal value…)

Quadrant III:

The third quadrant is the opposite: high impact with low reach. Some life-changing people work in this quadrant, and I’ve certainly greatly benefited in my own life from wonderful people like this. Kindergarten teachers, tutors, people working in small-scale humanitarian organizations, or specialists in an extremely narrow but important field might fall into this category.

Quadrant IV:

The final quadrant, and the most interesting one in this framework, is that of high reach and high impact. This is affecting many people in important ways. As an example, in this quadrant I identified medical device companies, leveraging the scalable nature of technology to be an influential part of many peoples lives, improving their customers’  health and standard of living. It is running large organizations (charitable being the easiest example). It is being a scientist at a pharmaceutical who assists in creating a medicine that reduces the risk of heart attack or relieves cancer. Some people who work in this quadrant are celebrated, but the majority most likely are not. However, it does seem to allow identification of opportunities that would be extremely fulfilling on a personal basis at the very least.

Other thoughts

Opportunities in the final quadrant are much fewer and further between than any of the others, and often require specialized training or rigorous demands. Given the high societal value of much of the work performed in this quadrant, one would think that more of us would be engaged here. But that often doesn’t seem to be the case. Why is this? Perhaps society and current economic incentives don’t reward work in this quadrant  as readily as those in others. Perhaps the payback period, both in terms of actual dollars and in terms of preparation, is too prolonged or non-existent. Or perhaps it’s just easier to solve less complicated or less important problems, and so we go for those instead. Whatever the case, it would be worth taking a step back to see if more of us couldn’t put our skills to work in more high-reach, high-impact positions.

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TLDR: While SSDs have a higher up-front cost, they are a large cost-saver in the long run in high-use scenarios such as data centers.

If you were building a large new datacenter, would you rather pay $0.10 per gigabyte for your storage, or $1.10? What if I told you that you should pay $1.10, and that it would save you almost 40% over 10 years? You would probably guess that I had flunked math (which luckily I only came close to doing in AB calculus), but there is a method behind the madness, and one that deserves a closer look.

Here’s the scenario: you are a part of an organization that is gathering historical scans from all around the world and will be archiving them for posterity. The data needs to be stored in a lossless format, and will collectively amount to 1.4 petabytes of data per year. Also, the images will need to be made available on-demand to lucky users across the Internet. How will you go about designing an infrastructure to handle these needs? This scenario is based on a real world implementation, and was given to us in an enterprise applications class with the instructions to create a feasible proposal for the project. While examining the various aspects of the project, we found that using solid state drives would be a huge cost saver in regards to total cost of ownership over the course of 10 years.

When storing large amounts of data, more than raw purchase price needs to be taken into account. Other important costs that must play in include factors such as:

  • failure and replacement rates
  • power costs
  • cooling costs
  • capacity (throughput/output) requirements

Typical enterprise-grade platter-based hard drives can cost as low as $0.10/MB to purchase, versus around $1.00/MB for a solid state drive1. Also, HDDs currently have much higher capacities than SSDs, with large SSDs typically maxing out at around 480 MB instead of 1 or 2 terabytes on HDDs. However, because solid state drives have no moving parts and run much cooler, they have lower failure rates. Furthermore, and more importantly when discussing costs, they draw drastically less power and require much less cooling than an array of hard drives2. Finally, when considering the need to serve read access to clients through the Internet, throughput becomes important. An SSD cluster can deliver on average 20-100x more throughput than can a comparable HDD cluster, even when properly RAIDed. Thus, the need for mirroring and splitting requests across drives drops significantly.

A graph showing the comparative costs over 10 years of HDDs vs SSDs in a datacenter.We plotted out the costs of an infrastructure using both traditional HDDs and new SSDs, considering the amount of drives that would need to be purchased at different times, the power and cooling costs, replacements, etc., and discovered that over the course of ten years, running a datacenter with SSDs would save an estimated $20,376,103.50, or 38%, when compared to the HDD option (HDD TCO: $52,535,121.04; SSD TCO: $32,159,017.54). While the first few years require a greater upfront investment in the actual purchase of drives, the savings in power, cooling, and replacements costs after year 5 begin to pay off substantially by the end of the product (see chart, full calculations available as a Google Spreadsheet here3). This result certainly surprised us, but it makes sense when you consider that adding space with hard drives is a very linear operation—the more drives the more heat and the more power. While solid state drives are pricier to purchase, their TCO is much lower when considered in mass quantities.

Many organizations are beginning to recognize this. Pure Storage is focusing on this angle, eBay recently deployed 100TB of solid state memory in their data center, and big data is really coming into its own. All of this just goes to demonstrate that we may be on the verge of a new and different data center, and that larger upfront costs may just pave the way for less expensive operational costs in the long run.

I certainly make no claims to being an infrastructure or hardware expert, or have experience in data center operations, but at least this was a good learning exercise for me. Remember, don’t discount options right away just because they appear to be more expensive at the outset!

Sources:

  1. Denali, “SSD and HDD Economic Forecast: Analyst Jim Handy Speaks Out,” Jan 26 2010, http://www.denali.com/wordpress/index.php/dmr/2010/01/26/
  2. SSDs consume 15% the power of HDDs and have a 2 million hour MTBF lifespan. “Unified Storage for Dummies,” Oracle.
  3. Calculation assumptions are noted in the spreadsheet.

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Preface: I am currently in a business strategy course for my Masters of Information Systems at BYU, and we are to write “journal entries” from time to time reflecting how our learning in the classroom applies in the world. Well I wrote this up and liked it so much that I thought I’d put it on my real blog, instead of just the throw-away one I’ve started to keep all the other entries in. It’s a cursory overview, so if other business-oriented people would like to comment or discount the views presented here, I would welcome it. But hopefully it is an interesting view on Michael Porter’s types of strategies, and how not applying them is dangerous.

RIM announced Friday a 59% drop in quarterly profit, a continued indication that the company is in dire financial straits, even though the co-CEOs believe they will be able to pull off a revived victory before the end of the year. Many in the industry acknowledge RIM’s downward spiral over the last few years, and many wonder if anything might stop it. But how did RIM get into such a predicament? There have been no HP-like corporate scandals, no rogue traders, and no massive natural disasters to throw it off course. Millions of businessmen and businesswomen, as well as consumers, still use their products.

Could the answer be that a lack of clear strategy has caused the dismal performance we are seeing today? Let’s analyze RIM in the framework of Michael Porter’s definitions of types of strategies and see where the company lies.

Porter, in his seminal HBR article “What is Strategy?,” clearly points out that a strategy is not simply being better or more efficient than your competitors. Instead, “competitive strategy is about being different” (Porter, 64). And how can a company establish a set of activities that differentiates it? By one of three broad means: having a variety-based, needs-based, or access-based strategy.

1. Variety-based Strategy

A variety-based strategy is employed by a company that produces a subset of products or services, generally through using a different set of activities. Porter gives the example of Jiffy Lube providing only oil change services to customers, detailing that it “specializes in automotive lubricants and does not offer other car repair or maintenance services… Its value chain produces faster service at a lower cost than broader line repair shops” (Porter, 66).

What products and services does RIM produce? They are in two general markets: enterprise email relaying and mobile phone production. Do either of these show signs of being a subset of a broader set of activities that could give RIM an advantage?

Over two decades ago when RIM was founded, the ability to page someone (and later email them) and have them receive that page or email instantly was a technological feat that many businesses around the world found essential to their day-to-day functioning. Even up until just a few years ago, having email pushed to you (as opposed to pulled, the typical, slower method) was a service offered almost exclusively by RIM. However, nearly all email clients and smartphones now support or emulate this type of functionality, and so what used to be RIM’s key selling point has now become diluted and common across all providers. This used to be a key element to RIM’s strategy, but their competitors have caught up with them.

Second, RIM’s phones also used to be rather unique in the market, providing larger displays and the ability to type emails and browse the web from any location. With the advent of the iPhone and all smartphones since, RIM’s BlackBerry phones have fallen far behind. One unique BlackBerry feature that is not mirrored in many other phones is the tactile keyboard, which some people like much better than on-screen keyboards. In a way, this particular subset of phones, those with physical keyboards, is serving a particular market need, but RIM does not have any particular activity that sets the production of this apart from its competition.

RIM seems to have invested deeply in a variety-based strategy in the past, but this strategy has since been duplicated and superseded by its competition. Unless it can come up with a new subset of products or services, it cannot continue to hold on to such a strategy and expect to succeed.

2. Needs-based Strategy

Michael Porter also discusses a needs-based strategy, one which he defines as the position of “serving most or all the needs of a particular group of customers” (Porter, 66). He mentions that this is similar to what most see as traditional market or segment targeting.

RIM used to produce phones that were heavily targeted to and used only by business professionals. Most common consumers didn’t need the constant inflow of emails 24×7, nor did they want to pay the extra fees for the service. Business professionals needed several features: the ability to instantly receive and reply to all messages securely , the ability to check on Internet resources, the ability to have a secure, remotely wipeable device, and the need to have a high-use cell phone. RIM catered to all of these needs very well, and while this aspect of strategy might not be as strong as the previously mentioned variety-based strategy, it certainly helped them to obtain the lion’s share of the business mobile market.

Unfortunately again for RIM, their competitors have struck with equal and often more compelling solutions to the same issues, giving both business and IT professionals more appealing and easy-to-use products. All smartphones can now receive all enterprise email, and the BlackBerry’s web browser is a laggard these days compared to iOS and Android browsers, leaving a painful experience for those still using RIM’s phones. Other enterprise-specific needs are also covered well by competitors these days, so RIM’s strategic advantages have disappeared.

3. Access-based Strategy

Finally, has RIM played into an access-based strategy before? Has it targeted customers in a specific “customer geography or customer scale” (Porter, 67)? Not really—its customers are all over the globe, and everyone from a one-man shop to a corporation with tens of thousands of employees can use the service. Therefore, we can conclude that RIM in the past has not pursued an access-based strategy (though perhaps it may now wish to consider it, given that its other two strategies have been deconstructed).

Conclusion

While the maker of the CrackBerry is trying to pull out some wunderstops with the introduction of the very me-too PlayBook tablet (which lacks any sort of distinguishing feature or specific target market) and the promise of a new phone operating system (too little too late?), it is clear that a lack of recent innovation has led to a lack of current, viable strategy. While RIM was the king of enterprise mobile communication until just a few years ago, thanks to a strong variety-based and a decent needs-based strategy, the company is floundering to find a clear differentiation in today’s market. Businesses have to find a way to “be different,” as Porter said, and being different by being worse doesn’t count.

Sources:

  1. Porter, Michael. “What Is Strategy?” Harvard Business Review, November 1996, 61-78

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