Category Archives: off-thesis

Public, Internal and Secret Strategy Papers

We just had an interesting discussion whether a strategy paper can be made public within the company. For one, it would be most purposeful to inform the employees about the direction where their company is heading and how they plan to do so. However, not everything should be published because of the threat that the competition will get their hands on this paper. Some aspects should be kept secret, right?

But how far can you go? Can you state the opposite of what you are really going to do, just to surprise the market? Wouldn’t the employees feel mocked? What if they as well have advised you otherwise? Better not to tell them anything to avoid disappointment?

Publically limited companys, for instance, can not publish anything relevant to their expected performance, not even internally, as to avoid the “spreading” of insider information. Wouldn’t a more detailed strategy description in contrast to a high level vision paper be more motivating for the employees, though?

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Is Retaining Talent Possible?

When you’re good at something – wouldn’t you want to try to perfect it furthermore to please yourself and others? Wouldn’t the pursuit of new challenges be the most important fulfillment possible to achieve? Where would you meet these new challenges: in your old job where you have been for 2+ years and where your work has become routine (and thus, masterly efficient) – or at a new job?

Probably, the highest risk factor for losing talents is their boredom. Additionally, the talents will very likely already know that they are welcomed pretty much anywhere (due to darn good job offerings). Stability and risk-avoidance is not a good argument for convincing a talent to stay.

What to offer?

What can you offer as an employer? Either more money or more challenging work. The latter is often not possible and also often not the most efficient and value-adding alternative for your company – a talent doing routine work would be way more efficient. Thus, you offer more money.

You also offer more money because you fear change. You fear that you might not find such a good talent again or that it would take a new employee too long to become as efficient or creative (if ever).

The problem with offering more money is that you’ll easily hit a number with the remuneration that might even make the best talent unprofitable. You build a bubble – the talent is overpaid. Additionally, you increase the market value of similar talents because a talent will expect the next company to pay at least the current oversized remuneration. And since that company has probably just lost a talent, they are willing to pay it (that oversizing of incomes and reputation is well documented in the movie 39,90).

But isn’t paying more money just a prolongment of the problem that the talent will soon be bored again? Even with more money? This will become a vicious circle until nobody can pay for these talents (and also pretenders by then) anymore and the market turns into either a winner-takes-all situation – one company has got the money for all talents – or talent remunerations burst and level out again with the larger companies having survived it.

Possible Strategies

When talent remunerations have leveled out again (still higher than for non-talents) the best strategy is probably to let talents go – because there’s always a talent in another company being bored and willing to leave and come to your place. Remember: they will leave anyway. So instead on focussing all too hard on retaining talent you should also spend quite a lot of time on scouting and obtaining talent. Get to know the common talent remuneration in your industry. Pay it – but only for real talents. Don’t overpay but don’t become inattractive for talents either.

An alternative, albeit very negative and inhumanistic strategy would be to convince the talents that they are not talents and every once in a while to assign unaccomplishable tasks. Is this a productive long-term strategy?

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Dynamic Pricing for Technological Projects

Not so long ago, I saw a presentation about the dynamic pricing system of Tuifly.com. Very interesting. Then I thought about my job and whether we were able to do any dynamic pricing as well. I started joking around and told one of our client managers that he should offer his clients the following model as a last page of the pitch material:

Dynamic Pricing Model for Technical Projects

Dynamic Pricing Model for Technical Projects

Of course, this model is not feasible (how to define the precision of a requirement?), but what is true in my opinion is the fact that the costs increase as indicated. It is very hard to achieve the upper left outcome – also often due to incompetencies of the agency. 

But our client manager said that we do offer special deals: “If you buy 30 man days you’ll get them for X”. We continued thinking: wouldn’t a stock price for man days be a cool thing? The more projects ask for manpower the higher the prices of man days. Actually, man days do vary in price since they are subject to supply and demand. But what I’m talking about is day-to-day changes – not yearly cycles. 

This concept is intruiging but it would inevitably lead to the fact that each department would try to over-book people in order to have the highest possible prices, and thus, be most profitable.

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The Product Life Cycle Is A Not So Helpful Regression

product life cycle

At my last university session we discussed the product life cycle and it being a regression. Since I have started focussing on regressions thematically as a means of evidence-based management, this fact immediately caught my attention.

Why the Concept Fails for Trend Analysis

However, the professor also stated that he finds the concept of the PLC highly useless for predicting the future development or the success of a future launch of a product. His opinion was that you just couldn’t predict at which point of the product life cycle you are and if your product will ever witness such a smooth curve at all with a known 90% failure rate of products in the food industry (quoting my professor). I agree. Add to that, that you can use that model for the introduction of a new product category AND for a single, company-specific product <– mixing stuff up. 

What Do You Need the Graph For Then?

If you can’t plan according to the PLC – what is the graph needed for? “This is how your product COULD develop – but it probably won’t.” There is no value-added in that statement. And in retrospect you can say “This is how the development of successful products looks like and since our product developed the same way, it is proof that our product was successful!”. No value-added as well, since there are way better indicators for stating that. What I would like to be able to say is: “We started way steeper during Introduction, had a way longer growth phase and relaunched successfully a couple of times whenever we hit the maturity phase.” <– THAT would be a cool statement.  

But is that the entire value of the PLC concept? I believe a further value of it is the mere seperation into phases and that you can tell your boss that it’s ok that a product hits bottom at some point. It’s a good thing that you have something to argue with or look at while discussing about “large majority”, “relaunchs”, “exit strategy”…

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