TriStrategist thinks that compared with a product-focused company, it is harder for a service business to innovate or keep an innovative edge among competitions. Thus, a long-time service business can be even more vulnerable facing disruptive forces. There are several reasons to it:

1. A service business, even with sound management and constant innovative moves, tend to be on sustaining innovation mode** at best. It tends to stay on course for the continuity of the services and for the satisfaction of their customers. They are easily restrained from making quick or drastic changes by their customers. This renders them a lack of flexibility and versatility to deal with new, distinctively different disruptive forces on the market;

2. An established service business tends to have heavy upfront investments or fairly fixed profitability model. Dealing with a new emerging disruptive service model on the market could mean to uproot or change completely the existing model, which is often to too costly, by their traditional way of opportunity cost calculation, to make up a good financial case in decision making when there is still time to react;

3. In an existing service organization, the continuity of the service to serve their most valuable customers often imply some specialized skills and fixed procedures in the process. Routine work and mindset thus formed. People in these organizations are typically not equipped with the capabilities of quick mindset or skillset switching that are urgently needed to deal with the emerging disruptive forces. Even if the organization is keenly aware of the new forces and their threats, people in the organization, including decision makers tend to be reluctant to face them until it’s too late;

4. The disruptive force for a service tends to first attack in one or a few segments of the value chain, either by advanced technologies or innovative delivery mechanisms. Still it’s often hard for an existing service business to incorporate the new ideas quickly into their existing service model, either due to value market differentiation, technology incompatibility with the rest of the chain, or a lack of expertise in the new way. Thus, the existing business can easily lose the valuable time to combat the new wave, and more often than not, cost them the leading edge or potentially the entire business.

One good example is the movie rental business of Blockbuster vs. Netflix. Blockbuster, founded in 1985, had the heavy upfront brick-and-mortar investments in its numerous neighborhood stores and had dominant position in movie rental business for years. By targeting the same customers and essentially the same service business, Netflix, started in 2002, offered a new delivery mechanism with a lower monthly fee and the convenience of in-house delivery(also a time-saving value for some customers). Blockbuster saw Netflix’ new delivery model coming, but it was hard for them to abandon the existing store model and reset resources to immediately catch up. In fact Blockbuster’s store model had a higher profit margin (apart from the upfront investments) than the initial Netflix’ mail-in model. When they eventually tried to counter offer the mail-in service to their customers, it was already too late as Netflix’ new model has been adopted by the mainstream. Moreover, Netflix quickly started investing in streaming videos/movies which had a hugely enhanced time value in delivery, appealing more to the society thanks to the prevailing cable networks at that time. We all knew how the story ended: by 2010, Blockbuster filed its bankruptcy protection and never came out of it.

Another contemporary example can be seen in book publishing services. The traditional publishing houses have been using the same process for decades. They charged a percentage for editing, publishing and promoting the books for the authors and the entire process is slow. When self-publishing service first came into reality, traditional publishing houses couldn’t deal with it immediately: both due to the different value market (selective authors vs. every writer) and the incompatibility of the publishing process and fee structure. Still self-publishing service poses a serious disruptive force against the traditional publishing service. Today it has started moving up the value chain to attract even the established authors for both the time and fee savings. The battle is still intensely on.

In today’s technology service sector, the battles are even more fierce and scary. TriStrategist will continue to study some of these cases in the subsequent blogs.

“All things are ready, if our mind be so.” – William Shakespeare, in Henry V.

Everyone can become a consultant nowadays. Thus, the challenge of “branding” falls squarely to the individual consultant oneself. The traditional consultants sell their problem-solving expertise or past experience. Trusted by the clients for their abilities to solve the problem though an outsider’s capable eyes and creative thinking, they are selling “the Brains” –  demonstrating competence on the spot for a new problem or situation,  then building reputations by doing so. Well, as the companies often encounter similar business problems, a potential client may want a consultant to solve a problem that he or she has already solved for another company. Then the consultant starts selling “the Gray-hair”, an easier adaption for the consultant and easier customer-driven business to attract as well. In modern days, especially in the every-increasing popularity of outsourcing non-essential business functions or tasks, many companies hire vendors or consultants to do the tasks that their own people are unwilling to do or considered cheaper by outsiders. In this case, many clients are only buying “the Hands” by the load, not “the Brains”. This is obvious especially in the popular technology consulting. Sometimes no experience is even needed, a pure play of the headcounts, the Hands service.  

“Where there is a need, there is an offer”, a description for many short-term profit-focus consulting companies or individuals, especially with the ebb and flow of the world economy. What many have failed to realize is that once a consultant shifts focus from selling the Brains business to selling the Gray-hair, or even worse, to selling only the Hands services, one moves his/her most valuable “specialty” brand as a consultant to a pure commodity service provider. Commodity is most easily replaceable.

Of course, the true enduring value of a business consultant, especially in modern-day business and technology consulting, is from the Brain business. Thus do more the Brains projects should be the goal. While the clients may not be smart enough or quick enough to realize the needs to buy more of the Brain services when the current business and technology problems are increasingly intwined, complex, new or need new solutions or perspectives everyday, it is the pure responsibility of the consultant to stay true to oneself and not to be distracted by short-term pursuits,to accumulate the cutting-edge skills and knowledge and to persuade the clients for their Brains work. Yes, it may mean walking away from some lucrative deals or a sacrifice of some short-term profit margins along the way, but the short-term focus is a slow poison and ticking bomb for a consultant’s value and career. There is also rarely a middle road.  

Companies which start thinking about adopting Agile or Scrum Methodology in their software development or IT support cycle because it seems to the current fashion in the industry may need some careful thinking.

Before answering the question of the title line, the first question need to be answered by these companies in fact is: Is your software development a creative endeavor or a commodity production? Or can your IT cycle be reduced into assembly line stages? If the answers to the above question are ambiguous, then think again whether Agile/Scrum method is suitable for you.

From TriStrategy’s observations of many software/IT companies using “Scrum Methodology” or groups in high-tech industry trying to mimic it in order to stay in fashion as the name itself seems to indicate, the success is far and apart and the results can be just the opposite sometimes.

If a creative endeavor is absolutely critical in making software product a success, then what’s the point of measuring human creativity by the yardstick of an hour? If a well-motivated group of individuals need to communicate timely and collaborate closely, what’s the point of showing up in daily stand-up meetings with the people who often sit in next cubes to you and answering others’ dry inquiries about what you have done in the day or why you are doing or not doing the assigned small tasks? If we can all expect that every piece of software feature or IT action can be measured by the hour based on some average mind, why do we need hire so many high-paid skilled talents in these fields instead of just creating some standard robots with measurable movements for each small step for the task? Why do we value experienced leaders or project managers to have the uncanny abilities of placing resources at their best strengths and motivate them to achieve the most?

If one day, the tools and technologies have advanced to such a degree that many of the current creative efforts can be done by the machines, then software and IT industry will enter into a whole new age that is comparable to the industrial revolution time of the assembly lines. Then this “agile methodology” may be better termed as “measurable assembly-line method”. Will that ever be true for all software development or IT environment?
One time, a fairly senior director at a big software company described to me that their online services group with scrum by the master’s book resembled a running a train which routinely stops or leaves at regular intervals. All people in the group are put into this routine, days in and days out, reported and pushed by the scrum hours. Then he wanted to seek advice on the group’s worries about the current stage of degrading morale, depressing atmosphere and the exodus of their talented resources in their “agilely” managed environment. He was describing exactly a typical environment that can be the result from this methodology if rigidly applied. In simpler terms, they turned a creative work environment into a grindstone or assembly line for everyone. I told him that the reasons are simple: human are not machines and businesses vary. Creative people cannot be fitted into square holes, no matter what the so-called “scrum masters” may say.

The logic and approach embedded in Scrum methodology can be questionable if we are not in the least in an age that all software and IT cycle can be done by robots. It simply humiliates human capabilities, demotes the true values of creativity, passion, individuality or ingenuity, and amplifies the distrust of workplace devotion and collaborative spirits.

It’s such a great relief that we heard from neither Steve Jobs nor Bill Gates on promoting the so-called “Agile Methodology”. Because they had in their own experience created completely opposite type of atmosphere that they knew would work, a lot more productive, creative and exciting for people to work together to achieve the best they can. They believed in creativity, productivity and human potentials in the true sense. Their time has not fully passed yet because we can never live without creativities for new products, new tools and new services.

We cannot foolhardily accept any superficial hype. There will be people who might fall into the categories whose jobs could one day be replaced by robots or tools, but it would happen only because they permit it in their minds and actions. Human potentials are unlimited. Unlocking them is the key for any success. Suppressing them with rigid process or controls will serve just the opposite. Similarly intelligent humans will never yield to the robots or the robot-minded, because they want to create them and use them, not to be controlled by them.