More than a year ago, I visited an idea you may have come across yourself: the notion that certain things are too contradictory to be attainable together. In today’s environment, I think we all need to revisit that topic and consider whether we ever, truly, absorbed the message.
These four qualities describe most of the outcomes any organization might focus on in applying a strategy and choosing tactics: “quick”, “cheap”, “innovative”, and “good.” Fast food franchises tend to focus on “quick;” discounters lean heavily towards “cheap;” most tech companies at least claim to be paying most attention to “innovative;” and just about everyone tries to say they are selling or producing products and services that are “good.”
Unfortunately, it’s impossible to have all four at the same time. You can choose any two, but your choice pretty much rules out the other two.
The commonest choice: quick and cheap.
The mantra of Hamburger Management — today’s favored kind of executive idiocy — is, of course, quick and cheap. In the lust for short-term profit, such organizations believe that time and quality are too expensive: they take away too much of the profit that could go to the executives and shareholders instead. They’re also not exciting, and macho managers want excitement the way an alcoholic wants a drink.
What is the outcome?
What is produced cannot be innovative, because there’s time to come up with new ideas; everyone simply repeats all the old ones. R&D is another cost that is quickly chopped away in the search to meet ever-crazier quarterly profit projections. Innovation costs money and rarely shows its benefits in the short-term, so it has to go. Stick with what you do and drive costs down. Oh . . . and do it faster than everyone else.
Nor will the products or services of such organizations be good for long, since making sure that quality is built into the process demands thought (which is too slow and wastes time), care (it also slows things down), consistent investment (too expensive), good materials (eat into profits outrageously), good systems (ditto), and people who are not being driven to distraction by constant stress and pressure to cut costs and save time.
How about cheap and innovative?
If you set out to be an organization that turns out things that are cheap and still innovative, you still can’t have the other two qualities.
What you sell won’t be good, because you’ll skimp on the cost of materials in an effort to cut costs. Quality will also take a big hit through trying to avoid spending time on inspection. It’s most likely that what you give to the customer will be full of mistakes and bugs that should have been ironed out properly first — if people had not been forced to cut corners and bring it into use in too raw a state.
You won’t manage to make what you do quick either, mostly because you’ll be forced to spend a great deal of unplanned time trying to correct the problems and errors built into the product or process by doing everything on the cheap. Innovation takes time to do properly. You may get the idea in a flash, but working it out into a practical system cannot be so easily rushed.
The only civilized choice
If you choose to provide a product or service that is both innovative and good, it will be neither quick nor cheap to produce.
Innovation and quality take time: time to produce and refine the initial idea; time to make sure that all the bugs are ironed out before it goes on sale (famous software companies and auto makers take note!); and time to introduce and market it correctly.
Besides, the people working on it need to come to work feeling in good shape, mentally and physically, or they cannot be as creative as you need them to be. Trying to rush things through, or cutting corners, will destroy the quality aspect. Being niggardly with resources will force people back onto old ideas, so there will be no creativity. Pushing them too hard will destroy their creativity and drive the best ones away.
Facing up to past mistakes
We’ve been locked for too long into patterns of management that assume quick and cheap are what it takes. Events have proved such people wrong. There’s always someone — typically in a low-wage economy on the other side of the world — who can do it cheaper. Doing things quickly makes little sense unless demand is high. Even then, the faster you pour what you offer into the market, the faster demand will fall as everyone who is going to buy already has what they want. Quick and cheap makes for a high-speed switchback ride, where boom and bust follow one another within months: exactly what we have just experienced. Make loans quick and cheap and you produce a short-lived boom, until the money runs out and people start to wonder what they bought with all that debt.
Innovative and good has been out of favor. It takes too long and costs too much in the short term. Of course, in the longer term, it’s the only strategy that allows you to avoid violent swings between boom and bust. Stable businesses have always acted this way, which is why so many of them have suffered from being seen as stodgy and under-performing. So the shareholders bring in a macho manager to stir them up. That’s what happened to the bond insurers. They acted bored with insuring bonds that hardly ever defaulted — surely the nearest known activity to a license to print money, albeit not in huge amounts — and started insuring fancy, mortgage-backed loans instead. Now the consequences are all too clear.
It’s a simple choice. You can make whatever you do cheap, quick, innovative, or good, but you can only have two of the four at any one time. Better choose wisely.
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