Podcast

How do you pay for a new system? - Jeff Bland, Trifin Capital | Podcast | Open Source Integrators

justin.hough — Wed, 31 May 2023 19:49:54 +0000

How do you pay for a new system? - Jeff Bland, Trifin Capital | Podcast | Open Source Integrators justin.hough Wed, 05/31/2023 - 12:49

Podcast

Today, we’re speaking to Jeff Bland president of Tri-Fin Capital located in beautiful San Clemente, California. Tri-Fin Capital is a boutique lease funding company focused on the it space. Jeff, thank you so much for being on the podcast today.

Transcript

Greg Mader: [00:00:00]

Jeff Bland: [00:00:18]
Thanks Greg. Thanks for having me looking forward to it.

Greg Mader: [00:00:21]
So I always start with this question is a bit of a warmup. What is your favorite snack food?

Jeff Bland: [00:00:28]
I love that. My favorite snack food is old fashioned. It’s a nice apple with some peanut butter.

Greg Mader: [00:00:37]
Peanut butter and apples, okay.

Jeff Bland: [00:00:39]
Just a little bit of protein and some fruit. And I’m good.

Greg Mader: [00:00:43]
Are you by any chance, are you cutting up the apple and then sticking raisins on it? So you can have the ants on a log or not so much?

Jeff Bland: [00:00:50]
No, no, I haven’t graduated to that level yet. Right. But I’m willing to learn. Um, but just standard apple slices with some peanut butter goes back to when Iwas a kid.

Greg Mader: [00:01:02]
You are in contention for the healthiest guest we’ve had on. So thank you, Jeff. I’d like to get right into the heart of the matter here, something that
you’re an acknowledged expert in. And that is the options the company has to pay for a transformational business it project. Can you talk a little bit about what options a company might have?

Jeff Bland: [00:01:25]
Sure. Traditionally, just to give you some background, I have been involved in various stages for the last 20, 25 years, structuring and funding transactions in the IT space.

Either, you know, hardware, software services, combinations of both. And when a company traditionally looks at purchasing an asset, they can either fund it out of cashflow, they can fund it through their line of credit, or they can fund it through a separate line of credit, which is what we prepare and do and provide.

All of them have different pros and cons like anything in life. Traditionally going back, if you go really deep, you can say, “Well, you know, we’ll structure this as OPEX or we’ll structure this as CAPEX.” But our focus has been providing a specific niche facility to handle a specific asset acquisition.

So it preserves the line of credit that the customer has, and it has minimal impact on the cash flow of the customer. So it flattens, the investment curve, the hockey stick, so to speak.

Greg Mader: [00:02:41]
So why would a company consider a lease option versus a loan option? What are the differences?

Jeff Bland: [00:02:50]
Well, simple interest loans are traditionally not offered in the commercial space for tech equipment, such as software and services and hardware. You mightbe able to get a term finance from your bank if you went to pursue that with them. But most banks are specifically not interested in soft collateral transactions.

So as a traditional lease versus loan, leases are a much more commoditized product. And much more easily available than doing a simple interest loan transaction.

Greg Mader: [00:03:28]
Are there tax benefits associated with the lease versus a loan?

Jeff Bland: [00:03:34]
Well, on a capitalized loan, you’re going to get the depreciation benefit. The customer will get the depreciation benefit. Similarly, with a capitalized lease product, the customer will get the depreciation benefit. Doing an OPEX or an operating lease, the leasing company takes the depreciation and the customer is then expensing the payments and pulling that off balance sheet and recording it just as an expense line item.

So depending upon what the financial goals are of the client, it really depends on what they want to do. Both of them are pluses and minuses, right? It’s whether you want the depreciation or you want the expense. How you view the asset, that’s where you get into the calculus of what and how the business wants to record the transaction.

Greg Mader: [00:04:24]
That’s really helpful, Jeff. For your average director of IT, these are the kinds of questions that they’d be asked by a director of finance, and it’s good to help them have the same language when they’re speaking together.

Jeff Bland: [00:04:39]
Absolutely.

Greg Mader: [00:04:40] So as you’re evaluating an application, I think you’re probably having to pick up on whether a company might be successful at a project or not because you don’t want to be stuck with a deal that is unsuccessful or unfruitful. From sitting in the bleachers, what are some indicators that you’ve found that a company will be successful in its IT projects?

Jeff Bland: [00:05:04]
Partner selection. Greg it’s, it’s really funny having been doing this for a long, long time, right? In our lab in the last 20 years, we’ve only had three.
What I would consider workout situations, and we have funded millions and millions and millions of dollars in software and hardware, more so software these days than hardware, but millions of dollars in projects, the three workouts that we had where we had a failed implementation it was due to the client. It was not, in my opinion, making a poor selection of the partner, the implementation project lead partner, or the vendor in the project, and that vendor maybe misrepresenting their strengths and capabilities in terms of delivering on the project plan. And from that starting point, yeah, it was almost like I was watching in slow motion, the train wreck happening.

Until we got to the point where the partner, the implementation partner was in, above their head and the client was pulling their hair out, saying we’re not in alignment on what needs to be, what needs to be going on. And then we get into the situation of starting the workout, getting a new partner.

You know, keeping the lawyers at bay, et cetera. So to make a short story long or long story short partner selection is number one, making sure that you’re in alignment with the partner, obviously product selection, making sure that your product or what you’re looking to acquire actually fits the needs of what you’re trying to do within your company.

It’s like the old carpenter rule, right? Measure twice. Cut once. Sometimes, people go into these things a little too quick and it can create problems. If that answers your question.

Greg Mader: [00:07:00]
It does. That’s really helpful. Are there any early warning signs, can you tell from a project charter or other documents that they might have a hiccup.

Jeff Bland: [00:07:12]
Well, obviously from a credit perspective, when we’re evaluating and setting up a facility, which I highly recommend, regardless, I mean, most of our customers
are all very, very well-run companies with solid P&L’s and solid balance sheets. So we do a thorough evaluation of the customer’s cashflow creditposition, et cetera.

The vendor knows what’s going on. The customer has this facility. And from that perspective, there is a high probability that financially we will get through the project without having any hiccups. So it becomes very important too, because once we have a financial facility put in place, everyone is operating within that box.

So if the project is a million dollars, then. Everyone knows that there’s a million dollar credit facility for the project and we’re operating within that box. So if I were to circle back and say, Greg, is there an indicator? The indicator would be looking at the credit position of the customer and seeing a lot of problems with their cashflow and their balance
sheet and P&L that’s an indicator that there’s something going on wrong with the business, and that can lead to credit problems, cashflow problems, project problems, et cetera.

Greg Mader: [00:08:31]
Jeff, that is blindingly obvious when I think about it, but I hadn’t quite ever thought about it that way. Thank you.

Jeff Bland: [00:08:40]
The subtle is a flying mallet, as I like to say.

Greg Mader: [00:08:42]
Yes, it is as subtle as a flying mallet. That’s very good.

As you mentioned this, it seems that if a company commits to this sort of loan facility or lease facility, it probably reduces the risk of the overall project quite a bit. Is that your perception? Is that part of the value of these sort of arrangements?

Jeff Bland: [00:09:05]
Correct. It’s a security valve and it’s another level of project management.

So from a vendor’s perspective, when you’re going into the project, there’s always risks when you’re doing a IT project, right. Greg, I’ve never been involved in a project in the last 25 years where there weren’t change orders or bumps in the road, right. Even in the most well scoped project, there’s always something: “Oh, by the way, can we do this? Yes,
we can, but it’s going to cost more.” You know, you get into these discussions. Having that facility ensures that the DSO to the partner is radically reduced, and that, from the customer’s perspective, they know that they have a defined facility where they’re not going to get big spikes and cash or an, “Oh, by the way, it’s going to cost us an extra a hundred thousand dollars here, $200,000 there.” It’s just a flat monthly payable that they can accurately forecast and predict, and they know that there’s an amount of cushion that’s built into the facility to handle unexpected change orders or things that just evolve into the project that weren’t anticipated, despite the best scoping efforts possible. So it reduces the risk to the customer. It reduces the risk to the partner, right? And from our perspective, it allows us to get ROI in return on our money that’s put out the door, so it’s beneficial to all parties.

Greg Mader: [00:10:29]
That’s really cool. Jeff. One question that comes up regularly, if you’re a director of IT at a company right now, you may get pressure from your board, for cloud applications.

And that’s all the other executives may know about it. Sometimes they know quite a bit. Sometimes they just have heard from a friend
about the cloud. So if you’re thinking about, a traditional IT project and maybe financing it versus a SAS solution in that sweet, sweet song that they sing about operating expenses.

Are they actually cheaper?

Jeff Bland: [00:11:08]
Well, that’s an interesting question. It’s a very—it’s a tricky question, Greg, you trickster.

Okay, so how do I explain this from my perspective? Okay. People talk about doing subscription and treating everything as an expense, which is fine. Okay. Fundamentally that’s okay. However, what always cracks me up or what gets a chuckle out of me is that when we do, we get into discussions about doing a subscription on software and op ex, et cetera, then the discussion comes in, what about my ROI associated with this project now?

ROI is return on investment investments aren’t expenses. Expenses are cost reductions that are placed, to offset income. Investments are recorded on the balance sheet. So you’ve got these two diametrically opposed ideas, some of which is almost like client confusion, in terms of what they’re trying to do. So once again, to make a long story short, cloud can be great if you have, if you know exactly what you’re doing and why you’re doing it. If you have a need to be up in the cloud, it’s perfectly fine. It’s great. It’s great if you have multiple sites, multiple users. You’re scaling up, scaling down. Its awesome. If your business is not that way, if it’s not set up like that, if it’s a simple operation, why would you do that? Especially from the perspective that the software that you’re implementing into your business could be very integral to your operations and actually be a real asset. I view software as an asset. So it’s a tricky question because it brings up a lot of issues in terms of how you evaluate IT within your business.

I personally look at IT, in the digital age in which we live, as being everything. People aren’t doing manual spreadsheets anymore. Everything is electronic. Everything is digital, everything is dashboards. So how you record that and what you do is a very individual choice within a company’s perspective.

We can go either way. We do balance sheet transactions and we do rental contract transactions for booking in OPEX. But from an IT director’s perspective, I think that’s a soul searcher. I think you really have to evaluate what you’re doing and why you’re doing it. If that, answers your question.

Greg Mader: [00:13:51]
It does.

I think I’m in a similar camp to you where I think software as service solutions are great for some applications. The cloud is actually has very little to do with this. As you know, I hear people all the time who are confused about cloud native applications or cloud hosting, or traditional hosting. And that’s where some of the confusion lies.

What I think people should realize is that I don’t think it does have to be all one or the other, and that you can have, what a smart guy named Chris once told me, partlycloudy solutions. And I think that’s about right. Some things may make more sense to keep in house or host in a cloud, but you still may want control of the source code in applications.

In fact, that’s what I built my whole business around. But I also recognize nobody really wants to mess with their own email server anymore.

Jeff Bland: [00:14:50]
Yes, sir.

Greg Mader: [00:14:51]
Yeah. There’s so many great solutions out there, so let’s just go with one of them and not think about it every day.

Jeff Bland: [00:14:59]
Yeah, I agree.

I agree, Greg. It’s a deep topic and we could discuss it for a long time, but I think you and I are in alignment on that. I think you have to make some decisions and not get caught up in the hype in terms of, you know, everybody and he’s doing this, so we should do this.

My dad told me when I was a young man if everybody is jumping off the bridge, are you going to jump off with them? No, I’m gonna make my own decisions and think about what we’re doing.

Greg Mader: [00:15:22]
Let’s get back to the question of what does it look like to have a lease for an IT project? Can you talk a little bit about what the process would be if you’re interested in that? What are the terms of the lease? What’s it look like when the lease is over? Tell us a little bit about the life cycle, Jeff.

Jeff Bland: [00:15:41]
Sure, so let’s box that a little bit more. Are we doing a capitalized lease or are we doing an op ex rental contract?

Greg Mader: [00:15:50]
Let’s do a OPEX rental contract.

Jeff Bland: [00:15:54]
Okay. OPEX rental contract.

So the first thing we start out doing is credit due diligence, which is boxing the project: understanding the software costs, the implementation costs, if there’s any hardware costs, just boxing the costs.

The second step is doing cashflow balance sheet credit analysis, determining what the risk profile of the client is and what pricing is going to be associated with the debt on the contract.

The third step is laying out pricing for the customer and presenting it. These are what the cash flows are going to look like over the next 36 months, 24 months, 48 months. Typically, we do 36 months because that matches the typical subscription contract.

From that position, we will document it through our rental contract. The customer will execute closing documents. We will activate the facility, whatever that amount might be, and then we’ll be in contact with the vendor or the implementation partner to understand what the project plan is in terms of funding. And we’ll start we’ll start the funding. If it’s X amount on day one, then day two, the customer will sign off on those fundings and we’ll wire transfer to the vendor those funds.

And then we’ll start billing incrementally on the contract, just like a traditional line we bill on what is used once implementation has been fully completed. We will truncate the implementation period. And then we’ll start a three-year run on the lease, fixed payments over the term. At the end of the lease, the customer then has the option to walk away from the lease contract.

They have an option to renew the lease contract with a new subscription, right. Or they can purchase the subscription or the services at some type of nominal value that we determined, but traditionally, if we’re doing OPEX and a OPEX rental contract, purchasing at the end is really not an option.

It’s just, a monthly payment subscription basically for the entire project, including the services.

Greg Mader: [00:18:12]
Okay, great. Jeff, you’ve been doing this awhile. Do you have any stories from the school of hard knocks?

Jeff Bland: [00:18:20]
Good partners make you; bad partners break you, right? That’s that is about as simple as it gets. Good partners will make you better, because not only do they have their best interests at heart, but they also have your best interest at heart, bad partners are bad partners. They do not have your interest at heart at all, and it’ll be best to separate early and often, quickly.

Greg Mader: [00:18:49]
Well, you’ve brought this up a couple of times, Jeff, so let’s pretend I’m a director of IT for this food manufacturing company that makes apples and peanut butter kits. Okay?

Jeff Bland: [00:19:02]
Sure.

Greg Mader: [00:19:03]
What warning signs or what things should I look out for when I’m looking for that partner?

Jeff Bland: [00:19:08]
I think, first of all, are they technically competent? Right? You know, do they know what they’re talking about? How long have they been doing it? You have to, you have to know that. And then secondly, do you connect with them on a personal level? Are you comfortable in doing business with them? Because in business, as you know, Greg, there there will be bumps. There will be bumps. And if the people that you’re doing business with, if you have a good working relationship with them and you know that they are a good character, you know that they will do their best without having to be prompted to rectify the situation, and that is so critically important in business.

At least from my perspective, that is so critical. The partners that I work with, I have excellent working relationships with them and I, and I trust them to be doing the right things, and handling things without having to go to Def-Con Four and finding out later that, “Hey, this rehab is a huge, massive problem, and oh, by the way, if he didn’t ask about it, I would have tried to bury it under the rug.” So if that answers your question, it’s fairly simple, but I’ve found it to be—I’ve found it to be true.

Greg Mader: [00:20:18]

Okay. That’s really helpful, Jeff. Is there a little bit of if it sounds too good to be true, it is too good to be true? Is that part of this as well?

Jeff Bland: [00:20:30]
Yeah, I think there’s I think there’s always some of that Greg in this world, for sure. If it sounds like faith, trust, and pixie dust created this, there’s probably a little bit of that in there. But you know, you’ve been around a long time, and you’ve done a lot of things too, and I’m sure that you’ve found there’s a lot of truth in the words that I’m speaking.

Greg Mader: [00:20:51]
There is Jeff. Occasionally, I have to think about how do I want to introduce myself because telling the world, I’m an IT consultant, might get me a bad glare from somebody who had a bad experience and so…

Jeff Bland: [00:21:04]
No, you’re a good guy. You’re technically competent and you’re very likable, so you’ve got it going.

Greg Mader: [00:21:10]
I’m working on both. Thank you though, Jeff. That’s it. Let’s wrap it up. Jeff Bland, President of Triffin capital.
Thank you so much for being on the podcast.

Jeff Bland: [00:21:21]
Thanks, Greg. I really appreciate it.

Shane Peabody, The Fulton Companies | Podcast | Open Source Integrators

bettina.acosta — Tue, 08 Jun 2021 16:30:27 +0000

Shane Peabody, The Fulton Companies | Podcast | Open Source Integrators bettina.acosta Tue, 06/08/2021 - 09:30

Podcast

Shane and Greg talk about Shadow IT, the power of Open Source, and pickles

Shane Peabody started as an intern at Fulton companies, a multi-national collection of heat transfer equipment companies, while still in college and is now its director of IT. His path has included milestones such as designing Fulton’s first website and transitioning to cloud-based platforms. His experiences have left him with a strong sense of the value of trust and teamwork as well as pride in Fulton companies.

Transcript

Greg Mader: [00:00:00]

Today, I’m speaking with Shane Peabody, director of IT at the Fulton companies. The Fulton companies are global manufacturers of steam and hot water boilers and thermal transfer systems. They’re based out of beautiful and snow covered Pulaski, New York. If you have ever enjoyed a craft beer, it may have been made with a Fulton boiler. So, is that a good introduction, Shane?

Shane Peabody: [00:00:24]

Yeah, I like that.

Greg Mader: [00:00:25]

Shane, I always start out with the same question for everybody as a way to warm things up. What’s your favorite snack food?

Shane Peabody: [00:00:32]

I don’t know. I’m not much of a snacker or, at least, I wasn’t before COVID hit. I find myself going upstairs and grabbing a pickle out of the refrigerator probably more often than my sodium levels should allow.

Greg Mader: [00:00:48]

You are the first person to mention anything that’s remotely a vegetable, so you already win the healthy award here. Very cool. Tell me a little bit about how you got to this place in your career, Shane.

Shane Peabody: [00:01:01]

Right out of college, I started at Fulton. Halfway through my senior year, I started interning. And I went to school for computer science, that’s what it was called when I graduated, and started basically just as a help desk, desktop support. My company has really embraced me and allowed me to grow in my position as my interests grew. I went back to school for programming, picked up network engineering, and became a rounded computer guy. And then, I just stayed on long enough that before I even realized it the department was mine.

Greg Mader: [00:01:38]

Tell me a little bit about the Fulton companies and your products.

Shane Peabody: [00:01:43]

It’s a family owned company. It’s 70 years old. We make large industrial heating equipment for the pharmaceutical industry, for heating water for schools, and for chemical processing. If there’s an industrial heating application, there’s a good chance that we’re involved in it someplace. Like you said, distilling has been a big one in the recent years.

The family’s been very involved since the day I got here. If I saw something I thought I could help with, I’ve been encouraged to do that, even if it isn’t directly related to the information sector. When I started, we were just all in one building in little Pulaski, New York. It was the early days of the internet, so I got to be here and help design the first website that Fulton ever had, and then the first ERP implementation. And then, as we built new buildings and expanded throughout New York and then internationally, I’ve been able to see a little bit of everything of a growing business. It’s really what’s kept me in this place for so long, just the new opportunities that come up.

Greg Mader: [00:02:51]

Fulton was very resilient throughout the last year. Were there certain innovations or changes that you had to do in order to help foster that innovation or that resilience?

Shane Peabody: [00:03:02]

We’ve always been a very innovative company. A couple years ago we made a deliberate effort to go more cloud-based, whether it’s through our ERP system, Odoo, or Office 365. When we were forced to decentralize, at least we had that as a backbone for technology. We had teams before anyone even booted it up. We were fortunate that we were in a position where we could nimbly go from fully onsite to fully remote. Of course, there’s other challenges: people being the biggest one of them, a new way to work, and a new way that you have to communicate. I think being part of that family company, everyone just came together and helped me help them, so they could get work in.

Greg Mader: [00:03:48]

Okay, that’s great. Given that it’s a family owned business—I know a little bit about you—you do have a professional management team, the family’s involved, but you hire the best people from wherever they are in order to build that great management team. How does management realize you need to charter a business change project?

Shane Peabody: [00:04:13]

Fulton is a very innovative company. Processes that have worked for us for a decade based on new opportunities or new challenges may need to be adjusted. It comes at me, personally, from all fronts.

The leadership team will approach me with a challenge or a direction, but I might also get it from the users. The end user may have a challenge that we haven’t seen so a lot of
times it’s taking that problem and framing it into what the larger processes look like. So, part of it is just resolving it against the overall strategy of that particular department.

Greg Mader: [00:04:54]

So I’ve got a couple of things I’ve noticed about you, Shane, that I think are part of this. I’ve known you for a few years now. You come across as very honest and straightforward and really looking out for the interests of everybody. How important is trust in IT leadership, especially at a company like Fulton?

Shane Peabody: [00:05:16]

Trust is my currency. I’ve been here a long time. I’ve built up a lot of experience with the people and a lot of success, and that’s given me a lot of latitude, a lot of trust, as you say.

Greg Mader: [00:05:29]

How do you feel about shadow IT, guerilla IT or grassroots?

Shane Peabody: [00:05:34]

I love it. I absolutely love it. It’s gotten me where I am, really. As I said earlier, the company has supported my growth, but really what happens is I’ll find something and I’ll tackle it, just on my own time or the downtime, and then present it. This is a new system that becomes adopted just because I saw something that wasn’t there. I provided them that thing that they never knew, that they never would have asked for. And then it becomes an integral part of the system. I like being able to find new things that we haven’t we haven’t asked yet and trying to come up with an answer before it’s asked. So I love it.

On the downside, you end up owning these things forever. You know, those fun little projects I did 15 years ago that come back to bite me every now and again.

Greg Mader: [00:06:19]

This is maybe the healthiest response I’ve heard yet. What advice would you give to other people with the same job title? Executives and IT management who maybe aren’t comfortable with guerilla IT or that shadow IT?

Shane Peabody: [00:06:34]

I totally understand. In a director or manager level position you want to have control over everything. You want to have that scope and that plan so everything fits into a piece, but really it goes back to that innovation. Are you really innovating if you have all of your answers already? I think you have to embrace some of that chaos. Of course, everything needs to be framed and fit into the larger strategy and the plan in the same direction that your company is going, but I think that you need those guys that can go off and come up with these innovative solutions that you can’t necessarily just Google for. Some of it’s IT; some of it’s process.

Greg Mader: [00:07:18]

That is really interesting. We’re in that marketplace of ideas and as we’re learning more, new options may present themselves.

What tools do you measure the progress of a project with, Shane? You’re managing so many projects in your organization. So how are you keeping track of them?

Shane Peabody: [00:07:36]

This is new for me taking more of that project management role on. It’s been a struggle, but as I get more mature in it, I find a true project management plan is what I use. You need to know what’s coming up next, what depends on what tools or Microsoft projects, but just having a whiteboard with post-it notes would be sufficient as long as you have that project plan.

I’m fortunate that I have great teams around me for my different projects. I hold them accountable and they hold me accountable. ,

Greg Mader: [00:08:07]

I have a motto for this podcast, Shane. Let me read it to you quickly because this is partly where I think you’ve done really well. The mission is that we’re here to empower business leaders to focus on what actually matters rather than focus on the pain of technology.

Are there tools that you use to keep buy-in among the stakeholders? What tools do you have to keep the leadership and management on the bus, here, as you’re going through a project?

Shane Peabody: [00:08:40]

The foundation of a company is its people. So in order to get the most buy-in for these things, you have to bring those people in as part of the project.

That’s why I mentioned my team earlier. I make sure that my team is diverse and they’re as close to the actual work being done as we can possibly get. It’s easy to make decisions at our leadership level, but a lot of times you lose the forest for the trees.

It’s bringing in those people that are going to have to do these transactions. You know, to get them involved early, and they’ll help you carry it across the finish line.

Greg Mader: [00:09:18]

Your company is in the thermal transfer business. You’re in the boiler business. You’re not in the IT business.

Shane Peabody: [00:09:24]

You know it’s a good day when no one calls you, right? You know, you’re in the background and you’re facilitating, making sure everything is getting done, and you’re as transparent as possible. You never want to be a impediment just because something seems a little fancier. You need a service that the guys out in the shop floor.

Greg Mader: [00:09:48]

How much do open source solutions play in your software decisions?

Shane Peabody: [00:09:52]

Oh, I’m an open source advocate. I mentioned the website way back. We use Apache, MySQL, and PHP. That really set my direction for the rest of my professional life, the ability to go in there and create my own stuff, extend what was already out there. There’s never a perfect tool for the job, so open source has always been something that you could lean into and help. You could form it to what your business needs were. I could never go back to that closed ERP world after experiencing the open source movement.

Greg Mader: [00:10:30]

People listen to this podcast who are at all different stages in their career. And with that, I have a question that I think is actually really important. You
must have a good story or two from the school of hard knocks.

Shane Peabody: [00:10:43]

Yeah. I mean, I’ve got a few. I’ve done everything here at this company. Like I said, I started fixing computers and fixing printers and the network and the website. I built the first web server we had here and, knock on wood, I’ve never had that kind of—I’m jinxing myself bad—I’ve never had catastrophic failure.

I can tell you something. I mentioned how we did a lot of development, alongside of the website, we built an intranet site. So what I did, starting out, is if someone had a request, I would do it. I didn’t look at the larger strategy. I would just say, “This person has a request. I can make it happen.” I would do it, and I did that time and time and time again. And what I really ended up doing was building a monstrosity that was unmaintainable. And a lot of times what I did was contrary to what I know now is good process. So I built this
Frankenstein system that now, 20 years later, I’m still trying to send to the great beyond. I just can’t do it, so this thing is haunting me to this day.

That’s another thing with Odoo. This is my key outta this internet zombie this can be the tool that I can use to finally put it in the ground.

Greg Mader: [00:12:03]

So you’re not planning on retiring soon, but this is your retirement plan. You have to build the replacement tier for a system.

Shane Peabody: [00:12:11]

Yes, for sure. They joke around here that they’re not going to let me leave the office or a bus will hit me because I’m the last one that knows how this thing was put together. They won’t let me leave until I can get rid of this thing.

Greg Mader: [00:12:25]

What’s been the project you’re most proud of there?

Shane Peabody: [00:12:27]

I think it’s just the sum of all of it. I got to where I was because of how all the pieces that I have done fit together. I can walk from one side of the building to the other and see everything I’ve done. I ran that CAT-5 up in the roof. I installed that printer ten years ago, the monitors on the walls, the computer system that everyone’s working on all day. I just take a lot of pride and ownership in what I’ve done. And when I say me, I don’t mean exclusively me, I have a great team I work with. And, I wouldn’t be here without them.

It’s just the entirety of these things. One of the things I’m most proud of is being able to let go of something and give the network over to my network admin.

Greg Mader: [00:13:10]

Any closing thoughts, ponderings, or musings that you wanna share?

Shane Peabody: [00:13:17]

No, other than that team aspect, we have a team internally that I lean on extensively. Also OSI, they’ve been a great partner to me. They’ve made me look good.

Greg Mader: [00:13:29]

Let’s try one other thing here too, Shane. I’ll see how it works in editing, but give a pitch for Fulton boilers. Tell the world why your products are the best.

Shane Peabody: [00:13:39]

Don’t do that to me. I’ve worked here twenty years, twenty-five almost, and there’s a lot of innovation going on out there on the product line. Like I
said, the company has been around for 70 years. There’s products that have lasted almost that long, honestly. There’s boilers out there that are older than, we are, Greg. They’re still running.

Greg Mader: [00:14:00]

Shane, thank you so much for being on the podcast today.

Shane Peabody: [00:14:04]

Hey, thanks Greg. I appreciate it.

Greg Maloney- How to scale ambitious projects?

bettina.acosta — Tue, 08 Jun 2021 14:04:55 +0000

Greg Maloney- How to scale ambitious projects? bettina.acosta Tue, 06/08/2021 - 07:04

Podcast

Greg and Greg talk about advanced IT management approaches, regulated industries, and Goldfish crackers

Transcript

Greg Mader: [00:00:00]

Today, I’m speaking with Greg Maloney. The enterprise systems lead for Invitae’s Boulder, Colorado office. Greg has over 40 years of IT and life science experience. And over 30 years of experience in manufacturing, purchasing, finance, sales, and R & D lines of work for large multinational companies. Greg is a go-to guy for regulatory compliance, business process design, and project management. Greg’s company is nice enough to let Greg offer his thoughts, but Greg isn’t speaking on behalf of Invitae. The short version: if you’re looking for an expert in IT for highly regulated critical industries, Greg’s your guy. So Greg, thank you for joining me today.

Greg Maloney: [00:00:43]
Thank you, Greg. Thanks for the invitation. I appreciate it.

Greg Mader: [00:00:46]
So the question I ask everybody to get started: what’s your favorite snack food?

Greg Maloney: [00:00:53]
Well, I am from New England, so there is a Pepperidge Farm. Goldfish has gotta be my go-to in the afternoon when I need a little bit of an energy boost.

Greg Mader: [00:01:03]
I didn’t realize that’s a regional thing. I thought everybody who had kids, at least, had goldfish in the house, but that’s a regional food?

Greg Maloney: [00:01:11]
It’s regional and it reminds me of home, so it’s one of those things. Yeah, Pepperidge Farm, I think is a local company, but I’d have to look that up to be sure.

Greg Mader: [00:01:20]
How do you feel about Moxie, possibly the strangest soft drink in the United States?

Greg Maloney: [00:01:25]
Moxie is pretty amazing. That’s also a fun thing to have on a warm summer day. They’re not that often in New England, though.

Greg Mader: [00:01:36]
Tell us a little bit about how you got started. How’d you get to this place in your career?

Greg Maloney: [00:01:41]
I started out, believe it or not, out of the Boston public school system. I went into trade school first and started out in electronics and then went into engineering, electrical engineering, and transitioned into computer science.

But as far as my first professional job, that was at Hewlett-Packard, working as a design tech and a bench tech. So, I would test medical products: printed circuit boards. And then my career took an interesting track in that it started to do some dabbling within computer science.

I went to school nights and finished up my degree, and then at the same time I went to IT management say around 1990. And then, from there it’s been kind of being right in the focal point of the new technology. It starts to emerge whether it’s early cloud; HP was experimenting with that. Phillips was doing things with robotic process automation recently, say, five to ten years ago.

And so, it’s been interesting in the career in that I’ve had a chance to look at some of that stuff early on and understand how it’s working. Even Agile Project Management,
iterative project management, that’s been really cool to be on some of the projects that are what I call big, hairy, and audacious. And that’s where you learn, and the learning is in the doing as far as I’m concerned.

Greg Mader: [00:03:07]
You’ve had a career specifically in these more highly regulated or critical sorts of technologies, too. What have you seen that’s different between those sorts of industries and maybe what somebody is facing in an average IT project?

Greg Maloney: [00:03:22]
Probably the biggest difference is that the user acceptance testing is really the capstone for any IT project. That is, you have the requirements; you want to make sure that you’re fulfilling the business need. And then you have a typical kind of end of project testing to make sure that everything’s working as it’s supposed to. In a regulated industry, the testing actually starts in the beginning. So what you’re doing is you’re doing things like identifying the requirements and then you have verification points along the way. There’s a
popular technique called the V-Model which is you have the requirements coming in, and then what you do is a unit test, module test, system test as you’re building. I would say the biggest difference between, a regular IT project, like a web development project, which can use Agile and you can make the requirements as you go along. You have to have more of a waterfall-ish approach in a regulated environment. And what we say in the industry is “waterscrumfall.” You create the ethics, you understand what the situation is, and then you do sprints in order to implement it, but then you’re testing as you’re doing this sprint, as well.

Greg Mader: [00:04:42]
As a general observation of society now, I think more industries are facing regulatory challenges and not less. What we notice in our own practice is that we’re dealing more and more with businesses that maybe have quite substantial regulations, perhaps a material traceability, perhaps in capturing the life cycle of a product, so
many things. And what I think is interesting about that is a number of companies that probably have been used to that loose and easy approach previously, like you said, for building a website or whatever are finding themselves challenged right now with understanding the differences between an IT project in a regular situation versus a highly regulated industry.

Greg Maloney: [00:05:35]
Yes. I agree, Greg. I’ve worked on different projects where even in the regulated sense you’d have the food and drug administration, or you’d have a competent authority in Europe, but then you’d also have regulatory agencies like the FAA.

There was one project I worked on where I was surprised that the product had to meet certain radio frequency controls, because it would be on an airplane at certain points in time. Some of those can be out front and some of them can be hidden. And then you have the regulatory aspects of the Sarbanes-Oxley, for instance. All businesses have to conform to that. So it’s interesting in that those skills that you gain, when you do regulatory businesses, are a good backstop for doing testing and just it sounds like it’s burdensome, but it really isn’t. And, when it’s applied, it actually reduces risk for the business as well.

Greg Mader: [00:06:34]
That’s a good point. Baked into this is risk reduction as opposed to your traditional IT project.

Greg Maloney: [00:06:42]
Yes. Yeah.

Greg Mader: [00:06:43]
What are your thoughts on grassroots IT projects or shadow IT projects?

Greg Maloney: [00:06:48]
That’s a good question. Usually, what I find is that and I have to—full disclaimer: that’s how I started out, within IT. I was on the business side. I worked in a manufacturing area and auto insertion and auto test. And so one of the things that I did was I worked with the computer systems at the time to do a defect measurement system. And what I find is that usually those grassroots or shadow IT projects identify a problem early on. They’re the canary in the mine and so in that sense, I kind of lean into them.

And then from an IT standpoint, it’s like, what can I do to help? Usually they start off with Excel spreadsheets and Microsoft access databases, and other kinds of desktop-type tools, but then what happens is, it reaches a critical mass. And at that point it’s: okay, how do we professionalize this process and application in such a way that it satisfies
the original business need. And believe it or not, I think those are the easiest ones to leverage because there’s already buy-in. You know that people already need something.

And then sometimes what it is is that they’re solving a point solution, but you can bring a technology like ERP or you can bring CRM or some other application to bear. It’s like, “Wow, I didn’t even think of the next stage. So that I think is good, but also in a regulated space there’s those conditions where maybe if I can come in and help with some of the documentation, ‘cause that’s required, then it’s almost like an opportunity to team build, if you will.

Greg Mader: [00:08:37]
That’s interesting. So you see it as an opportunity to build bridges. In many IT departments it feels like there’s the opportunity to burn a bridge so that’s just in contrast.

Greg Maloney: [00:08:50]
Right. And to build on that, what I’ve seen is that there are projects that are, for instance, any business that I’ve seen so far, the lifeblood is Excel, or Access. And that fills a necessary gap for either data analysis or making business decisions and those applications, then you can turn those into data lakes and business intelligence. And things like that really give the business a competitive advantage, but it’s not all rosy. I don’t want to misrepresent that either. There are some stealth IT projects that are a problem in the
making, and that’s where you have to communicate and be close to the customer to understand what it is that they need and what IT can provide.

Greg Mader: [00:09:37]
Which gets to where, I think, these grassroots projects often are good: in helping organizations realize that they need to charter a real business project.

Greg Maloney: [00:09:50]
Exactly. Yeah.

Greg Mader: [00:09:51]
Let’s kind of take this out broader, how, in general, should a business, or how do you realize that you need to charter a business change project?

Greg Maloney: [00:10:01]
One of the things that I tried to do to is scenario planning and that is looking at the current situation and saying, “How can I make this better? What are some possible pathways?” What you can do is you can look at something and say, “You know, we’re kind of stuck in a rut here. What can we do to improve? Who do I need to talk to? And how can I make the process more efficient? How can I make IT more efficient?” So in that sense, it’s really surveying the landscape on an ongoing basis.

It’s like having radar or having, in your car, the heads up display and when it gets dark out you can see things that are on your horizon that are hidden until the headlamps hit them. What I try to do is to push forward in time a little bit to see what the possibilities are; what might happen, given what we’re doing today. And so I know that’s probably not a clear answer, but it’s one of those things where you always have to be aware of what might happen and adjust.

Greg Mader: [00:11:08]
There’s occasional debates in our company about tools such as Six Sigma or Lean or other approaches to help identify those places where people are getting stuck. Do you use any tools like that, Greg?

Greg Maloney: [00:11:22]
I like Lean, Six Sigma. I’ve had some training in that area. I also have had a lot of training in what’s called business process modeling. And that is the philosophy really of writing down what the business is doing, and one company I worked for did, what I call, create an encyclopedia of the company. And so what that does is that sets a standard baseline through the company, and then from that perspective too, is you can see, okay, that’s where our baseline is; that’s where our standard is.

How can I differentiate my company or my process and push the company forward? So that’s another technique as well as to say, “Okay, we’re in this market niche and how can
we expand and improve and get more profit, for instance.” So in that sense, yeah, Lean helps.

Certainly the standard quality type approaches like Pareto charting, 80/20 rule , all of those help as well. I like the Kan Ban approach for project management. I like Agile, as well. There are a lot of situations where we know the problem, but we don’t know the solution yet, and we don’t know all of the requirements. And I like the idea of discovering them as you go along.

I did a presentation in my former company, and one of the things that I say about project management is, it’s kind of like making pancakes in the morning, right? One of the things is the first pancake never comes out right. The second one is a little bit better. By the third or the fourth one it’s much, much better. That’s just paraphrasing the learning curve.

Greg Mader: [00:13:07]
I love the pancake analogy; that’s perfect, first thing in the morning here. So we’ve decided we need to charter a project. What do you think the key components of that exercise should be, Greg?

Greg Maloney: [00:13:19] I worked for a
European company and one of the techniques that they use is PRINCE2, and PRINCE2 has a notion of a project mandate, and the project mandate can be from a senior level executive saying we really need to do this.

And it can be as simple as that, to start off with, as a trigger. And then what you need to do is to put some bones on it and say, “Okay, what are the deliverables? What are the goals of the project? What’s the mission? What unifies people?”

And then it all comes down to change management and how you get the organization moving in the direction that you need to move in. You need to have good communication. You need to identify the team. You need to have a good budget or a reasonable budget. And then you have to have a reasonable timeline or, at least, one that you can work with.

I do a project plan. They’re always changing because things change: you run up to issues, you identify risks, you have turnover on the team. And so all of those factors mean that you have to be nimble. And so there’s a certain amount of planning upfront to make sure that you have your goal in mind, but then after that, certainly, KPIs kick in—key process indicators—and objectives and key responsibilities, which is emerging as a new way to look at projects and look at achieving goals. What’s interesting is, in project management, it’s the leadership that comes first and the communication that comes second, really.

Our current situation is that we do a lot with remote teams. And almost every project I’ve worked on in the last 30 years has some sort of remote component where you have one individual, or even a team, that’s in another geography, another region, another time zone.

Greg Mader: [00:15:17]
So Greg, what are your thoughts on, how to wrap up a project, how to go live? And do you have any thoughts on Finish Big as maybe a mantra?

Greg Maloney: [00:15:27]
Years ago, as well, I read a lot about Tom Peters, and Tom Peters had a small book actually, that was that very premise, which was to go after the large, big, hairy, audacious projects and set the tone from a requirements standpoint and scope, but also when you create a project, what you’re doing is you’re bringing along a team, as well.

I think of Finishing Big is almost like when you go into the movie theater and you see the credits at the end. Any large project has hundreds of people working on it sometimes. A lot of people are in supporting roles where they’re going to be instrumental in making sure that, once it’s installed, that the application is working well. So you do want to celebrate that big. You want to acknowledge what people have done in the project, the things that they’ve achieved, and say, “Hey, we’ve done a good job with this. We’ve got it in there.”

I’ve worked with a project manager who is out of Europe. And one of the things that she used to say is, “It’s done and dusted,” which is, that it’s fully complete, ready to go, put the package on the wall.

So it’s not like we build bricks. We’re building usable components for the business. And so we do need to make sure that it gets installed correctly, that it’s working correctly, but also that people use it. That’s the big test of an IT project: does it satisfy the business requirement? What we need to do is to focus on what the need is and what will bring the business forward.

One company that I worked for, what they used is the NPS score, the net promoter score, which is you get rated as a project manager from a scale from one to ten. And the way the net promoter works is that you only get a positive number for nine and ten. Eight is okay. It’s the average, anything lower than eight is like a zero. It’s almost like a bell curve kind of evaluation. And what that is is that you have to have the big bang at the end. You have to, because otherwise, if the customer doesn’t think that it’s fantastic, you’re not doing a good job.

Greg Mader: [00:17:47]
That’s really great, Greg. A lot of the people that are listening to this podcast are going to be at different stages in their career. And especially for people that might be starting out, do you have any good stories from the school of hard knocks?

Greg Maloney: [00:18:03]
Oh, there’s a ton of them. One of the first things that I heard about was from my first professional manager. He was a former military major, and he said, “Don’t rest on your laurels.” That was one piece of advice. He said continue to learn, continue to challenge yourself, continue to pick up new skills as you’re going along. And then the other thing that he mentioned to me is not everything’s urgent. Sometimes problems fix themselves, just allow time, take a breath, look at the situation and encourage people to explore the solutions on their own. Seek out a mentor.

When I tell people about mentoring, one of the things that I advise people to do is, think of creating a board ,of directors: people that have different skill sets, diverse personalities; people that you wouldn’t normally go to. Sometimes, the challenging relationships help formulate your skills better than the ones that are easy.

Greg Mader: [00:19:06]
I think you’re like me; you’re quite a reader. Are there any books that you are particularly fond of that kind of helped capture the right ethic or spirit or maybe just practical advice for people in our profession?

Greg Maloney: [00:19:21]
I like to read up and down the project management spectrum and currently one of the things I’ve rediscovered is a book it’s called the Theory of Constraints. It’s one of those where everything is about a bottleneck. And when you think about the Pareto principle, your outstanding problem today, once you solve it you have a second one that shows up, and then the second one is there. And so the Theory of Constraints, although I haven’t read through the whole book, really deals with, once you solve one bottleneck, you may have a different one, and then you have to focus on that one.

And so from an IT perspective, it also affects projects. You have issues and risks and the top issue may pop up and then you have to solve that one.

Greg Mader: [00:20:12]
I didn’t prep you on this, but I’m glad that you’re a fan of Eli Goldratt, too.

Greg Maloney: [00:20:18]
Oh yeah, yeah, yeah.

Greg Mader: [00:20:19]
He was an incredible person, and I think incredibly generous with the way he tried to share his thoughts and information with everybody. So yeah, I’m a huge fan.

Greg Maloney: [00:20:30]
Yeah, exactly.

Greg Mader: [00:20:31]
Greg, I’d like to thank you for being on the podcast. It’s a pleasure working with you in my real life too, but this was a lot of fun, and I think you offered a lot of great ideas for people who might be listening. So thank you, again.

Greg Maloney: [00:20:45]
Thank you. Take care.

Bob Lewis, IS Survivor Publishing-- How to Keep the Joint Running?

bettina.acosta — Tue, 18 May 2021 17:03:10 +0000

Bob Lewis, IS Survivor Publishing-- How to Keep the Joint Running? bettina.acosta Tue, 05/18/2021 - 10:03

Podcast

Bob and Greg discuss IT project success, squirrels, and what executive sponsorship really means.

I first learned about Bob Lewis’s column and books from a direct report staff member, Clark Swinehart (RIP). I think Clark saw some gaps in my knowledge, and was politely trying to educate me to be an effective leader in our profession. Bob’s work has been incredibly influential in my own work, and many will testify that they have received one of Bob’s books from me.

Bob Lewis, Author of “There is no such thing as an IT Project”

Since the 1996 launch of his “IS Survival Guide” column in InfoWorld, Bob Lewis has been an iconoclast in the echo chamber of same-old same old commentary about business and IT strategy, tactics, operations, and leadership. His unique blend of vision, pragmatism and sardonic humor have made him one of the most trusted and independent voices in the field.

The award-winning author of twelve books and more than 1,700 columns, Mr. Lewis held a wide variety of executive, management and staff positions before becoming a consultant – he did the work before advising about the work.

Mr. Lewis posts a weekly column (he refuses to call it a blog) at www.issurvivor.com, along with occasional guest columns on CIO.com.

Transcript

Greg Mader: [00:00:00]

Today, I’m speaking with Bob Lewis author of the “Keep the Joint Running”, and “IS Survival Guide” columns. He’s the author of 12 books and over 1700 columns. His latest book is “There’s no such thing as an IT Project: A Handbook for Intentional Business Change”. I love this book. There’s certainly some ideas I want to talk about from this book, but everything Bob’s written, I found to be incredibly valuable. So thank you for being on today.

Bob Lewis: [00:00:31]
No, my pleasure. Thanks for inviting me.

Greg Mader: [00:00:33]
The question I ask everybody is what’s your favorite snack food?

Bob Lewis: [00:00:38]
Malted milk balls. Is there any other possible candidates? Really?

Greg Mader: [00:00:42]
That’s interesting. A particular brand, Whoppers, some other brand?

Bob Lewis: [00:00:48]
Well, actually there’s a local store here in the Twin cities area, called “We are Nuts” and they do a dark chocolate covered malted milk ball. I have no idea where they manufacture the things, but they were fantastic.

Greg Mader: [00:01:04]
My wife was once attacked by a squirrel in the winter at the University of Minnesota campus, while she was eating malted milk balls. The squirrel was in a desperate situation and wanted those malted milk balls more than my wife did. So, she threw them to the ground, and ran away. So that connects malted milk balls with Minnesota.

Bob Lewis: [00:01:25]
Well, thank you for sharing that.

Greg Mader: [00:01:28]
I’d be remiss if I did not include that. Ronda listens to these.

Bob Lewis: [00:01:34]
I hope she was able to replace the malted milk balls and wasn’t too badly injured by the assault squirrel.

Greg Mader: [00:01:40]
Yes, she’s good there. Tell me a little bit about how you got to this place in your career, Bob.

Bob Lewis: [00:01:46]
I don’t have the faintest idea. It just, I woke up one day and here I was. The “how did I get here?” Way back when, I was a little bit frustrated with the company I was working for. They were on their 37th management fad and counting, and I’d been sent to seminars on every one of those fads. And so I wrote a book titled Total Quality for Cement Heads, which I then sent to various publishers, all of whom had a very similar response, “Love the book. Who are you and why would anybody want to read anything you have to say?” And so that book got withdrawn, but a lot of the ideas behind it stayed with me.

So the key to my success, way, way back when was that I subscribed to CompuServe. This was back pre-internet. It’s the least popular internet. And my frustration with CompuServe was that I had nobody to send an email to and back then email was, like, for the cool kids or at least the cool nerds.

And I was also an InfoWorld subscriber and InfoWorld had a guest column at the time called “Peer to Peer.” And the way you submitted a guest column was by email and they had a CompuServe address. So I wrote a piece that assaulted the Gartner Group’s total cost of ownership formulation, and they printed it under the inflammatory headline “Lies, Damned Lies, Statistics, Something Funny with Gartner Numbers.” And Gartner challenged me to debate them, which I did at their annual symposium and hilarity ensued and somehow or other it ran into a career.

Greg Mader: [00:03:41]
It’s interesting. Actually doing homework and having an opinion based on homework seems to actually be relevant now more than ever. You maybe pioneered a bit of that for the rest of us.

Bob Lewis: [00:03:54]
What a scary thought that is. I’ve always thought that my approach to this was to do just enough research to be vaguely credible, but mostly I’m guilty of what I accuse everybody else, which is using research as a source for ammunition instead of illumination. And I try to avoid that, but it’s very hard to do, but I do at least enough research that there’s some basis for at least many of the things that I write.

Greg: [00:04:26]
I’m going to jump a little bit to what I think the outcome of some of your work leads to, this idea of the culture of honest inquiry. And as I was rereading your latest book, one of the things that really stood out to me, was the idea that you start with the decision process, not a decision.

A good friend of mine named George actually has a very similar idea. You don’t have to trust the individuals, if you have a process that you can trust. So how did you stumble on this and where does this fit?

Bob Lewis: [00:04:58]
I stumbled onto this, and I actually don’t remember exactly what we were selecting, but it was a software selection process way back when, early in my career.

The first meeting unsurprisingly you know, the old stages, the team formation: “Storming, Forming, Norming, Performing.” It was an advanced organization; so we always skipped the forming part, and we got right into the storming. Basically the first couple of meetings were nothing but arguments and they were arguments about whose preferred solution was the better solution.

And somewhere in there, probably just out of frustration, I asked everybody to call a halt to the arguing for a minute and instead asked them, “How are we going to make this decision?” And strangely enough, while we were completely incapable of having a productive conversation about what the better solution was, we were quite capable of having a very productive conversation about how to make the decision.

Basically, what are the requirements in multiple categories, what are the relative importance of each of those? How are we going to tell? And then it flowed quite smoothly because we all committed to a process.

We had one guy at the end who wasn’t onboard. He had said he committed to the process, but he would not relinquish his favorite solution, even though it was not even a close horse race with the one that we selected. His argument was that our selection process was flawed because we had scored a feature down that he said his preferred solution was very strong at, and it turned out that he felt that solution was quite strong, but the vendor said it was quite weak.

So he, in fact, decided to argue with the vendor’s statements about their own product. And he got laughed out of the room because we’d all committed to the process. I learned
another lesson then, which is one of the easiest ways to unite people who don’t normally unite is to give them a common enemy. So that worked out too, although it was the less savory part of the solution.

Greg Mader: [00:07:14]
Yeah. I think since you talk about software selection, I’ve sent your column to, I don’t know how many, possible customers here. Tell us your feelings about RFPs. Is that a good way for an organization to select software?

Bob Lewis: [00:07:33]
Oh, you mean “Request for Pain?”

Greg Mader: [00:07:34]
Oh, yes.

Bob Lewis: [00:07:37]
There we go. Yeah, I’m a consultant. The answer to any question is it depends. Is an RFP, a good way to go? I think what it depends on is a couple of factors. One is how well you understand your requirements and at what level of depth, if you understand your requirements, you can formulate them.

Otherwise the RFP process, isn’t really a bad way of getting to understand them a bit better. Where I think RFPs go off the rails is that when the person writing the RFP, or the people writing the RFP, in effect, want to be the vendor. They don’t want to be the selector. They’re smart people. They want to do the solution. They want to show that they know how to do the solution. And as a result, they over specified, and they don’t give the vendor enough latitude to propose creative ways of solving the business problem. And I’ve been involved in pursuit teams where we’ve had RFPs with 500 or a thousand detailed requirements. And it’s just a preposterous way of approaching this.

What you want to do, I think, is explain to each of the candidate vendors:

Here’s what we want to achieve.
Here’s the business outcome we’re looking for.
Here’s technical outcome that we’re pointed towards,
Tell us the best way of solving the problem.

Don’t respond to a thousand detailed questions. So are RFP’s good or bad? I think like everything else in the world, it’s possible for them to be useful. It is possible for them to be horrible. And regrettably, I think there are more horror stories than there are successes.

Greg Mader: [00:09:25]
I agree with everything you said, Bob. if I can summarize: how I’ve often seen these as the receiver of them, it’s clear they hired a consultant or someone internally to go around and take a survey from everybody in the organization and get their wishlist, and the wishes may often be in conflict with each other. But nevertheless, it’s a list of what accounting may want, what procurement may want, what manufacturing might want, that may or may not have any coherence.

And what I’m afraid is that most people that respond to RFPs do, is they’re just going to check “Yes” on all 500 requirements, that “Yes, we do that,” maybe put in a few asterisks and unfortunately what ends up is everybody says, yes. So it’s a race to the bottom. Who’s going to offer the lowest price, whether, in fact, it ever solves any problems or not is irrelevant.

Bob Lewis: [00:10:22]
I trust that you have the good sense to tell everybody who sends you an RFP, that this is far and away the best RFP you have ever read. I’ve been on both sides.

Greg Mader: [00:10:32]
That’s exactly it. Yes. I absolutely tell them that best RFP I’ve ever read. Perfect.

Bob Lewis: [00:10:39]
Absolutely. No, I think you’re right on the money with that.

Although there are a couple of other styles of RFP I’ve been on again on both sides of this. I learned the hard way, when I put far too much effort in very often, what the RFP really is a request for free advice. And so I’ve shared our methods. I’ve shared our approaches and then the response is,” Well, we decided to take this in a different direction and what the different direction is that the In House team is going to do this, using the ideas they got from all of the vendors they sent RFPs to.”

Greg Mader: [00:11:15]
Yeah. That has happened as well. Moving on.

Bob Lewis: [00:11:20]
Okay. Good plan.

Greg Mader: [00:11:21]
Yeah. Back to the idea of a culture of honest inquiry, another point you made that really sticks out.

Don’t create disincentives for honesty. I think you and I talked about it briefly a few days ago, but the idea of bad news doesn’t get
better with age.

Bob Lewis: [00:11:40]
Yep. Well, okay, so let’s take it this way now.

The oldest formulation of this is probably the most common.
We just don’t shoot the messenger. The messenger has gone through a lot of work to get to talk to you and give you an honest take. And even if they’re wrong, unless you think that the reason that they’re telling you something you don’t want to hear is if they’re stabbing somebody else in the back, which does happen.

And here’s a thing: If you’re trying to hold people accountable, what that’s saying is that you think they won’t do a good job unless there’s a threat of punishment hanging over their head, like the Sword of Damocles.

And if you actually have hired people who only operate well under threat, what you ought to be doing is wondering why you hired people so badly, because the idea of holding people accountable and people taking responsibility are really polar opposites. You want to hire people who take responsibility so that you don’t have to hold them accountable.

And if you’ve hired people that you have to hold accountable? Two things:

Give them the opportunity to instead find a job they can succeed in. They deserve to have the chance to be successful.
Hold yourself and your HR and your recruiters and everybody in the loop hold them accountable for hiring people badly.

What does this all have to do with a culture of honest inquiry?

It’s pretty straight forward. The folks who are taking responsibility understand that something is going wrong, something needs to be done about it. And if you do a proper job of root cause analysis, The chance that the fundamental problem is that you’ve got a bad person involved is usually….First of all, it shouldn’t be your default assumption. And second, is probably not anywhere in the root cause. Usually the root cause is going to be the systems, you’re using the processes you’re using, the tools you’re using. When you shake it all down, The idea that if somebody gives you bad news that somehow or other, they should be held accountable to be punished for, it just means you don’t know how to handle situations well when something doesn’t go your way.

Greg Mader: [00:14:07]
That’s actually very positive and inspirational. An organization I once worked for was notorious for “Dead Dog Fridays,” where bad projects would only be discussed with Management as late as possible on Friday afternoons, which led to this vicious loop of unhappiness with all parties, and they clearly weren’t following the guidance that you laid out there.

What do you think about the role of “Grassroots IT” in an organization? Some companies call it “Shadow IT” or “Guerilla IT,” I think depending on the Director of IT’s personal values on this subject, but there is this idea that business users will go find a solution for themselves.

Bob Lewis: [00:14:54]
Shadow IT, Do-It-Yourself IT, Guerilla IT, IT rarely has flattering names for these. And the thing to understand about the mindset that leads to Do-It-Yourself IT and why is it in conflict with what most of us have been taught for most of the last 30 years, at least, is this fairly preposterous myth that IT should view the rest of the business as its internal customer.

And so here’s where things get very strange and sideways is everybody from the CIO down and IT understands it’s supposed to treat people like their customer, but if IT was
running a restaurant, they would not say to a customer, “No, you shouldn’t have the ribeye. You should have the Cobb salad, because you’re frankly getting a little pudgy. And as far as desserts are concerned, just take that right off the menu. We don’t think you should be eating dessert.”

In other words, IT would act more like a dietician than a restaurateur. If IT were running Home Depot, somebody would go in to buy some drywall, and IT would say, “Sorry, you can’t buy drywall from us. We have to install it.”

So it starts with a very peculiar inconsistency because, just looking at the metaphor superficially, you understand IT should not be in the business of saying no to their customers any more than any retailer says no to their customers.

Here’s the second thing, because metaphors are whatever you make of them, and it’s easy to take a metaphor off a cliff anyway, but business managers are better than IT is at knowing what they want technology to do. They’re better at knowing how they want their part of business to run differently and better.

IT is much better at designing and constructing a resilient—if you like, a robust, if you do choose another word, sturdy, perhaps, how to build things that are built to last. So really when somebody in the business is perhaps somewhat technology savvy, but isn’t an IT professional, but they’re really good at making things work properly when they go out, figures out how to solve the problem, building a solution out of Excel or Access, license something open source, license, something software as a service and make it work for their part of the business. They’re doing the job of the IT business analysts coming up with something that demonstrably works exactly the way they want it to work.

There ought to be a mechanism in IT. ( And we would very well be served to establish a mechanism) for taking these Do-It-Yourself solutions and rewiring them. Replumbing them to make them sturdier and more robust while preserving all of the business logic that the business is built in, and knows this is exactly what we needed to do.

So my shot at Shadow IT is that you should—Oh, by the way, one more piece of this. Very, very often when somebody licenses a “Software as a Service” solution, when somebody develops something to make their part of the business work better, the missing piece is integration and integration is probably IT’s last frontier. It’s always hard.

Even when it works properly, it’s hard to maintain.

I worked with a company once they had more than a thousand batch interface jobs that had to run in precise sequence every night or things would go sideways. It was just a mess.

So one of the things that IT can offer, either during the Do-It-Yourself stage, or as part of this process of taking a Do-It-Yourself solutions and bringing them into the IT tent is addressing the integration challenges as well, so that the business users who can’t do integration, and as a result, they generate a whole lot of re-keying from one system to another, so that piece of inefficiency also gets addressed.

Greg Mader: [00:19:13]
That was fantastic, Bob. Thank you.

Similarly, I don’t think grassroots projects are good or bad. I think under the best of circumstances, they are solving some problems, scratching some itch that needed to be scratched. Even if they’re not perfect, it often helps point the way for what the real solution is.

Bob Lewis: [00:19:35]
Absolutely. And I think one of the things where it really gets into trouble is when IT tries to stamp out Shadow IT. Where IT can really get into trouble is saying, “We won’t do it for you. We won’t let you do it for yourself.”

So if you have a problem that could be solved by information technology, that’s just too bad.

We won’t allow it. You need to use ledger sheets and 10 key calculators or torture Excel until it’s screaming for mercy. Because IT is in the “Stamping out a Technology” business. Who’s that character in Dilbert? Mordac, the Preventer of Information Technology? Sadly that’s the problem with Scott Adams, so much as preposterous, all you have to do is recognize it as preposterous and you’ve got humor.

Greg Mader: [00:20:22]
Yeah, I think everybody in our business, when we look at a Dilbert cartoon, there’s a bit of schadenfreude and we might recognize it.

Bob Lewis: [00:20:35]
Yeah. I think there’s a term. Yes. Yes. I couldn’t agree more.

Greg Mader: [00:20:42]
I do want to ask a big question here. A lot of the people I think that are listening to this podcast are newer in their career and that’s where they haven’t maybe made all the same mistakes or had the same experiences.

I am curious, Bob, do you have a particularly good story from the school of hard knocks?

Bob Lewis: [00:21:04]
Oh, yeah. I have practically nothing but. But know what they say, “Experience is just too late learning.”

Earlier in my career, I was one of five people who were collectively formed as the organizations Chief Information Officer. They were trying an experiment in a team-based leadership.

Of course, we all hated each other. Oh, that’s not fair. We were all were bitter rivals because all of us figured that it was like Highlander. And in the end there would be only one. Of course, we all wanted to be the one.

And then we had a change in Executive leadership that didn’t believe in self directed teams at any level, and certainly not at a management level.

The person to whom the five of us who were the CIO reported, sat down with each of us to get a sense of IT and what should be done and all that. And I spent an hour with this lovely woman, very smart woman, sharing all of my thoughts on what I thought needed to be done for IT to be the organization that the company needed.

What I didn’t do, was ask her one question about what she thought. The hard lesson—I wasn’t the one selected—and the lesson there was pretty straightforward, which is you

don’t impress people with how smart you are by talking. You would persuade people that you’re smart by listening to them.

And if anybody who’s starting out on their career, or anybody who’s finishing up their career, for that matter: you are always going to sound smarter by asking good questions than you will by giving good answers.

Greg Mader: [00:22:48]

A person I used to work for some time ago, would always tell people that were new to the company (including me) this one bit of advice, and that was “Seek to be interested, not interesting.” I found that pretty helpful.

Bob Lewis: [00:23:06]
Close to that first piece of advice is the second one, which, it’s a long story that I won’t bore you with for change of pace, but I found myself at a round table among groups of round tables. All of them within the table were supposed to come up with the one skill that would be most important for folks who wanted to become IT leaders. And our table with yours truly, I confess, as an instigator, established the single most important skill anybody could develop if they wanted to be in a leadership role, was the fine art of sucking up.

So, listen, don’t talk first, but when you talk, suck up. Nothing comes close.

Greg Mader: [00:23:52]
Wow. Okay. I’m not sure where to go.

Bob Lewis: [00:23:59]
I think the best thing you could do is change the subject.

Greg Mader: [00:24:02]
Let’s do that. Wrapping it up, again for new people that might be starting out in their career, what are maybe the top five things they can do to keep a project on track and make it successful? And maybe there’s five things that are destined for failure every time they’re tried.

Bob Lewis: [00:24:23]
Oh, that’s a hard one. Okay. So looking at this purely from a project basis, I don’t know that I’ll get to five. The first, the single most important one, is that you need to have an executive sponsor, and I say executive because they need to be able to make sure you get the resources that you need, which means they need to be able to spend money.

The second key thing is a good sponsor is not providing oversight. The good sponsor is a collaborator. A good sponsor has got to want the project to succeed at least as much as the project manager does, deep in their bones.

So if you don’t have the kind of sponsor, who’s fully committed to making the project successful and he doesn’t want you to give the man honest accounting, going back to an earlier subject of where the risks, where the issues are, what is going wrong? What could go wrong? If you’re not dealing with somebody like that, and you’ve got a sponsor in name only, and the best thing you can do under those circumstances is run and hide under a desk someplace and hope that they don’t notice you for awhile.

Okay. I guess I should give you at least two, since you asked for five.

Greg Mader: [00:25:36]
I’ll take whatever you give.

Bob Lewis: [00:25:39]
The hard part is they get me to talk to the hard parts to get me to stop talking.

Number two, perhaps on your how to make your project successful, and I’ve seen this go wrong a lot of ways, and that is make sure that you have weekly status meetings.

Not status reporting, not status management, not status readout.

The key thing about a weekly status meeting is that everybody on the team should—first of all, your plans should be down at a level of granularity that at the end of a week, you know whether somebody got what should be gotten done that week or not.

So your tasks need to be defined to that level of granularity. And the reason you need a weekly status meeting and not status reporting and not emails with product status updates that a project manager and collect into reports and all the rest of that is—you want to be able to ask each member of the team:

What were you supposed to start doing this week? And did it start?
What were you supposed to finish this week and did it finish?
If it didn’t finish on time, what’s the plan for getting back on track?

And the key thing here is that each member of the team needs to say to the rest of the team whether they got done what was supposed to get done.

That’s the valuable piece of this because that applies peer pressure, which is far more effective in a team environment than any kind of management oversight, project management or other.

One more. So I’ll give you three out of five, that ain’t bad.

Greg Mader: [00:27:20]
I’ll take it.

Bob Lewis: [00:27:21]
So the third one is, and again, this is no particular order, but when you’re dealing with a project team, projects are hard.

Easy projects are hard. They get more difficult from there.

They start off looking great. You’ve got an inspiring idea. You’ve got something that is going to provide high value. The results are going to be very, very cool, maybe industry leading, and everybody’s pretty excited. But no, I don’t run marathons, but I imagined that if I did run a marathon the first block, would seem really, really great, through all of these people and they’re excited and it’s New York and they’re running through Central Park, and wow.

And after a block or two, I’m starting to feel tired. Now, not bad enough to be a problem, but there’s gotta be a point in the marathon where you ask yourself, “Why the hell am I doing this to myself?”

Like I said, I don’t run marathons, so I’m just speculating.

But projects are like this. Teams start with enthusiasm, drive, excitement, and energy and over a period of time, when you get past the launch and you’re in this day to day “Just put one foot in front of the other,” and there’s no discernible progress, because it’s a big project.

And what you’re able to accomplish in a day or a week is very small part of getting to the end. So where this is all going is that project teams have a fairly predictable set of stages they go through starting with unenlightened optimism progressing to daunting pessimism, and then you reach the pit of ultimate despair when you’re way, way into this, but there’s no end in sight and you’re just really bone tired.

If you keep going, the team will reach a point of enlightened optimism when they can start to see the finish line or at least envision it.

And then there’s one more dangerous spot. And that I call the pre completion doldrums. This is when you’re nearly done, you’ve done 95%, but you’ve got this nasty punch list of annoying little items.

And as fast as you take items off the punch list, new ones seem to appear. And so when you’re really close to the end, there’s this other energy draining stage that tends to happen. And the reason I’m telling you all of this—Oh, and by the way, you finally get the success. If you’re doing this well, the reason I’m taking you through this is that project management is usually described as a series of steps, the set of practices that you have to apply.

You’ve got a plan, you’ve got the sponsor, you’ve got weekly status meetings. People get their task assignments and so forth and so on. Okay. But a project is a very human enterprise. And one of the most important responsibilities of project manager has, is to recognize the emotional state of the team and the emotional state of the team members and take steps to provide energy when the energy is feeling drained.

Greg Mader: [00:27:20]

That’s really good. One of my favorite books is Solzhenitsyn’s novels called “In the First Circle.” And one of his characters was this engineer, who’s working on a
project and he comes up with “The Law of the Final Inch.” And the idea is that the final part of a project is probably the most painful and difficult.

And it seems very small to that idea of the punch list.You’re bringing up Bob, but it’s the most important part of the whole project. It’s that finishing big it’s the difference between getting across that finish line at the marathon on all fours versus getting across it on two legs and maybe being tired, but you’re happy that you did it.

Bob Lewis [00:31:22]

Yeah, just to put a bow on it. Harry Newton, he was close to a celebrity in telecom circles. Harry used to say that you need to beware of the 90% solution. The 90% solution, he said, anybody you hire, any employee, any place can take an idea and get it to 90% done. But the ones that can get that last percent done are very rare.

When you’re talking about the progress on a project, be very aware of the 90% done status, because that last 10% is as big as that first 90%. And probably then some.

Greg Mader: [00:32:01]
Absolutely. I’ve seen exactly the same thing. It was great to have you on, I’d love to have you on in the future, and I definitely want to stay in touch and tell me when your next books are coming out too.

Bob Lewis: [00:32:15]
Absolutely. Listen, thanks again for inviting me out. I hope that your subscribers find this interesting. If they don’t, well, this is now a half hour of their lives they’ll never get back.

Greg Mader: [00:32:26]
They can blame me.

Bob Lewis: [00:32:28]
That’s even better.

Greg Mader: [00:32:28]
Yes. Thank you again, Bob.

Bob Lewis: [00:32:31]
My pleasure. Talk to you soon.

Melissa Mack, Pharmore Ingredients-- How to build efficiency?

bettina.acosta — Tue, 27 Apr 2021 16:19:17 +0000

Melissa Mack, Pharmore Ingredients-- How to build efficiency? bettina.acosta Tue, 04/27/2021 - 09:19

Podcast

Melissa and Greg chat about product traceability, lab testing, efficiency, supply chain challenges and Faygo.

Melissa Mack is the VP of Operations at Pharmore Ingredients. Pharmore is a supplier of dietary supplement ingredients to both the human and animal nutrition industries since 2001. Melissa grew up in Michigan and has dedicated her career to the nutritional industry. She is passionate about providing quality products and committed to growing the business as technology evolves. Preparing for challenges can be unpredictable, like Melissa’s passion for riding a motorcycle. Some say why, Melissa says why not? This innovative thinking is why Pharmore was resilient and thrived during the pandemic to be a reliable supplier.

Transcript

Greg Mader: [00:00:00]

Today, I’m speaking with Melissa Mack, vice president of operations for Pharmore Ingredients.

Pharmore Ingredients is the leading wholesaler and supplier for a number of pharmaceutical and food grade ingredients that are primarily in the supplement business. Melissa, thank you so much for being on the podcast today.

Melissa Mack: [00:00:22]

Thank you Greg, for inviting me. I look forward to participating.

Greg Mader: [00:00:26]

So, the question I ask everybody first is what’s your favorite snack food.

Melissa Mack: [00:00:31]

Tortilla chips and salsa.

Greg Mader: [00:00:34]

Tortilla chips and salsa. Any particular kind of salsa?

Melissa Mack: [00:00:38]

The milder, the better, and I like it chunky not blended.

Greg Mader: [00:00:44]

I have a daughter who hates chunky tomatoes in any form, so it has to be perfectly smooth for her.

Melissa Mack: [00:00:52]

That’s more of a pico than a salsa.

Greg Mader: [00:00:55]

Okay. Do you have a favorite salsa brand?

Melissa Mack: [00:00:58]

There’s a local grocery store that makes it, and so it’s Harmon’s; they’re their specialty brand here.

Greg Mader: [00:01:06]

Next time I’m in your neck of the woods I’m going to check that out, so thank you.

Melissa, you’re one of the more accomplished people I know. You have this background in science and management that I think is amazing. Can you tell us a little bit about how you got to this place in your career?

Melissa Mack: [00:01:25]

I did achieve a bachelor’s in chemistry and it was because I had a passion for chemistry and strength in math that carried me through. As soon as I graduated, I started working at a manufacturing facility, doing quality control testing for both in process and finished goods. That quickly led me, when I was promoted, to technical support, where I worked with customers in helping them with their applications of our product. I actually achieved a patent while doing this with one of my customers. I quickly realized that my technical background would assist me in the business world. So I moved over to sourcing and purchasing, and that allowed me to work and communicate with the quality control as well as the business development process.

Then I was given this opportunity to run the day-to-day operations of an import company, so I was using my technical skills, my business skills, my finance skills. So, I’ve had a passion for the nutritional supplement industry and that’s where I have spent all of my career.

Greg Mader: [00:02:33]

It really is remarkable. I have two daughters who are both really interested in science, and I’m surprised at how nerdy our conversations around the house are. It seems to me like chemistry is one of the places where more and more women have found success. Were there a lot of women when you were taking classes in chemistry?

Melissa Mack: [00:02:56]

When I graduated, there were only two of us that were women in the bachelors of chemistry degree. So a lot of my classes were male dominated fields. And like I said, I only had another woman that graduated at the same time.

Greg Mader: [00:03:13]

It seems to have changed very quickly. That’s what I’m noticing.

Melissa Mack: [00:03:17]

Yes, I think we talk about that right brain versus left brain, and I think it’s about channeling that connection and finding that. Like I said, I wasn’t very good at chemistry, but I had a passion for it and my math skills carried me through. And so, it’s finding something that you enjoy, but you might not be the best at, that keeps you going at it, because if you go for something that you’re very good at, I think you’ll get bored very quickly.

Greg Mader: [00:03:49]

Talking a little bit about Pharmore and the last year: did you have supply chain issues? How did you manage?

Melissa Mack: [00:03:59]

So, supply chain for us is very long. We purchased from manufacturers that are overseas. So we’re dealing with not only the political environment from our relationships that we have with other countries, but also the importing that we have here. COVID really played an impact on the dock workers at port. It truly delayed our shipments and there’s really nothing you can do about it. We were fortunate enough to have the warehouse supply chain in place to be able to stock more inventory. Of course, that comes with costs, but keeping in supply for our customers was critical. We are proud to report that we’ve had no out of stocks during this situation and have been financially successful as well.

Honestly, I was shocked that we were able to turn around so quickly in managing people working from home and everything else. It’s not something that we really looked at, but our contingency plans that we had in place and that we had tested actually allowed us to be resilient.

Greg Mader: [00:05:11]

Interesting. When did it hit you that, ‘Oh, no, this is all different. We’ve got to change.’

Melissa Mack: [00:05:19]

Our customer service gal has kids that are very young, and daycares and schools closed and she had no choice but to be at home. And so, that’s when it hit us hard that we need to do something different to keep her employed and manage our business. We run lean and mean and so that’s really what hit me is when the schools and the daycares closed and she had no choice with her kids, we knew we had to come up with something different to keep us going.

Greg Mader: [00:05:47]

Was this an opportunity for you to look into new products and services?

Melissa Mack: [00:05:53]

Not really. We really supported our existing customers and our existing business took all of our resources just to manage getting things. The process took so much longer. I think our customers were just scrambling to keep production going because they had so many challenges with other ingredients. They were constantly changing their production schedules to accommodate the ingredients that they could actually acquire.

Greg Mader: [00:06:18]

How did you realize you needed to initiate some sort of a change in your business process?

Melissa Mack: [00:06:24]

Well, you realize that things aren’t going as smoothly as you want, and you want to improve. The goal always is to keep moving forward. And sometimes it’s not about innovation, but it’s about survival. What we were able to do was have people work from home and manage that as a smooth transition. And to me, that was probably our biggest business project you could talk about and we were able to quickly do that.

Greg Mader: [00:06:54]

In your organization, I think one of the key competitive advantages you have is your quality system. I’ve watched your quality system over the years, and initially it was manual with some automation throughout, but you’ve evolved that into having a very automated quality system that integrates these third-party tests into certificates of analysis and validates with local tests.

Melissa Mack: [00:07:22]

Quality is key in our business, for sure. It’s what really distinguishes us from our competition. But quality is given, your customer expects it. We don’t manufacture, so we have to validate what we are given. And we validate that through third-party testing.

When we were looking at different processes, we evaluated the quality piece and what we were doing was partly automated and partly out-of-the-system is what I would call it. And we found it key to do data analysis to evaluate how our process is trending.

And so it’s key to watch that from our manufacturing process and have the ease to do it so that we can evaluate that fairly quickly.

Greg Mader: [00:08:09]

In this journey of automating your quality systems, what percentage of your documents are automated, now?

Melissa Mack: [00:08:19]

I would say we’re probably close to about 80%. We still have third-party testing results that come to us and have to be entered into our system. And I don’t think there’s really any way that we can develop that relationship with a testing lab to enter that information on our behalf.

Greg Mader: [00:08:40]

What’s the role for business leaders to pick a technology?

Melissa Mack: [00:08:44]

Well, I think it’s important for business leaders to be involved in picking technology. Not only because of the cost and the time associated with it, but the resources that are going to be involved. They have to rely on their employees to be empowered to make the right recommendations. But, I think they have to support those recommendations and get everyone on board for what it brings, not only to solve a problem, but to protect you from the future as well.

Greg Mader: [00:09:17]

Why do some IT projects succeed and why do some projects fail?

Melissa Mack: [00:09:22]

Yeah, Greg, that’s a really good question. I think it has a lot to do with all of your background questions that you ask yourself. Sometimes you are asking the wrong questions and so you lead yourself down a path of failure. And you’re looking to solve a problem, not looking to how can we do something better? And you need to ask not only how you’re doing it, but why you’re doing it. When you do a project like that, you can be more successful when you do a lot of the research upfront and evaluate things and aren’t just looking to solve that problem. So, I think a lot of the future of a project and whether it succeeds or fails is what you’re trying to manage in the beginning and how you evaluate it in the very beginning.

Greg Mader: [00:10:12]

Melissa, you are this seasoned executive here. Do you have any fun stories from the school of hard knocks?

Melissa Mack: [00:10:21]

Well, it just goes back to evaluating the people that you have on board with you and how you approach things that make your job very interesting and challenging. On the school of hard knocks, I don’t have any real stories to share. For me, it’s the research you do before you make a decision. I spent all of my time researching and evaluating it. And again, it goes back into your personal life, too. Whenever you go to purchase something, you read all the reviews and you do all the research and the comparison.

And I think that’s where the school of hard knocks comes from, when you don’t take the time to make it right and have to make a quick judgment call. That’s what ends up really burning you in the long run.

Greg: [00:11:16]

One thing I’ve noticed as a goal for Pharmore was using automation to both cut costs and improve throughput. Has your new system achieved those goals for you?

Melissa Mack: [00:11:29]

Yes, most definitely. We’ve been able to minimize the workload of, say, our customer service person, who’s now able to work on inside sales that ultimately grow our company. We have reduced our paperwork, which has not only cut our costs, but it does also allow us to be remote working where everyone has access to everything that they need and aren’t relying on things. So yes, we had an unintended goal and it goes back to that resilience process that we were able to quickly turn the switch and manage our processes outside of the office because of those goals that we achieved.

Greg Mader: [00:12:15]

To help people who might be looking for your products or ingredients, can you give us a little pitch on Pharmore? Tell us why this is the right place to buy their pharmaceutical ingredients.

Melissa Mack: [00:12:25]

Pharmore has been in business for about 20 years, and we really do have a team of experts that have been dedicated to the nutritional supplement industry. Our quality team has visited over 500 factories, over many different countries. And we really strive to not only provide the product, but understand the processes of the product.

We manage our controls, I think that’s key; we seem to always be ahead of the curve as it relates to regulations in our industry. It was very exciting this year as we managed new processes that we were already doing, but had to just change the paperwork to be in compliance.

So really the key difference for us is that quality. We’re there for you. When you have challenges and formulating, we’re there to help you because we’ve been in your shoes, as well. So I think it’s that diverse team that we do have that understands the entire process and is committed to quality.

Greg Mader: [00:13:33]

So, I have some questions about specific Michigander food. Melissa, may I ask these questions? Can you explain Faygo red pop?

Melissa Mack: [00:13:46]

Oh my goodness. Faygo is one of my favorite brands. I remember going to the different places with the bottles, and you get to pick out all your different flavors and bring home a case of Faygo. Oh my goodness, yes. You can’t even begin to explain it to anybody. There’s nothing out there that can mimic the flavor, the style; it’s really nostalgic. So, thank you for bringing up that very good memory.

Greg Mader: [00:14:13]

Okay. One more then, the Detroit style Coney dog that is a love it or hate it thing. Your take.

Melissa Mack: [00:14:20]

I’m not that keen on hotdogs, but I will tell you that we introduced my children to it and they absolutely love it. We actually have it delivered to our house, occasionally.

Greg Mader: [00:14:35]

Wow. That’s something.

Melissa Mack: [00:14:37]

Yeah. It’s very expensive, but a very nice treat for them.

Greg Mader: [00:14:40]

Melissa, thank you so much for being on the podcast today. This was just so much fun.

Melissa Mack: [00:14:45]

I really enjoyed my time, Greg. Thank you for choosing me to be a part of this.

Jason Halling, Burr Oak Tool - How to get project buy in?

bettina.acosta — Tue, 13 Apr 2021 15:00:53 +0000

Jason Halling, Burr Oak Tool - How to get project buy in? bettina.acosta Tue, 04/13/2021 - 08:00

Podcast

Jason and Greg discuss how quality and innovation compete internationally, how to get strategic initiative buy in, and protein bars.

Jason Halling is the Vice President of Finance and Business Operations for Burr Oak Tool, a tool manufacturer that works with heat exchange companies in over 75 countries. Beginning his professional life in the world of international business and public accounting, Jason has found balance and opportunities to implement strategic growth and innovation at Burr Oak Tool.

Transcript

Greg Mader: [00:00:00]

Today, I’m joined by Jason Halling,Vice President of Finance and Business Operations for Burr Oak Tool in Sturgis, Michigan. Jason oversees all front and back-office operations in this innovative international business. Jason, thank you very much for being on the podcast.

Jason Halling: [00:00:20]

Thanks for having me.

Greg Mader: [00:00:22]

There’s a question I ask everybody starting out as a little bit of a warmup, but honestly, I’m always curious about this. What’s your favorite snack food?

Jason Halling: [00:00:31]

I generally gravitate towards some kind of a protein bar.

Greg Mader: [00:00:35]

So protein bar like a Bison bar, or the plant protein? Where are you at in this spectrum?

Jason Halling: [00:00:41]

More rudimentary, I guess. A Power Bar.

Greg Mader: [00:00:44]

You are by far the healthiest guest we’ve had on so far, so that’s a credit to you, sir.

Jason Halling: [00:00:52]

Good, I appreciate that.

Greg Mader: [00:00:53]

Um, yes. I run into people that have built up really interesting careers, and you certainly have had a couple of jumps in your career to get to this point. Can you tell me a little bit about how you got to this place?

Jason Halling: [00:01:07]

When I first came out of school, I had a background in both finance and accounting so probably fair to say I didn’t know exactly what I wanted to do for the rest of my career, but I wanted to always have an exposure on the international side of business. I loved the e-commerce side, the transactions, and relationships, so starting my career in public accounting and auditing was not necessarily the most direct fit, but I always knew that it would provide the foundation for understanding the language of business.

So, as quickly as I could, I transitioned from audits at Ernst & Young into performance improvement in the consulting arm of Ernst & Young. Absolutely loved it. Was really enjoying the strategy, the transformation projects that I was part of. But I think I was missing a piece of an important balance of me: being home a little more and with my family.

So when this offer came to transition to Burr Oak Tool, there was a component of travel, but there was also upward opportunities and a great opportunity to take what I had learned in the world of finance transformation and begin to apply it at a smaller organization. Hence, I jumped, and I haven’t looked back since.

Greg Mader: [00:02:17]

That’s really interesting because I agree, your financial and accounting background probably set you up very well for this. You probably had a breadth of customers of all different kinds, whether it was manufacturing or consumer, who knows what. But a wild guess is that the breadth of your early experiences probably has paid off for you here.

Jason Halling: [00:02:40]

Oh, tremendously. In fact, initially, the board looked to transition me immediately into the finance world, and I certainly would have been willing to jump into that, but at first, I transitioned into the world of marketing. So I began to discover the Burr Oak Tool market, the industries we played in, the customers, competitors, and I’m very grateful for that because it’s enabled me to do not only what I’m doing now, business transformation, but also understand the overall market dynamics. So couple those together, and I feel a lot more empowered to lead here at Burr Oak Tool.

Greg Mader: [00:03:14]

That’s great. So I run into a lot of interesting companies. Burr Oak Tool is a little bit different. I realize it’s an interesting and specialized market to be building tools for the heat exchange industry, but you guys are among the highest precision machine tool businesses I’ve ever run into. You care a lot about quality and innovation. Tell me a little bit about Burr Oak.

Jason Halling: [00:03:40]

It’s a really neat story. About 75 years ago, a gentleman and a couple business partners decided they were done being poor, and so in a small town in Michigan, they looked for some financing to begin doing some just general machining work. Push came to shove, they got the loan from a very small community by the name of Burr Oak, Michigan. Hence, why we carry the name Burr Oak Tool, as we got the initial financing from them.

From there on, we began doing some general machining, and very quickly around the outset of the expansion of air conditioning into a residential, even a broader market. It’s a family-owned company, and the family has always been focused on the highest quality, most precise tools, measurements, and machines that enable to us to be ultra-competitive in our current market, and perhaps even in others in the future.

So, we have a global footprint. We’re in over 75 countries and have been that way for probably over 50 years, which is a rarity for most US manufacturing organizations to be so global so fast. But air conditioners around the world are, of course, needed, and we were the brand name that everyone knew.

Greg Mader: [00:04:46]

Interesting. I’m looking at a new heat pump water heater for my house. What I’m asking myself when I’m looking at the different manufacturers is the same question: Are they using Burr Oak Tools to make the heat exchange gear? And you probably don’t have an answer, and I’m not going to make that a point of this, but-

Jason Halling: [00:05:04]

Probability is pretty high in the United States of America that some of the product has come off of Burr Oak Tool machines. You’re good, Greg.

Greg Mader: [00:05:10]

Okay, good. Yeah, I want to be loyal to you guys. You’re important to me. So ...

Jason Halling: [00:05:14] [laughs]

Well, thank you. We appreciate that.

Greg Mader: [00:05:16]

Switching gears: how do you realize that you need to charter a business change project? I’m specifically not using “IT projects” because I don’t really believe there’s such a thing as an IT project that’s successful. I think there’s only business change projects. So how do you decide that now is the time to charter one?

Jason Halling: [00:05:37]

I guess, for me, it takes on two different dynamics, I suppose. One, projects, or one set of projects, is launched based on just pure pain points. This is painful either in a process or this is prohibiting us from becoming what we want to become, and that is a segue into the second component, the strategy side. Most organizations, the strategic future of who they want to be as a company, their purpose, their mission sets themself up pretty well to say, “This project would help accomplish this.” I’ve been part of both. The reality is a lot of projects are just based on “This is too painful,” “This is too expensive,” “This is too hard. Let’s fix it.” And I’ve also been part of “Here’s the strategy of the future of the company. Let’s design it and go.” Both of which have their merits, both of which are hard, but I think that both of those two have been the general concepts of what drives, for me at least, the projects that are worth developing a charter.

Greg Mader: [00:06:33]

So is it fair to say that some projects are based on an emotion or an experience and, other projects, the charter the based around logical reasons?

Jason Halling: [00:06:43]

I appreciate you also used the term “launched from,” because I think, in the end, any project, its launch probably transitions to an emotional state, even if it was based on logic and others. I mean, from emotion to then a logic, or you kind of hope it does both. But, yeah, absolutely. I would totally agree.

Greg Mader: [00:06:59]

How do you get others on board and keep them on board?

Jason Halling: [00:07:03]

Yeah, for me, that’s a good question on culture. There are some organizations that their culture is just buy in, “Don’t ask questions, and go.” There are other organizations I’ve worked with that have a culture that’s ask lots of questions. Both of which are obviously healthy.

I would say, for me, the most successful projects that I can get stakeholder buy-in is when I really focus on the “What’s in it for me?” or the “Why?” behind the project. If and when I can get to the crux of the “Why” obviously then, in the midst of that difficult day-to-day churn or the weeklong “Hey, we’re not making progress,” you go back to say “Why are we doing this? Oh, yeah, that’s right. This is what we’re doing it for.” And that buy-in already happened, I hope, so that in the middle of the project, the “this is why we’re
doing it,” that purpose, always comes back. Probably the single hardest thing in terms of delivering large scale projects is the people side, because they’re the ones that have to get it done.

Greg Mader: [00:07:58]

I agree totally, Jason. In literature as well as our own research, the two biggest keys for success are business process engineering and change management. Getting that buy-in and keeping people bought in, even as you go through the life cycle of a project with maybe some ups and downs, if we can keep people motivated and excited for the end state and how the new future is going to be a better one for them, that seems to work pretty well.

Jason Halling: [00:08:32]

Agreed.

Greg Mader: [00:08:34]

Good.

Jason Halling: [00:08:34]

And that stakeholder analysis is really key. One of the things that’s unfortunate is I have done projects in the past that did not have a cross-functional buy-in, and generally speaking, that’s where projects fail is that lack of stakeholder buy-in for sure. It depends on the size of the project, if it’s company-wide obviously there’s a little more resources and a little more demand that gets pulled in.

Greg Mader: [00:08:57]

I was thinking about that cross-functional nature of your organization, so I’m going
to change subjects just slightly, here. You really do have this manufacturing business, but you also have to balance marketing, quality management, innovation and R&D. I can’t think of a company that has more demands for R&D than yours because of the increasing efficiency requirements in the heat exchange business.

Jason Halling: [00:09:26]

I think when you were here, Greg, if you recall, I believe we reviewed Burr Oak Tool’s vision, to be regarded as second-to-none by our employees, customers, partners and communities. Our mission is to eliminate waste, improve flow, and shorten lead times. And of course in a lead manufacturing world, anyone that’s in that space knows that’s the ultimate goal of an operation’s organization. And when you look at processes and you start to evaluate within a process; it might be accounting, it may very well be HR, it could be IT processes. If their duplication of efforts and adding overhead and not being as lean as we could possibly be, that’s waste. And so that buy-in across the entire organization that waste exists, and I think any organization on Earth that really has- takes a good, hard look at themselves to identify waste. If you’re not focusing on that to drive your large scale projects, and even small scale projects honestly, too, that should be what we focus on.

So we kick off every meeting with our mission, so the entire organization, I would assume, would be able to repeat back to you our mission: To eliminate waste, improve flow, shorten lead times. And that lean manufacturing is definitely baked into our culture.

Greg Mader: [00:10:37]

Okay. How do you govern this so that you are identifying these gaps or areas of
waste, and tell us a little bit about that sort of governance.

Jason Halling: [00:10:49]

It’s fair to say, and full disclosure, it’s not as good as we all would like. The reality is when we start to craft the business case behind it, it starts mostly with financial, right? We seem to think that it’s more expensive, and I can appreciate what you had mentioned, Greg. The innovation required in our space is very high. Couple that with the fact that our biggest competitors are in Asia, where costing and labor rates are significantly less, and so we couple innovation with the ability to also have to compete. If it takes, on a bill rate per hour basis, our competitors 100 hours, we have to find a way to do it in 15. And so because of our immense focus on reducing the time it takes, or enabling with technology areas in which we can get better.

Greg Mader: [00:11:38]

Do you have an organization like equality board or a IT governance board, and what role do they play in identifying the need for chartering a project?

Jason Halling: [00:11:52]

We have a team of about five individuals. We do keep a very deep record of a lot of our
quality issues. So, from there, we do have a kind of Pareto effects of the most common errors, the most common issues, and generally speaking, historically, that had only been manufacturing. And about- about three years ago, we implemented that across the entire organization, so a non-conformist report would be created for someone that did not follow an accounting process, or a sales-related process. We’ve got the Pareto, we now have history, and we leverage those quality points to determine what’s next. It’s not always the biggest driver of what we decide to fix next, but it generally is always a component of how we make that decision.

And then we create that business case where the financial estimates would then back, hey, we get frequency, can we quantify what that really does to the organization as a whole on the financial side?

Greg Mader: [00:12:43]

It seems in the last year we’ve all been challenged a bit. How did the COVID situation and material shortfalls or lead time changes or any of this affect you?

Jason Halling: [00:12:56]

We actually were quite fortunate. A lot of our supply chain has strategically for quite some time been based in the United States. Granted, even amidst the United States, we did have some here and there. But, generally speaking, our supply chain was mostly uninterrupted. We did have to work with many of our customers to be flexible in regards to when we could deliver certain machines or certain projects based on when they were complete. The most impacted area of our business was spare parts. Obviously, as organizations shut down their operations, there was less demand for commercial tooling, and so because of that, we saw a significant decline. However, there were those that were deemed essential, and even were part of government projects, that had to increase their production. And so we got some of the plus on that relative to the overall market.

All things considered, we felt like last year was okay.

Greg Mader: [00:13:51]

I got to think resilience has always been maybe not discussed but certainly baked into the culture there.

Jason Halling: [00:13:58]

Yeah, I think it’s certainly been part of our DNA because that same group of business partners that I mentioned that were just, quote/unquote, “Tired of being poor,” that they built the organization on the fact of, “Hey, we do this and this is our survival.” And so, in many ways, a lot of decisions that are made here at Burr Oak Tool were based on just good old-fashioned business. And what I mean by that is our core values are work hard, good people doing the right things, and innovate to meet and anticipate customer needs. We started with the “work hard,” because for all intents and purposes, and you’ve seen it, Sturgis, Michigan, is an agrarian society. If you don’t plant the seed and you don’t work it, you don’t get the return at the end of harvest. That’s part of who we are.

And so I think resilience is who we are, but then the reality is we also did have to make some changes, and of course, there’s certain areas where we said, “Hey, let’s look here a little bit more.” Generally speaking, we look to the future with a little bit more optimism because of the efficiency. Upcoming changes you mentioned—this year, changes are coming. In many ways, the opportunities of the future are significantly even better than what they were in the past, and so with that in mind, it makes resilience and growth even more exciting.

Greg Mader: [00:15:11]

Are there tools that you use to create trust?

Jason Halling: [00:15:16]

It’s a really good question. I would say what first comes to mind is our customer base. Obviously, there are many customers that come back to us because we’re just the best at what we do. And, of course, there’s no reason to not [laughs] say, “Let’s just keep doing that.” That’s one way, I guess in my mind, that we build trust is that the quality of products that we make people come back to.

Another component, I think it is with our vendors. We historically have always been that 30 days or faster in terms of paying our vendors. Many consultants have come in and said, “Nope, you shouldn’t do that. Here’s how you can control your cash.” The reality is I believe that the relationships we have with our vendors, because we’ve been so consistent and such a good partner, we’re probably getting better value out of the things that we buy from them aside from just a product. Maybe it’s better services. Maybe it’s top priority. Things that are tough to quantify but I think really do exist, and I think that’s how we build trust with our vendors.

So between the vendors, our customers, I also think it’s fair to say we always focus on hiring the right people. You have to have good people here that understand what we’re trying to do so we can exude that business relationship out in both directions. We, of course, work locally with our communities. We have a huge focus on making sure that Sturgis as a community is very vibrant, and Saint Joseph County here in Michigan, and other parts of northern Indiana. Those are our key stakeholders, and developing trust obviously means we do what we say we’re gonna do, we do it really well, and we’re just consistently doing that year after year.

Greg Mader: [00:16:45]

That was beautiful, Jason, actually.

Jason Halling: [00:16:48]

[laughs] It’s who we are. It’s actually a very easy thing to discuss.

Greg Mader: [00:16:52]

Cool. So going back to this idea of being a lean organization and using the lean principles to constantly improve, where does technology come into the picture for business change?

Jason Halling: [00:17:08]

Technology, I think, is critical. Our current CEO and Chairman, he, of course, grew up in the company. From the time he was 14, he was wiring presses in our shop. His expertise and his passion is related to manufacturing engineering. He’ll look at a process of how we take this raw material part and turn it into a finished good part, and of course if you just follow typical status quo, you would’ve looked and said, “Okay, it takes this machine 20 minutes. These are how many machines I need.” Our Chairman and CEO in prior roles would step back, and of course still today he does this as well, but that was his key stewardship in prior roles. He looked and said, “You know what? There’s gotta be a machine
tool builder that I could work with to make sure that we could make these faster.”

And so that’s been a huge focus in the role of innovation is that we’re not just looking at what process takes us how long and quantifying that, but we’re actually saying this process has to change. That’s been a hallmark of who Burr Oak Tool is. We’ve bought machines over the years that have probably been way more expensive than our competitors would’ve even thought and dreamed of, but that was the secret sauce. That’s the way in which Burr Oak Tool makes the quality part in less time and can innovate.

We’re trying to have that same cultural spillover into the business process side, which, unfortunately, there’s not one business process machine that you can bring in and suddenly it takes one thing that took an hour down to a minute-and-a-half. There’s been a lot of innovation in that space in recent years from the technology realm. I’m thinking of BlackLine as a good example in the world of account reconciliation. Those are big wins and so what we’re trying to do is also focus on the same repeatable framework that we have for the machines in our capex and identifying those big wins on the process side.

So, absolutely, everything is all in scope. Especially as now we look to make this migration to Odoo, we’re really re-looking at what processes we do that are so manual we say now is a good time to re-look at the tools that exist.

Greg Mader: [00:19:05]

I’m glad you said that, Jason. We need to always look at the business process itself and say, “Is this the business process that ultimately is the correct one for this business?” I can automate a bad, money-losing business process easily, and I promise I can really efficiently lose money—

Jason Halling: [00:19:23]

Technology, it’s that multiplying effect, right? It can make bad really bad. It can make good really good.

Greg Mader: [00:19:29]

Exactly right, yes. What tools do you use to measure the progress of a project?

Jason Halling: [00:19:38]

So the finance guy in me, of course, almost always gravitates back towards, “Hey, how does the P&L look? Are costs down, revenue up?” And of course that should never be the only driver of whether a project is successful or not. But the reality is, when push comes to shove, there has to be some kind of a business case for it.

Most of the tools that we use to measure are related to what’s time efficient. We’ll jot down very quickly on an Excel spreadsheet current state from point X to point Y, it took us this long. Now, let’s go in a future state based on some enabling technologies. Great, it’s half the time. Quantify that. Does it fit based on what we had estimated? If not, let’s go back and see if we can squeeze a little bit more time out of it or change the process to affect it.

I have worked with tools in the past in previous organizations, previous roles, to have certain assessments and databases. Benchmarking was critical for the world of which I came from at EY. We don’t do as much benchmarking here at Burr Oak Tools as I’d like, but once we get to a nice kind of stable state of design, I would like to help apply benchmarks to what we do, so good old fashioned Excel spreadsheet. I’m sure we can lean on the OSI team to help us either create or leverage some of the tools you guys might have to monitor, but at the end of the day, it’s more of the fact that you have to measure and observe the measurements. And of course, when that day comes, it would be nice to get a nice tool to help do that.

Greg Mader: [00:20:58]

A lot of the people that are listening to this podcast are at different stages in their career, and I always thought I’d rather learn from somebody else’s mistakes than make the mistake myself. So with that, Jason, do you have any stories from the school of hard knocks?

Jason Halling: [00:21:16]

It’s funny you bring this up because I was just talking to a friend of mine from Ernst & Young. We were talking about some of the issues that we had on previous client projects. And I would totally agree with you, Greg, about learning from somebody else’s mistakes. I think if there was a story I guess I would share, it was the fact that there was a previous client of mine with Ernst & Young. We got out of the gate, and I think it was fair to say the entire project team just neglected this stakeholder, that change management, the stakeholder analysis that was always part of our engagements, meaning we didn’t always get the buy-in of the lead executive. We thought we did. We assumed we had the buy-in because of the hearsay that was coming from the project-related teams, and suddenly, when we were ready to make some really hard decisions of really big dollar amounts, the executive essentially was ready to pull the plug on the entire project.

And it wasn’t because we hadn’t done our due diligence on the data or the technical side. We had. It was because we hadn’t done a full analysis of what that meant for the overall organization. And the stakeholder would’ve been able to talk us through that had we not just taken the hearsay or taken that as word. We should’ve done our due diligence in that area, too.

So I guess if I might provide any insights or help to some, you should never assume that the light is green across all channels unless you’ve actually done that work. Build those relationships with all the appropriate team members, even up to the executive, and make sure that you know firsthand, not secondhand or other, that you’re aligned in that. So those would probably be the most disappointing projects that I’ve been part of are those that I’ve neglected the- the change management, the due diligence, and that.

Greg Mader: [00:22:59]

That’s really good, Jason. I have had similar mistakes I’ve made, and it’s made me, over time, realize the more critical or large scale the change proposed is, the more permission is very important.

Jason Halling: [00:23:13]

Yeah, and, after all, business is about relationships, and when I forget that, or if I ever have forgotten that, that’s when things go sideways.

Greg Mader: [00:23:21]

Well said, sir. Thank you. This was a really great interview.

Jason Halling: [00:23:2]

Oh, I just appreciate the opportunity, and I guess I will just point out that it’s a pleasure to work with the OSI team. I think you facilitate a great team, good professionals, and that I would encourage anyone to seek OSI out for improving what they do.

Greg Mader: [00:23:41]

Great, Jason. Thank you. That was unsolicited, by the way. So ...

Jason Halling: [00:23:45] [laughs].

Thanks, Greg.

Why Open is important? - Bruce Aldridge, Orr Protection Group | Podcast | Open Source Integrators

bettina.acosta — Tue, 30 Mar 2021 16:48:35 +0000

Why Open is important? - Bruce Aldridge, Orr Protection Group | Podcast | Open Source Integrators bettina.acosta Tue, 03/30/2021 - 09:48

Podcast

Greg and Bruce discuss animal crackers, hard knocks, Odoo, and open software vs proprietary software.

Bruce started his career in IT in 2003 after completing the Programming and Systems Administration program at the Computer Learning Center in Los Angeles. He has also completed a Bachelor of Science in Business Administration and an MBA with an emphasis in Computer Information Systems. Bruce worked for seven years at the Mercury Group where he elevated to the position of Vice President of Data Processing. From there he moved to Austin, Texas while working as Director and then Vice President of Information Systems at Classic Soft Trim, a manufacturer and distributor of automotive aftermarket products. Bruce returned to California to work as Vice President of Client Services at HNC Insurance Solutions, managing the EDI, Maintenance Programming, Technical Support and QA departments as well as operational control of three service centers for the largest solutions provider of Workmen’s Compensation Repricing and Fraud Detection software. After the sale of HNC Insurance Solutions, Bruce became the managing partner of Daleon2, a consulting firm focusing on Regulatory Compliance and Law Enforcement software. To enhance his knowledge of Law Enforcement Systems, Bruce became a police officer, ultimately becoming a Certified Computer Forensics investigator and the Information Systems Officer for Downey Police Department in southeast Los Angeles. Bruce retired from Downey PD and moved his father to Kentucky to be near family in his father’s final years and worked as the Data Integrity Manager for The Rawlings Group, a company that provided insurance subrogation investigations. Bruce later worked for Appriss Safety as Director of Data Integrity and Governance, then left there to join the Orr Corporation as Vice President of IT and ePMO. During his career, Bruce has also served as a Risk Management consultant in the areas of Information Systems and Physical Security, and served six years as Captain of Guardian Ministries, managing the security of a 10,000-member church in Anaheim, California. Bruce is an avid reader and enjoys bike riding in his spare time. He lives in Louisville, Kentucky with his wife of 42 years near his two adult children and two granddaughters.

Transcript

Greg Mader [00:00:00]
Today, I’m talking with Bruce Aldridge, Vice President of Operations and IT for ORR Protection in Louisville, Kentucky. Bruce, thank you for being on. My question I’m asking everyone here at the beginning is, what’s your favorite snack food?

Bruce Aldridge: [00:00:20]
Ask anybody that knows me is listening, it’s untreated broccoli and kale chips, but probably between you and me, it’s frosted animal crackers.

Greg Mader [00:00:29]
Animal crackers. Okay. Is there a story behind animal crackers?

Bruce Aldridge: [00:00:34]
No, just my ranked immaturity.

Greg Mader [00:00:37]
[laughs] Okay. I love it. So, one of the things that I think is really fascinating is you are the Vice President of Operations and IT and I don’t see that marriage of job titles very often in enough companies. But it seems to me, in this day and age, operations and IT are joined at the hip or should be. How did you get to this place in your career and why that specific union?

Bruce Aldridge: [00:01:06]
I’d start by blaming my son. In 1982 when we became pregnant with our first born, I was working in a factory. I didn’t know what I was going to do for a living. My wife was a registered nurse and so she was making all kinds of good money. I was a factory worker working graveyard. So I decided to try out this new technical school that popped up called Computer Learning Center out in Los Angeles and computers were still pretty much mainframe oriented at that time. And so, I borrowed some money, went to school, learned about programming and systems and when I got out, I started working for a computer timeshare company.

And most people that are around today, don’t remember the days of punch cards and timesharing, but it used to be computers were so expensive that companies would just borrow your computer and you would charge them for the time that they would use that computer. And one of our clients ended up buying our company because they wanted their own internal IT department and I got involved in the operations there.

As time progressed, it just seemed like, for some reason, I would end up doing IT for the purposes of helping things out, but operations was really where I spent a lot of my time. So, I’ve been in manufacturing and healthcare and law enforcement and- and the company that I work for now does fire protection systems. But in all of that, I ended up doing both. And it is a good marriage in that when you’re involved in the day to day business operations and you- you see how things really need to work. It helps to inform you about what types of technology solutions make sense. So, I guess that’s how I ended up there.

Greg Mader [00:03:04]
That’s great, Bruce. Thank you. A big part of what we are trying to talk about in the podcast are the ways to think about business change projects and I’m
staying away from the term IT projects for lots of reasons, but I don’t really think there is such a thing as an IT project. I think there is a business change project. How, as an executive, do you determine the need to do something different? And I think the last year’s probably given us lots of examples of where we decided, oh, we need to change the way we’re doing something, but from a strategic level, when you’re working with the leadership, or for that matter, just the staff of the company, how do you realize there’s a need to charter some sort of business change project?

Bruce Aldridge: [00:03:56]
So, at ORR, I would say there are three sources for me. One of them is the Executive Committee. We meet on a regular basis. We have a very good relationship. We’re the major stakeholders in the different aspects of what goes on in the businesses and we just talk about how are we performing financially, how are we doing operationally? As we discuss those issues, certain things will come out of those discussions which will just spark an initiative.

We also have a Kaizen committee here. My first really big operations and IT job was in automotive aftermarket. We did manufacturing and I didn’t know it at the time, but the owner of the company was a major proponent of Lean manufacturing methodology. And I learned an awful lot about just working with people and talking with people. In Lean, there’s a concept of respect for the workers and to listen to them and to help them understand.

When I was working on a particular project, I put my desk right next to the desks of the people who I was developing the software for. Or implementing a solution for. And that’s developed into Kaizen, which is the Lean concept of continuous improvement. And we have a committee that meets, they meet twice a month and they will talk about what they need . There’s been a lot of good initiatives that have come out of that group. And that’s not run by IT people, that’s run by the operations people.

The third area, we have an open issues meeting once a month where anybody can come and talk about what issues are concerning them or what they think might be important. So, it’s just keeping as many channels open as possible. I think that helps inform me on when there’s a need for change within the organization.

Greg Mader [00:05:54]
That was really interesting, Bruce, for a lot of reasons. And let me ask this, because I don’t think there’s a right or wrong answer here, but it’s certainly one of the points of a lot of discussion and maybe even a little controversy right now. But, the idea of grassroots or guerilla IT projects to solve business problems versus business leaders picking a platform or solution.

Bruce Aldridge: [00:06:21]
When I think about grassroots projects, I think about initiatives that are carried out by non IT personnel. When I first arrived at ORR, the IT department kept talking about all of the shadow IT that was going on in the organization. The IT professionals felt like we were the new high priests and everybody should come and bow to us and we should be the ones that make the decisions about what happens. And, unfortunately, it- it just created a tremendous bottleneck for things getting done in a business. And software has evolved to where, especially a lot of the things that are available today with an Amazon web service, let’s say or Google workspace or even in Microsoft, you see a lot of tools and a lot of things that don’t require someone with an IT background, necessarily, to run.

We try to discourage people doing that at ORR without conversing with IT because we would like to keep a coordinated level of activity. Data, they’re like assets. It’s like inventory and when people are just collecting data for the sake of their own department or their own use, that deprives the rest of the organization from access to that data or integrating that data appropriately. But, I don’t want to ever be in the way of business getting done. I try to be a business partner and support the activity of our personnel. I prefer for IT to be intimately involved in choosing and implementing technology just so that we can preserve as much of that data as possible, prevent it from being siloed, but whenever possible, I try to partner with our citizen developers.

Greg Mader [00:08:18]
That’s really interesting. It really seems that trust is at the heart of this whole effort of being in leadership, particularly in IT, but operations as well. Are there tools that you use to create that trust and communication?

Bruce Aldridge: [00:08:34]
When I first got here at ORR, and we start talking about shadow IT and that sort of thing, you could tell automatically there was a lack of trust. For me, there is all kinds of different ways of measuring progress on a project or whatever. But, to me, the biggest tool that I use is user adoption. You can have the best product in the world, but if the end users aren’t using the tool, then you’ve not developed the right tool or at least you haven’t marketed it correctly or you haven’t deployed it correctly, you haven’t included them in the process.

And so, we tried very hard here to include users from the very beginning. From the design side of things we have what we call discovery sessions. We include as much of that process of, uh, workflow and value stream mapping as we can. But with the users, and we try to find out what is it that you really need in order to get your job done and work towards that direction. For me, the biggest tool for understanding if we’ve got a good level of trust is, are they using the products that we’re delivering to them?

Greg Mader [00:09:50]
That’s really helpful. How important is self-sufficiency, independence, or openness for you when you are looking at technology platforms?

Bruce Aldridge: [00:10:04]
I think if you are familiar with the fact that when I was recruited to ORR, they were in the middle of, or at the end of a pretty massive ERP implementation project that ultimately failed. One of the reasons why it failed was because we were building an environment in which we were not able to be self-sufficient. We were going to be reliant on external sources for support, for maintenance, for everything. And that just didn’t make sense to me. We needed to have the ability to extend, to modify, to support and then to use companies like OSI, for example, for the complicated stuff, for the challenging stuff, instead of for our day to day operational stuff.

And so, when we sat down and started interviewing companies, when we started this new project, one of the things that I talked to your team about was the fact that it was important to us that at the end of that project that we’d be able to support it, to maintain it, to extend it. That’s a complicated thing. It’s going to be hard to for me to find something that has that level of knowledge. When I talk to you or Wolfgang or Jen, and I get that level of…I mean, you guys just know it. That’s where the value of our partnership comes in, is that you have this specialized knowledge and ability to help us reach some of our goals. Well, for me, that’s the value of our partnership.

When it comes to doing updates and taking care of adding a field here or there or whatever, I don’t want to have to call you guys to do that. I want to use the smart people for the very hard things and, in the meantime, I’d like for us to be able to take care of our own shop.

Greg Mader [00:11:59]
Something I’ve noticed that I think the COVID crisis has accelerated, is companies and organizations feeling like they need some independence and freedom. It might be that a vendor was a little too brittle or that they were rather locked in and that lock in didn’t allow them to adapt to new situations quickly and that certainly what we’ve all gotten. So that’s where, I think, open systems are probably more resilient. And that flexibility allows resilience. Any thoughts on that?

Bruce Aldridge: [00:12:40]
At ORR, we are in the business of helping business stay resilient by protecting them from fire. We build fire protection systems for major data centers. I’ll be the first one to admit, when people first started talking about COVID, I thought, you know, this is just the flu, we’ll be done with this in a couple of weeks. And then, all of a sudden in a period of about two weeks, we went from a traditional on campus at the company every day, to sending everybody home.

Greg Mader [00:13:10]
Yes.

Bruce Aldridge: [00:13:11]
And we are today, we are a work from home operation and we did that in two weeks. The only reason we were able to do that is because we’d already started setting up systems in case we ever needed to do that. We have 12 facilities around the country. Some of them are in earthquake country. Some of them are in other disaster areas where we have to be prepared to just move and shift and change things over very quickly. So, we were already in that mindset and when we decided to send everybody home, we were ready for it. We already had the infrastructure set up. We were really trying very hard to facilitate something that would allow us to be able to operate from where we’re at.

And we’ve done very well over the last year. I’m very proud of our company. Our chairman of the board was sending out messages every day to let everybody know where things were at and where we were going. You just think about those periods of time in your history when you went through something really major but you didn’t realize it at the time how major it was.

Greg Mader [00:14:18]
Mm-hmm [affirmative]

Bruce Aldridge: [00:14:19]
This last year’s been that way. So, it has changed the thinking tremendously for a lot of people about how prepared are we really to just pick up and move to another location and still continue our business?

Greg Mader [00:14:33]
Do you have any stories from the school of hard knocks?

Bruce Aldridge: [00:14:38]
[laughs] Um, I have a lot of stories and some of them I can even tell. When I think about what I have learned over the years, I think the most important lesson was that I don’t have to do this on my own. That while there’s just a certain personality, a white knight type personality that you sometimes find in IT people and I think I was afflicted by that early on in my career. I was insulted when people offered suggestions on how to improve my software because I thought I did a pretty darn good job on it. I went through a period of time where I just thought I had to know all the answers. I had to make all the decisions. I had to be the one to figure things out.

When I said I could start pulling smart people together around me, that as a community, we could figure some things out together, that was a huge relief for me to think that I don’t have to have all the answers. But I also started taking joy in being involved with other people that had passion. We have a group that I call “The Three Amigos”, Kate and Jerry and Shawn and they all have different skill sets and provide, for me, so much help and assistance. They know how to deal with people better than I do. They know how to pull things out of our users. They can develop very good requirements of what’s needed. I rely very heavily on the three amigos and then I enjoy our meetings when we get together for OSI and when we start talking about solutions. It’s nice to have people that you can bounce those things off of. It’s nice to go into the Odoo community and see some of the solutions that some of the people there have figured out.

And, so when you get out of your own way, that’s probably the biggest lesson I’ve had to learn. Get out of my own way and start building teams. Building partnerships. That way, you get the benefit of a really combined and well thought out solution.

Greg Mader [00:16:49]
That was beautiful, actually. What I love about the community that we’re in, Bruce, and your discovering it I think, is that there’s people from all over the world who got great ideas they can contribute and I’ve gotten to meet many of them. I’ve traveled to Belgium and France and all over Europe and even Latin America and it’s amazing to be able to collaborate with these other sharp, fantastic people in a non-competitive manner. There’s no friction between us, there’s only the ability to work together and individually achieve our goals.

Any other comments or thoughts, Bruce?

Bruce Aldridge: [00:17:38]
It’s been a very enjoyable experience here at ORR to introduce the organization to concepts like open-source and cloud-based operations and the newness of what is available to us as a company, is pretty interesting. But it’s also been just great to see just the acceptance. You would enjoy, very much, seeing our users as they start testing and playing around with solutions that you guys have been helping us to develop. And it’s just been a lot of fun. This has been a great journey for us on the heels of what was probably the most depressing project failure that I was ever a part of.

Thomas Edison, supposedly he said that, “I didn’t fail, I just found a 1,000 different ways of how not to make a light bulb.”

When we put an end to the ERP project that I first came here to get a look at, some people thought we were insane to suggest that we start a new ERP project right on the heels. But we learned so much from that experience that I thought it was probably the best time for us to do that. And I’ve been happy to see that we are progressing down that road. So, my advice to people is, just be open. We think that within ourselves, we’ve got it all figured out or we have to figure it or we have to have the right answer and being exposed to different solutions that are available as different ideas that are available, it opened my eyes to a lot of things that I just wonder how much I’ve been missing over the last 30 years and not being open to some of this stuff. And I have had a great experience over the last year, since we started this project and I’m very pleased with where we’ve come and what’s been going on for us.

Greg Mader [00:19:37]
That’s awesome, Bruce. Thank you. So, thank you so much.

Bruce Aldridge: [00:19:40]
Thank you. I enjoyed it.

Dan Stern– Engineering Inhouse/ Manufacturing Outsourced

bettina.acosta — Fri, 23 Aug 2013 16:55:31 +0000

Dan Stern– Engineering Inhouse/ Manufacturing Outsourced bettina.acosta Fri, 08/23/2013 - 09:55

Podcast

Editor’s note- Dan Stern is a remarkable man. He designs and sells a number of specialty car parts, specifically around automotive lighting. Dan is a regular wherever people are discussing the finer points of automobile engineering. He is the editor of Driving Vision News and the proprietor of Daniel Stern Lighting Consultancy.

Dan has a point of view and an opinion or two. His respect for quality engineering makes him an inspiration for those that know him. He has a special regard for vintage Chryslers and their engineering. He works to source and integrate parts from others and designs and manufactures some parts himself. When I have been a customer of his, I get more than a product that he helped engineer or sells, but an education as to how it works, and why it matters.

This interview is important, because it shows a common pattern– Keep the engineering in-house, and find good partners to build your product. Jonathan Werner uses this approach, and Chris Anderson has written extensively about this as well. In some cases, this has proven to be a good way for a Manufacturing Entrepreneur to build his company.

Transcript

Tell us a little bit about what you make.

I make easily-accessible explanations for difficult-to-grasp ideas. My product is expertise to help people understand the intricacies of automotive lighting. It’s a field that seems simple on first blush; people tend to think they’re just lights, either they work or they don’t, and that’s about it. But in fact, there is an enormous amount of physics and engineering and physiology—and even psychology and philosophy—in just about every aspect of the design, performance, and regulation of every lamp, light, and reflector on a roadgoing vehicle.

When did you start making this?

I’ve been at it for most of two decades.

How long did it take you to develop it?

Most of two decades! This is not a static subject that can be learned once and taught indefinitely on that basis.

What changed along the way?

Almost everything. The technology and technique in headlamps and other automotive lighting is presently undergoing a near-total revolution as LEDs displace older light sources. For the first time, both the light source and the optics used to gather, focus, and distribute the light are changing at the same time. But while this is certainly the biggest revolution the field has seen, it’s not the first. We’ve had new light sources before: high-intensity discharge “Xenon” replaced halogen, which replaced tungsten, which replaced burning wicks. And we’ve had new optics, too: projectors, condensers, light guides, complex-surface reflectors. New materials have come in; glass and metal have given way to a variety of advanced polymers and other engineered materials. Computers and cameras have given us smart car lights that can follow the curve of a road and otherwise adapt the lighting performance to match prevailing conditions. On a parallel track, the regulations for car lights have had to change to accommodate the new technology and its performance potential. And that has spurred philosophical discussions about the finer and grosser points of regulation itself.

Did you run into times that you needed to redesign part or all of your product?

That’s a constant given. My range of products is diverse, because my clients are diverse; there’s no one-size-fits-all. The law enforcement agency trying to understand which cars to pull over for dangerous lights, the attorney working on a case involving vehicular lighting, the guy who wants to be able to see better while driving at night, the working group or government agency trying to update a technical standard or a regulation or a law, the lighting supplier considering additions to its product line…each of these different kinds of client needs the right set of information, presented the right way. So I have to tailor my product to its intended use whether I’m serving as an expert witness in a court case, or as a freelance consultant, or as an answer-man on a podcast or call-in show or column, or as a writer hired to produce a report on some aspect of the automotive lighting field, or in my positions on various technical standards boards, or in my role as General Editor of DrivingVisionNews, the global automotive lighting and driver assistance industry journal.

How did you figure out your manufacturing process to make this? Have you changed it since you first laid it out? Did you consider outsourcing or off shoring?

The irreplaceable basis of the process is comprehensive knowledge of the subject matter.It’s possible to bluff it effectively enough to make the cash register ring at a retail level—there’s a lot of that out there—but when the product is billed and reputed as expertise, sought by and marketed to those relying on the information to be all the way complete and correct, there is no substitute for thorough knowledge. And it can’t be one-dimensional; it’s not possible to give a usefully broad or deep explanation of the differences in American and European and Asian automotive lighting practices, for example, if one has only studied the field from within the American context. Beyond that foundation, the product development process is adaptation all the way. Adaptation to changing technology, changing facts, changing queries, and changing interpretations.

Outsourcing? Sure, there are services out of India that will generate a report or technical paper or whatever you want. It’s a great way to create a murky whirlpool of words on any subject, but that’s the direct antithesis of my product, which is clarity. It’s the same with product-development work; it’s possible to farm out the design of a headlamp (turn signal, fog lamp, whatever) to a job shop in China, say.

Outsourcing like this can be made to look like a great savings on paper…but only if we pretend that price and cost are the same thing. They are not! An outsourced technical report or a headlamp design-and-tool job with an attractive low price often winds up with a staggeringly high cost. Not only is the muddling effect of a language barrier greatly magnified when discussing a highly specialized technical subject, but a huge proportion of the outfits offering tempting services can’t deliver on their promises. I was doing a product-development job about five years ago on a line of motorcycle headlamps, and the boss said they had to be sourced in India or China for the low price. Every job shop I sent specs to would always come back and say they could do the job to an excellent standard, no problem, “sign here”. I drafted an unbuildable specification—a spec for a lamp that physically could not be manufactured—and sent it around. More than 9 out of 10 job shops still came back with “Yes, no problem, sign here”. Those very few shops that expressed some doubt about the spec were the only ones worth trying to talk to, and even most of those failed miserably. They just didn’t have the expertise and ability they claimed to have. On that project alone, the requirement to go to a “low-cost country” drove the cost of the project up far beyond what it would have taken to have the lamps designed and tooled in a top-flight American facility. And that’s just one example.

How did you find capital to get started?

Incrementalism, carefully controlled to remain within my actual means all along. I started out selling vehicle lighting equipment out of my college dorm room—headlamps and such—that I had evaluated and handpicked for being the best in their category. That’s how I started growing my reputation: headlamp customers took a chance that I was telling them the truth, bought what I said to buy, and found their night-driving problem completely solved. A good reputation began to develop, and then I did it again with specifiers, as when a truck builder asked which lamps should go on a fire truck being developed for the Australian market. Then I began gradually shifting towards a knowledge-based product, as when the government of a country in Southeast Asia wanted to know how they should update their headlamp regulations. Incrementalism, never spreading myself too thinly.

If you could go back in time, and talk to yourself at the beginning of this adventure, what you advise yourself to do? You must have learned a lot since then, so what lessons would you say stick with you?

Probably the main thing is that automotive lighting is a pretty rarefied field, and most of the participants are at least aware of one another. I think I would go back and tell myself to do a better job, in the early years, of allocating less of my time and attention to the big talkers, and more of it to those few bright stars in the field who really know what the hell they’re talking about, really know what they’re doing. And then I’d tell myself, once I sorted out whom to listen to, to talk less and listen more. Pretty standard older-self-to-younger-self advice, I suppose, but the Dunning-Kruger Effect is a big impediment to effective learning and teaching alike: we humans are poorly equipped to know just how much we don’t know, and the less we know, the more we think we know. I try to keep that in mind and never stop learning.

What is the worst advice that somebody gave you as you were building your operation?

“The customer is always right”. That’s terrible advice! Actually the customer is frequently wrong. by dint of ignorance. That might sound judgmental, but only because “ignorant” is often used as an insult. We have to keep in mind that there is no shame or fault in ignorance as such, and it is easily curable with knowledge and information. The fact that the customer seeks expertise or some other service or product amounts to “you have something I need; you know something I need to know”. There’s always an element of education involved, whether the product is pure knowledge, information analysis, some tangible product, or whatever else. The thoughtful customer seeks to replace guesses and assumptions with knowledge and facts, and the thoughtful provider seeks the same result.

Trouble comes in the form of the customer who isn’t really shopping for knowledge or information or a product, but rather seeks reinforcement of existing guesses and opinions and preferences. This buyer is determined not to let mere facts topple guesses, preferences, folk “wisdom”, and baseless conclusions. The provider must make a sincere good-faith effort to provide what the customer actually needs, but when faced with a customer who has decided to prioritize his ego over his project, the thoughtful, conscientious vendor does not—cannot afford to—cater to the customer’s jealously-guarded ignorance. There’s nothing to gain once the would-be customer insists that his preferences and opinions must take precedence over the facts, and there is much to lose. The thoughtful vendor, in fact, has no qualm about promptly telling such a customer or client to take his business elsewhere.

My grandfather, a public-utilities regulation consultant renowned internationally, gave much better advice. He told his clients and customers, “You are entitled to an opinion; you are not entitled to an uninformed opinion”. That sounds harsh, but it’s critically important: each of us, whether we’re the maker or the vendor or the consultant or the customer or the client, is entitled to his or her own opinion, but not to his or her own facts. When that basic reality is disregarded in favor of a bromide like “the customer is always right”, everybody’s actual, real interests go unserved—supplier and customer alike.

How do you innovate? When you get the next great idea for a product, or improving an existing product, where do the ideas come from, and how do you make it real?

The answer here ties in with what I’ve been saying throughout this whole interview: never stop learning. It’s not enough to keep up with the developments in the field itself; it’s crucial to continually seek new ways of looking at facts, new ways of thinking about existing questions, new ways of looking at existing reality. Inspiration can hit anywhere, at any time. In the shower, or while stuck in traffic, or on the way to the fridge for a midnight snack, sure, but also when talking and listening with people. It’s really important to listen not only to my direct buyers, but also to the people whose lives are affected by what happens in my field of automotive lighting.That’s pretty much everyone, since most of us drive and just about all of us interact in some fashion with cars every day. Everyday viewpoints and experience are vital to hear and understand, and they don’t filter up into the “expertsphere” on their own—you have to go strike up conversations, then close the mouth and open the ears.

But that “never stop learning” coin has another side, too: never stop teaching! It’s not enough to just pump people for info, listen and nod and go “Mm. Mm-hmm. Very interesting. Thanks for your thoughts.” As new viewpoints and perspectives get integrated into the knowledge, and thence into the product, it’s important to give back, to work towards greater accuracy of information on the subject accessible to the general public. Work at it hard enough, consistently enough, and eventually you get a nice positive feedback effect. The basic quality of people’s questions starts to get noticeably better. Facts and science start to edge out guesses and suppositions in the general chatter on the subject. It’s not only heartening to see and hear, but it lets more people make better decisions. Everyone wins.

How do you connect with your customers and fans? How did you build a community of people interested in your product and ideas?

The means, modes, and methods of connection have to match up with whoever I’m trying to reach. It doesn’t work to plop a product down and say “Here y’go, come and get it”. For the commercial side of things it’s word of mouth, online and offline. I’ve never bought an advertisement of any kind, and I deleted my Facebook account three years ago—don’t miss it, either; that turned out to be a great decision. My ability to buy groceries and keep the roof over my head and the floor under my feet lives or dies by my reputation…now that’s motivation!

As for building and keeping an interested community: that comes back to engaging directly with the community. That’s central and vital, but a lot of business don’t seem to think so. They make it impossible for users (or non-users!) of their products to get in touch and share their thoughts. You can’t call and talk to them. You might be able to send e-mail, but usually the best you can hope to get back is a bland, unresponsive “thank you for contacting us” from someone unequipped, uninterested, and unauthorized to engage meaningfully.

I really think that’s the wrong way to do it. When I was a teenager, long before I started any kind of business activity, I read Guy Kawasaki’s book “The Macintosh Way”. I was much too young to grasp much of what he presented, but two crucial concepts stuck with me: doing the right thing’s useless if it’s not done the right way, and personal engagement is centrally, utterly important. That second point was really hammered home for me when I finished the book and came upon Mr. Kawasaki’s phone number, right there in plain text. I called him up and he answered the phone and talked to me. He didn’t condescend or patronize, he really talked with me. It was as substantial a conversation as a highly successful executive and a 14-year-old could have had, and it really stuck with me: whoever sends me an email gets a personal reply from me, and I answer my own phone.

At the same time, there’s a tendency for individual participants in an industry to clam up and refuse to talk to other participants. Of course thoughtful discretion and diplomacy are needed; nobody wants to give away the proprietary secrets, and making unkind remarks about one’s fellows in the industry is seriously unwise. But there are huge benefits to intra-industry communication and community at a much higher level than we tend to see, especially in North America. Hey, there’s a trade journal and a trade association for just about any industry you care to name: the people who make bottles and cans have one. The people who make art supplies have one. But until a few years ago, there was none for the automotive lighting and driver assistance industry. Now we have one, DrivingVisionNews. It got started in Europe, where there’s less hesitation to form a community wherein people actually talk and listen with each other, even though they work for competing companies. Now we’ve got a lot of American and Asian companies on board, we’re holding workshops and panel talks and round-table discussions to capacity crowds, and the benefits of the improved communication are starting to be felt. Whole sectors of the industry, instead of remaining constrained by outmoded regulations blocking really good innovations from reaching the market, are putting their heads together. They’re paddling the canoe in the same direction, talking to regulators with a coördinated voice, and things are moving in a productive direction as never before. This is much better!

How do you do design work vs sourcing? When do you say- “ I know what I want, and I need to design it and send it out for production” vs. “I can make this product work exactly the way that I want””?

There’s no firm heuristic for this decision; it really is on a case-by-case basis. A lot of it depends, casewise, on whom I’m working with, in what context, and what constraints exist in terms of time, cost, confidentiality, etc.

What can you tell me about finding good manufacturers? How do you know that you found one that you like?

I like to do careful evaluation of a company’s existing products. Obviously there are objective tests for compliance with whatever standards and regulations are applicable, and those are a good go/no-go sorting criterion. But most standards and regulations in my field don’t require a good product, just a compliant one. So it becomes important to scrutinize the company’s products subjectively, too. A hold-in-the-hand test can be very revealing, if done by someone who knows what to look for, what’s good, and what’s not.

Likewise, it’s important to interact with the company at as many levels as possible. How quickly, accurately, and usefully do they reply to inquiries from potential business partners? From potential customers? From existing customers? If they’re slow and vague to respond to an enquiry before the project starts, they probably won’t speed up once it’s under way.

Last on my list is scrutinizing their certifications and processes and suchlike. Of course I want to know about the processes and protocols a company has in place, but I am not a big fan of things like the ISO 9000 and ISO 14000 series of quality assurance and quality control certification schemes. I just don’t think they’re anywhere near as helpful as they’re promoted to be. Of course, being human, I’m subject to confirmation bias just like everyone else, but in my experience there’s no reliable correlation between ISO certification and the ability and consistency of a company in producing a quality product. I’ve seen consistently excellent products from uncertified companies, and I’ve seen garbage from certified companies.

Do you have any horror stories about a bad vendor or source?

Unfortunately so. In that product-development work I mentioned when you asked about outsourcing and offshoring, I did not have free reign to choose vendors and sources. One of the project parameters was “product must be sourced from a low-cost country”, which in that particular case was code for China or India. I had severe qualms about this, because all my research and scrutiny told me it was not possible to get a satisfactory product of this type out of those countries. Nevertheless, that edict stood, so I made my objections known in writing, picked a vendor in India I hoped could be coached adequately to produce something at least usable, drew up a very highly detailed specification spelling out every last little detail in words of one syllable along with all the requisite drawings, crossed my fingers, and forward we went. Only we didn’t go forward! It was more like we were jammed in Neutral. What should have been a four- to six-month development timeline dragged out to two and a half years. There were long periods of time with no contact from the vendor—emails not returned, faxes not acknowledged, phone calls deflected. Every once in awhile they would send an unacceptable sample; we’d evaluate it, list and describe the faults for them, and after a few months they’d send another sample…with one of the listed problems partly addressed and three new ones. Lather-rinse-repeat! It was ridiculous, especially since there was nothing innovative about the product we needed. This was in 2005 or so, and it was utterly standard, basic technology—state of the art circa 1972 all over the world.

Eventually it was decided I should travel to India to see what was the matter. The vendor had me to their factory, we sat down at a conference table with cookies and tea, and they finally explained why they hadn’t sent a satisfactory sample: they’d never received such a closely detailed specification from a customer, they said, which meant we were the most knowledgeable customer they’d ever had, they said, and so they felt timid about asking questions, they said. 30 hours in Delhi sandwiched between 17-hour plane flights for that lame excuse! In the end we never did get a satisfactory product out of them. We had to unwind the deal and nobody wound up happy.

What would you tell somebody that wants to do something like what you are doing? Maybe it is automobile brakes, instead of lights—The pattern you built is what I am trying to suggest is repeatable.

Don’t overlook the ABCs! I see so many people screw this up; they get so enthralled with their gimmicks, slogans, novelties, and innovations that the basics get done in a slapdash, minimally-satisfactory way (if at all). The primary main objective of a headlamp is to light the driver’s way safely through darkness—not to look cool. The primary main objective of brake parts is to stop the car quickly and safely—not to come in a sexy box advertised on a fabulous website. There are tons of vehicle lighting products marketed with all kinds of claims and hype, expensive packaging, catchy slogans and promos, but just try asking how well they work in terms of objective safety performance. If you get a meaningful answer at all, it’s something like “Oh, they fully comply with all applicable regulations”. Again, the regs don’t require a good product, just a compliant one, so that’s an evasive non-answer. The same goes whether the product is a tangible item (headlamp) or an intangible (knowledge). Don’t be that kind of consultant who borrows the client’s watch and charges him to write up a report saying what time it is—have the passion, knowledge, and resources to give the client genuinely new and pertinent information, or do something else for a living.

And treat your customers as intelligent grownups. The market is crowded with fluff and garbage, and there are a lot of buyers for it. But there are also a lot of adults out there, and adults have more discretionary money than kids. They’re tired of being lied to, tired of being sold shoddy products whitewashed with lavish warranties, tired of feeling bewildered by a mountain of hype, tired of being the victim of “if it’s priced this high, it must be good!” games. These are people who want to see as well as possible at night, or want the best possible brakes (windshield wipers, whatever). They don’t care if it comes in a plain brown box, they’re not impressed with infomercials, they just want an honest deal on an honest product. The marketing decisions needed to make a successful go of such a strategy—here again, whether it’s a tangible product or a knowledge-based venture—are sometimes counterintuitive, but this market segment will always exist, even if it’s invisible to some of the louder marketeering strategists.

Where will your market, product, or business be in 5 years?

Well, the technology is advancing at an unprecedented fast pace. And the rate at which that pace is accelerating is also faster than ever seen. Every time we turn around and blink, LEDs are getting brighter and cheaper—and that’s just one example. There are new mirrors that give a broader field of vision without distorting the view. There are tiny cameras so sharp and fast that whole new driver assistance systems are possible that we couldn’t have imagined just a couple of years ago. In five years’ time, we’ll be thinking much less in terms of separate vehicle lighting systems and driver assistance systems, and more in terms of integral driver vision systems. Eventually cars will drive themselves and we won’t have much need of headlamps, stop lamps, turn signals, and suchlike. But that day’s not coming for quite awhile, so if you’ll excuse me, I’d better go get back to work on an analysis of how different types of headlight bulbs affect headlamp performance!

"Innovation happens when the constraints are present." - Jim Meyer | Podcast | Open Source Integrators

bettina.acosta — Sat, 13 Jul 2013 16:10:41 +0000

"Innovation happens when the constraints are present." - Jim Meyer | Podcast | Open Source Integrators bettina.acosta Sat, 07/13/2013 - 09:10

Podcast

James Meyer’s company, Quarq ( now a part of SRAM LLC) is a customer of Ursa Information System, and a user of OpenERP. We met Quarq about 1 year ago, and were incredibly impressed with their product, and their staff. They are a great manufacturing company, making high end parts for the Bicycle racing community. Additionally, they are located in Spearfish, South Dakota, in the beautiful Black Hills.

Jim Meyer — “Innovation happens when the constraints are present “

Editor’s note– James Meyer’s company, Quarq ( now a part of SRAM LLC) is a customer of Ursa Information System, and a user of OpenERP. We met Quarq about 1 year ago, and were incredibly impressed with their product, and their staff. They are a great manufacturing company, making high end parts for the Bicycle racing community. Additionally, they are located in Spearfish, South Dakota, in the beautiful Black Hills.

Jim is Quarq’s co-founder and now Technology Director. Jim has an undergraduate degree in mathematics from Rose-Hulman Institute of Technology in Indiana. After Rose-Hulman, Jim attended the Massachusetts Institute of Technology where he gained a Master of Science in Mechanical Engineering and delivered a graduate thesis on racecar data acquisition.

Jim is a triathelte, and a three-time Ironman finisher, including the Ironman® World Championship in Kailua-Kona, Hawaii in 2004. Since 2007, Jim has focused on road racing and endurance MTB. He won the Solo 30 Men’s category at Breck Epic 2012 and finished second in the Open Men’s category at La Ruta de los Conquistadores.

To say that Jim is exceptional is an understatement.

Transcript

Why did you decide to start a business in the Black Hills of South Dakota?

I grew up here. My father was a dentist. He and my mother drove into Spearfish on a sunny afternoon in June 1972 and then they never left and got carried over to me.

But mainly, I like the small town peace and not waiting in traffic.

We’ve got a lot of beautiful country around here. The other resources necessary for our business are either present or easy to get.

Can you tell me a little bit about what you make?

We build a power meter for a bicycle which is an instrumented bicycle crank set that measures the force that you’re putting on the pedals as well as the speed that the pedals are turning and that’s usual for training for neither professional cyclists but also for cycling enthusiasts… a measure of the training that quantifies your performance.

Have they been around awhile?

The first ones came out about 20 years ago, but then in the last 10 and particularly 5 years, they have become much more popular. 25 years ago, they were basically kind of a sports science tool.

What gave you the idea to start with this?

I actually went to buy a power meter in 2006. At the time, I was training for a Triathlon and I looked at the options that were available and realized that there was some market opportunities that were still available. That’s when I decided that I should try to fill that and build my own.

Was there something that you saw in the existing systems that you didn’t like?

There were several systems on the market but the 2 primary ones were SRM from Germany (another crank set system, similar to ours) and Powertap from Wisconsin and the Powertap system was in the rear wheel and that was unavailable to me because I had a set of carbon tri-spoke rear wheels and the Powertap system wasn’t compatible. So that meant that I needed an SRM but the SRMs were very expensive. So that led me to think that there was a hole in the market for somebody to build a crank set system at Powertap level pricing. That’s kind of the basic, original market hole that we went out to fill.

How long did it take you to develop it?

It took 3 months to build the first—to build and test the first prototype. In 3 or 4 months, it went really quite quickly from a prototype to something real.

It’s pretty amazing what you can do with a laptop and an internet connection. You can really learn and design a lot and get things made and done. From the time we tested that first prototype until shipping was 2 years

I think that was big lesson, because it’s a much smaller project to make one thing work once in one environment. It’s a whole other project to make all of them work all the same in all sorts of environment and that kind of shows the differences that 3 months to make a prototype versus 2 years to make a product.

The 2 year development was a lot about the actual—the design of the product itself and distributing out any production process that would be able to make it work.

How did you figure out manufacturing?

A combination of everything.

We originally have some partners that helped us with things which are great for some things because they bring in resources but then you know if you have outside partners there’s always knowledge that is outside of building them and so after we’ve gone, we brought more and more in-house and tried to capture and understand and kind of drive that knowledge internally within our organization.

As we’ve grown, we’ve hiring outside people, with new skill sets.

That’s an interesting pattern you’re bringing up. There seems to be two patterns for small manufacturers- the “I’m outsourcing everything” versus the “I want to try it internally.” How did you make the decision?

We just started with all the outside people and then the supply chain and the lead times involved get pretty long. We ran into problems where somebody is having a problem at one vendor that they don’t necessarily know how to solve and the solution is actually out of a different vendor and when those things are in different places with people that don’t talk to each other and they only coordinate through us.

It’s hard to find those solutions and so just from by necessity and practicality, we’ve kind of naturally stumbled into bringing more and more things in house, mainly because then you can chop out the waste and lead time between the steps, but then you also you get the learning where you watch what you’re doing in one step and see how that affects the next step; and of course that’s once you’ve developed the process and make it more efficient.

Where there times where you needed to redesign part of all or part of your product?

Yeah, there’s been a couple of times when we had to stop and regroup, I think that one of the reasons why we’re successful was the first version that we made was pretty good and so the first units that we shipped in 2008. We made one design change, but beyond that we went all the way around until 2012 before we introduced a full new ground from the ground up product.

That was pretty good result to get 3-4 years life cycle out of that first generation design before we switched to that second generation.

That is really exceptional. That’s hard to do and it says that you got your first one pretty right when you got it out the door.

Yeah.

Important topic for entrepreneurs– How did you find the capital to get started?

I saw a presentation once on “How to be an Olympian?” and it had 5 things you needed to do and I don’t remember what they were—work hard blah, blah, blah, but the fifth one was “Choose your parents right.”– And this is more important than other other factors put together.

My dad was a dentist and he started the business when I was young and he did well enough on that to sell it; so then when I wanted to start this, both my parents knew what it was like to start a business from scratch and they decided to help.

So you used the “family and friends” method which is the most common way I think people start businesses.

My dad didn’t have that advantage and so he went out and sold stocks to people in town, and these friends became involved in his first business.

And that’s what we would have done had the resources from them not been available.

Had my parents had not been available, we would have gone out and found some share holders.

If you could go back in time and talk to yourself at the beginning of this adventure, what would you tell yourself ?

There are a couple of things. One, we messed around with some vendors that weren’t entirely helpful to us. The more we brought in-house, the better off we were.

I summarize this as there were times when we had low leverage with our vendors and I’d really avoid that again. If you are using outside vendors, you want to be able to ask direct questions and get direct answers. If the vendor for whatever reason can’t or won’t be forthcoming about what’s going on in the process and how things work and if they’re not a partner in getting things solved then you kinda need to move on elsewhere, either bringing in-house or finding a new vendor; because if you got a vendor helping they really need to be a partner particularly really on– in a business.

How do you use technology?

We do a lot of CAD work for design and then we do a lot of automated data collection for testing and QA/QC. I think that we’re pretty data driven and that’s something that we want to do even more of as we develop the manufacturing further.

I’d like to get to be more structured in the way we do process control and really use a lot of those formal process controls and SPC tools to drive what we’re doing but from day 1 we’ve done a lot of automated data collection through all our testing and very early on, we built a data acquisition system—a database that could show test results.

So, over time do you see more of these tools coming in or you’re looking to automate more, what’s the right balance for you?

Well, we like to have data to make data driven decision but certainly it’s not really value added to be entering data into the ERPs to spend time entering data into the ERPs system so that time that you’re just purely on data entry is kinda waste.

So we do a lot to try to make ERP provide data input automatically within the process.

There are places where we take don’t automate, such as when we get the process lean enough that things are moving through the process very quickly. We have a physical model of being able to see what’s going on in the production flow either with Kanban or a fast enough production flow.

But of course, you can’t run the entire business that way. To me, the ideal use for the technology is to free people up to add value, but all the data and the reporting is available for analysis because the data was collected intrinsically within the process.

How do you innovate? When do you get that next great idea for a product or improvement and how do you make it real?

To me, the innovation piece really comes when you got a problem, and embracing the constraints when you’re stuck.

When you “can’t do this because of that and you can’t do that because of this” and once you start to kind of have those boundaries or you start to get boxed in, the problem drives the creative moment.

Once you get all those constraints, and think about what you’re really trying to achieve, generally, there’s some sort of base assumption that you realize is wrong. To me, that’s when the innovation happens, when the constraints are present.

So, are you a fan of Elihayu Goldratt?

James: Yeah, yeah I haven’t read “The Goal” in a long time but certainly—yeah.

When I hear someone who knows about the Theory of Constraints a little bit I—that perks up my ears.

Yeah, and of course you could think of it from a purely manufacturing stand point. But even Finance, when you get boxed in financially, you have to think “Okay, what are we really trying to achieve” and that’s when it really make you focus and try to maximize the results.

How do you connect with your customers and fans and how did you go about building this community of people interested in what you do?

We participated in forums directly from the beginning and we tried to talk to the customers as directly as we could. We had a big advantage on that and that our product was to generate the following and there’s a forum on Google of a bunch of bike nerds talking about power meters there everyday.

So we interact directly there and with basic posts and not trying to be really promotional but just having a conversation here of building a power meter and this and that and as we grew we found out that we had to interact less, mainly because we get our own fan base developing and they lay down their questions for us.

One of the things that I noticed from your website, is you are celebrating the victories and the whole career of your customers on your blog. You go out of your way to acknowledge the people out there who use your product.

Yup. That’s the important piece. We’ll hop in and say a word here and there and show that we’re watching, show that we’re listening, and that we care.

What’s the best advice that you have ever gotten?

I was getting coaching and mentoring from a trusted advisor. He encouraged me to raise our prices early on. We had more demand than what we have in supply and we were trying to keep the prices low to compete with Powertap price point.

We raised the prices and that turned out to be the best thing that we ever did.

Our advisor knew you need to understand that the price somebody will pay as related to the value that they perceive from the product and it’s fully unrelated to how much it cost to build the product.

The learning in there is to really make sure that you understand the value proposition that you’re creating and what’s that worth to people.

Let’s say you’re cost is $50, and you’re selling it for $100, if you can sell it for $120, you just made a lot more money on every sale and that’s the key thing to understand.

Where will your market and product and business be in 5 years?

We’d really like to grow into other products within the bicycle industry relating to data acquisition– other sensors or recording and display units or integrating into other components of the bicycle, that’s where we’re looking. Certainly Power is the big key product but then there’s more places to go.

Jonathan Werner– :” …Like it or not, globalization is here.”

bettina.acosta — Sat, 18 May 2013 15:23:53 +0000

Jonathan Werner– :” …Like it or not, globalization is here.” bettina.acosta Sat, 05/18/2013 - 08:23

Podcast

Custom Traxx is a leader in the model train hobbyist community, creating an exceptional product for a high end market.

Jonathan Werner, Director of Procurement for Custom Traxx

Custom Traxx is a leader in the model train hobbyist community, creating an exceptional product for a high end market. You can find out more at :

www.customtraxx.com

www.facebook.com/customtraxx

Disclosure—I have known JW for 30 years, since we were kids together in Bismarck, ND. He and I got into mischief together, and I hope we are in the clear now, due to the statute of limitations. Jon is an engineer, entrepreneur, and former Marine. He is also a sports raconteur, and a great friend.

Transcript

Tell us a little bit about what you make.

We are really a niche within a niche. Take the niche market of model railroaders, then take that down to the sub-set of enthusiasts who only model the streetcars which used to be a part of everyday life in this country.

Custom Traxx supports the HO scale electric traction modeler by supplying authentic detailed decal finishing sets, heralds, destination signs, and other markings for streetcars, and interurban railway vehicles as they ran in most American and Canadian localities. We also offer a growing line of parts including selected traction re-powering items; HO scale traction mechanisms, trolley poles, and HO scale ORR girder rail, turnouts and crossings, as well as a number of specialty parts from our strategic partner Bowser as well as several other manufacturers in the streetcar modeling industry.

Currently, our flagship product is the line of HO scale models we have produced with Bowser of the historic traction vehicles operating on San Francisco’s F Market Line. We just gave our first public glimpses of the newest model in this line, the Perley-Thomas 900 class car which originally ran In New Orleans, and are running today in both New Orleans and San Francisco. We are scheduled to have this model available by the end of the year in not only in its original New Orleans paint scheme, but also in the marking of a few other cities where these cars were in service, such as Atlantic City, Chicago, and Philadelphia.

A more detailed overview of Custom Traxx can be seen in a public album on our Facebook page.

When did you start making this?

This has been approximately a five-year process. Custom Traxx has actually been in existence since 1992, but the F Market Line was our first “full-blown” venture into mass production.

A PCC body during the F Market Line project testing phase , May 2009

How long did it take you to develop it?

One of the first F Market testing prototypes, May 2009

The F Market Line went into the “drawing board” phase in 2008. We introduced our working prototypes at the East Penn Traction Club’s bi-annual meet in Philadelphia in May of 2009, and the first models in that line were on store shelves by the end of that year. Since them, we have introduced new models in groups of four or five roughly twice a year.

What changed along the way?

Our entire concept of how to manufacture these things. Before the F Market Line, traction modeling was a world of scratch building, modifying existing kits, and generally scrounging for parts and taking a “make-do” approach because it is truly a niche hobby.

Then along came a technique known as resin casting. Resin had some serious upsides, namely it was economical and patterns and molds could be made inexpensively, which allowed for small and/or custom production runs. That fact in and of itself was a massive factor because most modelers want a specific model from a specific time, and from a specific city.

Resin also proved troublesome from a few perspectives. First of all, certain resins have durability issues, such as warping and cracking. Mass production was a problem because the molds generally didn’t have a long enough lifespan. But most importantly, working with resin could be dangerous, particularly inhaling resin dust from sanding the bodies before painting.

In other words, resin casting put the idea in our heads about taking the hobby out of the scratch-building world, but resin casting also proved it would not be the vehicle to get us there.

Did you run into times that you needed to redesign part or all of your product?

Constantly. There was the aforementioned issue with how we would even manufacture these models. Then, there were constant issues with fitting all the needed component into a cramped physical space. For a host of reasons, weight of the models proved to be a crucial issue. Then came the challenges of putting digital command and control (DCC) systems into these models. They were becoming all the rage in other model railroading circles, and it was clear to us that failing to incorporate this technology doomed us to obsolescence. However, that also meant fitting a circuit board with wiring into an already cramped space.

Custom Traxx CEO George Huckaby with Bowser CEO Lee English during the F Market project’s testing phase, May 2009.

How did you figure out your manufacturing process to make this? Have you changed it since you first laid it out? Did you consider outsourcing or off shoring?

Let me take that question by question. We came to our manufacturing decision essentially through reverse engineering. When the resin casting option proved problematic, we asked the question “How else can we build what we want, and in the quantities we want?”

George Huckaby and Lee English with some other project members at the manufacturing facility in Shenzen, China

It is important to note we asked this question at a point where we hadn’t yet decided to make this a business; we were still just a bunch of hobbyists looking to build something we wanted. Custom Traxx was still a “garage operator,” providing decals and other peripherals. We’d never done a “full-blown” effort into models. That means we never really laid out a vision of a manufacturing process as much as we laid out requirements. As we continued through that process, going off-shore proved to be the only real option, for several reasons.

Many people think the option to go overseas is simply financial, but there’s more to it than that. Granted, in our case the cost-per-unit to manufacture simply could not be ignored. Even after you factor in time, transportation, and the other logistical issues involved in having your production floor 10,000 miles and twelve time zones away from your management capacities, the decision to go off-shore was an easy one.

But another reason that made that decision an easy one was all the regulatory stuff the multiple levels of government will put you through in this country. Without getting into specifics, when you factor in the time and money involved in navigating that sea of red tape if you wanted to manufacture something in this country, you can have something built in China, let it spend two months in transit, and still have it on the shelves in America before you can get through the governmental hoops.

In my opinion, there’s something fundamentally wrong with that, and if we as a nation want to remain economically relevant 50 or 100 years from now, we need to stop the finger-pointing over “they are sending our jobs overseas” and start asking why that is happening. That includes asking the hard questions nobody wants to deal with, such as if we waved a magic wand and created 5 million new manufacturing jobs in the country, would our infrastructure even be able to support that?

The answer is probably not, because we haven’t made any significant upgrades to our infrastructure in 50 years. That’s in direct contrast to countries like China, Vietnam, and several of the former Soviet Bloc nations who are all increasing their manufacturing capacity.

The fact is that like it or not, globalization is here. It has been here since the days of the Silk Road; it’s the whole reason man learned to build ships to cross the oceans, and the technology available to us today is only furthering that. The people who will tell you differently tend to be good, old-fashioned isolationists, and any economic historian who is being intellectually honest will tell you there was a precise term for the last time America deliberately choked off foreign trade. It was called the ”Great Depression.”

Twenty years ago, Mexico was the “stealing our jobs” boogie-man. Now it’s China. In the future, it will be Vietnam or one of those former Soviet bloc nations I mentioned. The other day, I bought a shirt that was made in Lesotho.

Like I said, globalization is here. It’s time to address that as fact, then plan and act accordingly.

How did you find capital to get started?

We didn’t. After the financial panic of 2008, we knew we had no chance of getting a loan. This all came out-of-pocket and leveraged with partnerships. In many ways, all we really did was take technology that either existed or was emerging, and brokered it into packages that fit our needs. As long as we kept making those so-called “win-win” deals, the momentum kept growing.

But to be honest, this isn’t a “big-cap” venture. Again, it really started as a couple of hobbyists who weren’t so much about the proverbial “better mousetrap;” rather we just were looking for a way to build the mousetraps we wanted.

If you could go back in time, and talk to yourself at the beginning of this adventure, what would you advise yourself to do? You must have learned a lot since then, so what lessons would you say stick with you?

My answer for that is more of an observation about advice, and from whom you get it.

When you take advice, you really must understand where the advisor is coming from. For example, the words from the guy who tells you not to worry about risk when you discover he’s floating on some pain-free venture capital…well, those words ring a bit hollow. The same goes for the guy who tells you social media isn’t important, then you find out he’s running his whole business off an old-school land-line answering machine in his basement. My point is sometimes we tend to listen to advice that fits our vision; the old “people hear what they want to thing.” When words fit into our ears just right, sometimes we don’t do the due diligence. And that’s to our peril.

What technology do you use for design?

George Huckaby reviewing specifications with a project engineer in Shenzen, China

We are heavy users of CAD. Our partners at Bowser use a lot of CNC. I can see a need for ERP in the future, especially as the partnership continues to develop. CAD is mission-critical because one thing we learned about manufacturing off-shore is that our procurement packages needed to be flawless. When your production floor is 10,000 miles away, there’s no such thing as “fixing in production.” Once you flip the switch, the process doesn’t stop until you have a finished product. If it wrong, you just have to eat it and start over. For us, or for anybody like us, that would have been a fatal blow.

We have experimented with several CAD applications, but we really aren’t married to any one in particular. That may sound a bit strange, but we have a unique problem regarding complex curves. Without getting to detailed, we are in a world which demands a high level of accuracy in a model as compared to the prototype. Compound that with the fact we are modeling things which were designed anywhere between 60 and 100 years ago, with design techniques ranging from clay sculptures to pencil drawings…to make a long story short, there are challenges in replicating curves with a computer that weren’t necessarily designed with a mathematically-based approach. So, we are always looking out for whoever might build the proverbial “better mousetrap.”

Having said that, personally, I prefer programs that support *.dwg files. They are the closest thing the CAD world has to universal, and when you want to keep the ability to move around, that’s important.

It’s also a crucial component because as I’ve said before, when dealing with manufacturers who are on a different continent and have a different culture, precision in your procurement packages is essential.

How long does it take you to get a new product designed and out to the market?

The timeline in our product development has some fixed factors and some variable ones as well. The actual production itself, meaning the time from the molds are cast to the time the model bodies are complete is essentially a function of time per unit multiplied by number of units being made.

If we are talking about measuring from conceptual phase to putting boxes on store shelves, I can describe the time line like this:

Concept: “Let’s build car X. There’s one at Y museum we can use as a prototype.” Assuming we believe there is a viable market for car X, that’s the extent of this step.

Design: Variables based on phases…The complexity of the body type to be modeled and the number of paint schemes in which the model will be produced.

Production: As I said, time per unit multiplied by number of units.

Foreign Transport: Expect 30 days by sea from Asia

Customs: One of the biggest variables in the process. Dealing with Customs is like dealing with a building inspector…you never really know what you are going to get. Expect five days

Domestic Transport: Everything goes to our partner’s facility in Pennsylvania, and distribution to retailers happens from there, as well as direct on-line sales.

The bottom line. From start to finish, roughly six months.

What is the worst advice that somebody gave you as you were building your operation?

George Huckaby (Custom Traxx founder and CEO, and JW’s father) may have a different answer to this question, but to me, the worst advice I heard came from the nay-sayers to manufacturing off-shore. These were the people who told me nobody would buy models made overseas; these were the same people who lined up to buy them.

How do you innovate? When you get the next great idea for a product, or improving an existing product, where do the ideas come from, and how do you make it real?

George Huckaby pointing our details on a SEPTA PCC-II in Philadelphia

The re-emerging interest in public transit in this country is doing that for us. We started this with the PCC cars running on the San Francisco’s F Market Line. Since then, several other cities have gone on to bring back vintage rail vehicles. Just a few examples; San Diego has some PCC cars running on a line its Gaslamp district. Toronto is running some restored PCCs. Kenosha, Wisconsin has a heritage railway outfitted with PCC cars. And these aren’t museum pieces, these are fully-restored vehicles operating in revenue service.

We have a firm belief in only modeling things which are running on real rails somewhere, because people model what they see. As more cities bring back these vehicles, it simply becomes a process of determining which ones have enough market appeal to warrant putting them into production.

In terms of technology, the big thing we’ve done is to be on the edge of bringing DCC into the traction modeling world. This is the technology that allowed model railroaders to have models with realistic sights, sounds, and lighting, not to mention the ability to control multiple trains on the same layout from a single controller, or to stream video from a train to your smart-phone, or to even use to your smart-phone as a control device.

Again this was the results of our building relationships with companies already in the field like Soundtraxx and Train Control Systems. The Tsunami© decoder from Soundtraxx, and Train Control System’s advances like WowSound© and KeepAlive© allowed us to develop model functions specific to traction vehicles.

How do you connect with your customers and fans? How did you build a community of people interested in your product and ideas?

George Huckaby operating a vintage Pacific Electric vehicle at the Orange Empire Railway Museum, Perris California

Actually, this is part B to the answer to your last question. Before all these cities began running these vintage vehicles, to see them you had to go to a museum. To this day, the various railways museums around the country are the best places to do research for new traction models.

Really, this is another area where our emphasis on relationship-building pays off.

When many of these cities started putting these vehicles back on the streets, they didn’t have anybody who knew anything about maintenance and operation of them. They literally had no choice but to go to museums.

George Huckaby has been a member of the Orange Empire Railway museum in Perris, California for forty years. Not long after he started taking me out there, I was in the booth selling tickets . Now, forty years later, George is the CEO of the museum, and we are both using our experiences at OERM in many ways today.

That is really why we believe so strongly that the relationships between modelers, museums, and present-day transit systems can be very beneficial to all parties involved.

For example, the car shown above, Los Angeles Metropolitan Transit Authority (formerly Los Angeles Railway) Car #3165 was originally built for Twin Cities Rapid Transit in 1948 before being sold to LAMTA in 1953. Since we had intimate knowledge of its history, we knew that if we were to model this car, we would have to account for some of the unique details specific to cars built to operate in the harsh winters of Minnesota; features that may not necessarily be present in the car’s current Southern California museum life.

The knowledge gained from those relationships places us in a unique position to work with many modelers, other manufacturers, and even municipal transit operations to provide technical assistance, specification evaluation and verification, functional testing and design revision, and even maintenance and operational advice for the transit operators. Let me give you some more examples.

Massachusetts Bay Transit Authority (Boston) contacted OERM with questions about the braking system on their fleet of pre-World War II fleet air-electric PCC cars. OERM has been running just such a car for years; Los Angeles Railway #3001, a pre-war “Air-Electric” PCC built in 1937. The knowledge we had of that particular car also allowed us to offer paint and specification to another manufacturer for their production of a model of that car.

Through the relationship Custom Traxx established with San Francisco MUNI during the development of the F Market PCC models, we gained the ability to gather specification data on other MUNI vehicles, such as MUNI’s Breda Light Rail Vehicle. We then shared this data with another model manufacturer and offered technical assistance on their Breda LRV model project.

Another benefit of our relationship with MUNI was that we were granted permission to examine some pieces held by the Western Railway Museum, largely due to that organization’s relationship with MUNI. This had a major impact on our plans to model the San Francisco “Torpedo” double-end PCCs.

So, how does this all answer your question? The traction modeling world is genuinely a small one; the more places where we can make our mark can only mean getting visibility to our efforts where we may have not had it before. Many transit workers become museum volunteers, and many museum volunteers are modelers. On top of that, I mentioned earlier we only model vehicles which are actually running somewhere. By being able to say we are part of the resurgence of the use of vintage rail vehicles in actual revenue service on several transit systems, when people want to model those systems, they will already have the Custom Traxx name in their heads.

It seems like one of your competitive advantages is your R&D. You are intimately aware of your target product’s life history, and technology that is demanded by your customers.

The beautiful thing about model railroad enthusiasts is that they are not shy in sharing their opinions. As I’ve said, these are people who demand a very high level of accuracy in a model. So, when you unveil a prototype, you will get plenty of input. Again, this is where our relationships with various museums and transit agencies are in valuable. It gives us the ability to get almost any type of information we need for either no or very little cost. That approach also plays big when it comes to developing new technology. The partnerships we have formed with other manufacturers in the industry mean we can actively share information and expertise to develop new products and/or technology.

How did you figure out pricing for your products? This is a key issue for a lot of new manufacturers?

That’s a really good question, because pricing was really a key part of making the decision to build these ready-to-run models. Let me explain that. Ready-to-run models (meaning those that you could pull out of the box, drop on your track and away they go) were a rarity in the traction modeling world before Custom Traxx. Everything was kits…kits you assembled, painted, and put decals on yourself. With some manufacturer’s kits, you just got the body and the floor; the power and the decals were up to you to find. That meant you could pay $150 for a kit, and another $75 to power it and another $25 to put decals on it, if you could find them.

We figured out if we took a mass-production approach and integrated all the stuff you would need to buy to complete a kit into one ready-to-run model, we could offer a basic unit originally priced around $150. Naturally, technology advances such as DCC and sound were priced above that, but we knew for a basic painted and running model we had to stay below $200.

Where will your market, product, or business be in 5 years?

I’m not a big “crystal ball” guy, but I will say this. The opportunities to model vehicles which are running on the street are limited. That means we are headed for a change no matter what. Personally, I think it is probable we will be making models of the current light rail vehicles in the future. It is definite we will have a new market in five years. If you go to a model railroad show now, especially one geared toward traction modeling, you are going to see a disproportionately high number of gray-haired people. Our ability to remain viable is directly tied to our ability to get younger enthusiasts engaged in the traction modeling hobby.

This is why OERM hosts a number of “Thomas the Tank Engine” functions per year. All we have to do is get the kids onto the museum property and let them see out fleet of traction vehicles in operation. Since I am based in Lafayette, Indiana, this is why I have regular interaction with a large and established model railroad club at Purdue University.

Regardless, five years from now we will be marketing a different product to a different market.

How have you dealt with “Near Death Experiences?” Any advice to a new entrepreneur, who is scared out of his/her wits?

Well, just about anything can be a “Near Death Experience” in a start-up if you don’t make the right decisions at the right time. In our case, we really were fortunate in several senses. First, we knew a lot of the pitfalls from doing business in this market from having talked to several other entrepreneurs. Second, we knew where the fatal mistakes were in the process because we were able to draw on the experiences of others. Most importantly, we knew that over-reaching was a death sentence. This isn’t a market where you can generate a wide range of revenue streams. We knew we had to be deliberate in our actions, very much more the “tortoise” than the “hare.” I get that approach may not work in other areas, but I can’t see any arena in which interacting with other business owners and having as much useful knowledge as possible can’t improve your decision-making.