<OT> Ever wondered why CPQ, or any other boxmaker doesn't simply copy Dell's model and so take away any advantage Dell may have? Ever wonder why CPQ or AMD seem to play the perennial losers to DELL and INTC? Ever wonder why, the "cheap" CPQ and AMD always seem to stay cheap, even though there doesn't seem to be any inherent "knowledge" gap? (OK, there are other issues w/ INTC dominance and barriers to entry). Here's one explanation courtesy of the NY Times (BTW, I'm not endorsing DELL as a stock, just giving an example of the business model difference w/ CPQ):
nytimes.com
<<Competitors Can Teach You a Lot, but the
Lessons Can Hurt
By CLAUDIA H. DEUTSCH
few years back, a big pharmaceuticals company -- name withheld
to protect the embarrassed -- benchmarked its delivery methods
against a competitor's. The rival was combining product shipments from
different divisions, enabling it to negotiate bigger, and thus lower-priced,
shipping contracts. The pharmaceuticals company figured it would do the
same.
It never happened. First, its logistics staff insisted that it already got the
lowest prices. Then, its data processing people insisted that they were
too busy to run the historical transportation cost figures that could have
proved otherwise. And its salesmen insisted that only carriers dedicated
to their products could guarantee timely deliveries.
"It's three years later and the company still hasn't changed," said Thomas
H. Slaight, a vice president of A.T. Kearney, the consulting firm, which
helped with the initial benchmarking project.
Ever wonder why companies are so amenable to letting others study and
emulate -- or, in corporate parlance, to benchmark -- those things they
do best? Why give away the family jewels?
Probably because benchmarking, even with competitors, is a lot less
risky than it sounds. "Chains like Wal-Mart and Target don't make any
secrets about what they do to succeed, because they know most
companies just aren't capable of adopting their approach," said Darrell
Rigby, a director at Bain & Co., the consulting firm.
Rigby should know: He recently helped a floundering discount store chain
benchmark its marketing and customer service procedures against
industry leaders, only to see his client's employees botch any attempts to
implement what they learned.
Time was, just ferreting out who had the best practices, and setting up
teams to study them, was a big deal in itself. But nowadays, that problem
can be solved through trade association records, Internet and intranet
data bases, consultants -- and, increasingly, managers whose full-time
job is coordinating benchmarking efforts.
"Doing the benchmarking attacks only 10 percent of the problem," said
Kevin S. Dehoff, a vice president at Booz Allen & Hamilton, the New
York consulting firm. "The other 90 percent involves changing your
culture, your processes, your whole philosophy so that you encourage
your employees to learn and share ideas."
But even the best-designed benchmark program can founder on many
shoals:
-- (italics)Old habits die hard, even ones that employees rail against.(end
italics) When employees complained a few years ago of slow expense
reimbursements, the Xerox Corp. studied 26 companies to find a way to
speed up the payments. Problem was, the new system entailed new
forms, did away with cash advances and required people to carry more
than one corporate credit card.
It took months longer than management expected for employees to
embrace the new system. "Everyone resisted the changes, even those that
were unhappy with the old way," recalled Warren D. Jeffries, manager of
customer services benchmarking for Xerox.
-- (italics)Corporate egos have a dark side.(end italics) It is never easy to
persuade employees that a competitor does something better, particularly
when that rival otherwise has a reputation as a mediocre company.
"People don't realize that there can be a pearl in the garbage," said
Slaight of Kearney.
-- (italics)Compensation systems may be out of sync.(end italics) The
Ford Motor Co. recently benchmarked General Electric's success in
getting managers to share ideas. But there was a hurdle: Sharing ideas is
a basis for bonuses at GE, but not at Ford.
Instead, Ford emphasized the benefits to the corporation as a whole, and
used its intranet to guide people in implementing an idea-sharing process,
said Mark K. Slagle, Ford's process benchmarking champion.
-- (italics)Higher-ups may be left out of the loop.(end italics) "The people
who implement the changes have to be the ones visiting other companies
and getting a first-hand look at what can or cannot be applied to our
environment," said Kathleen K. Mallette, benchmarking manager at
AT&T.
They must also be charged with prodding the implementation along,
added Jack W. Hugus, vice president for best practices at Lockheed
Martin. "Maybe they didn't budget for training, or maybe it just wasn't
high priority, but too often the divisional chiefs let the process of
implementing get stuck," he said.
Of course, there is always the problem, too, that corporate cultures
differ. How do you get employees to make quicker decisions if they have
always been rewarded for following orders, or to take risks when they
have seen colleagues fired for failing?
Perhaps the companies that can best navigate these obstacles are those in
trouble so deep that employees know their jobs depend on turning things
upside down.
When Continental Airlines was swimming in red ink in the mid-90s, it
went to the healthy Southwest Airlines to see if it could adopt
Southwest's practice of "cross utilizing" personnel -- for example, using
the same people who load baggage to process customers at the gate.
Continental employees grumbled about doing more work for the same
pay. But they did not rebel. "It's a lot easier to get a buy-in when people
know that, without more efficiencies, you may have to lay them off," said
Mark A. Erwin, Continental's senior vice president of airport services.
But Continental threw in a sweetener. It asked employees to list all the
"dumb, non-value-added things," as Erwin put it, that they did each day.
Continental then dispensed with many useless chores -- say, filing a daily
report of how many tickets they collected at the gate, when all tickets
were sent to accounting for tallying anyway.
"We gave them extra time to handle the extra duties, so they didn't feel
they had to work harder than before," he said.>>
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