Decisions Don’t Start with Data. This was a post found on the Harvard Business Review Blog. This is another attempt to explain how marketers are the kings of the world telling us what we should buy and we are too stupid to know otherwise.
We buy goods and services because we believe the stories marketers build around them: “A diamond is forever” (De Beers), “Real Beauty” (Dove), “Think different” (Apple), “Just do it” (Nike).
That was my favorite excerpt from the post. Thanks marketers, because I wasn’t sure what running shoe I wanted but “Just Do It” has now made up my mind.
The point I got from the post was that people don’t make decisions based on data, it is based on emotions.
To influence human decision making, you have to get to the place where decisions are really made — in the unconscious mind, where emotions rule, and data is mostly absent. Yes, even the most savvy executives begin to make choices this way. They get an intent, or a desire, or a want in their unconscious minds, then decide to pursue it and act on that decision. Only after that do they become consciously aware of what they’ve decided and start to justify it with rational argument.
While I do believe this is true. It does not mean it is right. Just because executives do this does not mean we should succumb to their ridiculous decisions and not present the data.
I do believe we make decisions on data, whether it is consciously or subconsciously.
Apple may say “Think Different”, but if their product is crap and is breaking all the time a person wouldn’t buy it.
“A diamond is forever” doesn’t make me buy from DeBeers. It is there customer service and quality.
There was some form of information that is driving the decision.
I do agree with the author that when presenting a group with a new and possible radical idea that a person should approach his audience in a way that will get their attention.
For some that may mean presenting straight data. For others, presenting a story or a “what’s in it for me?” point of view and weaving the data in.
This isn’t about data and decision making. It is about knowing your audience and adjusting your approach to help meet the audience see your point of view.
I do like the Apple products. I have found them to be easy to use and high quality. I have the original iPad (although half my apps won’t update anymore) and I think the Apple music players are still the best on the market.
That being said, I think Apple is very limiting in it’s openness and they will do things their way at the cost of customers at times. I use iTunes as an example. It is very hard to buy music, books, movies, etc… on iTunes and then be able to use them on an Android device.
Recently, I had another experience that showed me Apple wants things their way and aren’t focused on the customer. I bought an iPod Nano for my wife for her birthday. I ordered it online so I could have it engraved and picked it up at a local Apple store which was the first time I had ever been in an Apple store. My wife used it 3 times, did not drop it and the screen has completely popped off.
I decided I would take the 30 minute drive to the closest Apple store and get the iPod replaced. I arrived at 2:30pm and was greeted by someone who then handed me off to someone else to here about my issue. They were glad to exchange the iPod but there would be no engraving since they don’t do that in the store. I wasn’t happy about that but the engraving was free and I was hoping to walk out with a new iPod so I was too worried about it.
I was then informed that I couldn’t exchange it until 6pm that evening. Three and a half hours later! My first question was “why?”. I was told a technician had to do it and the earliest appointment for a technician was at 6pm. Of course, I asked “why does a tech have to do it?”. That is when I got my favorite response of all time, “Because it is a legal transaction and serial numbers needed to be written down.”
My jaw hit the floor as I asked how long it would take and the woman said, “Oh it will take less than 10 minutes.”
Now my eyes popped out of my head. So, I was going to have to wait 3.5 hrs for a tech to do a less than 10 minute transaction. A transaction that would have already been done by any worker in the store if I would have bought the iPod at Target or Walmart.
My first thought is that Apple does not respect their store employees because they don’t trust anyone to do a simple exchange transaction. Really. Think about it. Think about some of the people that have done exchanges/returns for you at Walmart. The process shouldn’t be that hard.
Secondly, here I am. An upset customer because a barely used product 2 weeks old is completely busted and now I will have to wait 3.5 hours to get it exchanged. Now I am doubly upset.
I did not have time to wait and took my iPod home.
A few days later, I took the iPod to the Apple store close to my place of work. I went in without an appointment just to see what would happen. I got a new iPod in minutes and was out the door.
I’m not sure if that was an Apple policy or a store policy causing the issue at the first store. Either way, they weren’t focused on creating a good customer experience which can lead to lost sales and in my case my just do that in the future.
Last week, I caught a blog Why Apple Has to Manufacture in China. I read hoping to find some practical reasoning as to why it was critical that Apple manufacture in China. I read the post twice and I couldn’t find any reason it was critical for Apple to manufacture in China.
The post does say labor cost is not a reason to manufacture in China.
It is not an issue of labor costs. In fact, labor costs play a very small role in the equation — both for Apple and for Timbuk2.
The post compares Apple to Timbuk2, a company that makes custom bags. Two different business models, Timbuk2’s custom production versus Apple’s mass production. Here is what the post has to say about this.
Timbuk2 manufactures in the US because it produces custom-made bags, orderable through its handy web site, and customers ordering custom bags cannot wait for weeks for a bag to come from China by boat, while shipping by air is expensive and there would still be some uncertainty due to customs clearance. A very similar logic lies behind fashion retailer Zara’s choice to manufacture in Europe, also an expensive location in terms of labor costs. Of course, Timbuk2 does also produce many bags in China but these are mass-produced, non-customized bags, sold wholesale at a fraction of a price of a custom bag, and they are not time-sensitive.
Apple does not produce custom products and so it does not need to deliver quickly — all of its products are standard and mass-produced; just like the standardized bags for Timbuk2, so there is no reason to stay close to end-customers. Moreover, Apple does not change its assortment often — the new iPhone will probably be for sale for another year or two.
There is no need for mass producers to be close to the end-customer?! Really? So it is OK to spend a couple of months to get new phones to the U.S. or pay for air freight (which is quite expensive), if there is a defect in a batch of phones? Not in any business model I know of. That delay risks the loss of customers and costs the company more money than is needed because of the big batches that may have to be reworked or thrown out. Also, when the life-cycle of a product is coming to an end it may cause more phones to be thrown our or discounted because of the large batches.
The post is contradicting itself because it says cheap labor is only a small part of the total cost, but then does not take total cost into consideration when looking at all the freight and inventory and possible obsolescence costs.
So why else is it important for Apple to manufacture in China?
Apple is a huge company and as a New York Times article published in January this year details, its production volumes and often unpredictable engineering changes require manufacturing flexibilities and engineering capabilities on a scale that is simply unavailable in the USA.
Exactly my point about inventory above. The post goes on…
In China, by contrast, manufacturers can deploy thousands of collocated engineers to introduce needed changes overnight, and large supply of labor allows to ramp up and ramp down capacity quickly. There is simply no factory capable of employing 250,000 workers day and night in the USA, surrounded by flexible and capable suppliers. So the location decision isn’t really about labor costs — it’s about manufacturing risk and where that risk is best managed.
Because Apple has bad processes upstream, it is OK to disrupt the lives of thousands with no regards downstream to fix the problem. Reminds me of the saying, “A mistake by you, does not necessitate an emergency by me.” Again, raising the cost to produce.
- Mass producers don’t need to be near the end-customer
- Disrespect for people is OK when fixing a problem you created
Apple may be on top of the hill today, but 2-5 years from now they won’t be. As competitors, like Samsung, close the gap managing cost is going to grow more important. Fixing your processes so engineering changes are not needed overnight and locating close to your end-customer so when you do have an engineering change you don’t have tons of inventory to dispose of is a great way to manage your cost.
If you are a regular reader of Beyond Lean, you may know that I am a very big supporter of U.S. manufacturing. I believe it is the foundation for economic prosperity for our country or any country for that matter. Lean thinking and principles can help guide any business to success and overcome many economic and governmental situations.
Recently, the Harvard Business Review Blog has had posts talking about much of the same. Here are a few of the posts.
The authors break jobs into two categories.
But we were able to classify all jobs as either creativity-oriented or routine-oriented. And within the routine-oriented classification, there are three distinct types: routine-physical (e.g. an auto assembly plant worker); routine-service (e.g. an accounts payable clerk); and routine-resource (e.g. a coal miner).
The authors explain that creative-oriented jobs pay more and pose a great question.
…the real challenge for the U.S. economy is what to do with routine-oriented jobs in dispersed industries.
And their response to this:
There is no quick fix for this problem. But my view (and Richard’s) is that we have to rethink how we utilize workers in our advanced economy.
…But I believe that America can influence the slope of the line of increasing creativity-oriented jobs by leaning toward creativity; giving workers the encouragement and space to innovate; utilizing the most of their brain, not the least of it. That would be the grass-roots way out of America’s economic doldrums that everyone is looking for.
I interpret this as engaging everyone in the organization, even those doing what is considered a routine-oriented job, in innovating the business. Innovating is also about how to change the process to be better. Engage the minds and hearts of the employees not just the hands and feet.
The U.S. competitiveness debate too often devolves into a cry for more Apples and more Ciscos on American shores, when what the country really needs is more Hospiras.
Hospira is an advanced contract manufacturer.
The author talks about the importance of manufacturing for innovation. Something I believe to be true and how we must open our mind to what the definition of innovation can mean.
In the U.S., “innovation” typically means just one thing to people: novel gadgets. Few policy makers realize that much of the innovation that has propelled China’s economy, for example, is of the incremental or process type. Many of us admire Apple for its originality but tend to forget the importance of its power-supply innovations, all of which were done in China by a Taiwanese company.
When it comes to process improvements, American companies are stagnating at best, and in many cases slipping backward. Policy makers need to appreciate the value of keeping incremental and process innovation in the United States.
I don’t agree that the U.S. needs policy makers to give tax breaks and help U.S. companies realize the importance of manufacturing to all types of innovation. There are U.S. companies that have realized that on their own. I’m sure even Apple has realized the importance of the innovations from their suppliers. It is the companies that need to realize the benefits of this and make the effort to change their thinking around this.
A growing number of executives of U.S.-based companies are repatriating their manufacturing capabilities — moving some production operations back from overseas.
Many companies have been moving manufacturing back to the U.S. In fact, enough have done it the movement has a name…reshoring or onshoring.
The post talks about governmental help to support this movement. While, the governmental help would be nice it is not necessary. There are plenty of companies that have made the move without help from the government.
Here are three bullet points the author says the governmental help recognizes:
- Companies compete on cost and responsiveness, and this balance shifts dramatically when labor costs rise and the locus of demand shifts.
Labor cost has nothing to do with responsiveness. Quick lead times and location has to do with this. When total cost is looked at from end-to-end companies usually find that cheap labor really isn’t lowering their cost either.
- Local talent and skills are essential to productivity and innovation. Long-term depletion of manufacturing skills will make it hard to reverse the trend.
I think this is right on. It will be hard to reverse the trend but I think with more companies bringing manufacturing back to the U.S. this is helping to keep the skills from depleting.
- Research and development incentives provided by the U.S. government must be tied to manufacturing operations. Otherwise, whatever is developed with taxpayer money could easily be moved to other regions associated with low-cost manufacturing.
I don’t agree with this. This comes down to a company’s morals and beliefs. If they want to move some innovation out of the country they will do it. Their are companies innovating and manufacturing in the U.S. It just may not be the high profile company like Apple.
It is great to see more and more discussion about the importance of manufacturing in the U.S. That was not the case just a couple of years ago. Especially on a high profile site like HBR. The authors there are still spouting off too much about how the government needs to change regulations. They need to start asking how all the companies that have already moved manufacturing back to the U.S. did it. If they did, they might start writing more about Lean and end-to-end value stream thinking.
I’m not a Mac user and never have been. Not because I don’t like them. More because I have never had the opportunity to use or need one. I have always received a PC laptop as a work computer. The company I work for now uses about 50% Macs and 50% PCs so I am getting more exposure to them now. One glaring physical difference was the keyboards. I noticed how thin the Mac keyboard was. The picture is below.
Notice the keys are very low profile, the whole pad is extremely thin, and there are no bells and whistles on the keyboard. There is no place to turn the volume control up or down or shortcuts to mail, files, etc…
In contrast, the picture below is the PC keyboard that is attached to my docking station.
The PC keyboard keys are much taller and the entire keyboard is thicker plus has the bells and whistles on it.
Is the PC keyboard waste or is the Apple keyboard not meeting the expectations of the customer? For me, I see the PC keyboard as waste. There is more plastic per key used and the keyboard panel has more plastic also. This seems very wasteful to me. What would the savings be if the PC keyboards were as thin as the Apple keyboards?
I don’t use all the extra shortcuts on the keyboard so the manufactured over-processed the keyboard to give me more than I need. If you are a person who uses all the extra shortcut buttons on the keyboard then you may see the Apple keyboard as not meeting the value needed by the customer. Even if the Apple keyboard had all the extra shortcut buttons on it, I think it would still be thinner than the PC keyboad. What do you think?
Waste or not meeting customer needs?