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Discovering and Resolving Problems

Thursday, April 1st, 2010 by Setpoint

In any organization that intends to exist for an extended time period, learning is critical. Not repeating mistake allows a business increased profitability. Someone once said (I can’t remember who) something like - “the school of hard knocks is a hard school to go through, but only fools return”.

Over the years Setpoint has been, is, and will continue to be an engineering centric business. Most of the projects we build have never been built before; most are completely clean sheet designs, meaning that no one is quite sure what this machine will end up looking like. This means that there will be multiple iterations as we develop the machine. It is critical to our success that we discover our mistakes as soon as possible to reduce our costs. The table below illustrates how critical it is to discover the problems as soon as possible.

When Mistake is Discovered and Fixed

Relative Cost to Fix
Designing at the white board $1.00
Designing in CAD system $10.00
During build of machine $100.00
During debug phase $1,000.00
After installing at customer site $10,000.00

Over time we have developed some unwritten rules that we use to help us down the development path. For this blog we sat down and wrote down the ones that matter to Setpoint.  These are in no particular order:

  • Right to left thinking - What are we really trying to solve here?  What must be solved, what would be nice to solve, what doesn’t matter if it is solved? What happens if we just leave it alone?  Is it really a problem?

  • Stop to think and drive towards root cause or what really needs to be solved, it is too easy to get caught up in ‘noise’.  Always ask the five whys

  • Evaluate and Prioritize: does this need to be resolved this instant, don’t get caught up in minor issues and miss a fundamental problem - (forest for the trees). Most problems don’t have to be solved this instant – a little time and thought usually pays big dividends

  • Take a system view of problem, don’t resolve one problem and create 3 others because you isolated the problem and disconnected it from how it has to interact with the rest the system

  • Don’t get designed into a corner, you may need Plan B – in fact it usually helps to have more than one legitimate idea as you move forward. This helps avoid sticking with a solution too long that should be discarded.

  • You can’t ‘will it to work’. And ”it might work” generally means it won’t work

  • Document all important work in a simple manner…your memory’s not that great and often results in faulty assumptions that somehow get turned into facts. Always pull the data to see what is really going on. Many so called facts are generally assumptions…if in doubt, treat it as an assumption and react accordingly

  • Turn the problem objective into a math problem if possible. Typically the guy with the equation wins.  It is easy to argue about subjective ideas like – that’ll never last, that’s not strong enough, or that’ll never make cycle time. Facts should rule in those kinds of discussions

  • When debugging, only change one thing at a time if possible…seems slow but it’s much faster long term. That way you know what worked and what didn’t.

  • When debugging, document a known ‘baseline’ that can be returned to when you’ve tried 4 things & you can’t get anything to work anymore, if in doubt go back to the baseline.

  • Sometimes the best way to improve the Design Factor of a system is not by increasing the capability of the system but reducing the requirement…sounds obvious but it’s not.

  • When working on timing issues never forget parallel operations are your friend…once again, not always obvious

  • Watch for unaccounted moment loading in a design.  Forces are rarely overlooked; however, moments are commonly ignored

  • Is the process defined?  Because a process has been duplicated twice in a lab doesn’t mean it can be automated

  • What’s the simplest thing that could work?

  • Given enough time and money you can solve anything, is regularly heard on the engineering and assembly floors, and it is the enemy of profitability.

  • If you had to contribute your paycheck towards it would you still solve it that way?

  • And finally - What would Steve do?

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Value Curves

Thursday, February 11th, 2010 by Brad

As a pretty consistent reader of Harvard Business Review magazine, I find that there are many articles that are good and occasionally there articles that are very stimulating and worth remembering. Those articles make me think and give me new ideas to consider as we steer our business to be more successful. One of those articles that I read many years ago was, “Value Innovation – The Strategic Logic of High Growth”. It comes from the July/August 2004 issue. It is authored by W.Chan Kim and Renee Mauborgne. I pulled it up again and read it as we are trying to chart some new courses in our business. In addition to that article, they also have written a best selling book named Blue Ocean Strategy, you may have heard of it, it is also worth the read.

In the article they point out that most industries compete around the same points of competition and it becomes a race where everyone makes incremental changes in how they compete, but not very often does anyone truly have a breakthrough in how they approach the marketplace. The basis of the article is that incremental points of competition pushes the products or services towards commodity pricing and fights over small changes in market share, no big gains are possible with this strategy.

If you want to make major changes in your industry you have to think differently. Below is an example of their value curve research.

Value Curve

Value Curve

Every industry completes on certain factors. I’ve labeled this example with 6 factors that are along the X axis., there may be more or less in your industry. If there are too many, I’d suggest you boil them down to the few that really matter. It will be hard to figure out what to do if you have too many. Factors vary by industry, some may be the same and some will be unique to your industry. Examples of factors may be cost, features, size, quality, etc. Spend enough time to make sure you really have what the points of competition are, not what you wish they were.

Along the Y Axis we have a relative scale – from high to low, expensive to cheap, many features to few features, etc. depending on what the factor is, you get the idea.

In this example the existing competition is the blue solid line. Based on the factors you can see that the factors fall in different places to the relative scale. In a typical industry the competition will nudge these factors incrementally up and down the relative scale trying to gain market share, but not changing the Value Curve in any significant way.

In this example, a newcomer arrives with a completely new strategy. This is represented with the pink dashed line. You can see that this strategy completely redefines the blue value curve in which the current players compete. Pink is significantly changing how they are going to compete by significantly changing the relative value of factors 1, 5, and 6. If they are successful they should enjoy success and their research says they will enjoy many years of uncontested competition.

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5 S Process in an Assembly Shop

Thursday, December 10th, 2009 by ksmith

Recently we talked about the 5 S process developed from the Toyota Production System.  Some believe that the 5 S process can only be implemented in a manufacturing environment and do not see the benefits of using this process to improve their work environment.  Here at Setpoint we have our design engineers in an office environment and our assembly technicians in a shop environment with both areas using the 5 S process. 

We made a video and put it out on YouTube to walk through our shop and show how the 5 S Process can be implemented in an assembly environment where we build one machine and ship it, then build a completely different machine.

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An Interpretation from an engineer’s perspective

Monday, October 12th, 2009 by Mark

of “The Back of the Napkin” by Dan Roam

 

I am only one member in a mechanical design team of seven engineers, together we are neck deep in machine design and mechanical problem solving.  I started reading this book with hopes of picking up good ideas to apply in a group setting when we are at the whiteboard solving design issues. I have found the book to be somewhat interesting, but not enough to press my colleagues to read it.  The book has some good ideas in it, such as the SQVID method of imagining.  In summary, the SQVID method gives you five questions to ask and mentally process before drawing a picture.  These five questions are:

  • Simple or Elaborate?
  • Quality or Quantity?
  • Vision vs. Execution (do you want to depict where you’re going or how to get there?)
  • Individual attributes vs. Comparison?
  • Delta (change) or Status Quo?  (In Dan’s words: “The way things are versus the way they could be.”)

Dan is not simply suggesting “a few good ideas” in The Back of the Napkin. He has created a text book to guide you into learning a powerful and disciplined approach to visual problem solving that works well for Dan. Trying these ideas once isn’t difficult.  To implement these into your person, make them habit, and integrate them into your mental framework, and restructure your ability to solve problems may take years of self discipline. For example, the <6><6> rule: “For every one of the six ways of seeing, there is one corresponding way of showing. For each one of these six ways of showing, there is a single visual framework that serves as a starting point.” Email me when you’ve managed to get a good grip on that one.  Next, consider Dan’s Four Cardinal Rules for Better Looking:

  1. Collect everything you can
  2. Lay it all out where you can look at it
  3. Establish fundamental coordinates
  4. practice visual triage

These four things make perfect sense, but memorizing them in one day is not enough.  Carrying around index cards with notes to remind you how to do it is impractical.  The challenge of rebuilding your mental stairways to solve problems, to restructure your thought process and become fluid at this can be the challenge of a lifetime. The truth is, you probably already do these four things and just don’t realize it because it happens so fast.  But Dan did an excellent job of capturing this process on paper where you can read the steps and do a self evaluation.

Many times as I have pondered Dan’s ideas, the recurring message I get is - in summary: “You don’t think very efficiently, try my way, it’s better.”  If you consider yourself an efficient thinker, this book will make you reconsider because Dan illustrates how his methods can be applied universally.  The book is not compelling to the merely curious, there is nothing ground-breaking for the visual thinker, and the ideas are not easily accessible in many ways to the analytical thinker.  For example, the Bird Dog Drill on page 75.  If any analytical person makes it to page 75 of Dan’s book, they will find this drill to be a tall challenge because it’s an exercise in endurance and continuity of visual thinking.  That being said, I am about 75% through the book and still not sure if I have already passed the “meat & potatoes” of Dan Roams’ core message.  If I did . . . what was it? 

It’s almost like Dan is telling me: “This is so easy, if you could just be cleverer by using a bit of visual ingenuity, you could draw a picture and this complex problem would suddenly become clear.” Or “Why are you making this problem so difficult, just draw an efficient, well conceived, simple yet calculated, and well diagrammed picture.”  . . .  My thoughts exactly, “do what?”

To be honest, I don’t know if I will finish it anytime soon.  Not that the book isn’t good, it’s just not groundbreaking and easily applied. But it’s interesting if you are a visual thinker.  In reading this book I feel like I am being told that to be a good problem solver I must remove my old problem solving tool belt and strap on a new one that only has a single marker in it with instructions that simply say, “Think differently, and draw more efficiently.”

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Deciding on the Direction for your Company

Thursday, August 6th, 2009 by Brad

Companies that remain static and don’t evolve will eventually lose their profit margins and sink into oblivion. At Setpoint, as we try and adapt to the changing landscape I have noticed several things in dealing with deciding our company’s direction.

First, change is hard. It is much easier to continue doing what has been done in the past, even if it is not getting the results it used to, and rarely have I seen an idea that just works right out of the gate.

You can’t do everything, and if you try to, it will result in spreading your resources (money, time, people) so thin that you cannot be successful at anything. One of the hardest things is, deciding what not to do. It is difficult because you tend think that you are potentially leaving money on the table, and you may be – but you are doing it to pursue a better idea with more potential.

We have found that some feel more passionately about an idea than others, so we have developed a rule that is simply “whoever has passion about an idea gets less than 50% of the vote”. This helps us make more objective decisions. Key message is, don’t be so in love with a strategy or idea that you can’t dispose of it when all the facts point that way.

You never have perfect information before a decision needs to be made. As a result, assumptions are made in order to make progress. The problem is, unless those assumptions are tracked and noted they tend to become facts over time, and often those assumptions are wrong. You have to revisit assumptions to validate, modify, or eliminate them to reflect new information you now have. Not doing so can lead to less than desirable outcomes.

At Setpoint we try and follow the philosophy of “fail faster”. In other words, if something is not going to work the sooner you identify it the cheaper it is for the company in terms of money, time, and people. Most ideas can be validated or eliminated without much cost or time if the key issues have been correctly identified. The few key remaining ideas can then claim your valuable resources.

The shorter iteration cycles the better; the clearer the objectives, the easier it will be to identify the key issues that need to be proved out in order to validate the direction.

These are some of the techniques we are using at Setpoint to decide our companies direction.

This process is an ongoing part of a healthy company’s life. So get on with it.

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Outsourcing IT Management

Thursday, June 25th, 2009 by Setpoint

Information Technology (IT) has become a necessary component of today’s business culture.  If you own a business with more than 5 employees, it almost becomes a necessity.   In some form or fashion, you’re going to have to come up with a game plan to maintain and replace your current systems.  What works best?  Let’s talk about that.

If you’re a business with less than 100 computer using employees, you may find a lean philosophy will maximize IT efficiency as well as effectiveness.   Why?  Here are several reasons.

  1. Computer usage has become a common part of American culture.  Almost all sectors of professional life involve the use of a computer. When it comes to small IT tasks, just about any computer hobbyist at a company could manage and maintain software and hardware inventory, the ability to change a forgotten password, and add a printer to a workstation.  Depending on time availability of that employee, he or she could also handle email accounts and basic web site changes.
  2. Microsoft Windows is very stable.  I know, I know… you’ll always have a small percentage of PCs that will tend to crash.   This is more about the law of averages than the quality of Windows.  Generally speaking, a well made, properly installed Windows XP or Vista (and soon to be Windows 7) PC with up to date antivirus and antispyware software will be very solid.  The small stuff is usually easy to fix but what happens when you get a virus or spyware on your computer?  That’s when you need an IT professional.
  3. Difficult server, router, and security tasks are infrequent.   Don’t get me wrong, the need for expert IT professionals is still necessary and vital to the health of any business, but in order for an IT person to be proficient and up to date requires both constant training as well as exposure to these types of problems.
  4. Attrition of employees.  Generally speaking, good employees tend to be here today, gone tomorrow.  Just about every employee is looking to increase his or her leverage in the current job market.   Hey, if you could get a better paying job, with more benefits, and a better boss – wouldn’t you leave?  Of course you would.   Well paid professionals that outsource (in my experience) tend to stick around for much longer periods of time.
  5. The high cost of professional training and equipment.  Training and professional trouble shooting equipment range in the thousands.
  6. Managing and providing HR benefits.

 

What then do businesses need to outsource?

  1. File, print, email, web, and SQL server installation and maintenance
  2. Routers and firewalls
  3. Security implementation policies and procedures
  4. Remote computing access
  5. Budget planning and new business solutions
  6. Workstation hardware and software policies

 

After owning my own IT Company for 11+ years now, I have found that companies that outsource their top level IT needs save money.

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10 Ways to Creativity

Thursday, June 18th, 2009 by Mark

The Mechanical Engineer’s Perspective

  1. Music:  Certain types of music may be used to create a desired mood such as hard rock in a fabrication shop, jazz in the elevator, Kenny G at the grocery store, or Vivaldi playing low in a restaurant.  If there is a genre of music that provokes your spontaneous side, getting into that mood might help boost your creativity.
  2. Change of view:  When we have become numb to our daily routine and surroundings our senses tend to be in a lesser state of awareness.  Changing the physical location of your work space can be an effective way to awaken the sleeping sense of creativity.
  3. Strange Things:  Ambiance, tone, mood, and setting all play a role in your creativity.  Is there something that you can place in your work space that will help heighten your senses and capture your interest?  A Venus Fly Trap?  A clay sculpture?  A 1969 Camaro?  Make your work space someplace that calls to your creative side and beckons for the genius and artist in you to step forward.
  4. Retreat:  If you have been concentrating intently on one issue for too long and keep hitting dead ends, break away from it and “sharpen your blade”.   Is there grass outside that might allow you a brief escape and feel sunshine while you clear your head?  Investing 5 minutes in clearing your head and taking a step back to re-evaluate the problem will be more productive than 30 minutes of spinning your wheels without progress.
  5. On Your Feet:  At Setpoint we have a saying: “To the Whiteboard!!” We find it most effective to communicate our design ideas to each other by gathering around a whiteboard and letting these ideas come to life in sketches, diagrams, and pictures.  While we’re on our feet gathered around a whiteboard ideas are communicated effectively and develop quickly.  This is a great way to help others “see what you are thinking.”  Thinking on your feet in front of a whiteboard can be engaging and allows you to focus your thoughts in a visual and creative way.
  6. Confidence Builders:   It may sound cliché, but there is profound truth in accomplishing something because you “think you can.”  Sometimes when we’re up against a mental block, we just need something to push us forward.  Accomplishing a small task that you know you can do well is one way to achieve that needed boost.  Maybe it’s repairing an engine, fixing something around the house, or building something out of wood.  When you have completed this task - revel in the accomplishment.  Indulge in the reward of knowing you finished this task with perfection, review how you thought of every angle and went the extra mile.
  7. Good Meeting Management:  In the context of a brainstorm meeting, inspiring creativity can depend on the meeting manager among other things.  A good manager can keep a meeting focused on the subject.  A better manager can maintain meeting direction in a manner that the discussion flows freely while generating ideas from the team.  The best manager is decisive and can lead the team into creativity by giving clear guidelines and hearing ALL ideas, allowing expansion on different perspectives, encouraging positive objectivity, does not allow negative commentary on any idea, all while holding the meeting focus and reading the body language of participants to know when it’s time to “move on.”  A productive meeting has a clearly defined objective and end result.
  8. Dealing with Stress:  Stress chokes creativity unless it can be compartmentalized and channeled.  Defining the problem and knowing what the next step is to solving it will give you instant results for reducing your stress level and allowing your creative side to flourish.  Try the following exercise:  Take two minutes to write down all the tasks you are keeping a mental list of, beginning with those that cause you the most stress.  Completely drain onto paper that mental list you are packing around, exhaust every last item.  Including work related items, things from home, and anything else that’s on your mind - one big list.  This should be fast and informal, just find a pencil & paper and start scrawling away.  Next, categorize the items into two separate lists, either “Work” related, or “Personal.”  Finally, prioritize each item in each list in numerical order of what needs to be finished immediately and what can wait.  Having this list in front of you is very empowering, it will help you compare importance of all your tasks and will cause you to re-evaluate your stress level.  All you need to determine is what the next step is for each item.  Don’t solve the entire issue – ONLY THE NEXT STEP. Be realistic, maybe it’s a phone call, a trip to the store, or composing an email.  In some cases you may be able to completely eliminate tasks altogether.  Knowing you have a plan to take action on these items will tremendously relieve your burden.
  9. Use the “Other side”:  Do you dominantly use the right side of your brain or the left?  We tend to approach problem solving in the same way every time.  What if you could teach yourself to approach a problem from a different angle?  There is rarely only one perfect solution for a problem.  Then it follows there are endless ways to arrive at one of the many solutions that will work.  Try some exercises that will get the other half of your brain involved.  The left side of the brain is used for thinking analytically and logically.  We also use it for reading, writing, arithmetic, and understanding symbolism.  The right side of the brain is used for spatial reasoning, visual thinking, and intuition. The right side can deal with complexity, ambiguity, and paradox while the left side looks at sequences, patterns, and lists.  The left side of the brain looks at parts while the right side looks at the whole.  Sometimes, we use the excuse: “My mind doesn’t work that way.”  Therein lies the problem.  Why not train it to work that way and see what you are capable of when you tap into that reservoir of creativity hidden in “the other side.”  (Reference:     http://www.funderstanding.com/content/right-brain-vs-left-brain)
  10. Defining the Problem:  Moving forward with an idea without stopping to question all of the underlying assumptions can be risky.  Understanding the problem from multiple perspectives sheds new light on the solution.  For example, if I were redesigning a dishwasher I would want the insights of several disciplines including: Electrician who has to wire it, maintenance guy who has to install it, maybe even the teenager who would use it.  I would also seek out the Chemical engineer’s input on corrosion resistance, the mechanical engineer’s input on motors and wear.  I would also consider the programmer’s input on failure modes and troubleshooting. What about a blind person’s perspective?  A really short or tall person?    The point is – by thoroughly identifying all of the key issues surrounding a problem you have already developed a significant portion of the solution.

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The CAD System is Evil and the White Board is Your Friend

Thursday, June 11th, 2009 by Setpoint

Engineers are typically detail oriented, introverted problem solvers that techno-babble about the latest advances and can’t imagine how the previous generation accomplished anything without the modern tools that are available today.  So, what does this mean?  If we start with introverted…sometimes I’m certain that our virtual world that has been brought to fruition by engineers is just a selfish result because we really didn’t want to actually talk to each other in the first place.  How about latest advances, we spend significant time and effort learning, trouble shooting and maintaining the latest software tools.  Remember, engineers are problem solvers, given enough time and money we can make anything work.  I’m going to rant for a moment: how often do we end up with an annual software upgrade that requires nearly double the hardware capability that was fine for the previous release along with significant install, debug and training for no real ‘core’ improvements, just new look and feel.  Done ranting and back to latest advances, we spend significant effort on the latest CAD tools.

What does this add up to?  It is all too easy when starting the design process to work on our own with the latest software tools.  Generally goes something like this: there is a preliminary design review in two weeks, who has time for daily internal reviews not to mention the customer is expecting to see a beautifully shaded and textured virtual model…I just have to get this done.  There are a few things inherently wrong with CAD on the front end of the design process. 

  • Drives towards details rather than system thinking.  Rather than a generic ‘schematic’ component we model the actual component and it escalates from there to the fits, clearances, parametric mates etc.  It’s all too easy to get caught up in a correct or perfect model of a potentially flawed concept.  Think of this as the proverbial forest for the trees problem.
  • Far too slow and rigid for preliminary system thinking…a faster more flexible tool is required.
  • This is probably the most significant detriment: minimal team synergy.  Not only is it difficult to engage a team with only one person ‘driving’ but the ‘bandwidth’ of team resources is potentially limited to CAD jockeys.

 

How do we combat this at Setpoint?

  • Egos are checked at the door, there is no room for ‘not invented here’.
  • The old saying that there is no such thing as a bad idea…wrong.  Get over it, it’s part of the process and we’ve all had them, the public humiliation doesn’t last long and the bad idea may spawn a great idea.
  • Whiteboards are always available.  Impromptu white board discussions don’t happen when conference or war room pre-scheduling is required.    Table tops also make great whiteboard surfaces.
  • Typically no chairs in white board areas.  People are more engaged when on their feet, helps reinforce a sense of urgency and meetings rarely drag on.
  • Digital photos of whiteboards for a quick and simple archive.
  • Multi-discipline group involvement.  Rather than a review it’s a process that many participate in because anyone can operate a whiteboard marker.

 

Don’t misunderstand me, CAD is a valuable tool in design; however, it’s not always the best tool.

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Virtual Companies

Monday, May 11th, 2009 by Brad

You read and hear a lot about virtual companies these days. What does it take to actually try and make one work?

At Setpoint, we are in a highly cyclical business.  We used to size our business based on the busy times and then try and tough it out during the slow times with out having to lay people off.  Every time you have to lay people off, it is very painful – not only for the people you have to let go, but it is difficult for those that remain. A couple of years ago we made a strategic decision to size our company for the lean times and use outsourcing techniques to handle the busy times, we decided to try and become a small base of key people that can wear many hats and outsource some functions that we believed could be more generic with proper management.

I had read many articles about the virtualization of the work force. One book that gives great insight is The Future of Work by Thomas W. Malone.

It is hard to make a virtual company work. Reading about it is one thing, putting it into action profitably has been much more difficult.

We used www.dice.com to help us filter and identify technical people that fit our needs.  We then used our best mentoring VP to sort through the resumes and set up discussions to find those that might match with our culture.

One thing we did instead of flying them out to meet with us was, we set up a 20 hour project they had to complete (we paid them for this) to see how they would do. We found out a lot by seeing how they solved that project. Like all people that work for a company – not all will be a fit for you or them, the sooner you find out the better for everyone involved.

We have needed many tools to help us make this concept work. One of the main tools we use many times a day is from www.37signals.com – it is called Basecamp. This is our main communication and file tool, it is a diary of all that is taking place and assignments given. We use concurrent licenses for our engineering software programs to give us flexibility to share licenses. www.twiddla.com helps in our concepting phase. Every engineer has a unique color they use so we can recognize who has done what. www.gotomeeting.com is used to host virtual meetings and share information. You will need a conferencing program so that many can join the daily conversations. Setpoint is considering IP phones so we can send phones to our virtual employees and have them just a local extension away.

As you start out with new people give them clear short work assignments to make sure you and they are a good fit with your culture. The key roles of some of your employees will have to change. They have to over communicate and not be afraid to call up and see how their distant team member is doing. One of worst things is to assume everything is going fine if you don’t hear from a virtual team member.

More than anything it is important to have frequent (at least daily) contact with your virtual people. We have done things to connect with our offsite members so they feel like they are working for a real company that cares for them. In Basecamp we have a picture of our facility. As we send messages back and forth through Basecamp we have our own pictures on the message to reinforce that there is a real person behind all of this action.

Your face to the customer has to remain with your employees. We have found that customers have to connect with employees – not virtual team members. It has to appear seamless to them.

We feel that we are making progress but it is a continual battle.  Is it better than carrying too many employees through a downtime in the cyclical nature of this business? For us, the answer is a definite yes.

We are still growing at being a company that has virtual team members and believe we still have many lessons to learn as we go down this path. We’d love to hear from any of you out there that can help Setpoint get there faster.

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Disruptive Technologies and The Innovators Dilemma

Thursday, April 16th, 2009 by ScottP

I recently read the book The Innovators Dilemma by Clayton Christenson. I would not call it entertaining at all, in fact, I thought it was pretty good sleeping aid. That being said, I found the information and the subject matter extremely interesting. The book is based on the idea that very well run companies who are paying attention to their customers, investing in continuous improvement, and treating their employees well can suddenly and almost inexplicably fail and often go completely out of business. The amazing thing is that the very things that managers are doing “right” are frequently the exact things that cause a company to fail.

Christenson uses the disk drive industry as a study model. He says that biologists often study fruit flies because their life span is only several hours. Therefore they can study multiple life spans in a single research study. He claims that the computer hard disk drive industry is the closest thing in industry to a fruit fly. (Yes, I also found that amusing.) There are other industries that were studied as well. The author pointed to examples in the steam shovel industry, the motorcycle industry and the retail industry as well as others. He also introduced the term disruptive technology.

The claim is that a disruptive technology or idea is one that is less attractive in most areas than similar existing ones. Let me point to the 8 inch hard drive. This was a mature product. Manufacturers were continuing to improve its capacity and performance. They were responsive to their customer’s needs and invested in research. When the 5 ¼ inch drive came upon the market, the manufacturers existing customers (makers of main frames and large servers) had little interest in it. It had lower capacity and lower performance and was more expensive. Managers looked at this new disruptive technology and said, “Why would anyone want that, and why should we invest resources into it?”

The problem was that the customers for this new idea had not yet been found. The makers of small desk top PC’s were just coming over the horizon, and they loved the little underperforming overpriced orphan, so a few manufacturers started making them. As research on the smaller drives advanced, they began to approach and eventually surpass the performance of the larger drives. Suddenly they were attractive to the main frame and server manufacturers. Like getting hit with a surface to air missile, the big manufacturers were not prepared to compete in the new market and were shot out of the air. They never saw it coming, as the saying goes.

There is a solution fortunately. When a disruptive technology comes along that shows some promise, create a spinoff company. Make it self sustaining and self ruled. The new company must not be shackled to the traditions and “corporate culture” of the parent. The trouble is that large companies have big appetites and lots of traditions and expectations. In order for a $100 million company to grow 10 percent, they have to have $10 million in profit. A $100 thousand company only needs $10 thousand. A small company can afford to put resources into less mature technologies that a larger company could not.

Imagine yourself as a well trained competent and concerned manager. Of course your bonuses are based on the performance of your division. A well respected engineer comes to you and says, “I have this great idea. Take a look at this.” You look at “this” and agree that it is a great idea. You ask him, “What is the market for this idea? Who do you think will buy it?” He says he does not know exactly, but that some one would certainly want it. You say, “What do you think our annual sales would be if we made them?” He says that he is an engineer and has no idea, but it is a great idea. Because you respect the engineer, you take it to your sales people who talk to all your existing customers about it. Of course your existing customers have no interest in it. How much of your department resources are you willing to invest into this “great idea” that could otherwise be spent on improving existing products with accurate sales projections and known customers? (“Duh, I dunno” is not an acceptable answer.)

That’s it in a nutshell. Disruptive technologies come along all the time. The disk drive scenario played itself out about four times within ten to fifteen years. Hydraulic excavators replaced steam shovels with a nearly identical script although the time line was greatly stretched. Little Japanese motor bikes nearly wiped out the large American road bike industry at one point. By the way, how many large retailers have gone out of business or sold out to competitors in your life time? Think about it.

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