Real Estate Development in Mexico: the decline of innovation.

About technology, business & management issues..

After working exclusively for over a decade in real estate development projects in Mexico, I realize that  the Mexican industry is obsolete regarding its business practices and has the same phobia for change and innovation within the industry itself.

In most companies, if not all, are the same old practices of doing business that have led them to stagnate and make sure victims of changes in global economy. Some of these features are:

a) Exaggerated claims that these companies are at a stage to professionalize its operations, when in fact the same drivers of these changes (probably from the general direction of the business) are micro managing the business, with the same practices of the eighties where there is no empowerment to their junior managers.

 Change and professionalism never reach the company, no matter how much effort you make, as it is a mere simulation, consciously or subconsciously the "leaders" do not want change because they are fascinated with the messianic model of leadership and direction that has worked well so far.

b) Little or no professional investors participating in these projects. If we speak the truth, wealth in Mexico has been inherited, but not produced and how much the new rich businessmen have emerged only through partnerships with government officials and corrupt governments. Mexico has no business meritocracy, not a single person who has accumulated wealth in the first generation before the 38 years is to be considered self-made. If someone has a fortune before the 40's because simply inherited it and not created by itself.

This entails that Mexico is full of old-school investors, people above 50 years dedicated to investing in companies or businesses but who are accustomed to an eternal process of accountability for their investments.

The real estate business becomes, instead of a professional scheme where the investor provides the resources and monitors run through regular meetings and executive reports, the performance of their investments, awaiting the return of their capital and performance (with the risk that this implies), in a simulation where personal attention and political treatment of social events have been losing business focus: in Mexico, investors have to have them distracted by an eternal party and the social contract.

c) A general aversion to the implementation of technology in business processes. Why? Because that would mean transparency and order. It would  mean to try to run a true Project management, label  an accurate and transparent use of resources by investors, would also mean to prepare sales reports and indicators that were not manipulated or biased at all.

 But the worst tragedy of all would be that at last have clear policies and rules, would empower employees in making decisions processes which would result in better performance within the company.

But something tells me that the real estate industry does not want that. As one person told me long ago: "Why change a model that for decades has worked out that way?". I was mute.www.clarensyst.com.mx

Business Technology: The myth behind profitability.

About technology, business & management issues..

 A few months ago media announced the addition of LinkedIn, the social network focused on sharing information between users with professional backgrounds, to the stock market in the United States. The announcement, for various reasons and situations, revived  the eternal debate about the viability of business models (or lack thereof) in technology companies.

Many critics, especially after the crisis of the "dot.com bubble" continue to insist that companies in this industry remain creating business models which are not sustainable in the long term. Among other reasons, they blame the venture capitalists (VC's) for providing tons of money into these companies that have not even proven that their products or services may be successful in the marketplace. This has caused many people wonder what´s the real value of companies with millions of users such as Google or Facebook. This coupled with that for years with investors speculating that these companies can achieve in the medium to long term, causing a long period of time before they receive a single dollar in revenue.

The story tells of companies like Google that had impressive headquarters, hundreds of employees, millions of dollars in investment for years but did not record a single dollar in revenue. All this while developing a business model that would allow him to make a profit through (initially) a clever advertising scheme paid by its customers.

The same debate is on Facebook. Apart from breaking into the social networking world with a platform that allows users to exchange information, communicate with people, etc.,  it also has provided a platform for people exposed to the world, show their interests, life daily, feelings and ideas. There is no more powerful marketing tool : to play with people's feelings. However, if you put all that aside, what is the real value that Facebook provides a person who invests considerable resources in a company which to date has not been incorporated into the stock market? Many critics claim that the database that contains millions of user data from Google and Facebook is the true value. What they could not do  to many others with this information. How much is it worth?

Recently , writer Antoni Piqué reflected on  the magazine Expansion about  the legacy of Steve Jobs. Like many other thinkers of technology he emphasizes that Apple's true legacy is to have created and shown the world that a technology company could develop a business model capable of providing a service / product that the masses are willing to pay a relatively high price for them. Pique himself ponders that this legacy is mainly powerful today where the industry meets many open-source fans that while innovation has driven the industry, they also tend to adopt dogmatic positions, particularly in the areas of profitability of selling technology services.

While technology companies represent unique business opportunities they should remember that at the end of the day  they are still  businesses and while some rules and trends may not apply to them, there is no way to provide high quality services to users if they do generate no profit for the company that develops them. In this there is no dogma to change the cruel reality of the market.



www.clarensyst.com.mx

Moneyball and the reality of numbers.

About technology, business & management issues..

 A couple of days ago I had the opportunity to see the Moneyball movie starring Brad Pitt (what a terrible actor !) based on the book by Michael Lewis, Moneyball: The art of winning an unfair game. The film tells the story of Billy Beane, baseball team manager of the Oakland Athletics. What they said less tells the story of  Beane's efforts to rebuild the team of the Oakland Athletics after the departure of several of its flagship players (including then-famous Jason Giambi). The limitations that Billy had been unimaginable, not to have a sufficient budget to attract decent players to the team and to compete against financially powerful  teams the Yankees or Red Sox.

The plot revolves around Billy Keane and with the help of a young man, then his assistant in the Management of the team, challenge the establishment in baseball and begin to try to assign value to players who were virtually discarded by other teams, baseball scouts. This new approach was based heavily on statistics, curiously in a sport ruled by numbers, which were not valued among people who made decisions on the team.Thus, Beane assembled a team full of veteran players whose careers debris and were closer to retirement but surprisingly gave a stir in the American League division that year.

 Of course all this was achieved with a payroll of no more than $ 45 million per year (when teams like New York spent more than four times that amount) but which players were squeezed the last drop of performance they had.

The film revolves around the inertia and resistance that Beane met on the way: criticism of the other managers who said that not all decisions on statistics could be but it also should be considered human and sporting items that impacted performance  of the players. At that point the critics were right on  (the same argument of the film confirms that fact on Giambi's brother situation) that Beane just thought that the incidence of these factors was overvalued and that did not allow managers and scouts to see that there were  a  of set attributes much more measurable and less subjective than age, socialization, susceptibility to injury and personal education issues.

Analyzing the film, the plot of it reminded me of some chapters of the book by Ken Auletta: Google The end of the world as we know it. This book tells some of the difficulties the founders of Google faced as they try to convince their customers that there was a real and tangible merely measure  of the performance of their spending on advertising and that this metric would help to diversify and focus the resources the best possible way and not fall into a waste.

The same Auletta tells how the old marketing lords opposed the intentions of measuring performance in advertising spending  that Google promoted, since it would imply that "the magic was over" and therefore there is no way to charge the customers the  "intangible- magic"  concept related to all marketing campaigns that  established companies offer to their customers.

At the end of the movie, Beane’s interview with the owner of the Red Sox who was impressed by the theories and the management of Beane in Oakland and  offered him the post of General Manager of the team. Within the conversation, the owner of the Red Sox to Beane explains the resistance of the baseball world to his ideas was understandable as everyone knows that  revolutionary new ideas are often not welcomed by the medium, as this means that several people lose their benefits, expertise and even their own jobs and therefore  he should not take it so personally.

 At the end Beane decides to reject the offer and decides to stay in Oakland (where he remains to date) but his theories are being applied in some way or another within the organization of baseball and other sports.

A clear example of how lack of resources results in innovation of the ideas of people.

Products vs. Services: the real issue.

About technology, business & management issues..

It was about quarter to midnight, James looked at his watch as the waiter approached a couple of imported beers to the table. I ordered a cream jar, the place was far from having the right atmosphere. James turned on his place and trouble to comment, "I worry a little about the competition in town because even If my product is quite relevant is not as if I've invented the wheel of financial factoring industry, it will not be long before competitors just copy my service and so any competitive advantage achieved is likely to vanish within months, "-Santiago settled without hiding the frustration on his face.

"I think the idea that a single successful product will make you a millionaire and  therefore you can feed your children and grandchildren for the rest of their lives is a naïve idea" -I said, "The world has changed a lot since then," I repeated it a couple of times.

"How could I maintain my competitive edge over other competitors?" He asked bluntly .- "I think the best idea is to offer your customers a premium through the service,". Santiago was spinning in place, it was obvious he did not understand or satisfy my claim.




"It's a very contested business strategy in technology companies. As discussed a few minutes ago, some market leaders dusrupt with their products and become the platform within its industry, virtually forcing (lock-in) customers to use their products, " I said. -"A bit like the case of Microsoft or SAP," confirmed Santiago.  Just nodded my head.




"The key here would be to design products for you clients that eventually will require the services of your staff. That is, you become an expert in the field of financial factoring to the extent that eventually  as your products  may not fulfill certain types of clients`needs so there it opens your chance of developing the area of ​​services within your company " -I said without stopping a second. -"I do not think there is a correlation between two things" - James said with an air of presumption while the waiter helped light a new cigar, the fourth of the night.

"I think the relationship´s more than clear: it is one way you can kill two birds with one stone: creating a competitive advantage by offering an extra service to your customers that your competitors do not offer and provide a source of extra income which profit margin is huge and not run the risk of becoming a commodity "- I responded candidly while I realized my beer glass was empty.

Santiago chided me quickly and without hesitation: "Commodity? , How could my product  become a commodity? if we are not talking about barrels of oil here! "- I say excruciating :"Think more on the concept of the commodity when you think about your product: the moment you add a sale price that will leave a very generous profit margin, the problem comes when the competition begins to generate and flood the market with relatively similar products, some will be offered at lower prices so that you run the risk of your customers fall into the game if you have several suppliers with the same type of product and THERE IS NO DIFFERENCE BETWEEN THEM OR ANY OF THESE PRODUCTS AND IF YOUR PRODUCT DOES NOT OFFER A VALUE- ADDED, then simply customers will choose the cheapest one "- I ended abruptly and without breathing.

Santiago is left wondering a few seconds, he tapped his cigar, expired and continued: "At this point you may have a point, the demand of the market that I run is highly elastic, as products are cheaper and offer the same features without doubt  clientes will go with the lower price. "- "Certainly," I said. "The only way to differentiate at this point is to create a way to give another type of service to your customers through your product, you could offer consulting, engineering, financial product development etc. ..., All of which adds value to your product and avoid your client sees you as a commodity. "




"Ever heard of the economic terms of scope? "-I asked with some impatience. James smiled and answered me with another question: "Are you hungry?, I think it's time for dinner."

Jobs: The design of ordinary things.

About technology, business & management issues..

Jobs: The design of ordinary things.

 With the recent death of Steve Jobs, co-founder and CEO until few weeks ago of Apple there has been  an avalanche of praise and recognition to his career, from perennial competitors,  academics, management gurus to, why not?, Housewives in love with their iPhones or the latest fashion fad: an ipad in its latest version.

Doing all this aside, and giving a real perspective on things  Jobs could be many things at once , from its scary and enigmatic personality, perfectly described in an unauthorized biography called Icon Steve Jobs: the second greatest act in history of business written by Jeffrey S. Young, to be a fully- recognized persona by the industry for being a leader who was really ahead of his time (think about it: when one is holding an iphone or  back in the 80's you had a Mac, you really felt "a few years ahead of the time" ). Certainly the most accurate adjective that could describe him would be the visionary Jobs.

Some scholars may argue that his management was a revolutionary approach, a born innovator who could envision and create a series of products for which there was no market. That is, the vision of Jobs fulfilled the climax of any academic: to create a market for your product virtually from scratch, creating a psychological demand for them thus, they can be sold at relatively high price, unlike other similar products. Some of these things are a reality but the truth is that Jobs was anything but a perfect manager: his colleagues remembered him as brash, egotistical and with very little tact. I guess it would be difficult to behave differently if you are only twenty -years old and people are constantly reminding you that you're a genius.

However, in my point of view the greatest contribution Jobs ever made, without neglecting the other achievements, are his contributions to design products. Heard the phrase long ago that Apple was not really a technology company but a design company, I think there's enough truth in this assertion. Simplicity in design, functionality, elegance and neatness with which Jobs wanted to integrate the hardware and software of his products is actually the emblem of Apple and that has been characterized since the creation of the PC's (Apple, mac) to their latest products.

This highlights especially with competitors who offer solutions  already-complicated with excessive graphics and confusing functionality. Jobs  was king in that particular department, I could understand perfectly the sense of aesthetics and that simplicity make products easier, pleasant to use and therefore to increase the desire to obtain them.

The influence that the design of the products had on Steve's mind goes back to his youth. In an interview a few years ago, former Apple CEO John Scully (remembered as the man who fired Jobs away from Apple) says that all he really had in common with Jobs was a taste for design. In his case Scully was an expert on industrial design but remember clearly that from the beginning of Apple (when one could hardly imagine the graphical interfaces of today) Steve was really focused on providing the user with more aesthetic experience and functional features as possible to the products .

It's funny, now that everyone seems to think about Jobs and comment on his work and personal life. Few seem to recognize their contribution to the concept of aesthetics in technology. Steven Spielberg a few days ago  mentioned that he thought Steve Jobs was the Thomas A. Edison of our time. Other experts said that his wit was only comparable with that of Henry Ford. Without resorting to exaggeration I`d like to think  that Jobs's obsession with design and perfection makes him the Michelangelo of our time.

www.clarensyst.com.mx

Vertical or horizontal markets? .. The perfect approach

About technology, business & management issues..

James put out the cigar slowly while the other hand played with a glass of whiskey. We had met at their request to discuss the strategy in his business, a start-up factoring services as well as financial and business advisory. James was in a dilemma about which market to focus, whether it should integrate all efforts (and resources) of the business in a generic focus on several niche markets in various industries (pharmaceutical, medical, SMEs in general) or to venture into a more specific  (industry-related) approach and try to specialize and build expertise in a single market.




"Without doubt there have been companies that have managed to develop products and / or services that attack a wide range of clients in various industries or have started in a vertical segment (niche- specific) and then migrated to a horizontal market" I said. "But they have been the fewer. Surely the successful cases in Mexico can be counted on the fingers of one hand," I assured while I drank some cold beer that I had just been served. Santiago seemed restless, just shrugged.


I told James that the topic of conversation reminded me of the content posted in a book by American author Michael Cusumano (The Business of Software) in which the scholar, after decades of research and close collaboration with medium and large enterprises, had reached several interesting conclusions among which were:


- The companies that had managed to successfully migrate from a vertical to an horizontal market is because they had managed to acquire a significant competitive advantage (whether technological, financial, government). The obvious case is Microsoft, where competitive advantage is to have created a platform, in this case the Windows operating system, from a vertical (market for PC `s) to be the dominant entity  by means of a single product (Windows). This competitive advantage could never be surpassed by their rivals and allowed Microsoft  to offer and develop (migrating) products and services to a mainstream market.

That is why today Microsoft develops applications for business, educational, government as well as align those with its own infrastructure (servers, cloud computing) and recreational services (Hotmail, X-box, Messenger and Skype recently). A single dominant platform (Windows) successfully allowed the company to dominate or compete strongly on other markets. "The typical case in Mexico would be Telmex" I replied. At that time James burst out laughing and only commented: "That example is so obvious that is not even worth discussing."




- Another point of discussion, according to Cusumano, is the ability of a company to build a product or service capable of attracting a larger number of customers who come from a different background. "It's easy to think that a CRM app can be used by any company, whether it is dog-food provider or a shoe´s retailer" - I said. "But in Mexico would be difficult to adopt such approach if it is not designed to meet the specific needs of the industry itself," I added. "Logic would say that the tool would be useful for any company, considering that all companies perform sales efforts and manage a sales force, but if it is a true logic is not necessarily a correct one"- I ended it.






- In Mexico, most are very specific markets, partly due to a little professionalized culture in business, which have been developed empirically and not based on established processes as any basis for a particular industry. "I think the try to develop a service under a generic platform that aims to fulfill different needs under one single platform but the latter can drive you crazy and require enormous amounts of time and financial resources , and still you need to see the reaction and speed of market adoption (if it does happen!) "I explained quickly as I realize that the concern of Santiago increased.






"What would you do If you were in my position? "He asked with a hidden intent. "I think I´d first try to develop a specific service to an industry and see how it reacts: if you give advice and provide financial factoring to manufacture companies just focus on them, then try to identify the reason your customers value your service and then you could begin to analyze whether the model is replicable in another niche market such as the medical industry or insurance and thus I believe you can make small adjustments and successfully migrate to those markets "- I nodded.




"I think the temptation to try to do too much and try to be all things to everyone is very strong idea but I think you could  easily get lost walking down the path"I said, but not before finishing my beer.




Santiago turned his head slightly as he raised his right hand holding his glass of whiskey, now empty, while looking for any waiter at the place. "I think we need another drink," he mentioned it without remorse.


http://www.clarensyst.com.mx/

www.clarensyst.blogspot.com

Positioning : A brand name dilemma...

About technology, business & management issues..

Recently it was discussed a lot about the theories put forward in the marketing classic  from the 80's (or 70's)? called Positioning: The battle for your mind written by Al Ries and Jack Trout. The book caused a stir during its time for considering their ideas expressed were against the status-quo of the time and in particular- then obscure concept of brand positioning- a concept that while it had been discussed previously it was not considered a subject with enough depth research and scientific rigor to take it seriously.

A point of discussion among marketers was whether  Ries and Trout's ideas were still in force in the current market. It is a well – known fact  that the world of marketing and many other disciplines is constantly changing especially considering that many of his concepts are based on perceptions and ideas promulgated by people with different backgrounds: academics, marketing, and professional psychologists.

In his book, Ries and Trout stated that the best way to position a brand, product, service, company or even a person in the subconscious of the public was to be the first to reach its own mind, therefore filled  the "hole" in the customer's mind and move on to the idea that the gap which had already been filled first was extremely difficult if not impossible to change. The book mentions and several classic examples: Coca-Cola, IBM, Xerox, McDonald's, etc.

In the same terms Ries and Trout mentioned the lack of effectiveness  by extending the generic name of the company or brand to set a range of products. Examples of Menen, Bayer, Chevrolet, Ford are typical of how, according to the authors, generic brands have filled the subconscious of the client . Even though from the perspective of the marketers it would be beneficial to "extend" the name to other products (non-aspirin Bayer, Bayer Analgesic, Kleenex Tissues, Kleenex diapers) it actually proved to damage the image of the label and that adding the product range with an extended- brand name only causes confusion for consumers that now do not know what those products stand for    ( Is it klennex a handkerchief or a baby's diaper?) .

Anyway, authors accept that there are exceptions to the rule that when a product is innovative or has a weak competition in the current market then you can create a generic name extension on new products and to have moderate success in the market, at least in the short term. But say it is a matter of time for competitors to find this weakness and exploit it properly ending this competitive advantage.

Much of the discussion focuses on whether these ideas are still valid or whether Ries and Trout actually ever had a real basis for implementation. Companies like Apple and Virgin have made their mark across an idea in the minds of their customers and have sought to extend their names to different products or services that have had, evidently not all the time, favorable results.

For Virgin, a conglomerate owned by always-exotic- Richard Branson, has sought to extend the Virgin name to all businesses, profitable or not, ever ventured. From his music production company (Virgin Records) through his airline (Virgin Air) the name Virgin has earned a place in customer´s mind. According to Ries and Trout in this case Virgin brand should have been lost by now and would have resulted in a decrease in its value as this approach confuse  customers with many products and services associated with a name (What does Virgin do well, finally?). On the other hand, Apple is the case that while developing its early products with their own brand name rather than their generic name (Apple), it could not resist extending its name to an endless array of products and services based on a successful name (in this case the "i", so that way we now have ipods, ipads, icloud and what follows). Many wonder if this has caused surprise and confusion among consumers. Statistics show that far from causing damage to initiate their products " i " it has helped to consolidate the products in the minds of users.

Perhaps the reasoning is that Apple remains one of the most innovative, if not the most dominant in this sense, company  to create markets and products that did not exist in the minds of people, so in this particular case it doesn{t really matter whether  your product is called "icloud" or "ibarney" as it automatically fills  the conceptual gap that  already existed (or created?) in the mind of the customer. Would you agree on the latter ?.

www.clarensyst.com.mx

Keep It Simple.....

KIS (Keep It Simple)



During the first meetings the whole team had to begin developing Clarensyst ´s Web application that would eventually become  Aberys, people  always asked the  same questions (which eventually came up as the development of Carleon CRM went on):




- How to create a simple and intuitive interface that virtually anyone, even those without a technical background in the use of web browsers or general-purpose software, could use it without feeling lost?




- How to design it in such a way that does not require external assistance,  also generate basic information and exchange vital information with other users within projects (collaboration) without creating a graphical interface disaster in the attempt?



Unfortunately in Mexico, and I dare say that in the rest of the world, it is difficult to integrate a team where the outcome exceeds initial expectations. On the one hand, programmers can be very technical and dogmatic but many of them lack the experience to understand what end users expect from the web tool, much less have ideas of business processes that involve the industry which the app is intended for.




Additionally, graphic designers find it difficult to capture the idea that managers or developers of the tool got in their heads and often abused graphic resources in terms of colors, and font sizes instead of analyzing the aspects of aesthetic intuition of the design. We have repeated to exhaustion: the Web application should be as simple, pleasant and intuitive that even a chimpanzee drinking a glass of wine could use it while watching t.v.




Finally comes the case of the project manager: if you have a purely technical background is a dead end: hours and weeks of work and  useless code before achieving their "killer app". However, if the director has no technical background then runs the risk of underestimating the work of programmers and technical risks, even more latent, to perpetuate the process of development as they do not understand that it is better to land a preliminary application and then tune detail that never even set it at all.




In their books and blogs founders of 37 Signals have contributed many ideas to make it a point of thinking about the development process of web applications. Many might agree or not with them, but in particular we in Clarensyst believe is an interesting and liberating approach  in many ways compared to the expectations that applications can build the team internally and externally to the market general.




Within its mantras, 37 Signals pragmatic approach condense many ideas have been around for some time:




1.-Always think of the end user, not the manageror the owner of the company. The tool must be desired by end users but should be useful enough for principals decide to pay for it.




2 .- Do not try to do much the first time. It is better to have a simple and user-friendly  tool that solves the main problems of the companies (communication, sales tracking, information transfer, instant messaging) rather than having a complex hodgepodge (as many applications of the "big" software companies) that it is completely useless for the purposes of users. We are here to make your life easier, not more complicated than it already can be.




3 .- Manage a single development team , although specific roles and responsibilities must be assigned. This removes bureaucracy, endless meetings, professional egos and speed up decision-making and exchange of ideas between team partners.We must remember that unlike other places here the cooperation of all affects the final product.




4 .- Avoid help from VC´s or  capital partners. Their money would only bring you problems. They´d seek to interfere in your management decisions at all times and you will waste time on endless meetings. You can do a lot with very little in the technology industry.




5 .- Do not get bogged down by the future of business ... at least not yet. The technical aspect tends to create anxiety. How do we scale the application in the cloud when we have 5000 users?-Is a recurring question. As my grandfather would say "Let's worry about crossing the bridge when we get to the bridge ..." NO technical issue is a matter of life or death, white or black. Many technological ventures never get to reach those heights and if they do, which is the type of problems that every company wants, there is always opportunity to address it diligently.

In reviewing the mantra of the people of 37 Signals it seems as though everything is a joke or they would not mind to care: quite the opposite!. In our case we try to adopt this attitude because in the end , one of the ideas that  37 Signals  embraces  has to be the most accurate of all:
"If you enjoy the process, you enjoy the challenge and face difficult time with  energy and passion  as it will be reflected implicitly in your web tool."
www.clarensyst.com.mx