Lean Construction : Utopia ?

About technology, business & management issues..

Much has been written and read about the latest fad in the construction industry: the lean approach taking back some principles of lean manufacturing.  It's funny how a methodology designed and implemented for the manufacturing industry tend to expand to other industries or service companies.

The construction in Mexico is not immune to this phenomenon: during the last 25 years people have tried to reinvent the wheel. Since the consolidation of professional project management, for over 30 years in America and Europe, and with as little over 20 years of introduction in Mexico's construction industry has tried to implement different philosophies in order to standardize their processes .  If we look at history we could find two major events: the certification of ISO-9000 type and the philosophy of "total quality in construction."

In the early 90 `s in Mexico everyone spoke of the ISO. There were many certifiers and companies invested substantial financial and human resources in order to achieve certification. Construction in Mexico was not an exception. While it was thought that by means of defining processes, policies and specifications within the company people will adopt these changes, through a simple induction, reality faced a complicated situation. At least 80% of the workforce (permanent or temporary) in a structure of a construction company is cheap labor and low skilled. The rotation of staff is permament so there was no interest in the companies to  invest in training their workforce (as opposed to manufacturing) and this meant that the process could never be faithfully adopted. The result was an oversight of the certification years later. As of today it is difficult to find a major company that has an ISO type certification.

Later, by the late 90's, there was  the fashion of the overall quality of construction. More than a methodology, it was a philosophy of work that included extensive  rework by companies in their planning and design stages. If you spent time on this, it was said, the savings are considerable and the value added of the final product would make a difference. ¿Planning?, Many owners felt hives at this.

While philosophy was more readily applicable to the construction industry it involved a series of policy changes that aimed at standardization and professionalization of the company. The latter did not happen in Mexico. How could it be if the building is almost an art and a craft process?,-Said some  clueless managers out there. Now the consultants and similar species are trying to move the concepts of lean manufacturing into construction field. Now talk of "zero waste", "alignment of customer needs with the company", "generation of added value" is the new kind in town.

 It's funny but if you read any book of project management you´ll find that  these concepts are mentioned there. What's new with lean construction anyway ? - Nothing, it's just another fad in which several employers will fall to only realize after a few years that this philosophy it is exactly the same thing they had previously been trying to implement.

 It's the same dog but with a different name.

www.clarensyst.com.mx

Project Manager: the wrong idea.

About technology, business & management issues..

The concept of the Project Manager has varied greatly over the last twenty years in almost anywhere in the world. Originally it was thought that the project manager was responsible for the planning, execution, closure and implementation of a project.

Typically these projects were related to the fields of engineering in industrial areas such as construction and mechanical equipment. In recent times some other industries have systematized execution models as service companies or software developers have adopted the role of project manager in its operations. However in the last decade in Mexico, thanks in part to the professionalization of processes within companies, consultancy has idealized the idea of ​​the project manager in a somewhat romantic role but certainly not really aligned with the status quo mentality that prevails in many Mexican companies, particularly those engaged in industrial construction and property development.

- "The Project Manager should be in charge of the business unit," say pompously consultants and business leaders in Mexico. The idea is that the Project Manager is responsible for all areas of a project such as administration, sales and marketing. However, this domestic model enhances the whimsical minds of business owners but does not tackle the real problem.

Reasons? Lots ofthem: directing & supervising the operations of marketing, finance and management within a company involves a knowledge of the business that not all project managers (with a more technical background)  do not fully master. Moreover, the project manager works mentally for projects, from conception through implementation and ending with the closing. Being aware of other business areas involves constant attention and dedication that you are more likely to apply to a CEO role than someone who sees life through a series of projects.

On the other hand, perhaps the strongest reason passes for real empowerment in decision making. In theory, the project manager has the power to make financial decisions,  resolve operational and sales process issues, but in reality the micromanager that all owners have installed in themselves is constantly blocking  the PM do his work which undermines any attempt to develop as a business unit and turns the PM into a simple coordinator or  much-alike a personal assistant.

The funny thing is that the tendency to view the PM as the "cornerstone" of the business is still valid no matter how often they hit themselves against the wall.

www.clarensyst.com.mx

Risk & Commodities

About technology, business & management issues..

  During the last decade the commodities markets have experienced sharp fluctuations particularly strong price rise in oil prices, grains and some precious metals. This has led to farmers, industry, mining and petroleum related industries to suffer from year to year uncertainty.

The reasons are many: from long and protracted drought in the prairies of Russia and China, as the depletion of oil reserves in the Gulf of Mexico to the announcement by the U.S. government to support ethanol production based on corn.  So, how to establish mechanisms for producers, intermediaries and distributors to ensure a profit margin and create a foundation to grow their business?

Aristotle  mentioned  Thales of Milete as the inventor of the concept of futures contract by menas of an olive harvest in ancient Greece. Thales was  such an accurate predictor of how the conditions of the olive harvest would be months before it and this allowed him to establish price contracts with producers which in turn guaranteed in advance the price of it, avoiding both the vagaries of the market wreck at harvest.

But these financial vehicles not seem to have done to implement in many industries whether unions or organizations associated regulators have decided not to implement or have not been able to craft the right model for it.

There is a whole opportunity for the development of financial engineering vehicles to establish conditions for protection against the risk of volatility commodity prices.

The question remains whether there will be no other interests,  which are clearly  blocking the establishment of such vehicles.

www.clarensyst.com.mx

The eternal micro manager.

About technology, business & management issues..

   It was over a restructuring process within the company in which  I had collaborated for eight years when I realized it.  Senior Management had hired a consultant who worked out a pretty decent proposal and rationale for the size of the company at that time. "We are building the foundations of the enterprise for the next 20 years," said one of the managing partners.

The idea seemed perfect: professionalising the business, find performance metrics of the contributors to avoid subjectivity and to define roles and processes within the company. Create a structure in order to create a career path within the company itself (¿naive?).

But the owners could not get rid of the micro manager buried deep inside of them. That little devil in all of us that constantly tells you that you do not  need to delegate anything to your subordinates (nobody can do  it better than you !) that you need to check them out all the information generated or passing through them (why trust them?) and that planning meetings are merely a constant exercise of accountability that only strained relations between owners and delegates.

How to avoid the cancer that exists in virtually all businesses in the world? I think it is impossible to eradicate it: every business owner feels like he is the next incarnation of Steve Jobs so their bad manners and contempt and capricious treatment are fully justified.

Perhaps an effective tactic, as mentioned by the founders of 37 signals in his book REWORK,  is to avoid the maximum weekly meetings. As Jason Fried mentioned it, they have no particular target, people do not come prepared, are ambiguous in their objectives and always, always a fool wants to get the attention in the meeting and he thinks he has to share his wisdom with all.

www.clarensyst.com.mx

Agile business.

About technology, business & management issues..

It's been 11 years since Martin Fowler and 17 other programmers released a manifesto called Agile Software Development. The manifesto,  a highly praised ideological tool for people in the field of technology was a simple document which sets out some principles of a methodology to develop software more quickly and objectively.

Since that time the term and concepts have been applied to various aspects of enterprise development, particularly in start ups. Arguably, the lean start-up is a unique version adapted from the principles of ASD but with their particular characteristics.

The ASD emphasizes software development and the creation of a methodology that contrasts with the waterfall model which implies the full development stage of software before its testing phase has started.

If we make the extrapolation of these concepts to the idea of starting a business or a personal project, this is a valuable tool since it allows the flexibility to make changes to the business model necessary to ground the idea in a practical and concise way, without dogmas of faith or prejudices who die hard.

Figures determine the premises, but once put them on paper, developing and implementing action processes should be a dynamic exercise and constantly changing to adjust as needed. This would be like a properly calibrated weighing scale industry or  a simple called action to just tune into your  favorite radio station.

Test, tweak, edit and start over. It should not be so complicated.


www.clarensyst.com.mx

The business model: theory and reality.

About technology, business & management issues..

About ten years ago arguing with a former employer, a group of young people in their twenties ,who were part of the management team that run the projects where the company was involve, were not really keen on his claim. Those meetings stressed out the fact that the business model of general corporate and the one of  individual projects must be realistic and that these changes should be communicated to those affected. - "The projects are just perfectly in theory, in real life the dynamic is different, "- he said frequently.

The memory came to mind after talking to several people who are frequently faced with the grim reality of the business or a single investment project that has not been undertaken as they had planned in their minds. The reality was very different from the theory.

The reasons are many and countless: the entry of an unexpected competitor (in business with few barriers to entry), lack of funding (no more personal & family savings), volatility in prices (for projects that invest in commodities ) excess in sales and marketing  budget(if  you want to get into horizontal markets) and to the impossibility of finding a profitable business model in the short and medium term (tech-related companies).

The funny thing is that people get scared as if this were not the common denominator of any venture that has been started, as if fate had taken a fancy to make them fail.
The reality is that when this happens the easiest thing to do is understand the dynamics of business and make the proper adjustments to pull it off. This is especially important in technology companies that handle many dogmas as excess investment (usually raised capital) or reaching profitability in the long term.

Many of the lean startup philosophy applies in these situations. Applying common sense, if decisions are quick and assertive, if you remove the dogmas of the mind then you can adjust on the run the business model and surprisingly fix what was supposed to be broken.

www.clarensyst.com.mx

every.cloud

About technology, business & management issues..

It's funny how ideas arise in the minds of people. While spending hours in front of my computer in a room of 5 x 5 meters in a cold room of a university town in Wales ideas seemed to come from nowhere. Maybe it was the cold wind from the North Sea, perhaps it was loneliness that allowed the ideas flowing.

How to harness the trend of "cloud computing" in the context of SMEs in a developing economy like Mexico? How to make it accessible, easy to use and that met the Mexican reality? Under these assumptions the idea of ​​every.cloud was born.

The idea was to create a platform where SMEs could create their own collaborative ecosystem. The goal was for companies to use the Internet to communicate, generate information, reports, data exchange, creating value in the sales process. How to create something simple and useful, without pretensions or ambitions beyond delivering excellent customer service ?

Many questions and no answers at all. What target market? How to communicate the idea? What is the real possibility of adoption by SMEs? Does the service must be paid or a free one?

    After months of thinking about it, chewing it,  rejecting it, adjusting it, discussing  it and finally achieve it in a couple of real products that originated every.cloud as a web platform.

Coming soon it  will be available through the web and then we can verify that it complies fully with the purpose for which it was created: to provide a web tool to micro, small and medium enterprises in Mexico.

Businesses & social networks. Overrated?

About technology, business & management issues..

      Earlier this week I was checking the contents in several journals on politics, business, marketing and technology. Not surprisingly I found the common factor in virtually all of them: the use of social networks and support in political campaigns, social partnerships between businesses and individuals and as a means of online advertising for small businesses.

A couple of days later I read the article about a company in northern Mexico created by young entrepreneurs. The company has created a platform which offers various products (from a social network which enhances relationships between transport´s suppliers to car wash dealers). The products and their quality varied greatly: some looked like pretty good ideas and some just had no reason to be or didn`t appear to satisfy any demand for any particular market.

The funny thing is the advertising they set out: in all of them it created a social network among its users and, depending on the case, with third parties. After thinking a bit I asked myself: what is the added value or competitive advantage for using or subscribing to an online service that allows me to make contact only with suppliers of steel products for car-manufacturing industry and not to join any other group specialized within a social network like facebook, linkedin and Google +?

My logical answer was: nothing at all. Perhaps at that time was that I thought that many services that offer mere social networks are overrated. The social network offering should be integrated with another value within the same platform they offer. This integration can be a management inventory web tool, a database based on human resources, a forum for buyers and sellers of commodities or whatnot. Any other tool that will help the company improve its status quo as the social network will hardly alone do it.

No doubt if the creators of these services do not understand that social networking is more a means than an end in itself then the products will be doomed to failure.

No need to reinvent the wheel. Connecting people with similar tastes, interests and relationships is already happening. The services are being offered by the big players. If you do not add something else to the social network then there is no tangible value that any client may perceive as valuable and necessary for their business.

www.clarensyst.com.mx

Microcredit & connectivity

About technology, business & management issues..

      It was in the early 70's when Muhammad Yunus started the project of granting small loans to lower-class in impoverished Bangladesh. This exercise regimen introduced in late 70' & early 80's consolidated Grameen Bank in Bangladesh. Thereafter and in many developing economies Grameed Bank has given billions of dollars in microcredit.

 The objective of the Grameen Bank is lending to people who do not have assets that serve as collateral or have previous credit history. Obviously these people do not have stable jobs.
Microcredit does not establish formal contracts so that only the borrower is expected to honor his word to restore his credit and interest which, in comparison with commercial banks, are insignificant.

One could argue whether microcredit is a panacea or not  to all  problems of the disadvantaged economies or if the credit actually encourages the creation of more SMEs and generating jobs. Certainly it is an instrument that helps a lot but that alone will not solve all the problems in poor countries.

Recently Yunus has emphasized, together with other experts in the field, the need for affordable sources of credit for people and with favorable conditions for subsequent payment. Just spoke about the need for emerging countries to ensure coverage of Internet and mobile telephony.
It is easy to understand that a facilitator in the creation and maintenance in SMEs is communications. The clearest example is not far from Bangladesh:  in India there are over 900 million mobile phone users and just over 100 million Internet users. This has caused the average growth of the domestic economy of India in the last 15 years to be greater than 5%.

It is strange to see how some analysts decry the fact of cheap credit and access to telecommunications as a growth factor and job-generation in a developing economy.

No doubt the fact that there is a capitalism with a social objective which cannot harm the economic interests previously established and whether it offers a window of opportunity to many people trying to improve its economic environment.

www.clarensyst.com.mx

A cash flow problem in the cloud..

About technology, business & management issues..

Following the  very first companies offering services such as web apps or e-business through the cloud, the first problems of the business model began to emerge to the surface.

As a fact the American market has a strong stock market and vast amounts of venture capital. Many investors eager to invest in technology companies began to dictate the rules of business model: the first rule was to have money hand over fist.

With the promise of capturing major market segments, venture capitalists gave large amounts of money to companies for marketing spending and its market positioning. In many cases the product or service was not yet finished, much less proven. The latter caused a significant resource investment in the first months of lifeblood of the business thereby sought to profit long term.

Many argue that this only caused a distortion in the market that eventually provoked the downfall of many companies that had no solid foundation to succeed in the market.
In either case, these guidelines prompted one of the very first premises in technology industries which has cast strong roots in the subconscious of the leaders of the tech industry: give away the product or service initially and then cash for it.

The latter created the concept of the free trials and freemium services within any tech company, mainly driven by Web 2.0. current trend. While the main idea was to get a significant number of users and then make them fall in love with your product and keep them indefinitely and then convince them they now had to pay for what they had been receiving it for free. Now it was a financial problem.

While it makes sense that many companies invest massive amounts of money on advertising and then offer their services free for a while in fact this model does not make sense for other companies.

Like any other business, the business should focus primarily on generating revenue and become profitable in the shortest time possible. Any other statement would only be playing a fools´game and basically only cause a distortion of the market that does not help the industry or  customers who expect a solid product and a sustained customer service.

Is taken into account to understand the concepts and develop business models that other companies in other cultures and contexts have previously incurred. However, should always be a framework to adjust in order to suit the reality in which one develops.

Regardless of this globalized world, it is difficult to get by the dogmas created in another situation, in another context.

www.clarensyst.com.mx

Facing the Status Quo

About technology, business & management issues..

        Any company or business should be concerned about the place that its business should occupy within  a market, many times, fragmented and highly competitive.

In traditional industries (trade, construction, industrial, financial services) positioning is closely related to focusing on niche markets. That is, big players dominate the bulk of the market so you can only steal a little slice of the pie.

Al Ries & Jack Trout mentioned in his still-relevant classic book Positioning the beauty of entering new markets that allowed you to fill this gap in the consciousness of public opinion. Be the first one, no matter whether you were the best or the most capable, it will mean everything if you are concerned to position yourself in the market.

Other strategies used by many technology companies and other businesses, is to enter into direct conflict with market leaders. In doing so, as marketers preach, you would play  yourself as underdog, a David against Goliath. In a globalized world it rather seems than victimize your company is  the best  market strategy that any business could ever make.

But on the other side,  What do  you do in a fragmented market where there is no clear market leader who dominates the scene? What if you decide not to go against this leader?

Only in that case the battle gets harder and, clearly, an ideological one . You  will have to face the status quo. The business will have to be portrayed  as an innovative one, focused on customer service and maximizing the value added to them.

Sounds like a piece of cake, but then who or defines the status quo of a particular market?

www.clarensyst.com.mx

Family, Friends & Fools

About technology, business & management issues..

  In the world of personal finance there is the concept of  FFF (Family, Friends &Fools) as initial funding source for anyone wishing to start a business or develop a project that will generate some wealth in a given time.

Interestingly, both in consolidated markets, such as the American or European who have developed  powerful stock markets and where, until recently,  had more than enough capital to risk. However, borrowing  money or finance your ideas with your parents, friends or any known, without fear of taking risks, remained the first choice of financing.

The reasons? Just the emotional factor plays a crucial role here. Family and friends are people who might be interested in developing your personal aspirations(especially your family) while friends see an opportunity to solidify your relationship as they could, tentatively, to have some sort of benefit. In either case a third party (fool) would be more interested in the factor of the potential financial rewards that helping you develop your personal desires.

However, it is the easiest way, without bureaucracy, without many formalities to access a modest amount of capital to start your business.

As with any risky investment, the latter could jeopardize your relationship with your family and friends in case things do not go well. You have to remember more than 80% of businesses do not survive beyond 4 or 5 years. Over 50% you will not have a higher life beyond 12 months.

In any case, any relationship will invariably be modified by entering the factor of money into the equaton.

Have to think twice if the journey is the reward after all.

www.clarensyst.com.mx

Feedback.

About technology, business & management issues..

      Last week  we started with the final testing in our web application named Carleon  which has been developed and will be part  of Clarensyst´s core Every.Cloud portal that will include some tools designed especially for the SME market in Mexico.

Consciously the web app was sent to multiple end users whose status ranged from friends, work colleagues, IT industry professionals, lawyers, vendors and ending with CEOs of construction and real estate companies.

As expected feedback has been mostly valuable because it allows us to understand how an end user can prejudice a tool based on their professional background and the objective that the user thinks that the tool should pursue.

We could classify the feedback in several categories, but the simplest is to group it like this:

a) Feedback  based on functionality.

Users who have previous experience on web apps relatively easily found the tool simple & intuitive to use. Although they suggested improvements they also had no trouble understanding its functionality. By contrast, users who are not related to this market found it hard to manage it

This is a clear example that you cannot design tools to serve "all the people all the time."

b) Users who are related to the industry quickly suggested improvements as to the information captured by the tool as it is  better deployed.

In this case the feedback is not based on the tool´s functionality but rather on the added value  perceived by users based on the  quality of the information managed by it.

As an example one could say that a salesman only needs to "monitor" the process of selling as systematic and simple as it should be but a lawyer would be more satisfied if the tool allows him to check out all the paperwork included in a closing sale.

In the end, as the old saying goes “one cannot meet the needs of everyone on the first try”. As a new-born baby, the tool provides an approach, a philosophy, an idea of ​​how to do things.

The problem is that whether or not this idea seems good enough for many people.

www.clarensyst.com.mx