markwilson.it

Category: Waffle and randomness

  • Great service, great bike, great experience!

    I’ve written before about the interest in cycling I developed last year but I wasn’t able to buy a road bike at the time. A few weeks ago, that all changed as I found myself attracted to a beautiful piece of Italian machinery at just about the same time my bonus was paid…

    Mrs W. may think it’s a toy but I’m currently building up to my first (sprint) Triathlon and hope to be riding from London to Paris with friends next year.  That means that my Bianchi Via Nirone 7 Veloce Limited Edition is ridden several times a week as we enjoy the summer here in the UK and I try to build up my fitness (and knock off a few more kilos) – indeed I’ll be heading out tomorrow morning (and anything that gets me up early on a weekend must be fun).

    The reason for this blog post is not so much to rave about my first road bike though (lovely though it is) but to commend the dealer where I bought it.

    You see, I spent weeks looking at various bikes from Giant, Scott, Trek, Cannondale, etc. and I found many helpful dealers along the way. Unfortunately, I also found some who were less so – Pedalworks in Dunstable wanted to charge me so that they could spend twenty minutes working out which frame size would be right for me with the Scott Speedster 20 I was considering at the time. I managed to ride a machine from lower down the range at Phil Corley Cycles in Milton Keynes (they didn’t have a 20 in my size) but it just didn’t feel as comfortable as the Trek Domane 2.0 I rode next. The Trek was a lovely bike but this years colours are just so… dull (the 2.3 is OK, but outside my budget). I was tempted by the Giant Defy 1 (but struggled to find one in red/white) and I even gave Boardman Road Team Carbon Limited a try as it’s a stonking deal but a bit too racey for me (a*se up head down – as someone referred to it) and, despite their best efforts letting me ride one around the loading bay, Halfords’ staff just didn’t seem to know much about their bikes and how they compared with the competition (apart from on price).  Then, when two people independently suggested I took a look at the Bianchi Via Nirone, I liked what I saw.

    I called Epic Cycles who were a) incredibly helpful b) really friendly and c) willing to let me come and spend some time with them to work out what size bike I need.  And when I say “some time” – I mean an hour and a half fitting session working out how best to set up the bike. I said “but I just need to work out my size” and they said they understood – this is a sizing evaluation – apparently a full performance bike fit is 3 hours!

    So I set off to Ludlow, and Epic’s Ben Williams put me onto the turbo trainer, before setting about measuring various angles to get me in just the right position, each time explaining why it was so important and how it will make a difference on long rides (I have the measurements, but I wish I’d taken notes!). The thing is, it works – who would have thought that taking 1cm off the stem would make such a difference in comfort but it does – as does the position of my saddle (height and fore-aft), bar height, stem angle, etc.  Not only that but it made a huge difference in my purchasing confidence and the order was placed very soon afterwards.

    The Via Nirone 7 is available in various spec levels but Epic buy so many they’re able to have their own limited edition bikes built up.  Mine has a Campagnolo Veloce groupset (roughly equivalent to Shimano 105) and K-Vid Kevlar/Carbon seat stays which really make it a smooth ride.

    A few days later, and the bike was ready for collection – Epic would have delivered the bike to me, free of charge, but I elected to collect it – I didn’t want to entrust my pride and joy to a TNT courier. Even better, when I bought some pedals to go with the bike, Epic fitted the cleats to my shoes for me (even though I’d bought the shoes elsewhere) and helped me to get set up*. Great service, great bike, great experience – and hopefully the start of a great new hobby for me.

    Unfortunately, Mrs W wants me to ride around in neon colours now so that I can be seen… ah well, at least that’s an excuse to buy some more gear…

    • That still didn’t stop me from falling off after failing to unclip at the first junction on my first ride – but that’s something of a rite of passage, I believe.

  • London cyclist (for a few days)

    As I’m staying in London for my training course this week, I thought I’d try and offset the hotel breakfasts and pizzas/corner-shop evening meals (I struggle to get a hotel restaurant meal on my expenses budget) with some healthy exercise.

    We’re having a mini heat-wave in the UK right now (and very welcome it is too!) so, even at 21:15 my jog on Monday evening was a bit slow and sticky (and I gave up on tonight’s – it was just too hot!).

    Boris Bikes

    Consequently, I decided to take advantage of the (Barclays) London Cycle Hire (Boris Bike) scheme to cycle from the hotel to the training centre and back each day and hopefully burn a few calories on the way.

    Cycling in London

    I’ve heard a lot on cycling podcasts and TV shows about cycling in London and whilst six rush-hour journeys on a Boris Bike don’t exactly qualify me as an expert (even if I did cross some of the cycle black spots like Elephant and Castle and Blackfriars) I have to say that my impression of a lot of what’s written/spoken is a touch dramatic and maybe verging on the unrealistic.

    Sure, cycling in London traffic is not always easy – there are problems where cycle lanes just stop; buses block roundabouts; and getting into traffic can be difficult – but much of that is about people being selfish (or hesitant) and it’s just the same with motorised traffic.

    As for the danger – well, speeds are lower (if I get out on my bike back at home I’m straight into 60mph traffic on the main roads) and, yes, lorries and buses present their own challenges – but some common sense is needed there too.  I’m not suggesting that all of the tragic incidents that have led to loss of life are down to the cyclists – but take a look on YouTube and there are some nutters on bikes too…

    Buses weigh about 12 tonnes; lorries up to 44 tons. A cyclist weighs perhaps 100kg so there’s no contest really – watch out for what others are doing and don’t put yourself in a risky situation.  I guess, as a former motorcyclist, I learned to watch out for people doing things that they shouldn’t – and on a pedal cycle you’re just that little bit more exposed.

    A couple of things struck me though.  As a pedestrian in London, I’m always annoyed when cyclists nearly take me out on a zebra crossing but London cycling is very stop-start and I can see why people jump lights and don’t give way at crossings (I’m not condoning that behaviour, by the way – just empathising). I was also surprised at just how many cyclists there are these days – certainly a lot more than I remember a few years ago – and enough to make motorists a little more aware of their presence.

    Cycling Policy

    As for “Cycle Superhighways” – I do have to agree with the bloggers and podcasters there – some blue paint splattered on the road is not enough! I honestly can’t see the difference between one of the cycle superhighways (I used a couple of them) and the normal cycle lanes/bus lanes.  Even so, the idea of segregated cycle ways in an overcrowded city seems a little unrealistic. It would be lovely to create a dedicated cycle network but the costs are potentially astronomical.

    Just as I watched BBC Newsnight examining the case for high speed rail last night (it’s something we need as a piece of national infrastructure but should we really expect a positive ROI – the Jubilee Line extension didn’t get one – and, in any case, can we afford it right now?), if I were mayor of London I’d be asking similar questions about segregated cycle lanes. That’s why TfL’s current “Vision for cycling in London” is a start but it will take time to build out. What we really need (nationally) is a programme to build cycling into regeneration and new build projects – not just in London but for all of our villages, towns and cities.

    Boris Bikes

    The London Cycle Hire Scheme is not perfect but it’s not bad either.  Only once did I find there were no bikes for me to use but I did have problems with broken docks (presumably preventing the scheme’s operators, Serco, from realising that a docking station is full – they certainly didn’t move any bikes away) and local residents resorting to adding notices to stop people from trying to use them (thank you!).  It is annoying to have to cycle a few streets to the next dock (and then walk back to where you wanted to be) but at least there’s a free BarclaysBikes iPhone app that I can use to direct me to some spaces.

    The bikes themselves are heavy (23kg) and slow (three gears – all of them low) so cycling on a Boris Bike can be hard work. Also, releasing a bike from a dock seemed to require quite a physical effort – maybe OK for a stocky guy like me but not so for those with a more petite frame.

    I was kicking myself when, after failing to change gear for the first mile or so of using a Boris Bike and thinking the lever must be broken, I realised that the gear change is a twist grip mechanism (doh!). Once I’d worked out how to move up to third gear, I rarely dropped lower (and was wishing there was a 4th, or a 5th). The step-through frame is surprisingly easy but the rubber grips are sticky in hot weather and leave you with dirty hands. One change I really would like to make – replace the tiny bell with a great big air horn so motorists can hear you (pedestrians too!)

    My biggest issues were with payment.  The process of buying access and then being retrospectively charged for usage is a bit clunky and I could find no way of generating a receipt (I want to claim the cost of my cycling back on expenses). I’ve contacted TfL but there is a 5 day response on emails so am still waiting for a reply.

    Conclusions

    So – London cycling – hit or miss?  Actually, I liked it – and if I lived in London I would definitely be considering buying a cheap(ish) fixie for the commute (or an old road bike). My own bikes are too expensive to be left chained up outside an office but the cycle hire scheme is really quite convenient – unless you live in the suburbs (where there are no Boris Bikes) I guess.

    As for infrastructure – yes, the roads are a mess – but that’s the same everywhere and whatever your transport methods.  I was surprised at how many drivers did seem to notice me  (pedestrians on their smartphones whilst crossing the road less so), with only a couple of frantic bell-ringing incidents and two “ois!” shouted at drivers who pulled across my path (although I saw an unmarked police car do the same to someone else this evening, before shooting off on “blues and twos”).

    London cyclists should try somewhere else before complaining – meanwhile everyone should be encouraged to get out of their car and onto a bike for a day or two to see how it looks from the other side.

    Tomorrow I’ll be off the bikes, lugging my luggage through the tube, then back home to Milton Keynes where we have lots of segregated cycle ways despite constant complaints that the town was designed for cars…

  • Fighting back to the spammers: charging for removal of blog spam links…

    Right from (almost) the start, this blog has suffered from spam. I guess it just goes with the territory but I’ve written in the past about people who’ve left spam comments and then found Google’s index quotes them out of context or tech companies criticising their competitors “anonymously” in blog comments.

    Even when I was helping my then-CTO to raise his social media presence, my employer’s PR agency was encouraging the use of comments on blogs to generate backlinks and now the tide is turning as Google cracks down on low-quality backlinks.

    As a result, I’m getting an increasing number of emails from digital agencies including phrases like the one below:

    “I’m writing to request the removal of a link to my clients’ [sic] site which is located at the following page:”

    They’re (or their clients are) wasting my time, so I reserve the right to charge for removing such links.

    The irony is that, over the last few years, Google’s index changes have penalised original content creators like myself in favour of corporate websites and this blog has just a fraction of the traffic it once enjoyed (oh, those were the days)…

    Would be blog spammers at this site should check out the Rules for Comments.

  • Margin, or markup?

    A big chunk of my current role involves trying to convert a capability unit (with some great skills in the team, it has to be said) into a profitable business. That’s not necessarily easy – changing a culture created over years where utilisation was king – as long as we were busy, life was good – to one where we need to be busy but only if we’re doing the right things to keep projects profitable: get in; deliver a defined work package; avoid scope creep (Project Managers like to grab hold of good people); move on to the next thing.

    That means that, in addition to managing a team of my own for the first time, this technical manager is also on a very steep learning curve as he grapples with being a business manager too (but I can’t forget my technical roots – I’m also Messaging Lead Architect – and I’ve got a number of technical activities to juggle as we improve our capabilities, standardise our delivery, and drive out further efficiencies).

    I learned an important business lesson a few weeks ago, when my Manager sent me a “handy cheat sheet” for calculating margins on our day rates.  “But it’s wrong”, I exclaimed – “look, if I put 10% margin on £100 it says the answer is £111.11 – that’s 11% margin!”. “No Mark, that’s not how it works” explained my, extremely patient, Manager (let’s call him Alan because, well because that’s his name…).

    Alan explained that I was applying mark-up, not margin (“Doh!”, thought I).

    Alan went on to explain that margin requires working back from the price to work out the difference from the cost – whereas markup is simply adding a value on top of the cost to reach a price. So, if something costs £50 and is sold for £100 – that’s 50% margin but 100% markup.

    That was an important lesson for me – thankfully one that I learned on a £25K piece of consulting, rather than a multi-million pound managed service…

    Now onto the next challenge, making sense of revenue and margin flowing through umpteen cost centres…

  • Working from home vs living at work

    Before one of my recent business trips to Manchester, my eight-year-old son expressed concerns about my sleeping arrangements. It seems that, until my wife explained that I would be staying in a hotel overnight, he thought that I might have a comfy chair to sleep in, in the office!

    Sometimes though, it does feel as though that might be the approach I need to take…

    Ten or so years ago, working from home was an occasional event – and I could get done in 5 hours at home what took 8 in the office (no distractions), with the added advantage of no travel. Since 2005, I’ve officially been a “home-based worker” with varying degrees of working on customer sites and, in recent years, typically working from home most days with only a couple of days in the office each week.

    This has some significant advantages (both to me and to my employer) – I’ve seen my kids grow up, never missed a school nativity play, or sports day etc. but it also re-calibrates the expectation of working at home. The new normal is to be in my home office for a full day – and then to probably go back again in the evening.  I don’t have a desk at the company office (I barely even use a hot desk), and modern communications mean that I’m contactable almost 24×7, if I choose to be (at least 12×5).

    These last few weeks have reached a new level and this week was particularly bad.

    On one day this week I had no breaks between dropping the kids at school and wall to wall conference calls.  I had to ask my wife to bring me toast and Marmite when it reached 11:00 and I hadn’t managed to get any breakfast, then to do the same for me with a sandwich at lunchtime (munched on mute whilst taking part in a call). At 15:30 I finally got off the phone (mobile phone battery severely depleted, my ear seriously warm) to deal with the day’s email – and it was the evening before I got around to doing something productive.

    I’m slightly embarrassed to say that, on one day, I managed to go straight from bed (after working into the small hours the night before) to work, and back to bed again in the evening without having got dressed. I do feel sometimes as though I live at work, rather than work at home.

    So, the next time someone is working at home, and you joke about skiving off, remember that the 9-5 has its advantages too…

    This weekend, I’ll be continuing my drive to separate home and work IT (just as I do for telephony) in a quest to be able to switch off the laptop at evenings and weekends…

    I can but dream…

  • Eurosport Player lets me watch the Giro, without a Sky subscription

    Last year, I developed a new sporting interest. In common with many others in the UK, I found myself glued to the TV highlights for the Tour de France, followed by the various cycling events at the London 2012 Olympic Games, the Vuelta a España, and even taking a day out to watch the Tour of Britain. I haven’t got a road bike yet (hoping to get one soon – I’ve entered a trialthlon later in the year and am hoping to ride London to Paris next year) but I was looking forward to watching the Giro d’Italia. At least, I was until I found out it’s not available on free-to-air TV:

    https://twitter.com/markwilsonit/status/328999937973051394

    Tonight, determined not to miss Bradley Wiggins in action in the first of the Grand Tours, I was searching the Internet for Giro highlights and even considered taking out a Sky subscription after reading that I can get a Sky Go monthly ticket and watch via my Xbox.  An online chat with a Sky representative confirmed that I would need to pay £35 for a single month’s TV and even thinking of that as £1 a day didn’t help.

    I considered hitting the torrent sites until I learned (thanks to Ian Murphy/@journoian) that the highlights are on Eurosport as well as Sky Sports.  A little research suggested that, for £4.99 “Crowd Pass” I could access the Eurosport Player for a month (Android, iOS and Kindle apps, PC and Mac, as well as Sony and LG smart TVs – unfortunately not Samsung…). There’s also a £2.99 “Sports Fan” option but that involves a 12 month commitment.

    So, despite being delayed by two sullen blokes hitting coloured balls around a big green table, here I am, watching Cav, Wiggo and co. racing on the Italian riviera, just as I suspect I will be for the next three weeks!

  • Major change to my role at Fujitsu

    Over the last few weeks, I’ve dropped a few hints online about a change in my job at Fujitsu. Some, eagle-eyed LinkedIn connections saw me update my profile a couple of weeks ago to add a new position – as Fujitsu’s Head of Practice and Lead Architect for Messaging in the UK and Ireland – and today is my first day (although I’ve been picking up parts of the role for a few weeks now).

    After almost three years in a strategy role, supporting two Chief Technology Officers with very different areas of focus, it’s time for a new challenge. My new role is a mixture of line management and practicing consultant so I’m actually returning to my technical roots whilst gaining additional experience of directly leading a team and being responsible for growing part of our business (including some challenging financial targets). Added to that, as messaging moves into our Business and Application Services service line, this is an opportunity for me to work in an applications business whilst building on many years of infrastructure experience.  There’s also some pretty exciting stuff going on with Microsoft (I’m not sure that’s announced publicly, so I won’t say anything more here) – but it’s a great time for me to be making this move.

    Messaging is not entirely new for me – from the mid-1990s through to the mid-2000s, I worked on a number of NT and Microsoft Mail/Exchange migrations/implementations and I was one of the consultants working on ICL’s partner stand at the Microsoft  Exchange 4.0 UK launch roadshow.  In addition, one of my technical career highlights was the work I did at Polo Ralph Lauren, to design and project-manage a migration from Novell Netware to Microsoft Windows Server, from Novell GroupWise to Microsoft Exchange Server and to roll out a standard desktop build across Europe, in multiple languages, with just two Windows XP images (one uniprocessor and one ACPI). The success of that project was down to the professionalism and capabilities of the team around me – and it will be just the same in this new role.

    As for this blog, well, I’ve been pretty busy for the last few weeks, as I’ve juggled two jobs – and I expect I’ll be just as busy over the coming weeks and months – but I’m still tweeting and I’ll still knock out the odd blog post too.  There might be some more Microsoft Exchange and Lync content but I expect that the usual mix of photography, social media and observations on the state of tech will persist.  This blog has been here for 9 years now, the content just shifts slightly as I do different things in my life and it seems that some people still find it interesting enough to read (or at least to subscribe)!

  • The conference call productivity drain…

    The following script is based on a real conference call. The names and times have been changed to protect the not-so-innocent but, other than that, it’s pretty accurate:

    9:45 (15 minutes before the meeting): Reminder pops up, “snooze” it until 5 minutes before.

    9:55: I’ll just finish writing this email… I wonder, was there any preparation required for this meeting? I haven’t done any but no-one else will have either…

    9:59: Ah yes, that meeting – how long?! An  hour and a half! Dial the conference service. What was the meeting passcode again? Got it, I’m in. Ah, hold music.

    10:00 (advertised meeting start time): “The chairperson has not arrived. Please wait…” more hold music.

    Just after 10:00: Call is opened, just two people so far. Social chat about what’s going on.

    10:01: Someone else joins the call. Say hello, bring them into the chat. More banter.

    10:02: Two more attendees join. Roll call. Explain that we’re waiting for a few more.

    10:03: More attendees. Almost quorate now. Roll call, just waiting for Michael and Stuart. Michael did say he would join but, in the interests of time, start the meeting.

    10:05: Michael joins the call. Apologies for lateness. Quick roll call and bring up to speed on introduction. Start meeting properly.

    10:07: Stuart joins the call. He’s in the same building as the meeting organiser and wants to join in person. He’s told the room number and drops off the call.

    (call continues for another hour or so…)

    This is “normal”?! Several middle-managers, not exactly inexpensive resources, waste time waiting for others to get themselves organised. A few minutes, multiplied by several attendees soon becomes an hour of lost productivity for the company.  I’ve even seen this on calls with hundreds of people (literally) waiting.

    I admit, sometimes meetings over-run for good reasons. Only last week I had to delay a meeting and missed another two calls completely because an important issue arose which needed immediate resolution (a personnel issue – and people trump process in my mental rule-book) so I allowed a meeting to over-run. I tried to keep others informed though, rather than leaving them hanging on a conference call waiting for me to arrive.

    But, in our organisation, people accept the sort of practice I’ve laid out above as normal (or at least, they tolerate it) and I’ve coined a term to describe the company timezone (which is 3 minutes after the real time).

    The thing is, we’re not alone. That’s why I feel comfortable talking about this issue on a public forum – it happens in organisations all over the country – indeed, all over the world, all of the time.

    Yesterday, Matt Ballantine published a blog post entitled “clock watching”, in which he suggests it’s not collaboration tools we need, it’s somebody asking “why are we meeting?”. Quoting from Matt’s post:

    “Imagine if the workflow for setting up a meeting, rather than being ‘find a slot available for the attendees, book the meeting’, was more like:

    – state the objectives and outcomes required for the meeting
    – understand who might be active participants
    – describe who should be informed, yet not necessarily attend
    – validate that this will require a meeting to achieve the necessary outcomes
    – plan out the activities for the session
    – validate again that a meeting is the best route for the outcomes to be achieved
    – work out the correct time for the meeting
    – find an appropriate time slot for the meeting
    – send out participant briefing notes to everyone concerned”

    For a while now, I’ve been asking “Do you need me on this call? I’m not sure what value I’ll be adding”. In future I’ll be more strict. And I’ll be starting the meetings that I control right on time, rather than when we have most people on the call. If people realise that they miss things by turning up late, maybe they will be more punctual? Or maybe I just need to chill out?

  • Lego: the best value toy that money can buy (and tracking down replacement parts)

    Thirty years ago, I was a ten-year old boy who spent a huge amount of time building Lego models, usually to be destroyed by my younger brother*. Today, my sons are playing with that same Lego, supplemented by a growing number of sets of their own (slowly taking over our house in spite of my efforts to contain it to the living room and their bedrooms).

    Imitation sets are just not as good

    There have been a few sets gifted from others that are not “real” Lego.  It may sound ungrateful but these mostly have been passed on to charity shops as either:

    • They had black and white instructions that were difficult to follow.
    • They needed us to download and print the instructions ourselves (surprisingly expensive and impractical).
    • They just didn’t fit together as well as real Lego (the models are too fragile).

    Whether it’s Knex, MegaBlox or one of the plethora of wannabees, it seems that imitation Lego is really just a false economy.

    Sourcing replacements for broken parts

    One of the properties of Lego bricks is that they are incredibly strong. Anyone who’s every stood on one whilst walking bare-foot can tell you that! But, ever so occasionally, a practically indestructible Lego part gets broken and, faced with an inconsolable eight-year-old who wanted to use a 2×2 plate with ball connector that had snapped off (“it’s really rare and we’ve only got about 2 of them Dad”), I set about locating replacements (super glue had done a better job of sticking my fingers together than it did two pieces of Lego…).

    There are various Lego parts databases online, as well as sites specialising in selling second-hand Lego parts (although parts availability can be patchy). I found the BrickSet Lego Brick Guide to be comprehensive, accurate and easy to work with (it ought to be – I’ve just noticed it’s an official Lego site!) and I searched for the part I needed, using a set number that I knew it appeared in.

    Lego’s parts replacement service is not available in all countries and I couldn’t find it via the UK website but a friend who used to work at Lego said they often sent out parts to replace broken/missing pieces. So, after locating the exact part, I went to Lego’s replacement parts system and requested a new piece.

    This is where Lego excelled. Not only did they replace that part but I also asked for replacements for some others that had become broken over the years and Lego shipped them, free of charge. I would have paid for them, if I could find them but Lego’s customer service is so good and their confidence in the quality of the product so strong that they will replace the broken pieces.

    The real value of Lego

    I can’t think of any other toy that’s provided as much play value as Lego and it was interesting to read an article about how Lego’s price has changed over the years (it’s not as expensive as it first seems).  Then, last weekend, my sons spent their pocket money on some more.  My 6 year-old plumped for some Lego Star Wars sets (no surprises there) but my 8 year-old bought a battery pack, motor, lights, switch and gears.

    Over the next few days, he built a vehicle that drives itself, worked out how best to arrange the gears and motor, how to make it stronger, how to tweak the electrics so that the lights came on separately to the motor. Each iterative change brought improvements, and taught him a little more about making things work. In short, Lego taught him about physics, engineering, electronics (arguably innovation too…) – all with very little input from me.  Whilst my wife is looking for ways to feed his interest (and apparent aptitude) for STEM subjects (science, technology, engineering and mathematics. I think we might get quite a long way just by buying lots of Lego Technics and Mindstorms!

     

    * On one notable occasion I “left home”, aged 7, walking out after my brother broke up a Lego model I’d created… I came home a few hours later in a panda car…

  • How to be a CEO, in 10 minutes

    Look after the pennies and the pounds will look after themselvesRecently, I was listening to a CEO give a fantastic explanation of his job (described as “how to be a CEO in about 10 minutes – some free of charge advice”). Of course, it’s a massive over-simplification* but, fundamentally, this is what business is about.  I’ve left out all of the juicy metrics – they were confidential – and I’m not naming the CEO either but I thought it would be interesting to share the basics, particularly if, like me, you have no formal business qualifications…

    If you run a company – it’s a good idea to have a strategy. Often, that strategy boils down to three things:

    1. Run the company properly
    2. Grow the company
    3. Prepare for the future

    Whilst all three principles need to be applied, 1. needs to be in place before you can focus on 2. and 3., so let’s look at “running the company properly”.

    There are three important metrics to consider:

    • Gross margin
    • Operating expenditure
    • Operating profit

    We’re all in business to make money (or generate value in another form – which generally involves raising funds along the way). Gross margin is about customers allowing companies to charge more for a product or a service than it actually costs to create because the company adds value. The amount of margin that customers will allow depends on the types of products or services that are sold – and some products rely on high volume sales with low margins, whilst others are highly profitable in themselves because they attract a premium price (e.g. if they are in short supply).  Even if you don’t know what the margins are, it’s pretty easy to see which companies are charging a premium and which are not.

    So that’s gross margin.  The next thing to consider is operating expenditure (OpEx).  This is the overhead of running a company: premises, people, etc.  Reducing OpEx is about reducing overheads – and if you want to know if you are an overhead, consider whether your presence in the workplace has a direct impact on customers.  If it doesn’t, then you’re an overhead…

    You can’t run a company with zero OpEx, but it needs to be appropriate and under control.

    Gross Margin minus OpEx equals operating profit – and I said earlier that, generally, we are in business to make a profit.

    Now, profit is all well and good, but companies need cash in order to function – and a company’s cashflow is vital in order to be able to buy materials (to create products and services) and to allocate money for capital expenditure (CapEx) like new equipment and other investments in growing the company (e.g. acquisitions).  Just like a current account, negative cashflow is not necessarily a problem, as long as the company can be recapitalised (e.g. by its shareholders), or borrow money from a financial services institution (e.g. an overdraft, or a loan).  At some point the intention is such that the incoming revenues are sufficient and the margin/OpEx healthy enough that profits grow and cashflow turns positive. At that point, a company can return value to its shareholders, or invest for the future.

    So that’s how to run a company, with a little bit of growth in the mix too (principles like the service-profit chain can help too, linking profitability, customer loyalty, employee satisfaction and loyalty and productivity). With the basics in place and a good team on board, planning for the future is about vision – recognising upcoming challenges and finding new opportunities (maybe even some disruptive innovation).

     

    * At least, I imagine it is – I’ve never been a CEO and don’t expect I will be in the near future either!

    Photo Credit: Mukumbura via Compfight (licensed under Creative Commons).