The Art of Profitability by Adrian Slywotzky

Author:Adrian Slywotzky
Language: eng
Format: mobi, pdf
Tags: BUS000000
ISBN: 9780759527720
Publisher: Grand Central Publishing
Published: 2002-09-26T06:00:00+00:00

11 De Facto Standard Profit

January 4. Big, soft flakes were drifting past Zhao’s office window as Steve walked in. It was the first snowfall of the season.

Steve tossed his wet jacket onto the coat rack by Zhao’s door, dropped into his usual chair, and sat drumming his fingers on the arm rest and staring into space.

“What’s the matter?” Zhao asked.

“Did you hear the NetCom announcement yesterday?”

NetCom was one of the fastest-growing telecom companies, a burgeoning rival to DelCom. “No. I was flying back from Madrid. What’s up?”

“They’ve launched a telecom Switchboard. All the major players have signed up as suppliers. Including Delmore!” Steve uttered a single mirthless laugh.

“Is that all?” Zhao asked. “The way you looked, I thought you’d had your apartment broken into or something!”

“ ‘Is that all’?” Steve repeated. “Isn’t that enough? Frank and I knew the idea would work, we knew it, and if Delmore had gotten started when we proposed it, we might have beaten NetCom to the punch. Now it’s too late. What’s the matter with those guys? I just don’t get it.”

Zhao shook his head. “Relax, Steve. Number one, you don’t know whether NetCom’s project will work or not. Number two, even if it does, that doesn’t necessarily kill Delmore’s chances of getting into the same business down the road.”

“But by then—” Steve interrupted.

Zhao ignored him. “And number three,” he spread his hands, “so what? There are lots of other businesses to get into. The real key is for both you and Delmore to learn from a missed opportunity.”

Steve seemed to calm down a little. “I suppose you’re right,” he conceded. “But it’s so frustrating to feel like we had the idea and just couldn’t make it happen.”

Zhao chuckled. “If you’re going to let that upset you, Steve, all I can say is be prepared to be upset a lot.”

Steve didn’t laugh. “Okay, I’m impatient,” he said. “That’s how I am. Isn’t that normal? Isn’t it good to be driven?”

“Sure it is,” Zhao replied. “But I’ve traveled around the sun a few more times than you have. I still care… a lot. But I’ve learned not to take setbacks too personally. Otherwise you burn up a lot of energy in irritation and anger, which tends to lead to further mistakes.

“Instead, I recommend you look ahead.”

Steve sighed. “All right,” he agreed. “New year, new opportunities. What have you got for me today?”

Zhao jumped into action. “Are you familiar with the minicomputer industry, Steve?”

“Just vaguely.”

“In its day, it was a wonderful example—perhaps the ultimate example—of the Installed Base Profit model. Customers were locked into proprietary systems, paying high prices for years. Its success was also its demise, because of the incredible anger it created in the customer base.”

“You mean because of the high prices?”

“No, not really. That was the surface reason everyone assumed, but the real reason was the high costs generated by incompatibility.”

“I thought you said that costs weren’t the main issue.”

“Not direct financial costs. It was the other costs, in time, energy, and irritation, that had the most profound impact.

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