Yesterday, I wrote an entirely too-long post about my brief experience with the iPhone 5. My ultimate conclusion was that as gorgeous as the device is, as well built as it is, and as hip as it is to own one, it just isn’t meeting MY needs, and I’m sending my iPhone 5 back in order to start using my Android device again. But, what does that have to do with procurement and sourcing?
I’ll tell you. It is representative of what we see in the business community far too often. Companies, or more specifically buyers, sometimes get so caught up with the herd-mentality that they start to make poor decisions.
Below, I’ll outline three examples.
Apple has to be admired. They are the world’s most valuable company, they’ve made a lot of people rich in the last decade, and they had probably the most well-known CEO of all time (tied with Mr. Gates) leading their helm up until recently. They make cool gadgets, helped to revolutionize the music industry, and make products that lock you into buying more products, service and media from them by tightly controlling the devices. They’ve got a world class supply chain and some of the world’s best buyers and engineers. They simplified their devices to the point that they require you spend more time with them than their competition, but you happily do so because it has become part of your lives. They are a fantastic company from an operation standpoint, but most importantly, they are arguably the best marketing company in the world, because many people think they are part of some elite-class just for owning their products.
But you are not buying Apple’s stock, you're buying their products. Of course, you need to qualify your supplier community when you take something out to bid. You don’t want to buy from debt ridden companies that may go under, and you don’t want to buy from companies that can’t control the risks in their own supply chains. But at the same time, you really want to know if the product they sell is right for you. You can’t determine that simply by a company’s brand name.
We’ve all heard it before in business. “No one ever got fired for buying IBM”. Well, most people never paid the best price for buying IBM either. Just because a company has a great reputation, doesn’t automatically qualify their solution to your business. We see this all the time, especially with large companies that are looking to hire professional services firms. They automatically qualify a business into their RFP process (or final selection) just because the company (not their solution) has a recognizable name. I can’t tell you how many times we’ve seen customers pay for a big name company, and that company was simply reselling a far-less-expensive regional player’s solution. If they knew what they were buying instead of who they were buying, they could have spent far less.
If Android has more market share than iPhone, why don’t you hear about it more? Well, Android is not a singular phone, it an operating system delivered on a series of products manufactured by dozens of companies. It provides lots of choices. It’s difficult to build a group-think mentality and cheerleading network, when the users within it are all using different products. It’s not an interesting story for the news to report on a new Android phone, when they literally are being launched every week.
People and businesses often suffer from herd-mentality. iPhone has replaced Blackberry as the generic name for a smartphone. For years, people walked into a cell phone store and said they wanted a “Blackberry”, and that is what they were sold. What they really wanted was a smart phone, and had an option of RIM’s Blackberry, Windows Mobile, Palm and a couple of others. But people didn’t know that, they just had heard the term Blackberry before and thought that is what they wanted.
So, just because you hear everyone talking about a particular something, doesn’t mean that it the only option out there. When sourcing anything, whether it is your phone, a car or ERP software, make sure you have a true understanding of the global market, not just what you’ve heard of before. You may be surprised at all of the available options.
Selecting a supplier or a product for your business should not only be about Best-in-Class, and it certainly shouldn’t be limited to what other companies label Best-in-Class.
Oh, Gartner rated them high in their magic quadrant? Do you even use or want any of those features that they rated them against? Do you realize that Gartner, Aberdeen and the rest typically only review suppliers that have paid them some sort of consulting fee or have interactions with one of their customers that they charge a subscriber fee to? Do you realize that news reports, white papers, and research firms often review to common wants and needs, not your wants and needs?
Just because a company is considered world class, it doesn’t mean it is the right company or right solution for you or your business. In my case, the iPhone experiment and the iPhone itself was awesome, but my Android device lets me do the things I want/need to do faster which in turn lets me spend more time with my family or making savings for our clients.
Below, I’ll outline three examples.
Separate the product from the company.Are you buying the product or the company?
Apple has to be admired. They are the world’s most valuable company, they’ve made a lot of people rich in the last decade, and they had probably the most well-known CEO of all time (tied with Mr. Gates) leading their helm up until recently. They make cool gadgets, helped to revolutionize the music industry, and make products that lock you into buying more products, service and media from them by tightly controlling the devices. They’ve got a world class supply chain and some of the world’s best buyers and engineers. They simplified their devices to the point that they require you spend more time with them than their competition, but you happily do so because it has become part of your lives. They are a fantastic company from an operation standpoint, but most importantly, they are arguably the best marketing company in the world, because many people think they are part of some elite-class just for owning their products.
But you are not buying Apple’s stock, you're buying their products. Of course, you need to qualify your supplier community when you take something out to bid. You don’t want to buy from debt ridden companies that may go under, and you don’t want to buy from companies that can’t control the risks in their own supply chains. But at the same time, you really want to know if the product they sell is right for you. You can’t determine that simply by a company’s brand name.
We’ve all heard it before in business. “No one ever got fired for buying IBM”. Well, most people never paid the best price for buying IBM either. Just because a company has a great reputation, doesn’t automatically qualify their solution to your business. We see this all the time, especially with large companies that are looking to hire professional services firms. They automatically qualify a business into their RFP process (or final selection) just because the company (not their solution) has a recognizable name. I can’t tell you how many times we’ve seen customers pay for a big name company, and that company was simply reselling a far-less-expensive regional player’s solution. If they knew what they were buying instead of who they were buying, they could have spent far less.
Separate your needs from the herd-mentality“Everyone” loves the iPhone. Well, not everyone really. In fact, the latest numbers show that Android has a 50% or so market share vs. Apple’s 35%. RIM is sliding and Microsoft is climbing, but it has a long long way to go.
If Android has more market share than iPhone, why don’t you hear about it more? Well, Android is not a singular phone, it an operating system delivered on a series of products manufactured by dozens of companies. It provides lots of choices. It’s difficult to build a group-think mentality and cheerleading network, when the users within it are all using different products. It’s not an interesting story for the news to report on a new Android phone, when they literally are being launched every week.
People and businesses often suffer from herd-mentality. iPhone has replaced Blackberry as the generic name for a smartphone. For years, people walked into a cell phone store and said they wanted a “Blackberry”, and that is what they were sold. What they really wanted was a smart phone, and had an option of RIM’s Blackberry, Windows Mobile, Palm and a couple of others. But people didn’t know that, they just had heard the term Blackberry before and thought that is what they wanted.
So, just because you hear everyone talking about a particular something, doesn’t mean that it the only option out there. When sourcing anything, whether it is your phone, a car or ERP software, make sure you have a true understanding of the global market, not just what you’ve heard of before. You may be surprised at all of the available options.
Best In Class doesn't mean Best For YouThe entire purpose of my lengthy prior post was to outline how the iPhone was not right for me. But, don’t get me wrong, it is definitely a best in class product. It’s got a better build quality than the Android I’m switching back to. It’s got better battery life. It has a quicker camera. It’s got a slightly better screen. It’s likely to be the best selling singular phone of all time. It’s got a world class, stable company and support program behind it. iPhone is Best-In-Class, but it’s not Best-for-Me.
Selecting a supplier or a product for your business should not only be about Best-in-Class, and it certainly shouldn’t be limited to what other companies label Best-in-Class.
Oh, Gartner rated them high in their magic quadrant? Do you even use or want any of those features that they rated them against? Do you realize that Gartner, Aberdeen and the rest typically only review suppliers that have paid them some sort of consulting fee or have interactions with one of their customers that they charge a subscriber fee to? Do you realize that news reports, white papers, and research firms often review to common wants and needs, not your wants and needs?
Just because a company is considered world class, it doesn’t mean it is the right company or right solution for you or your business. In my case, the iPhone experiment and the iPhone itself was awesome, but my Android device lets me do the things I want/need to do faster which in turn lets me spend more time with my family or making savings for our clients.
I love you so much.
ReplyDeleteNot to mention herd mentality is scary
ReplyDelete