Wednesday, December 19, 2007

Price vs. Value

Thanks for the comments on my most recent article, TQM is Not Just Dead, It's in an Unmarked Grave. I especially liked the additional tag added by my friend Jim Anderson in Florida, who added, "and the unmarked grave is surrounded by armed guards to ensure nothing miraculous occurs."  I love it. If you have a similar comment, please let me know.  By the way, I plan on writing some book reviews and other articles to keep the thoughts on processes and systems alive. It's not about documentation - it's about profits and effectiveness!

On a different note, I was in a store yesterday with my wife and grandson just to pick up a few small Christmas wrapping items. They had some action figures for $1, and my grandson really wanted one, so I thought, "OK, what the heck." and bought it for him.

Of course, I knew that for a dollar, not to expect too much. However, my 3 year old grandson was expecting more.

When the figure didn't hold the sword very well, he started getting frustrated. He also didn't understand my explanation about "you get what you pay for."

Why am I going down this trail?  It reminded me of how people think first of the price of services, but fail to consider the value (or lack of it).

For example, a prospective client may ask for a price quote for me to come in and train their people. When I provide the quote, I also convey the value of the services, such as more defects found, better information provided to management, etc. I encourage people to consider how many defects prevented or found it will take to pay for the training. I have known some companies that measure defects that have found an average defect costs in the neighborhood of $5,000 to fix in production use.

However, some people just look at price alone. They will get a variety of quotes (nothing wrong with that), but then the comparison is on price alone. They may choose the cheapest option and then ask me to match the price but still deliver the same value as with my normal pricing. I will work with people to get a "win-win", but I don't play the car dealer game to match my competitor's lowest price. I just feel that it's a no-win situation. The client doesn't win because although they might get a low price, I'm not feeling good about my end of the deal and I don't like to risk that affecting my delivery of the service.

On the other hand, when I'm making my rate I go the extra mile for my clients and the results are spectacular. I have clients who think I should be charging higher rates. How often do you hear that?

I know this seems self-serving, but I don't talk about rates very often and it's on my mind so I thought I would blog it. Setting rates is a strange art, but I believe that someone's rate should be based on the benefit delivered, not on the "going rate" or how much it takes to keep the lights on. Consultants and trainers often get a black eye because the service doesn't give the value in relation to the rate. My motivation is to deliver the value in excess of my rate. I like for people to know my thought process about rates.

Speaking of rates, sometimes people ask why I don't post them on the site. I feel that 1) the rate depends on the job and each job is unique at some point and 2) I don't like to let my competitors know. All I'll say is that I'm not cheap, but I'm good!

So, if you ask me for a rate quote and choose someone else, I'm not offended. I just want to make sure you understand that just like the $1 action figure, you get what you pay for.

Have a great day!


Friday, December 14, 2007

Lessons Learned in a Boston Snowstorm

Well, I'm trying to get home from a class (Adding Value to QA and Testing Processes) I presented in the Boston area this week. It was a great session and I really enjoy teaching people who are engaged in the topic. I was so glad to be able to actually get to the class because in Oklahoma City we were hammered last Sunday by a devastating ice storm.

There were lots of trees destroyed and 700,000+ people without power at some points. (My thanks to the folks at OG&E and the people who came in from outof state to help us! God bless you!) In fact, my flight was one of the first to take off Tuesday afternoon, as the airport had been pretty much shut down most of the weekend.

As it turned out, I was jumping out of the refrigerator into the deep freeze!

As those of you in the U.S. know by now, Boston was hammered by a snow storm on Thursday (Gee, it seems like last week already!). Here's what made it interesting.

Despite the warnings and planning, most of the state was paralyzed. In fact, the warnings may have actually contributed to the problem in a major way.

It took me 4 and one-half hours to travel about 16 miles on the highway. The highest speed I reached was 15 mph, and the average was about 4 mph. I was not alone. In fact, I fared pretty well as compared to some.

The crazy thing was that the snow wasn't that bad. Listening to the radio was a riot. People who have lived there all of their lives were ranting about "what's happened to us here?" I'll admit, as a "Okie", I was thinking that even we handle winter weather better that this. (No offense intended.)

Here's what I think happened and it applies in other situations as well. Warnings went out the day before that the snow would hit during the evening rush hour, so people should plan on leaving work early. So, as people are (including myself), we waited until it started snowing around 1:00 p.m., then left. It was snowing about 1" per hour, so it didn'y take long for it to start getting messy.

However, because EVERYONE left work early, rush hour started at 1:00 instead of 3:00 or 4:00. So, the snowplows couldn't move the snow because of all the people trying to get through the snow. What irony! You might say, the perfect storm.

As much as the weather caused a problem, so did people's response to the weather. I think we may have been better off just giving the forecast and letting people figure out for themselves when to leave work.

We see the same thing happen with software and systems. Consider the web site to buy concert tickets that only gives people two minutes to complete the transaction. Because of the heavy load seen when the tickets go on sale, it's hard to get the response time to finish in two minutes! (As you can tell...I have experience in this scenario.)

When thinking about system performance, give very careful consideration about what people may do that could actually aggrevate problems (like hitting the Enter key multiple times just to make the system go faster). That's why good system performance (and weather response) needs to be well thought-out.

While we can't control what people do, we can influence what they do.

OK, lesson learned. If all goes well, I should get home to Oklahoma City just in time for another snow event. I think I feel a "sick day" coming on.