meJoe.com

I wrote this text for a business class. It takes the perspective of a Sony executive in June 2008, soon after discovering poor sales of the Playstation 3, especially when compared with the Wii and XBox 360.

At Sony we gambled that consumers would seek out the next generation in entertainment delivery mechanisms: the Blue Ray. With its high definition playback and super capacity, the technology represents a ten-fold incremental increase in the capabilities of the standard DVD. The Playstation 3 was meant to give consumers this technology in both their content consumption (movies, music, etc.) and gaming. This strategy closely ties our three core sectors: electronics, games and entertainment into one system (especially as outlined in our 2005 press release on corporate strategy).

Why don’t consumers see the obvious technological superiority over the Wii? The industry has flipped on us–the basis of competition has moved from faster and more life-like to slower and child-like. I have never in my career encountered such a regression.

In my search for answers, the article Strategic Dissonance provides me with some evidence for what went wrong. Here at Sony we are a well oiled machine. Our strategic intent and action are totally in-line. Our distinctive competence is making consumer entertainment electronics and content that people want to buy. In 2006 we even tweaked our internal strategy selection environment by clearing out unprofitable product lines.

We were ready to push the latest and greatest technology on to consumers… and totally missed the consumer’s need.

Nintendo saw change coming that we didn’t.

How did we miss this? I remember working as the Product Manager for the first Playstation. It was faster and more life-like than our competition. We had a great team, and are all now running gaming and electronics.

Our strategy has not changed—and there lies the source of our problem. We kept doing what we knew well. In our minds, the Playstation had cojones, and what else could you possibly need out of your gaming (except more cojones!).

Enter our Strategic Inflection Point. What next? Purchasing Nintendo, which is at a market capitalization of about 10 Trillion Yen or $111 billion, is obviously not an option.

I think we can beat them at their game. With Sony Pictures and Sony Music, there are a lot of opportunities to exploit our content for sole Playstation use. Additionally, we need to have some hard debates.  Do we drop the Blueray as primary Playstation functionality in order to lower the price? Do we release a functionally scaled down version? I will be reworking our strategic intent, and completing the third aspect of Strategic Recognition.

Fast Company, “Sony’s Risky Game”, http://www.fastcompany.com/articles/2006/11/sonys_risk.html

Sony.com, “Sony Corporate Strategy Press Release”,  http://www.sony.net/SonyInfo/News/Press/200509/05-050E/

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Note: The views I express here are mine and do not represent my employer, Rackspace.

The classics never go out of style, even in technology.

I just read The Art of High Technology Management (unfortunately its not free), a little excerpt from a technology management text book, circa 1984. Authors Maidique and Hayes highlight what successful tech companies are doing right, and aptly dub it “an art”. Their analysis was sound, a definite piece of the alphabet in the language of technology management. That however is not what evokes my entry. The haunting part of this read, was the sense that I was peering over the shoulder of a youthful Rackspace senior executive. Before me lay part of the blueprints of the near billion dollar company I work for today.

Authors Maidique and Hayes followed a number of companies in biotech, pharmaceuticals, computers, semiconductors and aerospace of various sizes ($10 million to $30 billion). They wanted to answer one question: “What strategies, policies, practices and decisions result in successful management of high-technology enterprises?” The answer to their question uncovered a challenging paradox: continuity and chaos. These two words aptly describe the dichotomous workplace I live every day. The article expands on the polarity of continuity and chaos through six themes. These themes hauntingly mirror Rackspace’s CORE values.

Continuity

1. Business focus - The drive behind continuity is discipline.  Discipline in technology specialization, focus on core competencies, consistent organizational objectives and real business results - the traditional work values that our grandparent’s generation embodied through companies like Ford and it’s Model T. At Rackspace we call this Results first, substance over flash.

2. Organizational cohesion - At the heart of continuity is people and their relationships. A strong tech company emphasized collaboration, communication, job rotation, multidisciplinary projects, and long-term employment. Executive open door policies at companies like IBM, generated a sense of hierarchical flatness and equality–permitting a free flow of ideas. Cross-pollination of knowledge and relationships occur as employees move throughout the organization into different roles and projects. My fellow Rackers refer to this as Treat fellow Rackers like friends and family.

3. Sense of Integrity - Hi-tech companies exhibited a values system that held ethics and trust above profit. Humility and self understanding are also characteristics that were encouraged throughout. Today I had an encounter with our Chairman Graham Weston. I asked him for some assistance and information on an issue.  Within 20 minutes I had everything I needed. Graham pioneered the strengths based culture at Rackspace. Every employee receives an analysis of their natural talents and is coached on how to develop them in both their professional and personal lives. During tough times, we exercise full disclosure to our customers and each other - Keep our promises. Bad news first, full disclosure.

Chaos

4. Adaptability - Change is the name of the game. Great tech companies knew when to change strategy and had the organizational flexibility to make the tough changes. In my four years at Rackspace, I have worked in three different roles, for 3 different VPs in 3 different buildings — all these changes occurred at different moments in time. Adopt change for excellence.

5. Entrepreneurial culture - Small scrappy teams, decentralized R&D, and FAILure tolerance are pillars of success. Everyone in the company has to feel ownership, a sensation that their work will “save the company”.  HP and Texas Instruments regularly split divisions into small groups. On the topic of decentralization, “IBM has found that rebellion can be good business.”, commented an executive about a secret endeavor to develop a new line of hard drives. At Rackspace, nearly 1/3 employees is a tech or an engineer. Everyone of these rackers are creating solutions to solve customer problems. This is the most important Rackspace value - Fanatical Support in all we do and Passion for our work.

6. Hands-on top management - This is about a highly engaged leadership team. Executives of this caliber are technically competent and prefer receiving direct updates from project members. They are comfortable asking lots of questions (even dumb ones) and are extremely involved in the high value aspects of the company. At Rackspace we do not have a CORE value to describe this, but I see it regularly.  Recently, Lanham Napier, our CEO, called one of my team members to ask some questions about a particular project. I can’t imagine this happening at a traditional company.

Balancing Continuity and Chaos at Rackspace

I have found that change and stability come in cycles at Rackspace. We will often see a 2 to 3 month period of significant chaos followed by an 8 to 12 month period of stabilization. Again, Rackspace leadership is on par with the researcher’s findings:

The successful high-technology company firm alternates periods of consolidation and continuity with sharp reorientations that can lead to dramatic changes in the firm’s strategies, structure, controls and distribution of power, followed by a period of consolidation.

The everyday Racker deals with this continuum in very different ways.  Some folks get frustrated with the chaos, others thrive within it. As a manager for a software team, I understand both perspectives. I am in the unique position of having to garner agreement on business processes and priorities among different teams. Describing my work as “Herding cats” is a true understatement. Rackers are also highly empowered to give feedback - and express frustration. This empowerment combined with technical and business expertise requires an open, servant style leadership that is probably uncommon in other firms.

My next task is to ask some of our VPs (they sit in cubes all over here) where our CORE values came from, and whether, as Picasso once said, “Bad artists copy. Great artists steal.”

“A little revolution now and then is a good thing.” - Thomas Jefferson

Like anyone, my life is marked by phases. There is a lot of overlap in types of phases. Some people have a healthy phase, family phase, watch certain show/director/actor phase, etc. During those phases, every ounce of your free energy is dedicated to the egoistic focal point of the phase. I love these, but lately mine have been far to pragmatic.

I realized today that I need a learning phase that has no end in sight. I need the chance to read and explore without expecting an outcome

Enter SXSW. Tony Hsieh from Zappos shared his inquiry into the scientific research available about Happiness. Obviously there is a reason he was interested in it, but I doubt he expects to deliver something specific.

If he has the time to do it, I should be able too.

In case you don’t follow me on Twitter (@mejoe), I can’t seem to finance a home purchase. With good credit and cash on hand, I was denied a loan. I was told the problems were caused by the private mortgage insurance companies — they do not want new loans. I think there was more to the story.

I’ve been speaking to my new loan officer and done some research. He mentioned that the big shops simply don’t have the funds they did previously because they can not find investors to buy their loans. Banks like Countrywide have 100s of millions of dollars used to originate loans. When the loan is funded, they turn around and look for an investor to purchase it.  When a buyer is found and the loan is sold, they take the funds and move on to the next home buyer.

The big banks are middle men in a fat supply chain of mortgage debt.

I found the following quote on Bankrate.com to support this notion:

Rates will go largely where the Fed drives them, but there are some structural problems with the mortgage business that are making it difficult to fund loans quickly. One is the enormous decrease in the size of total warehouse lines. Mortgage banks and operations such as ours — which is a “net branch” model (a mortgage bank which only takes business from its branches and not brokers) — depend on warehouse lines of credit from commercial banks to fund the loans which we then sell. According to the MBA (Mortgage Bankers Association), total warehouse capacity has decreased from $200-$250 billion to $20-$25 billion. The problem here is that refis occur in spikes when rates dip and there is not enough gross capacity to meet the demand created by dips in rates. Perhaps it is time for the Fed or Treasury to guarantee warehouse lines in the same manner in which it backed Commercial Paper.

- Dick Lepre, senior loan officer, Residential Pacific Mortgage, San Francisco

Warehouse lines? Sounds like a basic inventory problem to me. There is simply not enough used mortgage buyers visiting the lots. The Fed should have a talk with Crazy Dave’s Used Car Lot down the street.

Check out The Credit Crisis Explained in Simple English. It is a good source for understanding how we got into this mess.

“Fear of paying cash for your new car.” I try to avoid debt, but this is ridiculous. It must be a fear of banks or something.

Seems every blogger at some point does it.  After many years of religiously blogging at least weekly, I have gone months without posting a thing. I’ve been busy with work, life, yada yada.

So why have I neglected my writing? I changed jobs a couple of years back.  Since then, I’ve lost focus for a solid theme to write about. No theme makes it very hard.

I’m not going to make any promises with this post. I just wanted to do my token post. I’m trying to keep all of my sentences under 140 characters too. Not worried about exactly 140.

Matthew Sachs has a great evaluation of the Rackspace Mosso Cloud offering. He did a performance test and his results turned out quite positively. From what I understand the test was unsolicited.

Firefox Plugins

• Web Developer Toolbar
• Firebug
• Firefox Accessibility Extension
• Firefox User Agent Switcher
• Fangs
• Colour Contrast Analyser

Internet Explorer
Web Accessbility Toolbar

Screen Readers
JAWS Demo - a popular screen reader

Web design tools
Dreamweaver - a common web design tool

Goosh.org - “not an official google product”

Wow, these guys are going through a really tough time. I can’t believe the severity of it:

On Saturday, May 31st at 4:55pm CDT in our H1 data center, electrical gear shorted, creating an explosion and fire that knocked down three walls surrounding our electrical equipment room. Thankfully, no one was injured. In addition, no customer servers were damaged or lost.

The entire data center is down, including DNS services, customer portal, and who knows what else.