Bell: Well, Stu, here we are again. Want the good news or the bad news?
Stu: There's a difference?
Bell: The bad news: Your budget stays the same for 2010 and I have put you down for a 3% raise. That's also the good news.
Stu: You asked me for my self-evaluation form. Here it is...
Bell: Save it. It's probably just a rehash of last year...you claiming that each one of your initiatives saved us tons of money or gave us improved customer service or made our products safer or better or whatever. You will tell me that we have offloaded "non critical" efforts to a vendor and kept from bulking up our infrastructure, right? You will show me how you battled the Big Meanie software auditors from Oracle who wanted to exploit some dumb technicality and get more money from us. You are going to show me that by relying on our key "partners" like IBM or HP, we now are getting the maximum Volume Price Discounts. And you are going to snow me with testimonials from the Division General Manager. Right?
Stu: Stop reading ahead. If you didn't want the self-evaluation, why did you ask for it?
Bell: Why? Because HR demands that I ask for it. That's why. I can ask for it, but I don't have to read it. Especially since we both know what it says since it so very neatly conforms to what your "stretch goals" were for the year. But let's talk turkey. I really don't know how to evaluate you and your team's worth. I don't know how to benchmark you against your peers. Remember, I had your job once, but the world has changed twice since then. You are an expense center and not a profit center. Let me give you this: You hit your expense goals very well, and I think, but I can't prove, that we do as well as our competition in computing.
Stu: Some things are changing this year. We are moving more of our apps to The Cloud; we started the desktop initiative. We found that half our internal users need only a couple of productivity applications...and maybe we could make do with Google Apps there and cut our Wintel support costs.
Bell: What took you so long? I told you last year that your whole operation was looking peculiarly like my 1980s environment, where all we had were dumb terminals and a support person could handle 300 desktops. I may be out of that job for awhile, but to me a "thin client" is just a slightly smarter dumb terminal.
Stu: That just wasn't possible last year; we have some very "entitled" people here--and the message of Just Save Money they thought was for everyone but them. And you haven't said a word about what we did with our ERP implementation.
Bell: I get very worried about any project that has "multiyear" in front of it. We all knew that our supply chain was our weakest link. Ten years ago we tried this "just in time" crap and damn near killed ourselves. Then we did the "Internet solves everything" dance, and now what I am hearing is that we have to think "globally" and deal with how we handle "resilience"...which means dealing with unknown unknowns, or unk-unks? Do I have that right?
Stu: Pretty much. The way I see it we are vulnerable in five areas: globalization, rising transport/logistics costs, uncertain labor environments, sustainability, and volatility. So, yes, we have to do a multiyear upgrade. And remember, while the Internet can solve some of these problems, it creates others. You pushed the idea of "lean" manufacturing to drive down inventory costs, but when that gets broken...we cannot serve our customers. So, Big Boss, what do you want: lower costs or safety from disruption?
Bell: I want both! And that is why you are getting your raise. Let's face it, Stu, we both are overpaid for what we do. You have to become almost a lawyer to deal with all the crap that you do and I have to make sure that we are getting value. I am as worried as you that we have over-outsourced and made ourselves vulnerable, but I know that is a risk we have chosen to take. And if beefing up our ERP system counters that, I am willing to sacrifice one for the other.
Stu: Ok, Boss. Same time next year?
Bell: Count on it.
Howard Anderson, founder of Yankee Group and co-founder of Battery Ventures, is currently the William Porter Professor of Entrepreneurship at MIT. He can be reached at firstname.lastname@example.org.