Business Machine

Technology, business
and innovation.

And, not least, about
the Mac.

Weblog Archive Cutedge

by: Bernard Teo

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Copyright © 2003-2012
Bernard Teo
Some Rights Reserved.

Sun 25 May 2003

The Hair-Cut Machine

Category : Commentary/haircutmachine.txt

I had my hair cut at a Japanese-style S$10/10-minute hair-cut shop. It's a great example of a business machine.

Please read Seah Chiang Nee's excellent summary of the current state of business in Singapore - "A sign proclaims $10 for 10-minute haircut and I realised why" - which could be dugged out from a Google search.

Firstly, it's clean. And they promise to get it done in 10 minutes. Because of SARS, I didn't want to hang around in close proximity with 10 other people for more than 10 minutes. So that was fine by me. The barbers/hair-dressers (mostly girls) look trendy enough to risk a try. So, the business proposition was right on the money.

Next, they solved the problem of pilferage (the hand-in-the-till problem) by using a machine to collect the money. You slot a $10 note into a machine and get a waiting card. In one fell swoop, they did away with the cost of having a cashier. And collected useful statistics.

For example, the owners can have (if they want to) accurate records of the day's takings, the pattern of use (e.g., are they busier in the morning, noon or night?), how long people have to wait, the time each customer took (I've seen one done in five minutes, some in fifteen), which of their crew worked the fastest, the slowest, etc...? All these can be used to fine-tune the system.

Another part of the system concerns the need to be hygienic. They have a steriliser at each workstation - for the combs, brushes, vaccumn cleaner nozzle - anything that comes into contact with the customer. The cloth that keeps away the falling hair does not come into direct contact with your neck. They use a disposable liner. They were creative in finding ways to be hygienic and ended up with a "unique selling proposition".

And here is a good example of the concept of "triage" in action. There are many other services a hair salon offers - a hair wash, hair colour, manicure, even gossip, and a constant stream of chatter designed to create opportunities to sell more services. The $10 hair-cut shop pruned away at these possibilities to select only those they want to offer as a finely integrated package - quick, reasonably priced, hygienic, no-chatter, and, because they only do hair-cuts, they need a much smaller space than any other salon, which results in lower rents and greater flexibility in finding available shop space, and greater turn-over (say, $360 per hour, for a six-seater shop, multiply by 10 hours from 10 am in the morning till 9 at night, equals around or above S$1500/day, assuming 40% capacity).

I believe the best business ideas are those that emerge as a finely balanced gestalt. If you can do that, and it makes money, and you can run it using mere mortals (e.g., you don't have to worry about an up-and-coming David Gan or Georgie Yam stealing away your customers - because there's no time). Now, if you can do that, what do you do? Open as many branches, as fast as you can.

Posted at 2:57AM UTC | permalink

Systems Thinking

Category : Commentary/connections.txt

I'm trying to relate the idea of making a good living, through running a business that works like a machine, to knowing how to find the pieces of technology that can help you to actually build that business machine.

Without a system, a business cannot scale, and the owners cannot disengage from the daily grind long enough to dream about where to take that business next. With a system, you've already built the procedures that can be done by rote into the system. That forms the spine of the business.

In the fashion of the Seaman-Campbell-Keown-Vieira axis, which forms the central spine of the Arsenal team, allowing the creative types like Pires and Henry to run rings round the opposition. (Actually I'm a life-long United fan.)

If you have a good system in place, you can have a lot of flexibility in planning your staffing. You can experiment with the combinations - hardworking journeyman types, to people with a lot experience, to the young, fresh and idealistic - because a good 80% of the business processes have been made to run like clockwork.

In a system we have in place for a client (that's regrettably withdrawing from here, but had contributed a fair bit to our own passive income), they recruited a 65-year-old temp with vast claims-handling experience a year back. Old though he was, I've observed that it was possible for him to learn the system in a week - score a point for the Mac school of user-interface design.

He's helped by a system that presents him with only the data that needs to be focussed on, that collates the data and shunts it to the next step in the process, that knows how to roll everything back when he makes a mistake. That allows him to concentrate on what he is good at.

But I did not come to praise our system. No, only to bury the idea that IT has to be talked about in terms like "three or four-tier client-server", "hot or cold start", "Used-Case diagrams", "Black-box or White-box testing".

I actually get demands to typecast a system along these lines (whatever do they mean?) by IT managers before we even have a chance to talk about the business needs.

I believe there is a place for everything, and everything in its place. The trouble is that the IT Manager as GateKeeper is in the wrong place.

To build the Ultimate Business Machine, we've got to start the discussion from the business end of things, from the systems, procedures and processes that are needed, and work progressively downwards into the technical implementations, making innumerable trade-offs along the way. All the while, we need to remember that we're trying to build a "machine" that will deliver consistent services, of a consistent quality. We're going to have to resort to triage, making decisions in favour of cases that work 80% of the time, and move on.

I believe that if you proceed along these lines, you can force each technical decision to be reviewed against its contribution to the business objective - does it make the business run like a high performance engine? - and then choose the right tool for each job. It's possible to hold a technical discussion wholly at a descriptive level, in terms of capabilities. It's possible to insist that a technical person speak plain English. Get him to draw a picture of what he's trying to do. If he can't, it's possible that he's really clueless. You've got to have faith in your ability to discern the truth.

Posted at 2:52AM UTC | permalink

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