Our "Why" at ZTEC Instruments

Simon Sinek's book "Start With Why" argues that we are driven by "why". Decision-making is emotional and we use reason to justify our emotional decisions. Sinek supports his theory with a biological argument that decision-making is centered in the limbic system at the core of the human brain. The limbic brain is the most primal part of the brain and is responsible for emotion, behavior & long-term memory. Language and reason occur in the more developed part of the brain called the neocortex. We use reason to justify and rationalize our emotional decisions, but all decisions are based upon emotion.

Great companies start with a "why", and this "why" emotionally connects with customers and workers alike. We purchase products that resonate with our identity and values. We purchase products from companies that are aligned with our beliefs. Sinek states "People do not buy what you do, they buy why you do it." In regards to work, we all want to be part of something greater than ourselves. If you hire people who believe what you believe, work takes on true meaning and purpose. An organization aligned in its "why" provides the passion and drive to accomplish great things.

And, this is our "why" at  ZTEC Instruments.  We believe in individual contribution, contribution to our customers, to our industry, to our community, and especially contribution to the professional development of a superior workforce. We believe that a talented and highly-motivated group of people can change the world. We have the passion and drive to do extraordinary things. How we do this is through rapid and focused innovation. What we do is manufacture wireless test equipment.

Is Albuquerque a Great Place to Live?

Not long ago while traveling, when I told some people who I had just met that I live in Albuquerque, one of them responded with the knee-jerk response "Albuquerque is a pit." At the time, I was startled because I could not reconcile his opinion with the city that I love. I believe that Albuquerque, with its cultural diversity, its long history, its awe-inspiring landscapes, its access to numerous outdoor activities, its down-to-earth people, and what is arguably the best climate anywhere, is one of the most desirable places for my family and me to live. After some introspection, I realize that much of the world may not see my city in this same way, and I further realize that there are aspects that need vast improvement.

Is Inflation Truly Low?

Today while I was grocery shopping, I had a startling revelation. The price of milk, of apples, of beer, of a head of lettuce, of just about everything in my cart seemed to be twice the price that it was a just few years ago. I grant you that this is anecdotal and not hard data, but it got me thinking.

I went to the US Government Bureau of Labor Statistics website which lists historical inflation rates as measured by the Consumer Price Index (CPI). So far in 2013, CPI is running at annual rate of 1.8%. CPI was 1.7% in 2012, spiked up to 3.0% in 2011, and was again down at 1.5% in 2010. 2009 was 2.7%, and in 2008 we had a paltry 0.1% inflation. Over the past 5 years, total inflation was 9%. How can this be? Just about everything that I buy on a regular basis is noticeably up more than 9%. Think about it: the price of food, the price of gasoline, my phone bill, my medical insurance, the cost of air travel, my utility bill, everything is up significantly over the past few years. I cannot think of one thing that I purchase on a regular basis that is more economical today than it was in 2008.

How Big Companies Lose Their Way

I recently refinanced my home with a large bank, one that is publicly announcing that it wants to grow its market share to 40%. This lender currently controls 1 in 3 U.S. mortgages, and states that this is a result of doing a better job than its rivals. If my refinance experience is an example of doing a better job, this bank is sorely mistaken. This nationwide bank treated me as if they were doing me a favor by accepting my business, and either through neglect or bad faith, at three different times tried to extract thousands of dollars in additional fees. This episode demonstrates how a large organization can lose its way and cause its own downfall.

This leading nationwide mortgage lender attempted to raise fees at the very end of a 90-day refinance process, hoping that either I would not notice or would be so far along that I would cave in. I found out about the fee changes from the legal disclosure documents in the last days before closing. Three times, I was verbally assured that their original fee structure would be honored and then later received written documentation to the contrary. Each time, I had to make numerous phone calls to confront and resolve the undisclosed fee changes.

What Government Can Learn From A Startup

While our government continues to struggle with dysfunction and  ineffectiveness, the private sector is slowly and steadily rebuilding the economy and jobs that were destroyed when the real-estate bubble burst in 2008. The contrast is striking as I consider how we, as a startup company, have dealt with the challenges of the past 4 years, compared to the self-imposed struggles of the federal government. While we have accomplished more with less, the government continues to stagnate even as it consumes 27% more of our limited resources (U.S. government spending has grown from $3.0T to $3.8T between 2008 and 2012).

21st Century Infrastructure

Recently, there has been much discussion about the need for more government investment in our infrastructure. Most of us think about bridges and roads when we hear infrastructure. The world is changing rapidly and our infrastructure investments need to keep pace with those changes. Instead of building transportation infrastructure to connect us physically, why not build 21st century infrastructure to connect us electronically?

Holiday Wishes

The following is adapted from the year-end wishes that I shared with the outstanding small company that I am part of. It speaks to the values and culture within our startup.

As we conclude the year, I commend each one of you for helping to make 2012 another great year at ZTEC Instruments. Economic uncertainty has made 2012 more difficult than we expected. The year was challenging, partly due to market conditions, and partly due to our choice to aggressively invest in the wireless test market.

Success in the Future

Today's business environment is more competitive than ever before. Goods and services can be produced anywhere and sold worldwide via the internet. Enabling technology is pervasive and inexpensive, allowing low-capital startups to spring up everywhere. Education, hard work, and creativity are being adopted by cultures across the globe. On average these trends are lifting the world's standard of living, and there are winners and losers. Developing economies are extending prosperity and opportunity to more, and developed countries are under pressure to become more competitive or risk falling back. This is especially important for populous nations such as the United States that must employ many citizens in this highly competitive world marketplace.

Celebrating Opportunity and Those Who Pursue It

After watching the last two week's political conventions, I am left feeling more encouraged and optimistic than ever. It was not the soaring rhetoric, and certainly not the partisan attacks by each side. Rather, it was the speakers and their compelling life stories that uplifted me. Both political parties showcased examples of what makes America great. We saw impressive individuals from both parties, who took advantage of opportunities to make significant contributions.

Think about the common thread that we saw within both conventions. We saw examples of a great society that helps people to help themselves. Both parties celebrated the pursuit of a better life for ourselves and for our children. With assistance from families, from communities, and from government, ordinary people accomplished extraordinary things through scholarship, merit, hard work, and character.

Outliers

In statistics, an outlier is an unusual occurrence that falls outside of the normal statistical distribution. These random and rare occurrences often seem inexplicable. Consider rolling dice and getting snake eyes 100 times in a row.

Malcolm Gladwell's book by the same name, Outliers discusses unusual patterns of achievement and success. In the book, Gladwell identifies logical causes for what would otherwise be considered statistically impossible events. He identifies cause and effect relationships for statistical outliers.

Collaboration, Innovation and 5G WiFi

The IEEE standards association is a fantastic model of collaboration that brings together competing organizations, ideas and interests to advance technology and the framework for innovation. Companies from all over the world send highly talented engineers and scientists to develop standards within IEEE working groups. Competing companies collaborate to develop the standards that enable interoperability, innovation, and ultimately competition between those same companies. The consumer is the biggest winner of this cooperation and standardization. With a common and open standard, the marketplace creates the competitive environment that leads to innovative new products and drives prices down over time.

A standard that you will likely hear more about is the IEEE 802.11 Wireless LAN (a.k.a. WiFi) standard. A new 5th generation (5G) WiFi standard, designated 802.11ac will deliver multi-Gbps data rates. This is significant because 802.11ac will enable faster wireless data rates than most of us now have with our wired 100 Mbps connections. The 802.11ac standard is still in draft form and not expected to be completed until later this year, but already there are 5G WiFi products available. This shows the pace of market-driven innovation. 

Your Strengths Are Your Weaknesses

Those things that we do well can also be our greatest liabilities. Like a double-edged sword, a strength is also a weakness. The greater the strength, the greater the potential weakness and liability. Consider that....

• Physical strength can limit your flexibility
• Determination can become stubbornness
• Confidence can become arrogance
• Discipline can make you narrow-minded
• Analytical thinking can lead to over-thinking
• Focus can close you off to new opportunities
• Enthusiasm can make you act without thinking
• Spontaneity can lead to undisciplined action
• Meticulousness may become perfectionism
• Resolve can lead to ruthlessness
• Passion can become zeal and obsession

The list goes on...there is a counterbalance to everything. What personal traits are you most proud of? To what do these traits leave you vulnerable?

How The Mighty Fall

Last week, I went to select a book for a short trip that I could easily carry and read quickly. Two books in my need-to-read pile fit this criteria: "Only The Paranoid Survive" by Andy Groves, and "How The Mighty Fall" by Jim Collins. At the time, I did not consider that these two books addressed the same topic. Both discuss challenges facing companies, and explain that some companies rise to the occasion while others falter. Andy Groves describes how Intel transitioned from memory to microprocessor, dealt with a Pentium flaw in 1994, and managed through the explosive growth of PCs. Intel overcame these potentially catastrophic events thorough disciplined pursuit of its core business philosophies. Jim Collins studies great companies that stumbled or failed in an attempt to understand the underlying causes of business decline.

The Discipline of Market Leaders

I recently gave a colleague this classic book on business strategy by Treacy & Wiersema. Although I will not go into detail about the book's content, I do recommend it to anyone involved in defining business strategy. In brief summary, the authors provide compelling evidence that market-leading companies have single-minded focus on one of three value propositions:

1. Product Leadership
2. Operational Excellence
3. Customer Intimacy

Fair and Equal are Not the Same

Fair and Equal are not the same thing. When individuals are given equal opportunities, their accomplishments are rarely equivalent. Individuals perform differently due to a number of factors including effort, initiative, aptitude, and training. It is not unfair that everyone does not receives the same rewards. It is a fact of life. Not everyone deserves the same rewards. It is more fair to reward people differently for different levels or effort, skill or accomplishment. This is especially true in business.

Made in America

We hear much talk about the decline of manufacturing in America. Some argue that America has lost its manufacturing capacity. The data from the most recent year available (2010) paints a somewhat different picture. Not only is the U.S. by far the largest economy with 23.1% of the world's GDP (China is second with 9.3% of the world's GDP), the U.S. is the second largest manufacturer. In 2010, America's manufacturing output was $1.952 trillion, just behind China's $1.995 trillion. Yes, in 2010 the U.S. lost the title as the world's largest manufacturer that it held for more than a century, but America is far from having lost its manufacturing capacity. America still manufacturers19.4% of the world's goods.

Your Unfair Advantage

In his recent blog post on pitching to potential investors, Guy Kawasaki argues that a startup needs an unfair competitive advantage. He states "That’s why they are called unfair advantages...If everyone had them, the field was level, and everyone was created equal, then they would be called fair advantages, which is an oxymoron." Whereas pitching to investors is important, it is vastly more important for a startup to actually execute its unfair advantage. Unfulfilled promises to investors do not leave anyone very happy.

My experience has convinced me that the primary unfair advantage of any  startup is an ability for rapid decision making. I am not just referring to the early days when a startup must be opportunistic and meet the needs of any customers that it finds. Later, as a startup attempts to break out to become a successful mid-size company, it must also leverage its ability to quickly make correct decisions. Success requires an organization that combines three essential elements:
1) the right team,
2) clear objectives,
3) and a constant focus on rapid execution.

We Are Living in Exponential Times

The world is changing more rapidly than ever before and that rate of change is accelerating.

This YouTube video about the rapid progression of information technology was shown at a Sony executive conference last year. Here are some excepts:

• The first text message was sent in 1992. Today, the number of messages sent every day exceeds the number of people on Earth.
• It took radio 38 years to reach 50 million people, TV 13 years, the Internet 4 years, the iPod 3 years, and Facebook 2 years.
• The number of internet devices in 1984 was one thousand, in 1992 one million, in 2008 one billion.
• 4 exabytes (4 x 10^19) of unique information will be generated this year: more that the previous 5,000 years combined.
• The amount of technical information is doubling every year.
• The most in-demand jobs of 2010 did not exist in 2004.

Goal Setting

Over the past few months, my management team and I have been working on our 2012 Operating Plan. We are in the process of defining our goals, metrics, and budgets for 2012. This process, which we do every year, is always a combination of analysis, strategic thinking, constructive conflict, and some educated guesswork.

The Difference Between Winners & Losers

The following story illustrates a difference between winners and losers in the modern global economy.

A new VP who was just promoted was settling into his new corner office when he noticed that his trash can was full. When he arrived the next day, the trash remained. After a week, with the trash can still full, he decided to seek out the building manager. The building manager said that he would look into it, and came by later to tell him what had happened. A janitor had stopped by his office each night, found the door to locked, and gone on his way. The locks had been changed when the VP got his new office. The building manager said that the problem would be rectified immediately.