wandercoding.com

I can only think of one reason that the CEOs of companies don’t outsource their most expensive people.  They is them.

I’m going to make some sweeping generalizations and estimations here, so bear with me.  I’m going to stick with larger software companies because they are more likely to open overseas offices or outsource jobs.  Larger software companies tend to have higher paid CEOs and also higher pay for their software engineers.  Let’s do the math.  Average CEO pay: $10million in money and stock options.  Average software engineer pay: $70,000 to $100,000 in money and stock options.  Ratio: at least 100 to 1.

If you believe my estimates are out of whack, that’s ok.  Let’s assume that the ratio is closer to 25:1 or 50:1.  When one accounts for the entire executive staff – you know all the VPs of this, that and the other – you can add another 10 people or so whose ratios are 5:1 or 10:1 versus the average worker.  You can also add the board members, who tend to be CEOs of other companies.  They can make $100,000 for attending a dozen meetings a year.  Sometimes they get stock options, too.

It seems clear to me that a large company could very effectively save 80% of their executive compensation by moving those jobs to qualified people in India or China.  Clearly if the engineers there are capable of writing our software, they should be smart enough to run the company as well.

I’m obviously not a fan of massive outsourcing or excessive executive compensation.  I don’t believe that either of them accomplish what they’re cracked up to achieve.  I’ve seen outsourcing fail miserably due to communication problems, over-promising results, and even cultural hesitation to say, “No, we can’t do that.”  I also don’t understand how executives justify outrageous pay, bonuses, and golden parachutes, even when they don’t perform.

There’s a happy medium somewhere, but it seems to be getting lost.  The next time your CEO suggests that outsourcing will save your company tons of money, maybe you can find an anonymous way of suggesting that the CEO could outsource their own job to save even more.

I try not to lump people into buckets.  I like to think I’m open-minded enough to consider various points of view.  One thing, however, that really makes me mad is fear-mongering.  When W was running for his second term, the Republican supporters ran TV commercials warning us all that the U.S. could be headed for disasterous terrorist attacks if we voted for a Democrat who would most certainly be “soft” on terror.  More recently, there are ads urging me to call my Congressman and tell him that he should vote no on the health care plan.  The ads are full of fear-inducing messages about rationing, skyrocketing costs (aren’t they already?), etc.  Two of the messages talk about two different Congressmen, each of whom is the deciding vote.  Well, which one is it?

Politicians do it, marketing people do it, and salesmen do it.  “You don’t want the extended super warranty?  It protects your computer for 20 years and covers damage, even if you drop it in the toilet.”  Now, stories of people dropping their cell phones in the toilet are widespread, but your computer won’t fit in the toilet.

Too many decisions are based on fear.  Some decisions are valid to make on this basis.  Do you walk down the street in a neighborhood that’s known for trouble?  Do you leave your car unlocked when you know that there are people around who regularly steal cars?  Do you go skydiving without being absolutely anal about checking everything that come into play?  Of course, not.  However, most of the ads on TV and salesmen trying to sell you something are betting that you won’t do the research.  You won’t bother to find out the truth.

We all make decisions about things on the spur of the moment, often based on the fear induced by the situation or persuader at hand.  However, when you take some time to think it over in the absence of the pressure, you often come up with a clearer view of the situation.

People who resort to this are manipulating you and nothing makes me angrier than being manipulated.  When you can, take the time.  Do the research.  Make up your own mind.  Punish the fear-mongers.

Marketing people tend to get a bad rap, especially in software.  Just read a few Dilbert comics about the soulless folks in marketing and you’ll get a gist of their status.  I’m not suggesting that it’s entirely undeserved either, but not all marketing folks are dishonest, horrible people.  On the contrary, I’ve worked with many bright, knowledgeable folks who made a big impact on the company I was working for.

This post will deal mostly with an overview.  There are generally two kinds of marketing: inbound and outbound.  Inbound is the art of determining customer needs and producing products to meet those needs (i.e. taking in information).  Outbound is taking the products that you have and presenting them to the customers in the form of websites, webinars, presentations, brochures, advertising, trial software, etc. (i.e. sending out information).

Ideally, you’ll have folks at your company that are concerned with both inbound and outbound marketing.  Good inbound marketing is key to producing the products that customers will actually buy.  It should involve conversations with customers, and involve them in the testing of your software in alpha and beta stages of development.  I’ve always been leery of know-it-all people who come into the company and try to turn the place upside-down without any experience in the domain of the products (i.e. they’ve got 10 years of marketing experience, but they don’t know anything about building construction or software that supports it, for example).  That’s not to say that you shouldn’t hire someone not familiar with your domain, but you should expect them to, and encourage them to learn about it.  In the absence of this, your products can easily be led down a path of uselessness in the field.  It’s seriously hard to listen to folks who’ll pontificate on the direction your software should take when they haven’t a clue how it’s really used.  Expecting that your software will create a complete shift in how your customers will do business is a recipe for disaster.  Most companies are like slow-moving barges.  Having them move quickly because you’ve changed entire processes will likely result in a loss of sales.  When in doubt, ask several customers.

Good outbound marketing is essential to support sales and must be done at the appropriate level for your software and customers.  For example, if you write highly specialized software that costs thousands of dollars per license and will likely sell only a few copies per year, buying a Super Bowl ad is probably not a good use of your advertising budget.  Of course, the biggest bang for your buck is quality website.  When your customers find you, you save time and money.  Ensure that your site is clean and makes it easy to find out the information a user will want to know.  If possible, allow them to download a trial, preferably fully functioning.  After that, the marketing folks will have to figure out what to spend their money on to best increase awareness of your product and attract customers.  In my experience, huge booths at huge conferences are not cost effective if your software is high cost and long sales time.  For lower cost, easy to justify sales, it might work better.

This column isn’t the place to do a complete breakdown on marketing.  Besides, I’m a software guy and you probably are, too.  The point is to arm you will a little knowledge about what your marketing folks are supposed to be doing.  If they’re not, maybe you can nudge them in the right direction.  It can be hard to see the big picture when you’re in the middle of a detailed project.  Asking questions about what’s going on can lead everyone to think harder about the big picture and where the focus of effort should be.