Sin-Yaw @ Juniper

This Internet thing is good at satiating curiosity. I started a pursuit this weekend to get a grip on the industry, defined as: Cisco, Alcatel, Juniper, HuaWei, F5, Extreme, RiverBed, and Arris Group. (Foundry and Nortel are kind of hard to get these days.) I am interested only in their financial performance, so I dug up their latest federal reports, or whatever their websites will give.

Relative to each others, Cisco dominates with 51% market share. Alcatel follows with 25.7%, HuaWei 15.5%, Juniper 4.7%, and the rest combined is 3.1%. Interesting that each major sales region has a dominant player: US, Europe, and Asia Pacific. The numbers show Juniper is winning share, but I can be biased.

If economy of scale plays in this industry, smaller ones — Arris, F5, Extreme, and Riverbed — will face consolidation pressure. Since this is high-tech, I am not very sure economy of scale really play.

Among the “big 4″ (Cisco, Alcatel, HuaWei, Juniper), Juniper has the best gross margin (67.5% of total revenue) and HuaWei least (33.9%). This is not surprising that Juniper is at the “high performance” segment and HuaWei competes on costs. (Alcatel is 34%, just a hair better than HuaWei.) Juniper spends the most on R&D at 20.7% and HuaWei the least at 11.4%. HuaWei has the lowest OPEX (27%) and Alcatel highest (54.5%). Cisco makes the most money with 20% net income and Alcatel lost at -20.2%.

Alcatel deserves some attention with low gross margin and high OPEX. Not a good combination: products cost too much to make, company is not efficient. Over the other end, Riverbed has a whopping 73.5% gross margin and equally high OPEX of 74.8%. On the surface, this means they make and spend money both quickly.

Juniper’s and Huawei’s numbers make sense. One invested on R&D and the other kept the corporate overhead low. Extreme is interestingly pretty much on average in every areas. Mediocracy can be difficult to rid.

slide:ology The Art and Science of Creating Great Presentations Nancy Duarte ISBN: 9780596522346 O’Reilly Media, Inc. August 12, 2008

Completely reasonable for a graphic design company to publish a book on slide design or presentation style. The principles are completely dead-on: spend the time to prepare; watch out 3 elements: delivery, visual, and message; focus on the presenter not the material; and use contrast to emphasize.

The professional approach, however, makes the book less a tutorial than an advertisement. Ver few people can afford 90 hours for preparation, creating custom diagram, establish an image library, or do professional color schemes. Not all presenters will be Al Gore. In fact, many who present frequently are stretched in both time and money to just get by with slides slammed together quickly and a few minutes of mental preparation. They are the ones who need helps.

Any reasonably large organization must manage employee performance — separating the wheats from the chaff — rewarding those who brought in value and aligning talents to tasks. This has been practiced widely. It comes down to a simple concept: bucketization. Putting talents in buckets of various labels, exceptional, very strong, strong, etc., and deploy different incentives, or disincentives, accordingly.

If this is not controversial, why not nano-bucketization: putting almost everyone in his/her own bucket? Somehow, we are comfortable with calling 20% of the population exceptional, but not two of them “the best two” and the next person “the 2nd best.”

Think about the objectives of the performance process. Wouldn’t it make sense to be more precise? The precision, it seems, actually hurts teamwork. The destructive competitiveness among individuals somehow diminishes when the classification is sufficiently coarse. We are the best team, but each team member contributed equally and should not be treated differently. This is understandable from the team’s point of view, but not managerially. The manager needs to know the relative strength of each member.

Hence the paradoxical conclusion: managers must stack rank his/her organization, but not communicate the result with precision. Every study that shows the negative outcome of stack ranking misses this point. Stack ranking is absolutely necessary. It is done implicitly by every manager anyway. The communication of the rank, however, should probably never happen.

How do you make a large number of people to change at the same time?

Note the operating words. How implies a methodology that can be learned and practiced. Make signifies the intent. Large so that this is non-trivial. Lastly, same time means the degree of control.

Military perfected this art long time ago. Recruits go through a process that strips individuality and imprints discipline and obedience. After that, rigid structures guarantee the clarity and efficiency of the communication. When the commander gives the order, a massive number of people turn on a dime, at least when they are well-trained.

The fashion industry has a different approach. They have mastered human’s innate tension between novelty and conformity. With clever messaging, the industry seduces society to change voluntarily, quickly, and predictably.

Companies change too, some successfully, like GE, Intel, HP, and several others commonly studied and written about. Countries sometime change at stunning speed. Look at the transformation of China. No one visited 10 years ago would recognize its current state.

But how? To effect changes for a large number of people, the change agent must first understand those very people and execute with a methodology. People change twice: once internally and the 2nd time in behavior with their group. In the beginning of the process, people look for reasons not to change. Once the tipping point has been reached, they embrace it and the change accelerates. The challenge becomes keeping the balance of fast proliferation and the lost of control.

Of course, there is the traditional corporate-style change management: get senior executive endorsement, socialize with stakeholders, build early successes, prepare for communication, etc. We are in the era of blurred line between employees and community. New change management must embrace both approaches: the tipping point style and the corporate style.

A manager well-versed on both change styles will be rich rewarded in his/her career path.

The bus fare is $1.75 one way, gasoline costs about $3 per gallon, the vehicle costs about 50 cents per mile to operate, in terms of wear and tear, how long the commute must be to justify riding bus, or not driving? Or what will be the MPG (miles per gallon) threshold of the car to make it work?

If your car is a Prius (45 MPG) and your commute is longer than 3 miles, you save money. If an SUV (15 MPG), 2.5 miles will do. If we ignore the vehicle’s wear and tear, it takes 26 miles for Prius and 8.75 miles for the SUV.

EcoPass reduces the fare to zero and takes economy out of the consideration. Good job.

Cross posted

You have everything planned. Strategy is brilliant, wheels are turning, projects are in motion, future is unrolling. You feel good and can almost taste success. Unexpectedly, something big happened: two big buildings collapsed, a hurricane wreaked havoc, an earthquake shook a romote place, something called sub-prime is disturbing the US financial institutes. The event has no direct effect on what you are doing, but everyone is talking about it. Should you change your course or stand firm to ride out the storm? Since there is no data to support either decision, it is essentially a gut call, wrenchingly.

Guts are quite a rare commodity these days.

The question is whether the event has fundamentally changed the course of the world, or it is merely a ripple to be forgotten.
Sequoia advised their portfolio companies to change. In fact, to jump immediately.

If the event altered the landscape. Companies that reacted quickly also recovered quicker. Companies that tried to ride it out experienced painful cut-backs and frequently never recovered. There are many examples. Studious readers have already listed both columns. The million dollar question is, “How soon will this economy recover?”

You know Sequoia’s answer by now, “Not soon enough for you to just do nothing.”

I found myself preaching. Maybe I do it all the time, but rarely I was self-aware of that fact. I must have delivered the same sermon enough times already.

What separate professional software development and amateur? The ratio of effort devoted on quality. Amateurs make it work. Professional show evidences. The amount of efforts in professional software houses devoted to quality and verification easily dwarfs standard definition of development effort.

The verification takes place in phases. First is the effort to make sure the software works as designed. This is most commonly done by the same person who designs the software, but more effective if by someone who sits close to him/her and watches over his/her shoulders as he/she codes. The goal is to make sure the software behaves well for all ranges of inputs.

Next is the effort to verify that software meets the requirements. Most likely, someone who understands the requirements will come up with methods to verify such, without giving too much concerns on how the software was designed.

After these two steps, the developer confidently declares his/her software works. He/she now must prove the new does not break the old. This is simple enough. Just run all those previously developed tests in the first 2 steps.

Imagine many of such teams following the same process. When they all come together, they do not work together. There could be misunderstanding of the interfaces or inadvertent changes that affect other parties. This is why we need integration tests.

At the end, companies frequently will “try run” on their best customers’ environments. Sometimes, the best effort “in the labs” does not discover problems “in the real.” This is the attempt to be as “real” as possible. It also ensure the satisfaction of the best customers.

Some requirements are hard to verify. Specifically, performance requirements demand benchmarking, reliability needs stress testing, security needs attacks. None of these come “naturally,” and software houses frequently use simulators. They create un-natural but concentrated faults to put the software under duress. The most common simulator is for new hardware platforms that are still in development.

This whole system is under the supervision of a general test harness that automates everything, supplemented with as little manual tasks as possible, for maximum execution speed. This harness handles test sequencing, failure management, metrics of progress, report generation, and even provisioning of resources.

People asked why do I come to Juniper. “Because the way I watch TV now.”

Just a few months ago, I routinely fired up BitTorrent at night to download episodes of my favorite programs (House, Heroes, Grey’s Anatomy). I had no choice. Those programs are not aired in China. When I moved back to the US, I don’t wait anymore. I watch those programs from the official web sites: fox.com, nbc.com, etc. I will hook up my laptop to the new 52″ 1080p HDTV. Many programs play in full-screen mode (Fox is better) and I will soon forget that’s not live TV. I laughed so hard on Tina Fey’s SNL performance on my laptop, displayed on my TV set, Sunday afternoon — no need to stay up Saturday night.

Internet never busted. Many Internet companies went under, but the net kept on growing. Billions of people around the world are waiting to get online. Internet these days are several times larger than the bubble days and sees no sign of slowing down.

And which companies are to ride the wave? The one that produce the biggest, meanest, and fastest routers for the mass. There are other players, but Juniper is at the center of this stage.

Juniper is large enough to make a difference and small enough to experience explosive growth. Juniper’s executives are all on-board for this vision. Everyone focuses on the customers, the market, the revenue, the products: not on internal politics.

When I watched SNL, I noticed the page said more than a million viewings and counting. This is main-street behavior now. It takes lots of networking to deliver millions of viewings.

Can’t think of another company that is readier.

Few years ago, I read this book by Larry Bossidy and Ram Charan. Like most management books, they distilled common senses into operational principles and thought guidelines. This book has profound influence on my managerial style and even career choices. It is one of the books I kept on my shelf. (My standard practice is to donate them to friends or library.)

Over the years, I gradually developed my own execution skills, much of them based on Larry Bossidy’s book. I wrote two blog entries on this topic: Management 101 and Management 102.

Most worthy changes involve many people. As a general rule, people do not want to change themselves, they just want others to change. Almost all people will flatly deny their resistance to change, yet their behaviors betray them. The best, and sometime the only, way to change people is to convince them to change by themselves. Once people understand the needs and benefits, and they have accepted the stress, they change willingly.

The tricks are simple: after designing the change, allocate sufficient time to socialize and communicate. When doing so, put yourself in their positions. Focus on explanation. If things make sense, people embrace the change. Otherwise, they stonewall.

Socialization and communication is more effectively done in person. There are many modern ways of communication. Almost all of them remove personal contacts to certain degree. Supplement your socialization and communication with those tools. Avoid using them as primary channels.

What if you are in a hurry and there are too many people to visit? You will be surprised how much difference a voicemail would make. Rehearse and practice your voicemail. Keep it short, keep it personal, stay on point.

Give people time to internalize and express their thoughts. There are two benefits: being heard speeds up the acceptance, you may also learn something valuable.

Next topic? Managing time. (Not time management)

I sought advices from Mark for working at Juniper. He thought for a moment and said, “Listen first.” Mike Harding told me the same. They alerted me that I have not been following my own rules.

No sudden moves: it is almost never a good idea to surprise anyone. Plan for communication delays. Pull trigger only after everyone is expecting a loud bang.

I am not smarter: Jumping in to deploy an obvious solution, without understanding why it wasn’t done already, will frequently yield unpleasant surprises. If I am not smarter, then they must have good reasons doing things “obviously” wrongly.

Of course, all rules have exceptions. Emergencies demand swift actions. But Sin-Yaw, follow your own rules!