Hi, Humberto

Thanks for some thoughtful input.

It definitely is a paradigm shift. I went throught the same shift
while working the proposal, and it took a little work to get, of all
people, Bill Dettmer to agree fully with it. He was getting led down
the detailitus road.

The client says he agrees with the paradigm shift. But, then says
something that leads me to think he hasn't really gotten it.

It is a VERY unusual situation. So, let me see if I can convey it.
Its hard to discuss because we are bound by a non-disclosure on the
details of the product.

Treat it as an assumption, if you like, that it is a very high value/
high margin product with an effectively unlimited market...they
already have hundreds of orders, at multimillion dollars apiece, and
they haven't made one yet. They aren't promising one for over two
years, yet people are plunking down a couple of hundred thousand
dollars to "get in line".

The problem is that they are choking the development process, because
of cost concerns. They admit to have, in effect, lost the last year.
They do not have an effective plan por execution process that will
get them to the end product in a predictable time. Expereiences with
similar products frequently show large delays. They admit that they
have to struggle to figure out how they are doing on all the work
they know is ahead of them.

They will net a few million dollars per unit (T) as soon as they can
put the product out the door. They plan to ramp production up to well
over 100/year.

Now, here's the paradigm shift. The T they are losing by any delay in
schedule is NON RECOVERABLE. It is profit lost forever. The reason is
that if they are able to ramp production up further in the future,
they can sell those too...so there is no way to ever "make up" for
the profit loss of delayed introduction.

So, the profit loss (or gain) has almost nothing to do with their
increased OE and I during the delay period. But, that seems to be
what they focus on.

This isn't exactlty the same as the "first to market" advantage,
becasue as far as can be told, there isn't anyone even close to
entering the market with a competitive product. It also isn't a
saturation situation, such as the iPhone might reach. The market for
this product is large enough relative to realistic capacities that
their production capacity will likely always be the constraint.

Nonetheless, they seem focused on controlling development cost.
That's where the paradigm problem comes in.

So, it looks like option 2 to me in their nonconsious mind
(intuition). But, they can't say that to guy with the money.

=|JRM: So you don't know the nature of their conflict. You need these guys to
help you draw a cloud. Why don't you do a thought experiment with them where
you are their boss and they are trying to justify the project. They can
instruct you on their perception of their bosses' position (which will really be
their side of the conflict) and you can help them flesh out the other side of
the conflict (which is currently yours)!|=

BTW, I think the "bonus" idea Eli puts forth in VVs is a recipie for
disaster. It will logically and inevetatably lead to a pissing
contest. If they succeed, they won't want to pay you, and will show
why it was "other things they did" that made it succeed, despite your
input. If they fail, they will blame it on you. A little study of
psychology enables one to develop this causality with, what some
TOCers like to call, "lock-tight logic".

Regards,
Larry

=|JRM: Yeah. "Lock-tight logic" actually means, get ready, we intend to call
the client an idiot when he fails to purchase our simplistic proposition!|=