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Forgotten Fundamentals |
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Software Success Lessons (Including AI)
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Lessons |
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Article in process
Lean / Continuous Improvement for B2B Software Product Development
A Software Holding Company Based on Danaher, Berkshire Hathaway, Anduril, Palantir, Amazon Models
Symptom: For 30 Years Software Projects Have Failed to Deliver AS PROMISED 50% to 70% of the time
See www.tomingraminc.com for work samples
Additional Detail on Lean / Continuous Improvement Applied to Software
REDUCTION OF WASTE for Software:
“CYCLE TIME REDUCTION IS EVERYTHING”
ACID TESTS To Know When Getting It Right
CUSTOMER VALUE TOOLS (more pending)
PRODUCT LIFE CYCLE MANAGEMENT
GET GOOD AT EXPERIMENTS, TESTING DECISIONS
DECISIONS
ROOT CAUSE ANALYSIS (Data Based)
SYMPTOMS – Top Five
ROOT CAUSES – Top Five
ROOT ROOT CAUSES – Top Five
Rapid Prototyping with rapid, direct, yes/no feedback from real users
Continuous Improvement Events
Actively Fight
Some KEY DEFINITIONS / RULES from Toyota Production System
AGILE KANBAN BOARD – Additional Notes
Testing, Quality, Self Inspection Built Into Every Step
Technology is Secondary, But Will Be Best Practical Within Above
KEY CAUTIONS
DBS (Danher Business System): See exhibit 11 HBR’s Danaher Case, Updated 2015 (This is a purchased case. Tom’s markup available by Zoom call only). NOTE: They have a Lean Software Module!
SUMMARY OF TOTAL RETURNS, LAST 30 YEARS, 9/22/2026 from CLAUDE
(Close approximations)
EXAMPLE OF TARGET CUSTOMERS: DANAHER B2B INDUSTRIAL SEGMENTS, CUSTOMERS, KEY PRODUCTS
See exhibits 1 and 11 for brands, segments and specific customer details HBR’s Danaher Case, Updated 2015 (This is a purchased case. Tom’s markup available by Zoom call only).
Sources:
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Article in process
Liability as Answer to AI Safety – Rather Than Ineffective Regulation
9/28/2026 WSJ, Andy Kessler “The Real AI Fear: Lawyers” |
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667 |
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Big Software Success Lessons From Ukraine And Drone Mission Control Room
Wall Street Journal article September 26, 2026 inside Ukraine drone mission control room
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Amazon Lessons |
Article in process
Big Software Lessons from Amazon
From Bruce Allen, Former Dir(?) of Software Training Products
Amazon’s 16 leadership principles from ChatGPT
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665 |
Who Gets The Margin? |
Article in process
You Need to Invest in AI, but Don’t Expect a Return
By Anil K. Gupta, Wall Street Journal 9/1/2026
KEY SUMMARY POINTS – EXCELLENT (Mostly)
STRATEGY MISTAKE: INVESTING IN, COUNTING ON ROI WHEN YOU CANNOT CREATE BARRIERS TO COMPETITION
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664 |
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Article in process
Lessons from the Bond Market
Capital allocation in the real economy became distorted due to artificially low interest rates since the 2008/2009 crisis
Created a subsidy for profligate governments.
TOM: AND LUNATIC INVESTING AND ATTITUDES ON TECH / SOFTWARE INVESTMENTS
CAUTIONS: Same effect on entire economy – from colleges expanding their real estate empires to California’s bullet train (which may never be finished).
10 year treasury bonds are at 4-5% which is normal.
The debt crisis many expected is not here yet – but keep an eye out.
Wall Street Journal, 9/2/2026 |
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663
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Architecture
Why No Code / Low Code Solutions Have Limited Effectiveness |
Forgotten Fundamentals: Architecture Checklist
Following is a summary of our group discussion from August 24, 2026.
The checklist is intentionally brief – to act as a reminder – not fully discussing each item.
Thanks to Cal Smith, a Salesforce Technical Architect, for joining us and helping create this list.
Finding Good Work for Senior Software People – Implications
GENERAL DO’s to Consider
FRAMEWORK EXAMPLES
SOFT ISSUES
GENERAL TOOLS / APPROACH
DON’Ts / TRAPS TO AVOID
To be continued…
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Article in process
Other Product-First B2B Software Companies Like Anduril
From Chat GPT and Claude
CHAT GPT
What other B2Bsoftware companies are pursuing "develop product first" strategies similar to Anduril? Summarize their target customers and business model
Yes. If by “develop product first” you mean the Anduril pattern of building a substantial capability before the customer has written a detailed requirement, demonstrating it in the customer's environment, then expanding from the initial use case, there are several important B2B software companies using variants of it. I would distinguish this from ordinary product-led growth (PLG). PLG usually means “build a good product, let users try it, then sell more.” The Anduril-style model is more aggressive: Build a capability → put it in front of a difficult customer → learn from real operations → modify the product → prove economic/operational value → expand the account → turn the solution into a repeatable platform.
The closest examples
But the degree of similarity varies considerably.
1. Scale AI — probably the closest current example I would put Scale AI near the top of the list if your objective is to identify companies that could follow the Anduril/Palantir pattern. Scale originally became known for data labeling and AI training infrastructure. It has been moving toward a much broader model: building complete AI systems for enterprises and governments. Scale now explicitly describes its enterprise business as building, deploying and operating AI systems in production. Its customers include organizations such as BP, Mayo Clinic, Meta, Howard Hughes and government/defense organizations. Its particularly interesting tactic is forward-deployed product management. Scale's job descriptions explicitly say that forward-deployed product managers work inside customer organizations, determine what actually needs to be built, and feed the resulting knowledge back into the core platform. Even more revealingly, Scale says: "What we run on is what we sell." Its internal AI teams use the platform to solve problems internally and then selectively commercialize the resulting technology. Target customers
Business model Platform + application + data + deployment Scale is trying to move from: selling AI training data to: providing the infrastructure and applications that make AI operational. That makes it particularly analogous to Anduril's transition from individual products toward Lattice + autonomous systems + Arsenal.
2. Palantir — the intellectual ancestor of the model Palantir is arguably the clearest software example. Its distinctive strategy is: Build a powerful general platform → embed engineers with difficult customers → solve real operational problems → generalize the solutions → expand throughout the organization. Its forward-deployed engineering model is particularly important. Recent reporting on Palantir's FDE organization describes the engineers as an extension of the product organization rather than conventional consultants or customer-success personnel. The resulting product architecture is: Gotham / Foundry + Ontology + AIP + Apollo The customer is therefore not simply buying an application. It is increasingly adopting a software operating layer. Target customers Government
Commercial
Business model Large initial deployments → operational proof → expansion into additional workflows → enterprise-wide platform adoption. This is the purest software analogue to Anduril.
3. Datadog — a much more conventional version of the model Datadog is interesting because it demonstrates how the product-first → land-and-expand model can work at enormous scale without Palantir's heavy forward-deployment component. Datadog explicitly describes its model as: land-and-expand A customer might initially deploy infrastructure monitoring, then add:
Datadog's investor materials show that customers initially adopt a product and then expand across the integrated platform. Target customers
Business model Consumption/usage + subscriptions + multiple products per customer This is a less radical version of Anduril: Build a great product first → get a foothold → develop adjacent products → sell the platform. The critical difference is that Datadog generally doesn't need to invent a new solution inside each customer.
4. Snowflake — product first, then consumption expansion Snowflake is another strong example. Instead of adapting traditional enterprise databases to the cloud, Snowflake built a new cloud-native architecture around:
Its business model is particularly interesting because customers pay primarily according to actual consumption, rather than buying large quantities of software licenses that might sit unused. Snowflake's investor materials explicitly describe this consumption model. Target customers
Business model Platform → usage → increasing consumption This creates an unusually strong product-first mechanism: Get the developers/data team using Snowflake → workload grows → consumption grows → revenue grows. It doesn't require a traditional “sell $1 million software package” approach.
5. MongoDB — developer-first rather than executive-first MongoDB demonstrates another important variation. The product is designed to be adopted by developers before the CIO necessarily makes a major procurement decision. MongoDB Atlas makes this particularly powerful because developers can begin using the managed database with relatively little commitment. MongoDB reported more than 66,400 Atlas customers as of April 2026, with the company specifically emphasizing on-demand scalability and minimal initial commitment. Target customers
Business model Developer adoption → production workload → enterprise expansion → consumption The key idea is: Don't sell the database to the CIO first. Get the developer to build the next application on it. That is very different from Anduril's government sales model, but strategically related.
6. Atlassian — perhaps the best example of product-led enterprise expansion Atlassian explicitly says it pioneered product-led growth by:
It now has more than 300,000 customers. The progression can be: Jira → engineering team → entire engineering organization → product management → IT → business teams → Confluence / Jira Service Management / other products. Target customers Essentially any organization with:
Business model Subscription + product-led adoption + cross-sell + enterprise expansion This is a less "Anduril-like" but highly scalable implementation of the same basic commercial logic.
7. CrowdStrike — product architecture creates the expansion opportunity CrowdStrike is particularly interesting because its strategy resembles Anduril's platform rather than product concept. It started with endpoint security but built a cloud-native platform on which it could add additional security modules. The customer can therefore progress from: endpoint protection → identity → cloud → vulnerability management → threat intelligence → SIEM/log management → other security functions. Target customers
Business model Subscription platform + modules + expansion The important strategic principle is: Make the initial product sufficiently valuable that customers are willing to put more of their security stack onto the same platform. That is conceptually similar to Anduril's attempt to put more autonomous military capabilities onto Lattice.
8. ServiceNow — the "operating system" version ServiceNow demonstrates what happens when a product-first company successfully expands from one workflow into an enterprise-wide platform. It originally focused heavily on IT service management. It then expanded into:
McKinsey specifically identifies ServiceNow as an example of a company using land-and-expand and SKU-based development on a common platform. Target customers Large enterprises. Business model Start with one workflow → add workflows → expand users → become enterprise platform. This is probably the best historical example of the "one product becomes an operating system" strategy.
9. Samsara — closer to Anduril because software meets the physical world Samsara deserves special attention. It combines: hardware + sensors + connectivity + cloud software + AI for physical operations. Customers include:
Its strategy is to start with operational visibility and then expand across multiple workflows. Samsara's investor materials show that its largest new-customer and expansion transactions increasingly involve multiple products. Business model Connected hardware + recurring software subscription + additional applications This resembles Anduril much more closely than conventional SaaS because Samsara has to control both the physical edge and the software platform. The analogy is: Samsara Sensors → connectivity → software → AI → physical operations Anduril Sensors → Lattice → autonomy → physical systems
****10. A particularly interesting new category: AI-native companies There is now a second generation of companies following the Palantir/Anduril model. The common pattern is: Don't sell an AI model. Build the complete workflow that makes AI useful inside a business. Scale AI is the clearest large example. But the broader category includes companies building AI-native products for:
The difference from traditional SaaS is that these companies increasingly start with a workflow and build the technology necessary to automate it, rather than asking customers which software features they want. This is why forward-deployed engineering is becoming increasingly important. The current literature describes FDE as a product-development methodology, not merely an implementation or consulting function.
CLAUDE
What other B2Bsoftware companies are pursuing "develop product first" strategies similar to Anduril? Summarize their target customers and business model
Since Anduril's "develop product first" approach — self-funding R&D, then selling a finished, working product rather than being paid to attempt one — is mostly discussed in the defense-tech context, most companies pursuing a comparable strategy are its "neoprime" peers (venture-funded firms selling AI/software-centric systems to militaries). I've grouped them below; note several are software-plus-hardware rather than pure B2B software, since that hybrid is central to how this model works in defense.
Palantir Technologies Target customers: National governments/intelligence and defense agencies (its original base) plus large commercial enterprises in healthcare, manufacturing, and finance. Business model: Palantir builds and sells software platforms for data integration, analysis, and operational decision-making — Gotham for government/defense, Foundry for commercial enterprise, and AIP for AI orchestration. It monetizes via subscriptions to hosted or on-premises deployments with ongoing operations-and-maintenance services, following an "acquire, expand, scale" pattern where it bears pilot costs upfront and profits once usage scales across a customer's operations. Shield AI Target customers: U.S. and allied militaries needing autonomous aircraft that operate without GPS or reliable human control links. Business model: Shield AI develops the Hivemind autonomy software and platforms like the V-BAT drone, building the aircraft and AI stack itself before contracts are secured, then selling finished systems — its recent $1.5B Series G at a $12.7B valuation reflects investor comparisons to Anduril's trajectory as it wins programs of record like the Collaborative Combat Aircraft. Helsing Target customers: NATO-aligned national defense ministries and armed forces in Europe — the company explicitly sells only to democracies. Business model: Helsing rejected the traditional hardware-first defense model, pursuing a software-first approach, aiming to deliver rapid, upgradeable capabilities across platforms. Its Altra Recce-Strike software platform and HX-2 drone are developed with private capital (starting with a €100 million seed from Daniel Ek's Prima Materia) before being sold or integrated with partner hardware like Rheinmetall vehicles and Saab's Gripen jet, aiming to shift its revenue mix toward more recurring software licensing. Vannevar Labs Target customers: U.S. military and intelligence agencies needing foreign-language signals intelligence. Business model: Vannevar Labs turns foreign communications into real-time intelligence for the military, building its flagship Decrypt product — using AI and large language models to translate, organize, and process intelligence data — before landing large production contracts (a nearly $100 million Defense Innovation Unit award). Notably it reported being profitable on $90 million raised, well before Anduril-scale funding, suggesting a leaner, software-only version of the same self-funded playbook. Epirus Business model: Epirus was started by a former Raytheon chief engineer who, rather than wait for a traditional defense contract, raised private cash to spin off development and build prototypes for a new kind of directed-energy "force field" weapon, later converting that self-funded prototype work into an Army contract for counter-drone systems. Target customers: U.S. Army and allied forces needing counter-unmanned-aircraft-system (counter-UAS) protection. Saronic Target customers: U.S. Navy and maritime defense customers. Business model: Saronic concentrates on autonomous vessels, having secured a $392 million Navy production contract; it's grouped with Anduril, Shield AI and others as part of the "autonomy" cohort of neoprimes drawing large late-stage rounds on the strength of product demonstrations rather than cost-plus development contracts. Govini and Onebrief (pure mission-software layer) Target customers: DoD program offices and military planning staffs. Business model: These are described as leading the "mission-software layer" alongside Anduril and Vannevar Labs — Govini is noted as having the best recurring software economics among defense-tech peers, selling operational/analytics software on a subscription basis rather than hardware, closer to a traditional enterprise SaaS motion but still built and proven before large contracts land.
One caveat on scope: with the exception of Palantir, Govini, Onebrief, and (mostly) Vannevar Labs, these are software-defined hardware companies rather than pure B2B software vendors — the "develop first, sell finished product" strategy in defense tech is most visible where autonomy software is bundled with a physical platform (drone, vessel, jammer). If you want, I can search specifically for non-defense B2B software companies using an analogous self-funded, product-first go-to-market (this pattern also shows up in some enterprise infrastructure/dev-tools startups), since the defense-tech framing above is a narrower slice of that broader question.
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Palantir Lessons
Economist 8/22/2026 Appears significant success reducing admin work and headcount in Britain’s Metropolitan Police and National Healthcare Service (NHS).
Police claims “[hundreds of officers on patrol instead of in-office…]”, doing admin work.
NHS claims 110,000 extra surgeries performed with same staff (probably exaggerated)
Palantir “licenses software and sends ‘forward deployed engineers’ to clients (Jack Prim, Jack Henry former CEO admires this approach.)
Notes risk of extreme switching costs (TOM: Palantir’s upside for a job well done!)
Economist thinks it is a “data management company” whose business model predates AI. They are doing a good job of catching up.
40% of $6 bb annual revenues comes from U.S. government, 15% from Britain
Peter Thiel is chairman. Alex Karp is CEO (caution – super salesman criticism)
CHAT GPT 9/27/2026 Palantir's business model is more software-centric than Anduril's, but there is a useful parallel: both are trying to change defense procurement by combining proprietary software, close customer engagement, rapid deployment, and unusually aggressive expansion from an initial use case into a broader platform. The literature on Palantir suggests a business built around four mutually reinforcing platforms—Gotham, Foundry, Apollo and AIP—plus an unusually hands-on sales and implementation model. 1. The basic Palantir business modelPalantir describes its business as providing software that integrates an organization's data, decisions and operations at scale. Its four principal platforms are:
As of 2025, Palantir reported 954 customers and $4.5 billion of revenue, with 54% from government and 46% from commercial customers. That is an important change from Palantir's earlier identity as primarily a government/intelligence contractor. In 2024, the mix was 55% government / 45% commercial, so the company is approaching a roughly balanced government-commercial model. 2. The central strategic idea: become the operating layer between data and actionThe most useful description I've found comes from CB Insights. Its analysis argues that Palantir is positioning itself as an "orchestration layer" between AI models and enterprise data, rather than attempting to compete directly with companies developing foundation models. That distinction is fundamental. Palantir doesn't need to develop the world's best LLM. Instead: OpenAI / Anthropic / other model This potentially puts Palantir in a strategically valuable position regardless of which underlying AI model wins. 3. The Ontology is the key intellectual propertyA lot of superficial descriptions of Palantir concentrate on "big data" or AI. The more sophisticated literature focuses on the Ontology. Palantir describes the Ontology as the architecture that connects:
Its current platform documentation explicitly identifies the Ontology as the architectural differentiator of the Palantir platform. This creates a powerful business proposition. A conventional analytics system might tell you: "Inventory is declining." Palantir wants the system to understand: "Inventory at Plant 4 is declining because supplier X is late; production line Y will stop in 36 hours; here are three possible responses; execute option 2." The distinction is: data analysis → operational system That is why Palantir increasingly describes Foundry as an operating system rather than merely a data platform. 4. Foundry is designed to become deeply embeddedThis is probably the company's most important commercial tactic. Palantir does not want to sell a tool that an analyst occasionally opens. It wants to become infrastructure through which an organization conducts important work. The 2025 10-K explicitly says Foundry is becoming a central operating system for individual institutions and entire industries. The progression can look like: one problem → supply-chain optimization → production planning → quality control → inventory → procurement → enterprise-wide operations Once Palantir becomes embedded across those workflows, replacing it becomes considerably more complicated. This produces what could be called operational switching costs. 5. The "land and expand" strategyPalantir's sales strategy is unusual. Rather than trying to sell a giant enterprise license immediately, it ********often begins with a difficult, specific problem. Then it expands. The company's own filings say it manages customers at the account level rather than simply by industry, looking for additional long-term opportunities within each customer. A simplified version is: small initial deployment → prove operational value → additional users → additional department → additional workflows → enterprise deployment → additional Palantir products. This explains why Palantir is so interested in organizations with extremely complicated data environments. 6. Counterintuitively, Palantir deliberately targets difficult projectsThis is one of the clearest strategic statements in its SEC filings. Palantir says its customer-acquisition strategy targets large, difficult-to-execute opportunities where:
Palantir argues that those characteristics actually create barriers to entry for competitors. In other words: Palantir doesn't necessarily avoid the hardest customers. It seeks them out. That's quite different from a typical SaaS company seeking a simple, repeatable implementation. 7. "Bootcamps" are a major sales innovationThis is probably the most interesting Palantir sales tactic. Historically, Palantir often spent months embedding teams with prospective customers and conducting pilots. The company acknowledges that this can require substantial resources and may produce little or no eventual revenue. AIP changed that. Palantir developed AIP Bootcamps, where customers can use their own data and workflows and see working AI applications within days. Palantir says these bootcamps can produce actual workflows in days rather than requiring lengthy implementation programs. This is strategically clever because it addresses the fundamental enterprise-AI sales problem: Don't explain what AI might do. Demonstrate it using the customer's own data. 8. The "forward-deployed engineer" modelAnother distinctive tactic is embedding technically sophisticated Palantir personnel directly with customers. Rather than: Salesperson → contract → implementation consultant Palantir's model historically has been closer to: Palantir engineer → customer problem → build solution → deploy → iterate. This makes the sales process partly an engineering process. It also creates a feedback loop: customer problem This helps explain why Palantir has historically been willing to spend unusually heavily on individual customer engagements. 9. The company is moving from bespoke deployments toward repeatable platformsThis is one of the most important changes in the business model. Early Palantir could look somewhat like a high-end technology consultancy. The strategic objective now is much closer to: build once → configure repeatedly → distribute widely. Palantir's 2025 filing explicitly discusses industry operating systems, with examples including:
The idea is to develop solutions that can be distributed across an industry rather than rebuilt independently for every customer. This could materially improve scalability. 10. AIP changes the economic opportunityAIP gives Palantir a way to monetize the enormous interest in generative AI without having to develop its own foundation model. The company's architecture allows organizations to use different LLMs while connecting them to Palantir's data, permissions and operational workflows. That produces a potentially attractive strategic position: Model layer OpenAI ↓ Palantir AIP + Ontology + Foundry/Gotham + Apollo ↓ Enterprise Data + workflows + decisions + actions Palantir therefore has an incentive to remain relatively model agnostic. 11. Apollo is more strategically important than it initially appearsApollo is essentially Palantir's deployment infrastructure. It allows Palantir software to operate:
Palantir describes Apollo as a control layer that continuously manages software updates, security and configurations. This creates an interesting three-layer architecture:
That architecture is part of what makes Palantir different from an ordinary analytics vendor. 12. Palantir's government strategy is also a commercial strategyPalantir's government origins are not simply historical baggage. They have become a competitive advantage. The company developed its technology in extremely difficult environments:
That gives Palantir credibility when selling to large commercial organizations with similarly difficult data problems. The company's own filings say it began with U.S. intelligence and counterterrorism and subsequently found similar data problems in commercial enterprises. This produces a useful flywheel: Government → difficult problems → sophisticated software → operational credibility → commercial applications → additional revenue → more R&D → better government capabilities. 13. Palantir is deliberately building a dual-market companyThis distinguishes it from many defense-tech companies. In 2025: Government: 54% of revenue. The company therefore has two enormous markets available to it. Government
Commercial
The same underlying architecture can serve both. 14. Cloud partnerships are another distribution tacticPalantir has increasingly partnered with major cloud providers. The 10-K explains the logic directly: cloud companies already have relationships with essentially every major enterprise and large sales organizations, providing Palantir with an additional distribution channel. That changes the sales equation from: Palantir must find every enterprise customer itself. to: Palantir can use cloud-provider relationships to reach enterprises already using those clouds. 15. Developer Tier is a funnel strategyPalantir has also introduced Developer Tier, allowing developers to experiment with Foundry and AIP with limited upfront commitment. The company's stated objective is to allow developers to explore and build without significant enterprise costs. This resembles a classic software strategy: free/low-cost experimentation → developer adoption → proof of concept → departmental deployment → enterprise contract. That is quite different from Palantir's historical sales model and could make the company substantially more scalable. 16. Palantir's major strategic advantage: customer data + ontology + workflowsThe competitive moat is arguably not the AI itself. It is the combination of: customer data Ontology business logic operational workflows security/access controls AI deployment infrastructure Once those pieces are integrated into a customer's operations, replacing Palantir means replacing much more than a database. This is why Palantir's strategy is better understood as enterprise operating infrastructure than simply "AI software." 17. The main criticism: it can be expensive and labor-intensiveThere is an important contradiction in Palantir's model. The company wants: high-margin scalable software. But its historical sales model requires: highly skilled engineers working closely with individual customers. Palantir itself acknowledges that customer acquisition and deployment costs occur before revenue is recognized and that pilots can generate little or no subsequent revenue. The strategic challenge is therefore: Can Palantir convert an unusually labor-intensive implementation model into a genuinely scalable software business? AIP Bootcamps and Developer Tier appear to be attempts to solve exactly that problem. 18. Another risk: concentrationAlthough Palantir now has hundreds of customers, the largest customers are still economically important. In 2025 the average revenue from its 20 largest customers was approximately $93.9 million, compared with $64.6 million in 2024. That is both an advantage and a risk: Advantage: enormous expansion potential within existing accounts. Risk: substantial dependence on a relatively small number of very large organizations. 19. Government procurement is a structural riskPalantir explicitly warns that government procurement policies could change in ways that affect:
It also identifies bid protests and budget constraints as risks. This matters because Palantir's government business remains more than half of total revenue. 20. Political and sovereignty concernsThere is also a substantial body of criticism concerning Palantir's role in:
Recent UK reporting illustrates the issue. Five UK police forces ended a Palantir pilot after two years, citing funding limitations and insufficiently defined benefits; the decision also occurred amid broader concerns about procurement and accountability. The criticism is strategically relevant because Palantir's business model depends on deep integration into government institutions. The same integration that creates a competitive moat can create political and regulatory opposition. 22. Publications I would prioritizeIf you're studying Palantir as a business strategy case, rather than simply following its stock or political controversies, I'd put these at the top: 1. Palantir's 2025 10-KThe most important primary source. It lays out the business model, customer acquisition strategy, bootcamps, direct sales force, industry operating systems, cloud partnerships and government/commercial mix. 2. CB Insights — From the battlefield to the factory, Palantir is going on an AI offensiveUseful independent strategic analysis of Palantir's investments, partnerships, AI strategy and movement toward an orchestration layer. 3. Palantir's 2024 10-KParticularly useful for seeing how the AIP Bootcamp and Developer Tier strategy emerged and how Palantir's commercial strategy evolved. 4. Palantir's platform documentationUseful for understanding the actual architecture rather than the investor presentation: Foundry + Ontology + AIP + Apollo. 5. Recent Financial Times reportingUseful for understanding the political, government-contracting and international risks surrounding Palantir's expanding role in government systems. Bottom lineThe publications suggest that Palantir's real strategy is considerably broader than "selling AI software." Its model can be reduced to this sequence: 1. Enter a difficult, high-value problem That explains why Palantir's most important strategic asset may not be its AI models at all. Its objective appears to be controlling the layer where an organization's data, AI models, decisions and operational actions meet. CB Insights' description of Palantir as an orchestration layer between AI models and enterprise data captures this particularly well. And that is also where the comparison with Anduril becomes particularly interesting: both companies are pursuing a platform strategy, but Palantir is trying to own the digital operating layer while Anduril is trying to own both the digital layer and the physical autonomous systems beneath it.
CLAUDE 9/27/2026
A cluster of business-analysis publications describe Palantir's model consistently, with a common framework and some differing emphases. Core framework: "Acquire, Expand, Scale"The most repeated structural description, appearing in FourWeekMBA, The Strategy Story, and Business Strategy Hub, is a three-phase model: the company bears the pilot costs in the acquire and expand phases, and it runs at a loss, while in the scale phase, the customers' contribution margins become positive. FourWeekMBA frames the acquisition phase as deliberately targeting difficult customers: Palantir's acquisition strategy targets large-scale, hard-to-execute opportunities at large government and commercial institutions — the kind of customers that most enterprise companies might avoid, due to the high acquisition cost, and difficult technical feasibility — and this acquisition strategy, in theory, works also as an entry-barrier to potential competitors. The Strategy Story adds that in the scale phase, Palantir's investment costs relative to revenue generally decrease, while its software's value increases as the platform's usage increase across the customer's operations. Palantir Business Model Explained (2026) - FourWeekMBA +2 Two (now three) platforms, and how they monetizeSources agree on the product core: Palantir has three principal software platforms: Gotham, Foundry, and Apollo, providing critical infrastructure to integrate customers' data and operations and run their software in virtually any environment, with the vertically integrated nature of Gotham and Foundry allowing users of varying technical abilities to collaborate — from data engineers to senior decision-makers. Monetization runs through subscriptions to access its software in a hosted environment with ongoing O&M services ("Palantir Cloud"), and software subscriptions in customers' own environments with ongoing O&M ("On-Premises Software"). PitchGrade's more recent research note frames this as a long-term platform licensing business augmented by professional services, historically delivered by "forward deployed engineers" (FDEs) embedded directly in customer operations to build workflows and drive adoption — a model PitchGrade calls capital-intensive and limiting to scalability, which is why the transition to AIP bootcamps and standardized product onboarding is strategically critical. How does Palantir make money: Business Model & Competitor Analysis +4 The AI pivot (AIP)The Strategy Story's 2026 pieces emphasize that Palantir is positioning itself not as a foundation-model developer but as connective infrastructure: Palantir's opportunity is not based primarily on developing a single foundation model — instead, it seeks to provide the infrastructure through which different AI models can safely interact with enterprise data and real-world operations, addressing the enterprise need for controls over which data models can access, what users are allowed to see, what actions can be taken and how AI outputs connect to existing systems. The same source describes a sector-templating tactic: by developing sector-level architectures, Palantir can potentially accelerate deployment and increase the number of customers served without recreating every solution from the beginning — a strategy that can also create network effects at the ecosystem level. Palantir Business Strategy 2026 - The Strategy Story +2 Revenue mix and growthFigures cited across sources show the government/commercial split shifting over time. In 2023, Palantir's revenue was $2.23 billion, with commercial revenue growing 20% year-over-year to $1.0 billion and government revenue growing 14% year-over-year to $1.2 billion. By 2025, per The Strategy Story's later piece, government customers generated $2.40 billion of Palantir's $4.48 billion of 2025 revenue, and the company's basic mechanism is described as: customers pay to access and use its software platforms, either in Palantir-hosted environments or within their own infrastructure, generally entering contracts ranging from one to five years, with revenue recognized over the contract term. How does Palantir make money: Business Model & Competitor Analysis +2 Ecosystem partnerships and distributionNewer strategic commentary (Umbrex, The Strategy Story 2026) highlights partnership-based distribution as a growing tactic: Palantir has publicly expanded its alliances with major infrastructure and enterprise software partners, including cloud providers, which strategically helps distribution, deployment credibility, and access to customers that may prefer a broader ecosystem approach rather than a standalone vendor relationship. The Strategy Story frames this as combining Palantir's software with the market access, industry relationships and delivery capabilities of established partners, while stressing that a defining element of Palantir's business strategy is its emphasis on the lifetime potential of a customer relationship. Palantir Strategy and Business Model +2 Culture and long-game framingOlder strategic profiles (Think Insights) emphasize company culture as a competitive input, describing a strong mindset derived from its founders around expanding and improving services — not only software and machines but employee capacities — combined with an expansion strategy built on constant development through new technology or buyouts of minor enterprises, and a strong emphasis on discretion and secrecy. The Strategy Story ties Palantir's underlying growth thesis to a belief about institutional failure: Palantir believes that the systemic failures of government institutions to provide for the public — fractured healthcare systems, erosions of data privacy, strained criminal justice systems, and outmoded ways of fighting wars — will continue to require both the public and private sectors to transform themselves, thus increasing the need for its products. Think InsightsThe Strategy Story Sources: Umbrex, FourWeekMBA, Think Insights, The Strategy Story (three separate 2024–2026 pieces), Business Strategy Hub, seat11a.com, and PitchGrade Research.
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Anduril Lessons
Watch the Defense Industry startups – especially in Silicon Valley. These startups have found a way to DRAMATICALLY SHORTEN THE GOVERNMENT PROCUREMENT PROCESS.
Major defense contractors sell programming / software / product development programs to the government – a long, arduous, problem prone process.
Startups use AI to rapidly create complete products and offer them to the U.S. government. The government says “yes or no”, DRAMATICALLY SHORTENING PROCUREMENT TIMES!
Claude 9/27/2026
Core model: self-funded R&D, fixed-price products The most repeated theme across sources is that Anduril inverts the traditional defense-contracting model. Rather than waiting for a government Request for Proposal and getting paid "cost-plus" for effort (the traditional model, where contracts can only generate 7-12% margins, incentivizing contractors to make projects as expensive and long as possible), Anduril takes on the R&D burden upfront, offering pre-developed, cutting-edge solutions to the DoD and allied militaries, which lets it reach market much faster than the multi-year government acquisition process. Think Insights frames this starkly: most defense companies get paid to attempt a solution, not to deliver one, whereas Anduril spends its own money on R&D first, then sells a finished, working system at an agreed price — absorbing the cost if a system fails, and keeping efficiency gains as margin rather than having them negotiated away in follow-on contracts. Report: Anduril Industries Business Breakdown & Founding Story | Contrary Research +2
Lattice as the software moat Multiple sources identify the Lattice software platform as the real economic engine. Business Model Analyst argues Lattice is an AI platform that ties every product into one command-and-control layer, creating recurring, high-margin, sticky revenue — hardware like drones, towers and submarines are really just delivery vehicles, with the software as ***** the moat and margin. Contrary Research quotes CEO Brian Schimpf's own framing: he's described it as "an à la carte umbrella where everything works together, very similar to AWS," with different components available as needed, and notes the platform's use extends into civilian industries too. Business Model AnalystContrary Research FedSavvy Strategies places this in the "Neo Prime" category — a new breed of Silicon-Valley-born defense contractor that prioritizes a "product-first," software-centric mindset over the traditional "exquisite hardware" model, investing heavily in private R&D on commercially available products like Lattice, and argues Anduril is evolving from a disruptive startup into a mainstream, established defense prime, with Lattice as the "glue layer" moat and its "Arsenal-1" manufacturing vision providing industrial mass for sustained conflict. FedSavvy StrategiesFedSavvy Strategies
Acquisitions as a build-out tactic Think Insights and others describe a consistent acquisition tactic: since 2021 Anduril has acquired capabilities in small drone technology, autonomous undersea vehicles, solid rocket motors, radar, ruggedized computing and infrared sensors, folding each purchase into the Lattice ecosystem rather than running it as a separate business line, with subsidiaries like Area-I, Dive Technologies, Adranos and Blue Force Technologies supplying drone, undersea, propulsion and aircraft technology that feeds directly into Lattice. A Medium deep-dive and Substack piece both note the Microsoft IVAS AR-goggle takeover as part of this pattern. Think InsightsThink Insights
Capital structure Sources agree venture capital is essential to sustaining the model. Venture investors led by Thrive Capital, Andreessen Horowitz and Founders Fund fund the research and factory buildout that government contracts alone do not cover, while the cap table also includes General Catalyst and Lux Capital. On IPO plans, Anduril has said it isn't planning to go public yet, with Palmer Luckey stating he wants public markets to better understand the business model first — possibly in 2026 or later. Anduril's Fixed-Price Defense Model | Think Insights +2
Skeptical counter-take Not all coverage is admiring. War on the Rocks' "Cogs of War" newsletter is more critical, arguing that for Anduril and peers like Helsing, Saronic, and Shield AI, the real business model may be to get the end-user hooked on cheap hardware, sold for minimal or no profit, so that the company's software later becomes indispensable — generating revenue through permanent licensing and updates. It also flags a structural risk: even though these companies' software suites should theoretically interoperate under the Pentagon's "modular open systems approach," a resulting "zoo of systems" is neither scalable nor especially profitable. War on the RocksWar on the Rocks
Financial risk Business Model Analyst is most pointed on the risk side, calling it a "high-wire act": a $61 billion valuation sits on a company posting a billion-dollar-plus operating loss, betting everything on a gigafactory never built at this scale, serving essentially one customer whose priorities can shift overnight — and the same vertical integration and self-funding that produce the margins also concentrate the risk. Business Model Analyst
Sources: Sacra, Contrary Research, War on the Rocks ("Cogs of War"), Think Insights, a Medium deep-dive (BUVCG Research), FedSavvy Strategies (two posts), Business Model Analyst, and a Rigatoni Capital Substack post. is anduril public
CHAT GPT 9/27/2026
There is a fairly substantial body of writing on Anduril, but it falls into two different categories: descriptions of what Anduril says it is doing and independent analyses of why the model might work—or fail. The publications collectively portray Anduril as trying to build something closer to a Silicon Valley technology platform plus industrial manufacturer than a conventional defense contractor. 1. The core Anduril business model The most consistent theme is that Anduril attempts to invert the traditional defense-contractor model. Traditional model Large defense primes generally:
Anduril's model Anduril instead:
The Los Angeles Times describes this explicitly as a Silicon Valley approach: Anduril uses software, venture capital and private development capital to build products before asking the government to pay for development. Palmer Luckey has similarly described Anduril as a "defense-product company" that puts its own money into building things and arrives with a working product rather than asking taxpayers to bear development risk. A 2023 strategy analysis calls this the fixed-price defense model: privately fund development, deliver a finished product, and charge a predetermined price rather than billing for the government's development costs. 2. Lattice is arguably the most important strategic pieceA number of publications make an important distinction: Anduril is not fundamentally a drone company. It is increasingly a software/platform company that happens to manufacture autonomous weapons and sensors. Anduril describes Lattice as the software platform underlying its "software-defined weapons," integrating Anduril and third-party sensors, vehicles and effectors. The strategic significance is substantial. Instead of selling: Drone A + radar B + interceptor C Anduril wants the customer to buy into: Lattice + an ecosystem of autonomous systems That gives Anduril an opportunity to become the integration layer connecting numerous military systems. CB Insights makes essentially this argument, describing Lattice as a digital backbone that can connect systems across land, sea, air and space. An academic analysis published in Science as Culture goes further, arguing that Lattice could become an infrastructure through which future procurement decisions are organized. In that interpretation, once a military organization adopts Lattice, additional Anduril products become easier to integrate, potentially creating ecosystem effects and switching costs. That is an important strategic distinction from simply selling hardware. 3. "Hardware-enabled, software-defined"The underlying architecture can be summarized as: Lattice That allows Anduril to reuse software, autonomy algorithms, communications, interfaces and manufacturing processes across different products. For example, the same general architecture can support:
Anduril's own description emphasizes that Lattice is sensor-, network- and system-agnostic. This is analogous to a technology company's strategy of building a common operating system and then putting many products on top of it. 4. Arsenal: the other half of the strategyThis is probably the most significant evolution in Anduril's business model. Originally, Anduril's advantage was largely: software + AI + rapid engineering It is now attempting to add: software + AI + vertically integrated mass manufacturing. Anduril calls the manufacturing architecture Arsenal. Its announced Arsenal-1 facility in Ohio is intended to become a very large, software-controlled manufacturing operation. Defense News reports that Anduril's objective is "hyperscale" production—tens of thousands of autonomous systems rather than the relatively small production runs characteristic of many sophisticated defense programs. The strategy has several components: A. Design for manufacturing from day oneInstead of designing an extraordinarily sophisticated weapon and figuring out how to manufacture it afterward, Anduril wants engineers to design the product around:
Janes' reporting on Arsenal-1 describes Anduril designing products from the beginning to be "easily manufacturable, easily scalable, and easily fixable." B. Commercial componentsAnduril says roughly 90% of its products can use commercially available components and materials. The objective is to avoid defense-specific supply chains wherever possible. C. Flexible factoriesRather than constructing a factory dedicated to one weapon, Anduril wants production lines that can be reconfigured. Janes reports that Anduril deliberately minimizes fixed infrastructure so that production lines can be expanded, reduced or reconfigured for another product. D. Software-controlled manufacturingArsenal is intended to connect:
Anduril describes this as a software-defined manufacturing platform. This is important because it potentially makes the factory itself a technology product. 5. The strategic objective: affordable massAnduril's executives repeatedly emphasize mass rather than extremely expensive "exquisite" platforms. The logic is straightforward: A military cannot necessarily afford to lose hundreds of $100-million aircraft. It potentially can afford to lose large numbers of relatively inexpensive autonomous systems. This is particularly important because Ukraine has demonstrated the importance of:
A European Journal of International Security analysis quotes Anduril's own strategic presentation describing the objective as "affordable distributed mass." So Anduril is attacking two traditional defense assumptions simultaneously: Old model Make a small number of extraordinarily capable systems. Anduril model Make large numbers of sufficiently capable autonomous systems and continuously improve them through software. 6. Rapid iteration is a deliberate tacticOne of Anduril's most distinctive tactics is accepting failure during development in exchange for speed. The company favors: prototype → field → observe → modify → redeploy rather than: requirements → specifications → development → testing → certification → production over many years. This explains some of Anduril's unusually rapid product development. For example, Roadrunner was reportedly developed secretly with internal funding for approximately two years before Anduril presented it to the government. The strategy has an obvious advantage: The government sees a functioning product rather than having to fund a speculative technology program. But it also produces a major risk. The Wall Street Journal documented a number of Anduril test failures involving autonomous systems, arguing that the company's aggressive development culture creates a tension between speed and reliability. Anduril's position is that frequent failure is an unavoidable component of aggressive testing and iteration. That is probably one of the most important counterpoints to the more enthusiastic accounts of Anduril. 7. Build first, create the market second EXTREME RISKAnother unusual tactic is that Anduril sometimes develops products before there is a large formal government program. This creates what could be called bottom-up procurement. Instead of: Pentagon → requirement → contractor → product the sequence becomes: Anduril → prototype → military demonstration → small contract → operational deployment → larger procurement program. This is particularly visible in products such as Roadrunner and some of Anduril's counter-UAS systems. This approach attempts to exploit a weakness of conventional procurement: government organizations are often unable to specify technologies that do not yet exist. Luckey has explicitly argued that defense entrepreneurs should sometimes build solutions the Pentagon doesn't know it needs. 8. Use small contracts as beachheadsAnduril's strategy does not require every initial contract to be enormous. The company can use a relatively small operational deployment to establish:
Once the technology is proven, the contract can expand substantially. This appears to be one reason Anduril has pursued numerous different military applications rather than betting everything on one large program. Defense News reported that Anduril's 2024 growth came from a combination of:
The diversification is strategically important because it reduces dependence on any one weapon program. 9. M&A is another deliberate growth tacticAnduril has also used acquisitions differently from a traditional conglomerate. It has acquired companies whose technology, people or military relationships can be integrated into the Anduril architecture. For example, it acquired portions of Numerica, adding radar, signal processing and command-and-control capabilities to Lattice. Anduril's CEO Brian Schimpf reportedly described looking for small companies with:
and then using Anduril's resources to accelerate them. This creates another version of the platform strategy: Acquire capability → integrate into Lattice → manufacture through Arsenal → sell as part of the broader Anduril ecosystem. 10. Venture capital is part of the strategy—not merely financingThis is a particularly important difference from conventional defense companies. Anduril has raised enormous amounts of private capital, including a $1.5 billion Series F used partly to build its manufacturing infrastructure. The capital allows Anduril to:
The Los Angeles Times characterizes this as using venture capital to disrupt the defense business model. That is potentially the key economic innovation: venture capital absorbs development risk that traditionally would have been transferred to the government. In exchange, investors expect enormous growth if Anduril can become a major defense prime. 11. The ultimate objective appears to be becoming a new defense primeThere is an interesting tension in Anduril's rhetoric. It portrays itself as an alternative to traditional defense primes. But Luckey has also explicitly said that the objective is to become the next major defense prime. So the strategic objective is not necessarily to eliminate the defense-prime business model. It is to rebuild it around a different technology and economic architecture. A simplified comparison:
12. The most interesting recent development: scale changes the economicsThe newer publications suggest Anduril is moving from an engineering startup to an industrial company. That is a major transition. The Information reports that Anduril expects revenue to reach approximately $4.3 billion in 2026, while simultaneously expecting very large losses because it is investing heavily in factories, employees and new products. The thesis is essentially: Lose money now to build manufacturing capacity that makes the company highly profitable later. The factory spreads fixed costs over increasingly large production volumes. That makes Arsenal-1 much more than a factory expansion. It is a bet that defense manufacturing can achieve something closer to automotive/electronics economics. 13. International expansion is part of the modelAnduril is also deliberately building an international customer base. Its activities include:
The strategy has several advantages:
CB Insights identifies international partnerships as one of the company's major strategic pillars. More recently, NATO selected Lattice for its Enhanced Air Command and Control data-platform initiative, providing an example of how the software platform can expand independently of an individual weapon system. 14. The biggest strategic risks identified by the literatureThe publications are considerably more skeptical when discussing economics and execution. Risk 1 — Customer concentrationFortune reported in 2026 that CEO Brian Schimpf described Anduril's business as "outrageously concentrated." Despite international expansion, the U.S. government remains enormously important. Risk 2 — Enormous capital requirementsAnduril is no longer simply writing software. It is building:
That consumes enormous amounts of capital before the resulting production generates revenue. The Information reports that Anduril remained deeply unprofitable while investing aggressively in factories and expansion. Risk 3 — Manufacturing is much harder than softwareThis may be the most important unanswered question. It is relatively easy for a software company to go from: 1,000 users → 10,000 users → 100,000 users. It is much harder to go from: 100 drones → 10,000 drones. You need:
Anduril is betting Arsenal can solve this. Reuters reported in 2026 that Arsenal-1 began production of FURY and was expected eventually to employ more than 4,000 people. Risk 4 — Rapid iteration can produce unreliable systemsThe Wall Street Journal reporting on failures is important because it provides the counterweight to Anduril's own narrative. The company has experienced:
The strategic question is therefore not whether Anduril can develop quickly. It is whether it can develop quickly without sacrificing military reliability. Risk 5 — Lattice creates both opportunity and dependenceLattice could become a powerful platform. But the same characteristic that creates competitive advantage can create criticism: If Lattice becomes the common software layer connecting many weapons, sensors and autonomous systems, Anduril becomes increasingly embedded in the military's infrastructure. The 2026 academic literature explicitly discusses this in terms of platform lock-in, path dependence and procurement influence. That is a more sophisticated criticism than simply saying "Anduril makes weapons." Publications I would read firstIf your objective is to understand Anduril as a business rather than simply its weapons, I'd prioritize these:
One particularly useful way to study Anduril is to treat it as a three-layer business: Lattice (software/platform) → autonomous products (hardware) → Arsenal (manufacturing platform). The publications make considerably more sense when viewed through that framework.
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Warren Buffett Lessons
Berkshire Hathaway Lessons
Charlie Munger Lessons |
Software Lessons from Buffett, Munger, Berkshire Hathaway
TOP CONCEPTS SUMMARY FOR B-TO-B 10X SOFTWARE BUSINESS
Link to Berkshire Hathaway, Warren Buffett, Charlie Munger Lessons (Summary by Tom Ingram, password required)
TRAPS, BIGGEST MISTAKE: Miscalculating the underlying economics of a business
- How possibly know what/how to evaluate? ONLY way is LEARNING CURVE, HAVING DONE IT BEFORE.
- FUNDAMENTAL TRUTH OF FOCUSING ON NARROW HIGH VALUE urgent compelling need
*Military history-best at AFTER ACTION REPORTS
* NEVER DO ANYTHING FOR FIRST TIME if possible
- STEWARDSHIP OF O+WNER’S INTERESTS / CAPITAL FIRST (Luke 16:2, parable of unrighteous steward, from 2002 shareholder letter pages 16-21)
- RATIONAL MANAGEMENT AND EXPECATIONS: 15% Compounded annual return is goal. Has managed 17%+ over 50 years.
- NO SPECULATION!
- VALUE IS PRESENT VALUE OF FUTURE PROFITS – NOTHING ELSE!!!
- If not paying income tax – not interested – not a real, viable company
- DURABLE BARRIERS TO COMPETITION (SWR GENERALLY BAD)
- WILLINGNESS TO ADMIT MISTAKES, TAKE INPUT, CHANGE
* JP Hogan: #1 reason military excellence not adopted by commercial. AAR report example.
* Easy to underestimate. Business people won’t open kimono, admit weakness
- AVOIDS “TOO HARD” PILE: TECH, Speculative, turnarounds, industries in trouble
- AVOIDS "fast moving technology which… CANNOT RELIABLY EVALUATE LONG TERM ECONOMICS”
- AVOIDS businesses that only work with SUIPERSTAR CEOs
- TRAP: Single biggest mistake is bad estimate of underlying economics
- Rigorous CEO Selection (normally long term in place CEOs)
- Fair CEO Compensation BASED ON RETURN ON INVESTED CAPITAL
- BOARD effective, interests aligned, non-interference, NO POTTED PLANTS
- HOLDING COMPANY CEO:
* NON-INTERFERENCE, EXTREME DELEGATION, Authority / Responsibility Matched
* Willing, COMPETENT to override management when self interest conflict is skewing judgement
- INCENTIVES, PENALTIES EFFECTIVE for board, management, employees
- Only what you understand. VIGILANT TO NOT GET DRAWN INTO TECH DON’T UNDERSTAND
- DISCIPLINES TO CONTAIN NEGATIVE CONDUCT
- Costs low and going down
- Happy customers – HIGH VALUE CREATES BARRIERS TO COMPETITION
- Happy employees
- Loyal suppliers
- Products continually improving
- GROWTH IMPERATIVE NONSENSE
- NO ACCOUNTING, FINANCIAL WALL STREET, DEAL, BORROWING WASTE OF TIME NONSENSE!!!
- LONG TERM, BUY AND HOLD for 10 years minimum. NO EXIT PLAN TO SELL TO GREATER FOOL
- Low debt
- ACQUISITIONS: Rigor, discipline, clear value to owners
- MARGIN OF SAFETY
- Fix or sell under performing businesses immediately (when clear can’t be fixed)
- Not making decisions in front of salespeople / advocates
- Much time spent reading, being up to date, independent, unpressured thinking and judgements
- PATENCE BEYOND BELIEF: Acquired only 30 whole businesses in 50 years
- INSURANCE INDUSTRY PARALLELS
* Buffett EMBRACED THE INTANGIBLE / HARDER TO UNDERSTAND when he moved away from textiles into insurance
* Reinsurance, Business Property, Casualty are B to B
* INTANGIBLE LIKE SOFTWARE
* DISCIPLINE REQUIRED (Underwriting willingness to walk is essential. Reserves - kept conservatively)
* REQUIRES FOCUS Wide variety of insurance types – easily distracted
* Treated as commodity, UNDER ATTENDED by SENIOR MANAGEMENT until TROUBLE
* VERY LOW BARRIERS TO COMPETITION
* SUPERSTAR MANAGEMENT is primary barrier to competition (Working for Buffett but RISKY - hard to duplicate when leaders are indispensable)
* Capacity easily added – JUST ADD MONEY but competitors have same advantage
* Healthy pricing MARGIN OF SAFETY REQUIRED because nasty surprises are common
- See DEAL SHENANIGANS master list on TIA website
- Possible to TRIAGE QUICKLY TO SUPER HIGH VALUE APPS WITH MOATS AND PREDICTABLE EARNINGS – like Jack Henry, other winners
- FRANCHISE CONCEPT: “No close substitute in customer’s eyes” (No urgency, customer DIY, many competitors are swr historical problems)
++++ EXTREME HIGH VALUE for customer possible, GREAT PRICING POWER
+++ No regulation
----- COMPETITORS HAVE SAME ADVANTAGES
+++++ SMALL INCREASES IN COST TO CREATE WHOLE PRODUCT SOLUTION CAN CREATE LOLLAPALOOZA EFFECT ON TOTAL PRICE AND SALES VOLUME
+++ Competitors DISTRACTED BY COMPETING ON TECH, PRODUCT LEADERSHIP
+/- Returns in inflationary times???
+++++ WHOLE PRODUCT SOLUTION on NARROW, FOCUSED SET OF CUSTOMERS creates EXTREME VALUE and MOATS (High barriers to competition) with STRONG FUNDAMENTAL VALUE
+++ LOW CAPITAL REQUIRED – GREAT RETURNS POSSIBLE
+++++ POSSIBLE TO DEMAND PROFITABILITY FROM YEAR 1
+++ Prices For Good Businesses With Good Long Term Prospects Are Sky-High As Of 2018 Letter. By mandating profitability from year 1 and these other disciplines, MAY BE POSSIBLE TO PREDICT WINNERS BETTER THAN IN PAST – before price is bid sky high
- Swr lends itself to Munger recommendation to take a simple, basic idea and take it very seriously
* e.g. Solve competent authority / responsibility / competence problem in swr??? (includes removing perverse incentives, replacing with good)
* e.g. Solve the narrow focus on super high value solution problem (includes payback triage, scope change discipline)
+++/-- DISCIPLINE NECESSARY: Swr has not yet evolved economic systems to prevent vice, reward virtue
--- REMEMBER – BUFFETT LOST $13BB ON IBM!!!
+++ Swr industry is generally focus-averse. TOO EASY TO SAY "WE CAN DO THAT"
++/-- Discipline is unpopular at the moment
+++/--- FIX PROCESS FIRST, Process Reengineering, all required for big-bang implementations in TOO HARD PILE at the moment. APPEARS SEPARATING PROCESS IMPROVEMENT FROM TECH SOLVES THE PROBLEM
+++/--- AUTHORITY / RESPONSIBILITY / COMPETENCE MATCHING IS ALMOST UNHEARD OF
--- Family, multi-generational businesses not likely
---/+++ EXECUTIVE EXCESSIVE SELF REGARD rampant. "I know what I need to know", "I don't need to know the details", “Don’t take up my time…” RAMPANT, must be contained
---/+++ FEATURE COST / BENEFIT TRIAGE almost unheard of
+++/--- Scaling up, economies of scale different from insurance – must be managed closely. RE-USING LEARNING CURVE, NOT HAVING TO DO EVERYTHING THE FIRST TIME ARE CRITICAL. Integration to poor customer systems will be huge issue.
++/-- CUSTOMERS FED UP with immaturity, poor results, HATE SPENDING THE MONEY, ATTEMPTING COST CONTAINMENT but STILL NOT GETTING RESULTS desired / needed, making same mistakes over and over
----- INDUSTRY MAY BE SO CONTAMINATED – BETTER TO STAY AWAY
* Compare to investing money in mutual fund before committing (what acquisition focused managers fail to do)
* TROUBLED INDUSTRY, Insurance Lesson: NEAR INFINITE SUPPLY, LIMITED DEMAND created extreme price competition to no profits for nearly all competitors
- REMEMBER BASIC ECONOMICS CAN PREDICT MUCH: Supply up – PRICE DOWN / Demand up - PRICE UP. Successfully predicted impact of aluminum tariffs, egg price up, gas supply in Europe during Ukraine war. GETS IN TROUBLE WHEN PREDICTING TOO MUCH, CLAIMING ACCURACY BEYOND BASICS.
- TOUGH CONVERSATIONS SOMETIMES NECESSARY, NEED TO BE DONE SOONER RATHER THAN LATER: Watch out for the great executive who is succumbing to Alzheimer’s or dementia or some other debilitation. Happened a few times and Buffett / Munger did not act soon enough. Directors – speak up!
Sources and References
FROM https://www.berkshirehathaway.com/letters/letters.html. CM (CHARLIE MUNGER) CITATIONS BELOW ARE FROM POOR CHARLIE’S ALAMANC, EXPANDED 3RD EDITION WB (WARREN BUFFETT) CITATIONS BELOW ARE FROM ANNUAL LETTERS BH (BERKSHIRE HATHAWAY)
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Danaher Lessons
Acquisitions Based on Continuous Improvement
Amazon Lessons
Toyota Lessons
RELX Lessons
Hands On, Lean, Continuous Improvement Lessons for Software
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Danaher Model Shows Possible Path to Changing The Software Industry!
Obsession With Creating Value For Customer!
Obsession With Better, Faster, Cheaper – Every year – Every Department!
Sources:
Too many CEOs come up through the ranks of finance, strategy, sales, consulting – NOT OPERATIONS! They have no confidence in their ability to make operational improvements!
This explains much of what I see – executives REGULARLY under attending the hard, necessary PROCESS improvement work needed for major change efforts
Danaher, Amazon, Toyota and RELX are the exceptions. Execution, operations effectiveness, walking the talk are fashionable and demanded.
Some of the best CEOs create systems and cultures that help everyone excel at getting work done.
WRONG: conventional leadership theory wants CEO’s to avoid being drugged into day-to-day operations. It urges them to focus on vision, strategy, and delegation.
These companies demonstrate dramatic improvements, and performance with deeper engagement, obsessing over the customer, designing systems of execution, using experiments to make decisions rather than presuming executives have unfounded superior knowledge. They teach operational two kits in a bed excellence into daily practices.
These CEOs are much more engaged in the WHAT and the HOW. The result is a sustained competitive advantage.
What CEO does not claim to care about execution? What is the reality that you have seen?
RELX is the best performing stock in the four year history of the FTSE 100 index in London. The CEO obsesses over how to measure customer value. He insists on doing it using the customer’s economics! (Tom: I learned, the hard way, that customers don’t pay any attention unless they are using their numbers). IS THE CUSTOMER BETTER OFF WITH OUR PRODUCT? HOW DO WE PROVE IT?
These leaders reject metrics that show how the customer benefits the company.
Amazon: Bezos built the company by demanding they actually deliver the lowest prices on 1000 items. Fast reliable delivery. In the early days, Bezos built desks, and pack boxes himself. He determined to keep a hand in the work.
PowerPoint presentations are forbidden. Software teams have a great deal of autonomy. Every proposal must be written in six pages or less. (Amazon found written memos to be better at requiring detailed thinking than PowerPoint.). Amazon encourages no title, no holds barred debate. Decisions are made quickly, consider provisional and revised as new information comes in.
Decision rights are close to the front lines. This is difficult work because it requires leaders to give up control, Redistribute authority, remove approvals and reduce frictions.
Toyota: Decisions are made by testing-not rank or hunch whenever possible. The data makes the decision. Authority comes from the evidence. This prevents command and control dysfunction.
KAIZEN: Know customer and what they want. Observe to understand problems. Root cause analysis by data. Brainstorming. Rapid prototyping. (the list of things Toyota does well goes on and on and on.)
DANAHER: Larry Culp, now leading GE, “we forced division presidents to develop a command of the hows so that they can teach the how. They say come do it with me“. Hands on, in the trenches work is not a phase to outgrow. “You can’t allow yourself to get distracted from the real daily work of the organization”
They strive to be better, faster, cheaper – every year, forever.
Failure and invention are inseparable. Failures will happen. You live with it for the upside.
A rare skill: the ability to move between altitude and detail!
Mission clarity – not micromanagement! (Making decisions for people)
=========
ADDITIONAL POINTS FROM SCOTT COOK, FORMER CEO OF INTUIT INTERVIEW WITH HBR: https://hbr.org/podcast/2025/12/why-great-leaders-focus-on-the-details
MICROMANAGEMENT IS MAKING DECISIONS FOR PEOPLE
STRATEGY ALONE WITHOUT ABILITY TO EXECUTE = FAILURE
TOYOTA STARTED AS A LOOM MAKER IN RURAL JAPAN IN 1930S
STAY CLOSE TO THE WORK - NOT MAKING DECISIONS BUT CONSTANTLY REINFORCING SYSTEMS PROCESSES VALUES PEOPLE
FOUNDER VS PROF MGMT: SMALL SAMPLE OF 4 - NO DIFFERENCE
OBSESSING OVER CUSTOMER VALUE - MANIC ABOUT DEFINING UP FRONT
DICTATING WHEN NECESSARY
BEFORE YOU DICTATE >>> EXPERIMENT TO MAKE SURE DICTATING THE RIGHT THINGS!!!
TOYOTA STORY > TESTING TEAM LEAD SOLUTION AND PLANT MGR SOLUTION AT SAME TIME
TEACH THE TOOLKIT OF THEIR ORGANIZATION
CONTINUOUS IMPROVEMENT
AT COMPANY ALL MGMT MEETINGS
WHAT NEEDS YOUR ATTENTION NOW? Hard question – always have big time demands
CEO TIME SPLIT
ACID TESTS TO KNOW GETTING IT RIGHT
HBR DANAHER CASE OBSERVATIONS BY TOM
BEFORE: NOTE HOW THEY EVOLVED FROM VINYL AND RUBBER MFG TO VERY HIGH DEBT / LEVERAGE / TAX DRIVEN ACQUISITIONS, BRUTAL (NECESSARY) COST CUTS AND DIVESTITURES, HOSTILE AND FRIENDLY, STAYING CLOSE TO INDUSTRIAL PRODUCTS, EXITED AUTO INDUSTRY
NOW: SCIENTIFIC, TECHNICAL INSTRUMENTS, DENTAL, LIFE SCIENCES, DIAGNOSTICS, ENVIRONMENTAL, TEST, MEASUREMENT, INDUSTRIAL TECHNOLOGIES
SEE EXHIBIT 6 - OPERATING INCOME FOR HIGHER VALUE SEGMENTS OUTSTANDING
STARTS WITH CUSTOMER (MARKET / INDUSTRY ATTRACTIVENESS - NOT AQUISITIONS FOR SALE!)
MORE AGRESSIVE, LESS SELECTIVE THAN BUFFETT IN ACQUISITIONS
DBS OFFICE - CONTRAST TO PMO INEFFECTIVENESS!!!
DIFFERS FROM BUFFETT WHO DOES NOT HAVE A "STABLE OF EXECS WHO HAVE BEEN PROMISED CHANCE TO RUN A COMPANY"
STILL PUSHING ON GROWTH, EARNINGS GROWTH. LESS ABLE TO RESIST WALL STREET THAN BUFFETT
ONLY IN ACQUISITIONS, BUSINESSES WHERE DBS CAN BE CONSISTENTLY APPLIED (INDUSTRIAL ONLY, NO CONSUMER, NO TECH??? - ASK DOUG DICKERSON ABOUT INET... WAS IT DIVESTED?
GOT THROUGH 2008/9 IN GOOD SHAPE - ABLE TO TAKE ADVANTAGE
DEB TO EQUITY: EXHIBT 13, 2002 TO 2010, JUST 20-30% OF EQUITY. CHERRY PICKED?
GROWTH 1/3 ORGANIC, 2/3 ACQUISITION 2002 TO 2010
CUSTOMER VALUE FOCUS: NOT STRESSED BY HBR. SEE EXHIBIT 4 - LISTENING TO CUSTOMER PROMINENT. ALSO RADIOMETER STORY PAGE 12 GETS TO CUSTOMER FOCUS
SUMMARY OF TOTAL RETURNS, LAST 30 YEARS, 9/22/2026 from CLAUDE
(Close approximations)
============
Summary of Lean applied to Software while working for Mitel, being led by a former Danaher executive https://tiainc.net/SkinnY%20Support%20for%20Lean%20Summary.pdf
============ KEY DIFFERENCES BETWEEN LEAN AND CONTINUOUS IMPROVEMENT:
Continuous improvement is a general philosophy: always look for small, ongoing ways to make processes, products, or services better. It isn't tied to any one method. Kaizen (the Japanese term), PDCA cycles, Six Sigma, and Total Quality Management are all forms of it.
Lean is a specific management system, rooted in the Toyota Production System, that has continuous improvement built in. Its central goal is to maximize customer value while eliminating waste, meaning anything the customer wouldn't pay for, such as waiting, overproduction, defects, and unnecessary motion or inventory. Lean comes with its own principles and tools, including value stream mapping, 5S, pull systems, just-in-time production, and standard work.
The key differences
This ties to the Cook and Nohria article, where kaizen (continuous improvement) is one practice, but Danaher's consistency comes from the broader system around it. As the authors put it, you can't just borrow kaizen and expect the same results. GE under Culp adopted Lean specifically, with continuous improvement as its engine.
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659 |
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Article in process: AI Economic Model Emerging As Cloud Computing GOOD WSJ Aug 2026 |
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658 |
Barriers To Competition |
AI Barriers to Competition, Moats, Where Major Companies Will Focus
“Good Enough” AI at commodity prices will become the widespread norm.
Useful Article - but Omits Vertical Focus
Code Generation Emerging as Best Niche – Barriers Possible
WSJ 07 18 2026 by C. Mims |
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657 |
No Code / Low Code / User Programming /
Code Generators
Lessons for AI |
7/13/2026 Session Summary: AI Code Generators, Low Code, No Code Solutions
The Big Takeaway: Best work for senior software people is LARGE, COMPLEX, HIGH VALUE APPLICATIONS / WORKFLOWS. Integration, Architecture, Complexity which AI is not ready for yet.
Avoid the small, simple software apps where a junior person can get the job done with AI’s help.
See Tom’s Success Story for using AI Code generation on a large, complex project. Includes process improvement, use cases, architecture, WBS (Work Breakdown Structure), Gantt Chart schedule and Agile development Click Here for Full Case Details #3.41
Summary: POSITIVES / GOOD NEWS
NEGATIVES / BAD NEWS
UNDECIDED / TOO EARLY TO TELL
DOs
DON’Ts
See Previous Newsletter Items For Successes, Lessons, Detail: 497 (Lawson, BEST), 493 (Correlation), 488 (Reseller Success, Very Good) 457 (Seibel, Mixed) 450 (Progress, Huge Win for Shareholders) and 654 (Summary of code generator / no code / low code history and lessons)
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656 |
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Article in process
6/2/2026 Wall Street Journal: AI Big Players Now Giving Away AI Capacity or Selling Cheap
OpenAI Anthropic Profit Projections Ridiculous WSJ 04 06 2026
ChatGPT Now Selling Ads on Free Versions – Citation pending
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655 |
Software Industry Financial Lunacy Being Laid Bare
Software Will Get Cheaper, More Complex with Less Support
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6/2/2026 Wall Street Journal Finds Software Company Revenues Artificially High Due to Covid, DEBT NOW BEING DOWNGRADED.
AI Also Threatening Software Company Viability
TOM PREDICTION: Our research found in 2022 that the software industry was, as a whole, unprofitable and high debt / bad balance sheets were everywhere.
Under this stress, software companies will “Add Features and Cut the Price”. (Michael Porter concept).
EXPECT SOFTWARE TO GET CHEAPER and MORE COMPLEX – with LESS SUPPORT and many software companies becoming irrelevant or just going away.
Summary from article:
See Wall Street Journal, 6/6/2026
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654 |
No Code / Low Code / User Programming /
Code Generators
Lessons for AI |
Summary of No Code, Low Code Solutions, Code Generators Last 45 Years
Big Lessons for AI: WE HAVE SEEN CODE GENERATION GOOD / BAD BEFORE!
See Newsletter Items For Successes, Lessons: 497 (Lawson, BEST), 493 (Correlation), 488 (Reseller Success, Very Good) 457 (Seibol, Mixed) 450 (Progress, Huge Win for Shareholders)
Following is a summary of points and key software with a link to the full detailed article at bottom – password required.
Link to full article, requires password
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653 |
Who Gets the Margin?
Economics of AI Don’t Make Sense |
Article in Process.
“…subscribers of the top [AI] models… pay 1/40th of the actual cost.” From Wall Street Journal, 6/17/2026 by Holman Jenkins |
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653 |
Who Gets the Margin? |
Summary of “Who Gets The Margin?” Newsletter Articles
New Addition: Sam Insull, the 1920s utility baron who electrified the economy but ended up broke. From Wall Street Journal, 6/17/2026 by Holman Jenkins |
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652 |
Executives Not Competent to Lead Major Operations Improvements |
Article in Process.
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651 |
AI Slop Code Consequences
What It Takes for Production Quality Code
Good AI / Bad AI |
Only 13% Of AI Code / AI Output Has a Clear Owner Responsible When Things Go Wrong
87% Lacks Clear Owner for Security, Integration, Testing, Production Support, Compliance / Audits, Data Integrity and Business Continuity
This is What Separates Solid, Complex Workflows and Applications from “AI Slop Code”
(Thanks to Ron Giblin for contributing this summary)
See the CloudBees 2026 survey on AI-generated code https://www.cloudbees.com/lp/2026-state-of-code-abundance-report
Good Uses for Quick AI Code”
Trouble When Undisciplined Code is Relied On:
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650 |
Rapidly Entering New Markets
Shortening Defense Procurement Process
Understanding AI Costs |
Startups and Bigger Firms Using AI More Than Mid-Size Firms
(Thanks to Ron Giblin for contributing these two summaries)
Dr. M. Ray Perryman recently cited federal business trend data showing that AI use is much higher in larger firms. Companies with at least 250 employees are far more likely to be using AI than smaller firms. See article for checklist / guidelines https://www.census.gov/library/stories/2026/05/ai-use-businesses.html
Startups Using AI To Rapidly Enter New Markets
See HubSpot’s research: https://www.hubspot.com/startups/ai/ai-stats-for-startups Includes detail on thinking through startup issues.
TOM NOTE: Watch the Defense Industry startups – especially in Silicon Valley. These startups have found a way to DRAMATICALLY SHORTEN THE GOVERNMENT PROCUREMENT PROCESS.
Major defense contractors sell programming / software / product development programs to the government – a long, arduous, problem prone process. Startups use AI to rapidly create complete products and offer them to the U.S. government. The government says “yes or no”, DRAMATICALLY SHORTENING PROCUREMENT TIMES!
Thanks to Jim Sherrill for this insight.
Understanding AI / Token Costs
See Microsoft article tips on where to watch for costs. https://learn.microsoft.com/en-us/microsoft-copilot-studio/analytics-cost-savings
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649 |
Sloppy AI Code
Bugs
Outages
Security Breaches
Technical Debt
Precedent: Off-Shore Programming |
5/23/2026 Key AI Architects of Open Source Agent, Coding Tools Sound Alarms Coding Crisis Coming – Inevitable FORECAST: Companies will realize bad software is being created without the expected cost savings. Claude Code: BIG Criticism for bugs, screen flickering, memory hogging, feature creep
Wall Street Journal article describes likely problems identified by Mario Zechner and Armin Ronacher – architects behind OpenClaw open source coding tool.
Inevitable Consequences
Effective Uses:
Weaknesses:
Marginal Uses
See https://www.wsj.com/tech/ai/vibe-coding-slop-ai-tools-e6a99394?mod=Searchresults&pos=2&page=1
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648 |
Low Barriers to Competition
Deal Fever, Perverse Incentives
Disastrous Price Assumption
FrankenApp Risk |
Global Crossing Precedent for AI Valuation Lunacy $55 billion valuation down 90% in four years during tech bust, Bankrupt in five years from JUST ONE BAD PRICE ASSUMPTION IN A SPREADSHEET. Forecast: Token Price Down 90-99% in Five Years, 470 Million Coders instead of Current 47 Million Coders China’s DeepSeek Price Cut by 75%. OpenAI and Anthropic Cost 15X as Much Tom:
Extracts from 6/1/2026 WSJ, Andy Kessler At the time, undersea T-1 lines (which transmit data at 1.5 million bits per second) cost between $10,000 and $20,000 a month. Their AC-1 undersea fiber could handle 40 gigabits per second, or more than 10,000 T-1 lines, which could easily generate more than $100 million a month. Spreadsheets flashed green!
Salomon Brothers and Merrill Lynch took Global Crossing public in 1998, raising $400 million. The stock peaked at $55 billion in value. Global Crossing borrowed heavily to build out 100,000 miles of fiber.
At the time, undersea T-1 lines (which transmit data at 1.5 million bits per second) cost between $10,000 and $20,000 a month. Their AC-1 undersea fiber could handle 40 gigabits per second, or more than 10,000 T-1 lines, which could easily generate more than $100 million a month. Spreadsheets flashed green!
Salomon Brothers and Merrill Lynch took Global Crossing public in 1998, raising $400 million. The stock peaked at $55 billion in value. Global Crossing borrowed heavily to build out 100,000 miles of fiber. But it worked only with $10,000-a-month pricing. The world isn’t static. AT&T and MCI created a joint venture to lay their own undersea cables. Prices plummeted. By 2002 the cost of undersea T-1 lines dropped to $1,000 a month, down more than 90%. Spreadsheets flashed red. After reporting fake revenue that Arthur Andersen blessed, Global Crossing filed for bankruptcy. See https://www.wsj.com/opinion/the-hallucinatory-ai-math-075f1112?mod=author_content_page_1_pos_1
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647 |
Fix The Process First!
Who Gets the Margin?
Verify Demand Actually Exists
Durable Barriers to Competition
Focused on Right Questions
Ignore Lesser Distractions |
Nov / Dec 2025 Three Solid Essentials for Effective AI Use, Havard Business Review
TITLE: The Genl AI Playbook for Organizations by Andy Wu et. al.
SEE CHART ON PAGE 129. TOM note: the three items on far right of the chart match my thinking exactly. I’ll paraphrase.
Map tasks, focus on COST OF ERRORS, and TYPE OF KNOWLEDGE REQUIRED.
Embrace AI where it is already useful.
MISDIRECTED, WRONG QUESTIONS: is AI perfect enough? Are we moving fast enough with AI transformation? What are competitors doing with AI?
BETTER QUESTIONS: Where can AI create a durable competitive advantage? How can I use AI differently/better than competitors? What are AI implications, upstream and downstream in my value chain?
WHO GETS THE MARGIN? Do you reap the efficiency GAINS or are they negated by competitors? Does your SUPPLY CHAIN gain leverage for lower prices or better terms?
PRECEDENT: the PC Transition from command line MS DOS to windows GUI. Took 10 years to mature. Did not significantly alter large process / enterprise applications.
DISTRACTION of AI PERFECTION: The real focus needs to be on effectiveness compared to current work methods.
CAUTIONS, WATCH OUT FOR:
SOME OPPORTUNITIES
AI will not magically improve your P&L. It will require intentional use and durable competitive advantage.
See article for other contributors, including NYU Stern, school of business. HBR Reprint R2506K
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646 |
AI Cost / Benefit Viability
Who Gets The Margin?
Vertical Application Focus Most Likely Winner
Commodity Cautions
Long Term Strategy Focus Instead of Reactive Short Term
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9/19/2023 Unlikely BIG AI Investments Will Make a Profit, Havard Business Review:
HBR’s Andy Wu Explains Extreme Challenges
Basic economics of generative AI are being overlooked.
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645 |
Enterprise AI Success Story
Agent Success
Code Generator Success
Good Processes to Start From
Needed Time to Capture Right Data for AI Prediction
Baby Steps, Quick Hit Benefits before Advanced AI Usage |
(See key lessons from 6/8/2026 Zoom session at bottom)
6/8/2026 An Enterprise AI Success Case by LogistixIQ and Chris Cameron, SVP*
BEFORE AI: Four dispatchers could handle just under 500 Trucks Of Fracking Sand Per Shift
AFTER AI: Four Dispatchers Expected to Handle 1000 Trucks Per Shift
Competitor Benchmark: Chris tells me he knows of a competitor using 8 dispatchers to handle less than 500 trucks per shift.
Chris’s team is looking at DOUBLED OUTPUT for same labor cost – possibly 4X OUTPUT compared to a competitor!
Chris Cameron, SVP of logistics IQ, shared some amazing results managing about 30,000 truck shipments per month, seven days a week, 24 hours a day.
A TIMING AGENT allows the trail of several hundred trucks to act as storage! Significantly reducing storage, handling, and other costs.
The TIMING AGENT also estimates turnaround time to optimize sand supply chain for each well.
A RISK AGENT continuously ranks wells at risk of going down for lack of sand, GREATLY REDUCING chances of well going down. AI is able to handle the complex calculations far quicker than humans. Provides continuous well risk management rather than sporadic.
TECHNICAL FOUNDATION is a custom built core system in REACT with a MySQL database. Chris uses Windsurf for AI coding.
Chris led the charge to put the AI on top of the course system in less than five months.
Chris will be discussing this case with our Senior Software Working Group at 6 p.m. Central time on Monday, June 8, 2026. Both in person and by Zoom.
Email me if you would like to join us. No cost.
======== Key Takeaways, Success Tips from 6/8/2026 Working Group session by Chris Cameron=========
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644 |
Effective Allocation of Capital
Product Development: Work Hard to Find Low Capital Niches
Careful – MUST Still Have Barriers to Competition
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5/12/2026 Wall Street Journal Shows 99.99% probability big investments in AI will produce poor stockholder returns
The magnificent seven got where they are by producing huge returns on low invested capital.
They are abandoning that model, investing huge amounts on AI.
100 years of detailed US stock market returns show with near certainty that asset-light companies produce better returns than asset-heavy companies.
History shows that asset-heavy company stock prices do great during booms but lose all the gains when the tide goes out.
The very few winners will win big, society will benefit and customers will get advanced capabilities at a bargain price, but the vast majority of this invested capital will produce poor returns.
Tom: Our research shows repeatedly that the right question to ask is “WHO GETS THE MARGIN?“ (Who benefits from the productivity gain?)
When a productivity gain is easily duplicated by numerous competitors, the margin ALWAYS goes to the END CUSTOMER and a few select niches in the value chain.
Our recommendation is to focus on those niches where barriers to competition can be created and a strong margin can be sustained.
See Wall Street Journal Article https://www.wsj.com/finance/investing/leading-stocks-are-losing-their-low-asset-edge-4a2885c3?mod=author_content_page_1_pos_3
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643 |
Effective Allocation of Capital
Polar Opposites Provide Contrast
Warren Buffett vs. Softbank |
5/10/2026: Economist Article Contrasts Two Extremes in Ownership / Investing
Implications for Software Product Development, Software Jobs
Buffet / Berkshire Hathaway Approach: “Low risk, low debt, big cash reserves, strong barriers to competition, predictable profits on moderate to low invested capital, happy customers, happy employees, consistent solid returns for shareholders, holding good companies for a long time. Buys companies based on present value of future profits.”
Softbank* Approach: “Invest in any tech that is gut level promising, especially AI, regardless of price. Extreme debt. Cash from operations nowhere near able to pay debt. One in 10 big wins is all that is needed. Extreme AI investment means Softbank could easily disintegrate. (Softbank’s demise has been predicted many times.)
Tom Comments on Impact for Software Products, Jobs: Be aware that there is a school thought for software / tech products which is very close to the Buffett approach: Insisting on profitability from the start, only pursue niches where we solve a big problem for customers, barriers to competition exist resulting in strong margins on low invested capital.
I am repelled by the hype, unmet promises, volatility, lack of concern for customers and employees in the Softbank approach. This is a complex topic – contact us for details.
* Softbank founded by Masayoshi Son, initially an Asian Telecom, has grown into an enormous tech speculative investor based in Japan. Softbank did well by bringing proven tech trends from U.S. to Asia. |
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642 |
AI Lessons from Life Insurance Software |
Lessons from North American Life, Midland National Life, Globe Life, AIG Life (now Coforge), U.S. Life
Article in process –
Will be subject of AI Software Product Development Working Group Session |
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641 |
Big Win for AI with Process Improvement
Enterprise Software Product Saves Brain and Heart Tissue, Reduces Cost and Doctor Time Waste
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Success By Viz.Ai Using AI To Create More Effective Pathways (Processes) https://www.wsj.com/opinion/the-algorithm-will-see-you-now-e8cc8b93?mod=Searchresults&pos=1&page=1 Wall Street Journal article by Andy Kessler 4/20/2026.
VALUE CREATED
BEFORE
AFTER
SUCCESS LESSONS
COMPETITORS doing similar work include AI.DOC and OpenEvidence.
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640 |
Blackberry Revied by Narrow Niche Focus
Right Out of Playbook for Crossing the Chasm, Other Books Advocating Niche Focus |
5/2/2026 WSJ article about Blackberry Returning to Profitability Through Niche Focus Transitioned from handheld to Auto Computer Real Time Operating System niche (RTOS) then to additional niches in medical devices, industrial automation and robotics NOTE: TIA’s research in 2024 classified Blackberry as a (huge) ROIC loser (Return on Invested Capital): $9 Billion in Capital Tied Up for 9 Years produced a $7 Billion Lost The news is it has now produced an annual profit for first time in 20+ years.
A big SUCCESS STORY in turnaround through NICHE FOCUS (so far…)
Their RTOS product is now found in 275 million cars. It provides the plumbing that allows key driver, assistance: Collision warnings, blindspot, notifications, adaptive, cruise control, pedestrian detection, steering correction… It is designed to never, ever fail and moving on to additional niches in autos, factory floor, hospitals, surgical robots, etc.
Some hard work, some luck resulted in finding this great niche. The gigantic blackberry failure drew all attention, leaving this business unit alone to work on solving a big problem for a KEY customer. The desperate circumstances of Blackberry also meant they had no choice but to find a better business model.
BREAKTHROUGH came over a beer with a key Customer, Audi’s engineering chief. He said “we are moving our infotainment business to Google but here is what we need for the next generation of cars...“. The Blackberry unit Head listened and a new, profitable niche focus was born.
See article at https://www.wsj.com/tech/blackberry-qnx-software-cars-bf2a2280?mod=tech_lead_story
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639 |
Vertical Software Firms More Stable, Less Vulnerable |
4/26/2026 AI-Driven Severe Downturn in Software Company Stocks Shows Industry (Vertical) Focus Holds Up Best Under Stress / Pressure WSJ - see
Loans to vertical software companies have only been discounted by 4.2%
Software Engineering firms discounted 16.3%
Horizontal firms by 8.8%
Cybersecurity by 5.3%
Inherent advantages of vertical / industry-focused software firms:
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|
638 |
History of No-Code / Low-Code Solutions
Relevance to AI |
Code Generators, No-Code / Low-Code Solutions, Citizen Developers, User Programming …
History, successes, failures, over-optimistic predictions shed light on use of AI to create code.
Click here to see article in process (password required)
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637 |
Skunkworks
Sybase
Salesforce
VMware
Symbol
Short Success Stories |
Skunkworks, 1974 by, Kelly Johnson and Ben Rich. 14 rules and RIOT ACT resulted, spectacular, unequaled, defense results over 50 years. Most projects completed in 14 months to two years:
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636 |
Bessembinder Findings
Only 3.4% of Public Stocks Created Net Wealth in Last 100 Years
Corroborates TIA Research |
95% of public firms don’t outperform cash. 50% lose money per finance professor Hendrik Bessembinder of Arizona State University. Wall Street Journal, 4/9/2022 by Jason Zweig
“Most of the return of the stock market over time comes from a few high-performing ‘superstocks.’ More than 95% of all stocks, over their lifetime as public companies, collectively, don’t even outperform cash, and more than half deliver negative returns”
Corroborates 2024 TIA Research finding: “89% of public software companies fail to outperform cash in a mutual fund over 10 years.”
REMEMBER: Only 1-2% of Tech Startups Become Public Companies or are Acquired “Only the best become public companies” may be an illusion.
3/23/2026 BESSEMBINDER CITED AGAIN in Wall Street Journal “Research by Hendrik Bessembinder indicates that almost all the wealth creation from equity investing was produced by a tiny fraction of individual stocks.
For the 100 years since 1926, the U.S. stock market has returned about 10% annually. But only 3.4% of the stocks were responsible for all the wealth creation.
The rest of the stocks combined didn’t produce net gains that exceeded the amount that could be earned from investing in 30-day U.S. Treasury bills. And more than half the stocks in the market lost money. * The generous average return from the market came from a tiny handful of stocks. An indexing strategy works because it captures these rare winners.”
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635 |
Percent of Services Matters
Barriers to Competition
Whole Product Solution |
(AI’s Impact: Early 2026 is showing BIG drops in major software company share prices. We are looking a WHY and what to do…)
When Services are Less Than 30% of Revenue, Software Companies are Vulnerable, Unstable
Features, Tech Leadership Alone Are LOW BARRIERS TO COMPETITION
Your competitors will duplicate your features, cut prices and squeeze your margins
Services at 30% or greater shows focus on High Value for customer, WHOLE PRODUCT SOLUTIONS and creates barriers to competition.
Dassault, a $6 Billion French software giant has sales declines and a 50% drop in stock price. (FYI: I have some negative experience with Dassault products – all techno hype and no regard for effective implementation.) Services are 10% of revenues.
Major company % of revenue from services per ChatGPT on 2/15/2026:
Our research from 2021 shows that software companies producing a long term Return on Invested Capital over 10% have between a 70/30 and 30/70 software to services mix.
BOTTOM LINE: Competing on tech / product features alone leads to very very rare short term wins, but it is a slippery slope. Much better to focus on creating extreme high value for customers (a whole product solution to an urgent compelling need) with a mix of product, services and partners.
Sources: WSJ 2/12/2026, TIA Research from 2026 software company stock price drops, TIA Research Update #3 2021, 49 Firms Studied
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634 |
Who Gets the Margin?
Containing the Failings of Human Nature
Owner Interests Ahead of Personal Interest
Rational Management |
“Exciting technology or healthcare stocks end up earning lower returns than companies making bottle caps or toilet paper.”
Robert Haugen, University of California, Irvine, wrote a rigorous book “The New Finance” (out of print.)
He argued that “the pathetically inefficient market doesn’t seem to have a clue as to what is going on.”
His analysis of data from 1928 to 1992 concluded “the risk-return trade-off is truly negative,”
Why? Less-volatile stocks are priced too cheaply “because they are boring.” That’s why buyers can earn higher returns in the long run.
Source: Wall Street Journal, 2/7/2026, THE INTELLIGENT INVESTOR | JASON ZWEIG
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633 |
Who Gets the Margin? |
Who Will Reap the PROFITS from New, Big Technology???
THE GRETZKY METHOD: Always asking “where will the profits be?”
Good Competition / Bad Competition
Clayton Christensen did a great service by insisting we REMEMBER to think through VALUE CHAIN PROFITS. See example page 155.
He walks us through the PC Revolution and shift to non-proprietary hardware as example.
He shows WHO WON THE BIGGEST MARGINS AND ROI FOR OWNERS – by far:
The rest devolved to either commodity status or simply went away. Think of all the big names that are now no longer relevant: IBM, DEC, Compaq, Dell, Data General, Wang, Computer Land, Business Land…
WHO DOESN’T GET THE MARGIN: Feature based competition is easily copied – results in nothing but reduced margins for all competitors – and customer reaps the value / margin.
Bad competition allows others to reap the value of improvements.
Good competition allows you to reap the value.
Gretzky taught us to “always ask where is the puck going?” AI fans pay attention. We need to be asking “who will get the margin?”
Source: Innovator’s Solution by Clayton Christensen, 2003
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632 |
Authority / Responsibility / Competence
Profitable from Day One
Not Chasing Every Dollar of Revenue
Scope, Requirements, Change Control
Narrow Focus on Extreme High Value For Customer
Work Breakdown Structure Discipline Leads to Accurate Status
Cost / Margins
Sales Execution Excellence
Urgent Compelling Need |
Big Lessons from the Navy, Long Career in Software. Interview with Ted Puchacz January 2026.
Ted was in the Navy in Intelligence and had a big career in the software industry leading sales teams for IBM, Nashua, UCCEL, Computer Associates, Siebel and Axiom. Ted and I discussed some key things he has seen improve software outcomes:
Cost / Margins, Cutting the Team in Half: A Computer Associates, Charlie Wong story on managing and optimizing the cost of technical delivery: Charlie Wong was the controversial head of Computer Associates. There is good news and bad news about Charlie Wong’s approach, Ted: “Charlie taught me that on every big software project if you start out with a team of 20, a few months in you can cut it by half, because half of the people are doing the primary work and you’re beginning to understand who they are. In another few months you will be able to cut that in half again, down to 5 people or so. It will be very clear who is performing / contributing and who is just hanging on.
Ted was able to overcome an Urgent Compelling Need – state governments cannot commit to a lease for more than one year. Ted structured a rebate of discount rebate where, if the state government renewed the following year, they got the discounted price and the total 5-year cost was attractive. If they could only pay for one year and did not renew (which never happened) they simply paid for the difference between list price and the discount price.
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631 |
Containing Human Failings
Leadership Includes Industry Expertise
Quality of People Doing the Work
Costs / Margins Earned for High Value Work
Scope, Change Control, Requirements
Narrow Focus On High Value For The Customer, ROI
Urgent Compelling Need
Finding the High Value ROI
Fix the Process First
Prevent Technology Fascination
Costs / Margins / Risk
Fix the Sales Problem |
How Big Consulting Firms Increase Software Project Success Rate from National Average of 35% to As High As 80%**
My research starting in 1998, the Standish Group 2019 Survey, and numerous other sources put National success rates for business software projects around 35% as promised. The majority of projects in large companies actually deliver only 42% of promised features and functions.
The big firms have a number of advantages. Mark, a veteran of Financial Accounting and Reporting Niche Practice from both Deloitte and KPMG, shared how - summary below.
The big consulting firms have made a business of doing a better job for their customers – and this is why they get paid well. Mark’s view over a long career is that projects were consistently well above industry averages and often reached 80% or better as promised, defined as the “Customer would do it again.” While these measures are imperfect and subjective, the fundamental disciplines and things that the big firms do are clear, straightforward and repeatable by smaller firms. Importantly, these outcomes were most consistent in projects with clear executive sponsorship, enforceable scope control and alignment between business and technology owners.
Ethics and Partner structure: Mark and most of his co-workers came from Audit practices where ethics and integrity were everything. This structure causes partners to share reputation, financial, and governance risk for delivery quality. This enforces an accountability that we do not see in many other sectors performing software projects.
Industry Expertise: The big firms nearly always include serious executive industry expertise on their teams. It costs more, but adds credibility, wins sales and prevents repeating dumb mistakes
Good to Great People: The big consulting firms charge significantly more than many consulting and services companies to do the same work. A significant portion of that cost is due a consistently higher baseline of trained, coached, reviewed, and mentored talent, with strong internal quality controls on who is staffed to client work..
Big Firms work with Bigger Customers, willing to pay for Quality Help. Again we see that price, margins, profits are interrelated with the ability to staff, govern, and protect quality delivery through disciplined controls.
Scope, Change Control, Requirements: Mark learned the hard way that the person writing the written agreement for Scope must have experience over 20+ projects. He also learned the sales process never gets enough detail for adequate scope and change management. THERE MUST BE A POST-SALE EXTENSIVE WRITTEN AGREEMENT ON WHAT WILL ACTUALLY BE DELIVERED.
He also found you must REIGN IN THE ENTHUSIASM. There is so much excitement when a sale is closed that team members go off in wrong directions.
Narrow focus on high value for the customer, High ROI: Mark’s practices were primarily financial reporting using Oracle and other financial reporting tools.
ON FINDING THE HIGH ROI: Mark found that some 20% of projects the customer was nearly desperate, at risk of failing an audit, failing disclosure rules or the financial reporting problem was so big the customer did not want to take the time to do formal ROI calculations. They wanted a solution now. This is defined as a UCN (Urgent Compelling Need) in the management literature. When the customer has to act.
In the other 80% of clients, the ROI came from the impact of the accuracy of financial reports and how quickly management got it. Labor savings alone will not justify the project. The anecdotal impact of mistakes that management had made in the past because of late or poor financial reporting produced all the ROI justification needed to proceed with these projects. (Tom: I have used this “cost of past mistakes” approach to ROI very successfully.)
Fix the Process First: The big firms all have standard best practice process templates. Mark’s practice required in the contract that the best practice process would be implemented prior to implementing the technology. This might be the single biggest thing the big firms do right. They insist, even over lower level objections, that the client process be fixed before applying the technology. Mark noted that front line low level and mid level people often resist changing the process where senior management universally supports getting to best practice processes.
Business Result First Prevents Technology Fascination: The narrow focus of Mark’s niche lent itself to keeping “Technology for Technology’s Sake” pressures at bay. This is another of the key issues that the big firms do right.
Scope, Change, Risk Control #2 - the “Deal Review Board” was a critical control mechanism. It was rigorous, escalated reviews based on dollar volume and insisted on a profit margin commensurate with risk. Margins in the high 20s to 40% range were typical for approval, with higher-risk or less-defined projects requiring either higher margins, additional controls, or outright rejection. (Tom: My research shows that 38-40% margins are necessary to keep a firm continuously improving and able to weather storms. Below 38% I have seen a downward spiral of poor people, poor systems, unhappy customers and declining profits.
The Sales Problem: The big firms are noted for spending a substantial portion of their effective cost structure on sales activity when partner selling time is included. They don’t call it that, and the Partners’ business cards don’t say, “Salesperson”, but that is what they do. This is another essential to the big firms’ success. They spend the money to build a pipeline of work so they can pick the good projects with good margins, rather than taking anything they can sell just to meet payroll. (Tom: I worked for a former big firm partner that helped me understand why big firms spend 1/3 of revenues on sales / marketing. I watched IBM do this and conducted my own research showing that at less than 28% spent on sales / marketing, software companies tend to decline.) ** (Tom: The improvement to 80% success rate was not provided by Mark. It is a “guesstimate” based on my research and a long software career. It is not rigorous or statistically proven. My point is that the big consulting firms do things that dramatically improve client outcomes – we can all learn from these lessons.)
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Authority / Responsibility / Competence Matching |
Notes On Authority / Responsibility / Competence Matching, January 2026
Key seems to be placing authority as close as possible to the decisions / work.
His most important factor? Vesting the Chiefs (front line supervisors) with authority and requiring them to take ownership responsibility for improving outcomes. See the book – a great read.
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630 |
Urgent Compelling Need
Narrow Focus On High Value For The Customer, ROI
Cost / Margins to Pay for Good People
FGIC Problem (Financial Guys In Charge) |
Lessons from Convex Super Mini Computers: Convex came to dominate the Super Mini Computer segment in the 1980s and 1990s with more than 500 units installed worldwide.
Convex took a significant number of sales away from Cray Computers because it found a niche, “Half the power of a Cray Supercomputer for one-tenth the cost”.
Convex is cited by Regis McKenna in Relationship marketing for defining and dominating a segment (super mini computers). Cray was too established in super computers and DEC was too strong in mini computers.
A friend who worked for Convex for some 15 years mentioned some of the things that made Convex:
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629 |
Fix The Process First
Containing Human Failings
Requirements, Scope, Change Control
Use Cases
Exceptions Control
Authority / Responsibility / Competence Matched
Quality of “Doers”
Narrow Focus On High Value For The Customer, ROI
Cost / Margins |
“What I learned from a $20 million disaster.”
A colleague with 35 years experience in the software business (Oracle, PwC, Bearing Point) told me about the hard lessons learned leading a huge failure for CBRE (the largest real estate and property management in the U.S.) The application was hand-held facility management.
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628 |
Leadership
Authority to Say “No”
“Mechanical / Electrical Engineer In Charge” Problem
Requirements
Scope / Change Control
Architecture
Authority / Responsibility / Competence Matched
Sales Problems, Pressure to Sell
Selling to Board Members, CEOs
Technical Execution Excellence
Commander’s Intent |
Ross F, former Texas Instruments Program Manager and Software Team Lead for 16 Years, Led 12+ Programs / Projects (Classified and Unclassified). Huge Win Selling His Own Tech Company for Millions, Other Big Software Rolls / Wins, Retired Lieutenant Colonel, U.S. Army Tank Commander in Dessert Storm
Ross and I met in 2025 and 2026 to discuss his big lessons from and long career in Defense and related software projects. My summary of key takeaways:
Tom: I require “Fix The Process First”. How can you have a clear commander’s intent when you buy technology and throw it at a broken process?
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629 |
Authority / Responsibility / Competence Matched
Saying “NO” to Bad Business
Not Chasing Every Dollar of Revenue
Extreme High Value for Client First
Margins To Do It Right
Fanatic Controls on Risk, Margins, Merit of People
Quality of Leadership, People
Strategy
Leadership Accountable
Competence, Hard Truth and Results – Not Good Intentions
Disciplined Process for Selling, Contracting and Execution |
Lessons From Big Consulting – The Best of the Best: Accenture
2024/2025 I’ve had the chance to learn from some long term Accenture people. No firm gets it perfect every time (we discuss a failure below) but Accenture’s record of growth, profitability and happy customers deserves study. Some lessons:
MANAGING DIRECTORS ARE IN CHARGE!
EXTREME FOCUS ON BUSINESS VALUE for CLIENT – Not on Technology. Example: My contact’s boss was “no BS, hyper focused on extreme customer value, brutal and disciplined after 35 years at Accenture.”
Deliver Extreme High BUSINESS Value And Charge For It!
Accenture is very good at fixed fee projects but my contact noted that the Cost+ or Hourly work segment matters. It serves as a low risk pool of talent to keep people on the team, trained for higher value work and to elevate the best people to highest value work.
Projects over $X went to Deal Review Committee which included people from all over the country. If big enough the project had monthly oversight by the deal review committee. This takes advantage of all the expertise within Accenture instead of just “blasting ahead on your own.” E.g. “Sally in Indiana has done this before”. Some additional comments from my sources:
Where Problems Show Up: My contacts were candid about when Accenture makes mistakes or gets in trouble.
Sometimes, It Still Goes Wrong: We finished by discussing a BIG NIGHTMARE at a Fortune 500 Dallas client where Accenture REFUNDED MILLIONS OF DOLLARS. Even the best of the best are not perfect but there is much to learn from Accenture.
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627 |
Trap: “Sure, We Can Do That…”
Trap: Lack of Real Product |
Long Term Manufacturer’s Sales Agent on REQUIRING REAL PRODUCT before He Will Take On A Client
In 2024 Trent H, a long time friend and 20 year+ veteran of selling in and around the semiconductor industry mentioned this issue. Mos of us have seen that software people always respond with “yes, we can do that…” I found it instructive that in an electronics / hardware based business like semiconductors he found the same problem. As Trent put it “I can't sell 'one more engineer's great idea'.
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626 |
Strategy
Requirements
Scope
Process
Sales / Marketing
Leadership
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11/29/2025 WSJ: Anduril (Defense Contractor) Drone Boat software failure results in public embarrassment, 30 drone boats towed out of exercise zone to prevent hazard to navigation
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625 |
Cost / Margin
Strategy
Leadership
Barriers to Competition
Authority / Responsibility / Competence (OPERATING EXPERTISE REQUIRED)
Discipline of Profitability Day 1 |
10/9/2025 CISCO FOUNDER JOHN CHAMBERS: VENTURE CAPITAL (VC) MODEL FAILING, TOO LONG, TOO MUCH RISK
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624 |
Discipline of Profitability Day 1 |
September, 2025, Harvard Business Review,. Why Startups Benefit When Big Investments Come Later. Summary of research by HARSH KETKAR of UT Austin and Maria ROCHE. CONSISTENT WITH
- Concludes startups are MORE SUCCESSFUL when funding stays low early in company lifecycle. - Argues that experimentation, innovation, unconstrained are essential to evolution of effective strategy. - Also notes that investor tolerance for experimentation, exit strategy, and degree of micromanagement are make or break issues. - Study of 11,853 US tech companies from Pitch Book. Note: most were creating apps and websites. Not seeing significant rigor in the research. Appears to have come to the RIGHT conclusions for wrong reasons. Study is overly focused on innovation as solution to all startup problems.
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620 |
LANDMARK on STRATEGY
Compete on Product / Tech / Features vs. Compete on Cost / Economies vs. Compete on Highest Value for Customer |
1960 Landmark HBR Article - Theodore Levitt Problem / Opportunity: MARKETING MYOPIA. Mistake of focusing on YOUR PRODUCT instead of CUSTOMER NEED.
Also Popularized the Product Life Cycle (PLC): Products go through predictable stages: introduction, growth, maturity, and decline.
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617 |
AI Updates
Who Gets The Margin?
USE CASES: Show Cost / Benefit
STRATEGY: Compete on Highest Value for Customer |
9/2/2025 Containing The AI Hype: Big software company SN spent three years, big cost, big hype adding AI to product line. Out of Thousands of customers, to date have only sold two “Agent AI” customers and a dozen paying for “Advisor AI”. Per MM, details confidential. See HOW THE WINNERS DO IT, Other Useful Lessons January, 2025 McKinsey Paper, Other Citations show PROBLEM IS FOCUSING ON TECH – RATHER PROBLEMS and SOLUTIONS CUSTOMERS ARE WILLING TO PAY FOR – AT HEALTHY MARGINS Also known as the THEODORE LEVITT TRAP (a Harvard Professor): When A Business thinks of itself as SELLING PRODUCTS rather than SATISFYING CUSTOMERS. Click for Details 2/10/2025 WSJ, Andy Kessler: The Best Use Cases: Call Centers, Doctor’s Notes Summaries, Legal Tasks, Companions, Software Coders, Education, Graphic Designers 9/2/2025 Other Key Use Cases Identified in Last Three Months: Detecting Deep Fake Video / Audio Forgeries, Checking Code for Hacking Vulnerability
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616 |
How to Get Dramatically Better Outcomes from Big Application Software
Fix The Process First!!! |
Fix The Process First: Click for article in process, citations from Bill Davidow, Geoffery Moore, Clayton Christensen, Fred Wiersema, Tom Davenport, Lynne Markus
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612 |
FGIC Problem (Financial Guys in Charge)
Strategy
Leadership: Authority / Responsibility / Competence Matching
Cost / Margin
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Labor / Capital / Technology Cycle Arguments: (article in process - see OneNote)
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501 |
Big Lessons from Our Research
Our study of 427 PUBLIC AND PRIVATE SOFTWARE COMPANIES |
2025 and Ongoing: Our study of 427 PUBLIC AND PRIVATE SOFTWARE COMPANIES reveals hard truths
Click for Full Study (password required)
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629 |
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Ongoing: Berkshire Hathaway, Warren Buffett, Charlie Munger Lessons for the Software Business (Summary by Tom Ingram)
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506 |
Big Lessons from Management Literature
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3/10/2025 The Innovator’s Solution by Clayton Christensen
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507 |
Big Lessons from Management Literature
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3/17/2025 Crossing the Chasm, 3rd Edition by Geoffrey Moore:
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508 |
Big Lessons from Management Literature
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3/24/2025 The Discipline of Market Leaders by Wiersema and Tracy:
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499 |
Find Your Niche
Shorten Sales Cycles
Narrow Focus on Extreme High Value for Customer
10x-30x ROI for Customers
Barriers to Competition Self Referring Niches
Urgent Compelling Need
Ideal Prospect
Solve Sales Problem
Sales Execution Excellence
Avoid Sales Traps
Whole Product Solution |
Documentum Case: From Sales of $2 Million to $75 Million and IPO in 4 Years! Shortened Sales Cycles from 18 Months to 6 Months. Customer Payback Average Of 10 To 1, As High As 30 To 1. Saw Strategy Working Within 60 Days Strategy
Product / Offering
Sales Execution
More information
(Source: Interviews and Crossing the Chasm)
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497 |
Narrow Focus on Extreme High Value for Customer
Beating Bigger Competitors
Whole Product Solution
Bowling Alley of Adjacent Niches
Fix The Process First
Barriers to Competition
Seeing Big Picture, Macro Trend
Circle of Competence
Actively Fight Complexity
“Sign Posts” To Differentiate from Competitors
Winning The “Integration Devastation”
Single Line Of Business Buyer
Urgent Compelling Need
Rare Win in Volatile Industry
Sign Post Signal of Differentiation |
Lawson Healthcare Niche Success: Grew from $4 million to $40 million in four years. Dominated Super-Narrow Niche Of Healthcare Integrated Delivery Networks (HIDNs). Successfully Competed with Oracle and PeopleSoft
BRILLIANT NARROW FOCUS on BEACHHEAD segment of HIDNs. This is a great example of whole product, creating barriers to competition and selling multiple bowling pins (products) to the same customer.
Fixed The Process First With Activity Based Costing Training / Consulting As Part Of The Whole Product Solution.
Spectacular Example Of No Code Workflow Software + Costing Helping Customer To Reengineer Processes. No code software was kept simple, did not require coding skills of most competitors. (Tom: I have seen this problem many, many times). Other notes:
(Source: Crossing the Chasm, Innovator’s Solution)
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496 |
Profitable From Start
Overcame Technology for Technology’s Sake
Actively Fight Complexity
Costs / Margin
Practical Beats “Cool” |
Brickstream breaks cycle of failure and finds the right new strategy.
(Source: Crossing the Chasm)
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495 |
Narrow Focus on Extreme High Value for Customer
Urgent Compelling Need
Bowling Alley of Self Referring Niches
Pragmatic Buyer – Not Early Adopter
Effective Reseller Programs, Contains Problems
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VMWARE Examples: 220% ROI in 9 Years. New Product $0 to $40 million sold in Texas alone in two years. 1,000 New Customers
(Source: Crossing the Chasm, Innovator’s Solution, Interview with former executive)
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494 |
Profitable from the Start |
Absolute Software: GREAT job of profitability from the start
See TIA publication How to Increase Margins for Software Companies
(Source: Crossing the Chasm)
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493 |
Whole Product Solution
Narrow Focus on Extreme High Value for Customer
Architecture, Product Pipeline |
Corelation Inc (Credit Union swr, GREAT EXAMPLE OF Focus, WHOLE PRODUCT PARTNERS.
CORE Processing Solution is designed to enhance credit unions and includes no code, dashboards, user engaging interface.
Collaborates with strategic partners to integrate additional functionalities into their platform such as online and mobile banking, digital account opening, loan origination, and digital card issuing.
Jack Prim IS A FAN: Private, solid, great profits, where Jack Henry was 20 years ago. Does not want to go public or raise capital "leave us alone and let us run this business")
(Source: Crossing the Chasm, Jack Prim, former CEO of Jack Henry)
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492 |
Whole Product Solution
Narrow Focus on Extreme High Value for Customer
Niche With No Dominant Competitor Which You Can Dominate |
Intel Won The Microprocessor War With A Whole Product Solution.
Product included the chip, application notes, ads, microprocessor development systems, emulators, software, field applications engineering, single board computers, customer education programs and marketing's capture of public imagination.
Intel beat HP and Tektronix in Market for a new segment of electronic instrumentation. Competitors built general purpose equipment supporting any manufacturer’s microprocessor.
Intel focused narrowly on being spectacularly good at the whole product surrounding Intel microprocessors. Competitors could not match Intel's whole product solutions.
Initially found niches with no dominant competitor.
(Source: Marketing High Technology)
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491 |
Business Expertise
Narrow Focus on Extreme High Value for Customer
Cost / Margins
Barriers To Competition
No Tech for Tech’s Sake
Extreme Focus on Service to Customer
Whole Product Solution
Pragmatic Buyer Market instead of Early Adopter
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Big Lessons from IBM
IBM salespeople were consultants. Their personal contribution could overcome price and performance deficiencies.
SPECTACULAR DOMINANCE OF MAINFRAME INDUSTRY page 151. 70% market share, 95% of industry profits. Proprietary products, strong cost advantages, high barriers to competition,
DIFFERENTIATION. ACCOMPLISHED WITH NARROW FOCUS, EXTREME HIGH VALUE FOR CUSTOMERS. Primary focus on service, value to customer over technology. REMEMBER – THIS SERVICE DOMINANCE CAME DURING ERA OF EMERGING, UNRELIABLE MAINFRAME COMPUTERS. Customers needed high level of service and were willing to pay
REMEMBER - IBM’s System 3, 34, 36, 38, AS/400 Series. Likely best, longest whole product application value for customers in history. Certainly for mid-range. PROSPERED while Wang, Apollo, Prime, Convex, Data General, DEC went away!
Amusing how derided as “old tech” for decades, but continues to sell and provide value to customers today. WHOLE PRODUCT IS CLEARLY SUPERIOR FOR THE PRAGMATIC BUYER, even though the generic product itself is old tech.
Great Precedent: IBM AS/400 and HP 3000 thrive while Wang, Prime, Apollo, Convex, DG, DEC gone
IBM’s System 3, 34, 36, 38, AS/400 Series
Additional Positives:
Some Negatives
(Sources: Crossing the Chasm, Discipline of Market Leaders, Marketing High Technology, Innovator’s Solution, Tom’s experience competing against IBM)
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490 |
Profitability from the Start
Narrow Focus on Extreme High Value for Customer
|
Big Lessons from GE
GE’s famous “#1 or #2 or get out”
(Source: Marketing High Technology)
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489 |
Profitability from the Start
Narrow Focus on Extreme High Value for Customer
Saying NO, Not Chasing Every Dollar, Extra-Large Customers
Margin / Cost: Can Afford to Invest In Service
Charges Significantly More Than Competitors
Urgent Compelling Need
Understands Customer Problems Better Than They Do
Are You Sufficiently Focused: How To Know
Rational Acquisitions
Ruthlessly Qualify Prospects
Sell the Business Executives, Not IT Dept
Service as Primary Barrier to Competition
Avoiding Wall Street, IPO Traps |
Jack Henry: 500% Return on Invested Capital from 1995 to 2005. 300% Return on Invested Capital from 2012 to 2021.
See our case study for these key lessons:
Disciplines
(Source: Case Study: No27JackHenryProfitable30Years.pdf , Interview with CEO Jack Prim, 2nd Interview with Jack Henry CEO Jack Prim)
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488 |
Narrow Focus on Extreme High Value for Customer
Economies of Focus
Avoided “Tech for Tech’s Sake” Trap by Focus on Customer Need
Generic Products Not Viable |
Reseller of No Code / Low Code Software and Services. Grew from $1000 investment to $28 Million in Sales by Narrowing Focus
See our case study for these key lessons:
(Source: TIA Case Study No23SwrFirmStartedwith1000.pdf) |
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487 |
Narrow Focus on Extreme High Value for Customer
Leadership Replaced
Tool Kit Products Not Viable
Shorten Sales Cycles
Barriers to Competition
Whole Product Solution
|
European Software Company Struggling in U.S.: Closed Six Large Sales in Eight Months (After Closing Zero Sales in the Previous 16 Months).
See our case study for these key lessons:
(Source: TIA Case Study No24SwrCoCloses6LargeSalesin8mos.pdf)
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486 |
Narrow Focus on Extreme High Value for Customer
Shorten Sales Cycles
10X Payback for Customer
Ideal Prospect Concept
Direct Approach Worked
Distribution Channel Through Consultants
Did Not Chase Every Dollar of Revenue – Selective on Customization Requests
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Struggling Software Firm Gets Focused, Sells 12 New Accounts in 16 Months, Generates Over $10 Million.
See our case study for these key lessons:
(Source: TIA Case Study No26StrugglingFirmSells12NewAcctsin16Mos.pdf) |
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485 |
Urgent Compelling Need
Narrow Focus on Extreme High Value for Customer
No Price Competition
Whole Product Solution
Barriers To Competition
Bowling Alley of Self Referring Niches
Leadership
Say “No” To Business Outside Your Focus
Shortened Sales Cycles
Minimal Acquisitions, Done Well |
Docucorp: Struggled for Five years, Got Focused, Grew Sales from $15 Million to $75 Million During Difficult Post-Tech-Bust Years!
From initial losses, rose to solid profits, spectacular return on low invested capital
See our case study for these key lessons:
(Source TIA Case Study: No28DocucorpSuccessStory.pdf ) |
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484 |
10X Payback for Customer
Narrow Focus on Extreme High Value for Customer
Honest Sales Representations
Solving the Sales Problem
Minimal Price Competition |
Fiserv: 11.14% Average Net Return on Sales during DOT COM bust. Grew from $20 Million to $3.5 Billion in Sales, Profitable Every Quarter. Share Price Up from $1.22 to $37.00 a Share after Seven Stock Splits
Spectacular market value on moderate invested capital. Sustained market value as Tech Bubble burst.
See our case study interview with the CEO for these key lessons:
Fiserv provides services and software to financial services industry.
(Source TIA Case Study: No29FiServSuccessStory.pdf NOTE: This interview took place at Fiserv’s height in 2004. Fiserv has come under some recent criticism… We can still learn from what built this spectacular success.) |
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483 |
Early Profitability
Narrow Focus on Extreme High Value for Customer
Barriers To Competition
Solved Tech for Tech’s Sake Problem
Sales Funding, Execution
Whole Product Services Critical to Success |
Ixos – Imaging Software. 20+ software sales of $1 Million+ at 50%+ Gross Profit. Profitable after 3 ½ years.
Workflow Add-On for SAP AP, AR, Other Financial Apps.
EXTREME SUCCESS, LESSONS BENCHMARK versus competitors with technology focused strategies. Prospered with Focused Application Value niche while competitors (Viewstar, IBM) floundered.
Filenet, a competitor, also prospered with Focused Application Value niche while competitors (Viewstar, IBM) floundered Initially 5-10% services, grew to 40-50%
Sales Execution
(Source: Interviews, Tom worked for competitor) |
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482 |
Narrow Focus on Extreme High Value for Customer
Bowling Alley of Self Referring Niches
No Tech for Tech’s Sake
Said “No”
Profitable From Start
|
Tyler Technologies: TIA study winner, 100% ROI in 5 Years 200% ROI in 9 Years.
Narrow focus on city government, started with city tax management and electric utilities. Grew to eight city management segments total.
(Source: Customer, Interview with Marketing Consultant)
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481 |
Profitable from the Start
Narrow Focus on Extreme High Value for Customer
|
BENTLEY SYSTEMS INC (PROJECT MGMT FOR ENGINEERS AND CONSTRUCTION) 2023 TIA Research Winner. 100% ROI in two years.
Focus on STRUCTURAL AND CIVIL ENGINEERS USING SOFTWARE TO SIMULATE BIG PROJECTS.
4/19/2024 WSJ: Schnieder Electric bidding for control where it will merge its software business with Bentley. Family controlled Bentley may not go for it. APPEARS SCHNIEDER UNDERSTANDS BENTLEY IS WAY BETTER AT SOFTWARE THAN IT IS.
(Source: TIA research) |
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480 |
Narrow Focus on Extreme High Value for Customer
Urgent Compelling Need
Whole Product Solution
Do Not Chase Every Dollar of Revenue
Saying “No”
Scope / Change Control
Big Winner Without Most Current Tech |
Black Knight, Inc. (LOAN ADMINISTRATION SWR) 2023 TIA Research Winner. 100% ROI in four years.
Urgent Compelling Need: Regulators compelled Bank of America to move off their home grown mortgage software and implement a package approved by the regulators.
BofA management wanted one reliable neck to hold responsible.
Fiserv was a distant second choice.
The WHOLE PRODUCT SOLUTION included regulatory compliance and a rigid implementation process.
Black Knight used a super rigid implementation and NEVER FAILED to get a customer implemented. It was a genuine, strong process but not sophisticated. “Their way or the highway”.
Said “NO” to customizations. Significant hard feelings with very big banks who want it their way, think they are smarter than everyone else
Stodgy, old tech. Mainframe app with new interface Now adding some bolt on apps for more value
(Source: Bank of America former employee)
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479 |
Narrow Focus on Extreme High Value for Customer
|
CADENCE DESIGN SYSTEMS INC 2023 TIA Research Winner. 100% ROI in two years.
Focus is electronic engineering design
- STRONGEST PROFITS IN STUDY - Low invested capital - Huge valuation
(Source: TIA Research)
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478 |
Narrow Focus on Extreme High Value for Customer
|
Cerner 2023 TIA Research Winner. 100% ROI in six years
(Source: TIA research, met founder, interview ex-employee)
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477 |
Fix The Process First
Narrow Focus on Extreme High Value for Customer
|
DESCARTES SYSTEMS GROUP INC (Canada, 2023 TIA Research Winner. 100% ROI in eight years
BUSINESS PROCESS AUTOMATION SWR, supply chain management business processes)
(Source: TIA research)
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476 |
Narrow Focus on Extreme High Value for Customer
|
GLOBALSCAPE INC 2023 TIA Research Winner. 100% ROI in 6 Years. 300% ROI in 9 Years
CRM software, provides secure information exchange, data transfer and sharing capabilities
Successfully acquired due to STRONG PROFITs and LOW INVESTED CAPITAL
(Source: TIA research)
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475 |
Profitable from the Start
Narrow Focus on Extreme High Value for Customer
Barriers To Competition
|
Group 1 Software 2023 TIA Research Winner. 100% ROI in five years.
Direct marketing and customer relationship systems
ACCOMPLISHED WHILE COMPETING WITH SALESFORCE! Winner from original study
(Source: TIA research)
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474 |
Profitable from the Start
Narrow Focus on Extreme High Value for Customer
Barriers To Competition
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MANHATTAN ASSOCIATES INC 2023 TIA Research Winner. 100% ROI in 3 Years, 200% ROI in 9 Years.
SUPPLY CHAIN management software, solutions to manage supply chains, inventory retailers, wholesalers, manufacturers
FOUND NEW MARKET HELPING MANUFACTURERS SELL DIRECT TO CONSUMER.
ACCOMPLISHED WHILE COMPETING WITH SAP AND ORACLE!
Big Win: spectacular market value on low invested capital, held value through tech bubble burst
Profits: 30%+ before tech bubble, 10% after, significant acquisitions
(Source: TIA research)
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473 |
Narrow Focus on Extreme High Value for Customer
|
NATIONAL INSTRUMENTS CORP 2023 TIA Research Winner. 100% ROI in 9 Years
ENGINEERING software for automated test equipment and virtual instrumentation software
(Source: TIA research)
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472 |
Narrow Focus on Extreme High Value for Customer
Barriers To Competition
Profitable from Start
|
Paycom Software, Inc. 2023 TIA Research Winner. 100% ROI in 6 Years
Software puts all HR functions online including talent acquisition, time and labor management, payroll, talent management and human resources management
Accomplished while competing with Workday, Peoplesoft, Oracle!
(Source: TIA research)
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471 |
Narrow Focus on Extreme High Value for Customer
|
PTC INC. 2023 TIA Research Winner. 100% ROI in 9 Years
MANUFACTURING software for computer-aided design / engineering, manufacturing, and services
Steady Profits = Durable Market Value
(Source: TIA research)
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470 |
Narrow Focus on Extreme High Value for Customer
|
SHOPIFY INC. 2023 TIA Research Winner. 100% ROI in 9 Years.
MARKETING TECHNOLOGY software enables merchants to sell their products across different sales channels
Found niche HELPING MFRS SELL DIRECT TO CONSUMER
(Source: TIA research)
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469 |
Profitable from Start
Narrow Focus on Extreme High Value for Customer
Bowling Alley of Self Referring Niches |
VEEVA SYSTEMS INC 2023 TIA Research Winner. 100% ROI in 4 years. 140% ROI in 9 years
PHARMACY software cloud solutions for the life sciences industry / pharmaceutical, biotechnology, and medical device companies
Very Strong Profits created Very High, Stable Market Value
(Source: TIA research)
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468 |
Narrow Focus on Extreme High Value for Customer
Dominate Niche |
Boston Consulting Group study 1968: MUST pursue sufficiently isolated segment which can be dominated.
If cannot be dominated – withdraw.
(Source: Marketing High Technology, page 14)
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467 |
Narrow Focus on Extreme High Value for Customer
Ideal Prospect
Barriers to Competition |
Reynolds And Reynolds - Big Win: Spectacular market value on very low invested capital due to debt pay down and stock repurchase.
SEE CHARTS, HUGE WIN FOR INVESTORS, Sustained Market Value after Tech Bubble!
Focused On Auto Dealers Who Needed Help And Were Willing To Pay
Sales Execution
Technical / Operations Execution
Big gains early, but big drop due to divestiture, regained some revenue growth
See study PROFITS OF 427 PUBLIC AND PRIVATE SOFTWARE COMPANIES, 2022
(Source: Innovator’s Solution, TIA Research)
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466 |
Narrow Focus on Extreme High Value for Customer
Pragmatic Buyer Instead of Early Adopter |
Oracle: Standardized on IBM’S SQL interface.
Ported To Every Relevant Operating System / Platform
APPS DEVELOPED IN ONE EASILY MIGRATED TO ANOTHER
KILLER USE CASE! Won pragmatists in IT depts
This is what built Oracle
SPECTACULAR WIN FOR NON-PROPRIETARY
Oracle, disciplined enough to say NO to bad integration projects, demands from big customers Jim C., Real Page former COO story, mad at first, then respected their discipline and focus
(Source: Crossing the Chasm, Jim C, interview)
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465.5 |
Narrow Focus on Extreme High Value for Customer
Profitable from Start
|
SYNOPSYS INC SEMICONDUCTOR TOOLS SWR 2023 TIA Research Winner 100% ROI in 8 Years
Semiconductor Engineering Simulations Design
Focused Application Value
Steady Profits = Big, Stable Market Value
12/23/2023 WSJ update: Market value up from $60bb to $80bb, still going strong, chip design focus, acquiring Ansys AMAZINGLY SMOOTH MARKET VALUE GROWTH FROM STEADY PROFITS. VERY MUCH WORTH STUDYING
Source: TIA Research 2023 |
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465 |
Narrow Focus on Extreme High Value for Customer
Profitable from Start
|
ANSYS INC 2023 TIA Research Winner. - STRONGEST PROFITS IN STUDY. 100% ROI in eight years.
Focused on Manufacturing (especially simulations for Aerospace, Healthcare, Automotive.)
MANUFACTURING SWR, engineering simulation software, simulates how real products work
Increasingly important for structural, mechanical, power? reasons as products smaller and more complex. Very large invested capital 12/23/2023 Synopsis acquiring, TWO STRONG PERFORMERS, BUFFETT / MUNGER STYLE – ACQUIRE STRONG COMPANY AT FAIR PRICE?
(Source: TIA Research)
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464 |
Narrow Focus on Extreme High Value for Customer
|
APPFOLIO INC 2023 TIA Research Winner - 150% ROI in 10 Years
PROPERTY MANAGEMENT SWR / Real Estate Swr
(Source: TIA Research) |
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463 |
Narrow Focus on Extreme High Value for Customer
|
Cheetah Mobile Inc. 2023 TIA Research Winner. 100% ROI in five years. PROFITS GOOD BUT UNEVEN
Software applications for smartphones and tablet devices
Moderate invested capital, Market Value Dropped by $20 BB, Still Profitable, Viable.
(Source: TIA Research) |
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462 |
Narrow Focus on Extreme High Value for Customer
Bowling Alley of Self Referring Niches |
NICE Ltd. (Israel) 2023 TIA Research Winner. 100% ROI in 9 Years
CRM Swr Customer Engagement and Financial Crime and Compliance markets
(Source: TIA Research)
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461 |
Narrow Focus on Extreme High Value for Customer
Saying “No”
Go Find Good Business
35%+ Of Revenues on Sales / Marketing
Bowling Alley of Self-Referring Niches
|
EDS – Numerous Lessons
e.g. HOW BUILT $100 MILLION BUSINESS UNIT. Services Only to Defense Contractors: Engineering Manufacturing Development, Virtual Assembly Aviation Defense Contractor Niche
Initial Big Successes from Narrow, High Value Initial Offerings
THE DISCIPLINE OF NARROW FOCUS ON HIGH VALUE APPLICATIONS almost certainly proceeded from the core disciplines. Core IBM principals (Don’t take bad business, Go find good business) also contributed.
Insurance data processing niche Medicare processing started in 1965. 40% of business by 1977 and largest in nation by 1990. Cumbersome 1965 legislation created opportunity for EDS
(Source: Former employee interviews)
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|
Horizontal / Vertical Focus Done Well
Narrow Focus on Extreme High Value for Customer
Bowling Alley of Self Referring Niches
High Margin and Worth It |
Peoplesoft: Great Example Of Horizontal Platform Marketed Vertically To Industries
Captured 50% Market Share For Client / Server HR Apps, Then Moved On To Related Niches
- Lagged behind until Windows 3.0 established as standard for client of client server in early 1990s
- One of 3 core apps that Drove Windows 3.0 adoption (also Sap and Oracle)
- Able to keep charging premium because of market dominance
- HR systems were low risk app for pragmatists to try client / server
- Moved to next pin, financials, very strong due to HR position
- Challenge will be narrowing financials app targets to ones where HR strength is enough advantage to compete with Oracle and SAP From Crossing the Chasm 3rd Edition pg 173-174 and Inside the Tornado (subsequent Geoff Miller book) |
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460 |
Narrow Focus on Extreme High Value for Customer
|
Workday (See Peoplesoft as Starting Point):
Peoplesoft success was due to bringing big suite of interactive HR tools to client / server (which HR had never had).
After hostile takeover by Oracle, former executives formed Workday and did the same thing with SAAS / online HR software.
BIG HORIZONTAL WIN BY FOCUSING ON JOBS CUSTOMER NEEDED DONE (rather than industry vertical)
- Key SAAS benefits * IMMEDIATE implementation * Pay as you go, lower risk * Continuous releases / updates * PERCIEVED LOWER SWITCHING COSTS (process is still the bigger barrier)
(Source: Innovator’s Solution)
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459 |
Narrow Focus on Extreme High Value for Customer
Bowling Alley of Self Referring Niches
Urgent Compelling Need |
Clarify: Possible big win with textbook Chasm Crossing approach
Software Application Support: Full SAAS automation of Customer Service Software and Network Hardware Support.
Won Cisco, 3Com, Synoptics, Wellfleet, Microsoft.
NOTE: Jury is still out – not sure if successful yet, but good lessons
Next Niche: Telecom. Same customer service / application goals as TE Connectivity - Agent Screen: Customer Calling, (all possible info), Product causing call, Knowledge to meet need - Increase Sales through Better Service - Increase Sales with Buying Patterns, Promotions tuned to customer - Order / Shipping knowledge, troubleshooting - Screen sharing with customer *** Bug Case routing to development org, tracked through resolution - Skill based routing to best fit agent - Hot Lead capture, prioritization - Email, voice or chat as customer prefers - Automated chatbot service where works - Quotes tracked through on time response, esp. outside service dept. - Service Level Agreements enforced for resolution - Warm handoff of leads to partners - Agent productivity, measurement, training calls - Tiers of service, charge for, effective - Universal Agent: All able to do customer service, product specialist, inside sales jobs, best possible - Remote agents on PCs or Tablets - Integration to tracking sensors, other customer systems - Speech to text, natural language, text analytics
Urgent Compelling Need: Competitive advantage, increased sales from superior service OPPORTUNITIES: - Network Hwr Support, Vertical market with broken mission-critical process - Niche lends to whole segment of customers – not just one at a time LESSONS: - Make a total commitment to your focus niche, use whatever you have left to service other easy business coming in - Started with Network Hwr Support, won Cisco, 3Com, Synoptics, Wellfleet - Next bowling pin: Software App Support, won Microsoft - Next Pin: Telecom
(Source: Innovator’s Solution, Tom client)
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458 |
Narrow Focus on Extreme High Value for Customer
Failed Horizontal Approach |
Lotus Notes: Big initial success with narrow focus on global account management for worldwide accounting and consulting firms.
Migrated to another pin – customer service for high-tech companies. Other customers started adopting, became fragmented, used for everything, lost focus,
BECAME HORIZONTAL, acquired by IBM, died.
NOTE THAT SUPERIOR COMPETITORS, HP’S NEW WAVE, NEXT’S NEXTSTEP, ARGUABLY TI’S PRODUCT, NINTEX, DOZENS OF OTHERS FAILED BECAUSE THEY WENT HORIZONTAL
(Source: Innovator’s Solution) |
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457 |
Narrow Focus on Extreme High Value for Customer
Whole Product Solution
Industry Expertise
Lost Their Way |
Seibel – Pioneered CRM Applications. MIXED - GOOD AND BAD
(Source: From former #3 sales exec in the world)
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456 |
Focus on The Pragmatic Buyer
Extreme High Value for Customer |
Lessons from Microsoft
Microsoft’s position in history and size make it unlikely that its success will ever be replicated, but here are some lessons we can take away
Microsoft was built in large part on this concept: “Customer funds initial software, we productize the software – make ready for large scale sales - sell big value for low cost” – e.g. MS Office. Note There are significant costs to productize the software – making it ready for large scale sales. Focus on pragmatic customers: Low cost, high value software.
SPECTACULAR WIN FROM THE SHIFT TO NON-PROPRIETARY HARDWARE.
(Source: Former employees, TIA Research) |
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455 |
Narrow Focus on Extreme High Value for Customer
Authority / Responsibility Matching
Controlling Interference from Investors, Board Members |
Sernic: Canadian Supplier of ERP Software to NGOS (Non-Govt. Orgs.)
(Source: Randy K, former CEO)
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454 |
Narrow Focus on Extreme High Value for Customer
|
ACI WORLDWIDE, INC., 2023 TIA Research Winner 100% ROI in six years Complex FINANCIAL SERVICES software for transaction clearing, security between banks.
- Large invested capital - Very strong profits while growing revenue - Unusually low market value - CAUTION: Possible problem period with customer hostility but has new CEO
(Source: TIA Research)
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453 |
Focus
Barely A Winner, Lost Their Way |
ALLIANCE DATA SYSTEMS CORP, 2023 TIA Research Winner 100% ROI In Seven Years
Credit card, loyalty and marketing services
- $25 Billion Valuation Down To $7 Billion. Exited business, remainder now Bread Financial - $3.5 Billion In Capital Tied Up For 10 Years+ - Startup unit for deregulated gas and electricity billing – ended losing in big litigation (Source: Tom Ingram Worked There Two Years)
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452 |
Profitable from Day 1
Narrow Focus on Extreme High Value for Customer
|
CHECK POINT SOFTWARE TECHNOLOGIES LTD 2023 TIA Research Winner 100% ROI in four years - STRONGEST PROFITS IN STUDY
CYBER SECURITY SOFTWARE High invested capital Huge valuation
(Source: TIA Research)
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451 |
Narrow Focus on Extreme High Value for Customer
Whole Product Solution
Services Sells Software |
INTUIT INC 2023 TIA Research Winner 100% ROI in 4 Years, 200% ROI in 9 Years
FINANCIAL SERVICES / TAX SWR
NOTE: Added services!
(Source: TIA Research)
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450 |
Whole Product Solution
Effective Reseller Industry Niches |
Progress Software: Big Win: Spectacular Market Value On Low Invested Capital Due To Repayment Of Debt No-Code / Low Code Software Development Tools Strong industry focus programs for resellers Source: TIA Research 2009 Revised, interview with former executive, site visit |
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Whole Product Solution
Narrow Focus on Extreme High Value for Customer
|
Micros: Big Win - Spectacular Market Value On Very Low Invested Capital 30%+ growth some years with significant acquisitions Strong profits, avg 12% Point of sale systems and terminals for hospitality industry Source: TIA Research 2009 Revised |
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*Contact Us in Dallas, Texas, USA at tom@tomingraminc.com or 972-503-9287. but may have been altered for simplicity, teaching purposes or to protect confidential information. Names and faces are disguised to maintain privacy. Contact us for details before making any purchase decision. |