do stairways have to do with industry analysis?
this month's article I'm admitting to an oddball
trick of mine for assessing the future performance
of a company. What are some of the ways you
size up a company before purchasing their
product, accepting a job with them, or investing
in their stock?
I wanted to let you know about the following two
speaking engagements. Stop by and say hello if
you're attending either conference.
International Symposium and WILSHIRE Meta-Data
Conference, Boston, MA, Tuesday,
March 6, 3:15 PM, "Leveraging
Data Shadow Systems for Business Value”
World Conference, Boston, MA, May
13-18, "MDM & CDI: Data Salvation or
Data Silos?" (exact date and time of this
course to be announced)
and questions are always welcome.
Sherman, Athena IT Solutions
Stairway Method of Industry Analysis
have an oddball method for assessing the health
and future of a company – the stairway method.
constantly asked to assess not only the overall
Business Intelligence/Data Warehouse market, but
also specific companies. This means that I have
to invest a lot of time doing due diligence to
provide as educated a guess (and foretelling the
future is always a guess) as possible.
anyone following an industry, for the most part
I turn to the usual methods. My experience with
a company and its products, along with talking
with my peers, industry analysts and various vendors’
customers yields a lot of great anecdotal evidence.
I also read and discuss evaluations by industry
analysts and experts. Industry analysts’
“positioning” charts that compare
vendors in an unbiased (although vendors don’t
always think so) fashion help me with high-level
addition, my due diligence includes checking out
company and market financials such as stock performance,
revenue, earnings and other key performance indicators
(KPIs). In fact, several financial analysts regularly
contact me during their channel checking inquiries
before they update their market and company financial
reviews. It’s a good chance to swap information
far these are all pretty standard due diligence
approaches. But in the financial community many
analysts have “out-of-the-box” (a
more politically correct way to phrase oddball)
methods to determine market or company performance.
So have I: the stairway method.
was reminded of my oddball method recently when
running by a few corporate headquarters on my
noon jog. My method: you can learn a lot
about a company by looking at the size of the
stairways in its headquarters.
I admit this may seem weird. But honestly, I have
observed over the years that the size of the stairways
is generally more reliable than industry pundits
and often provides as much insight into a company’s
future as financial or industry analysts’
are stairways a solid predictor of a company’s
future? If the founders think they are going to
grow substantially then they build their headquarters
with an abundance of wide, well-lit stairways.
If you invest in your stairways, especially
since no one will really see them, then you
must be thinking you are growing.
On the other hand, if the firm is cash constrained
when it builds its headquarters, it is likely
to skimp on the stairways. After all, not everyone
sees the stairways, so it’s a natural place
to save money.
you’re not laughing too hard to try the
stairway method for yourself, note that it doesn’t
matter if the headquarters is lavish or plain.
The current decor may be more of a reflection
on the current management or founders’ taste
than a financial performance indicator. There
were plenty of Internet companies that never made
any money, but spent lavishly and were doomed
to fail. (If I only realized that before the NASDAQ
bust!) Even now, there are many firms that want
to show off -- whether they are actually wealthy
or not. On the other hand, there are also many
“New England Puritan” firms with strong
balance sheets yet plain headquarters.
stairway indicator analytical approach came to
me from my days at Digital
Equipment Corporation (DEC), which was bought
by Compaq and then HP. The company’s founder,
Ken Olsen, was a classic New England frugal engineer
-- never flashy. Later he was replaced by Bob
Palmer, who was quite the opposite. (Palmer soon
sold DEC to Compaq.)
the company’s initial stratospheric success,
buildings during Olsen’s reign were
far from lavish – think old mill buildings
with tilted floors and repurposed shopping centers.
But the stairways were the true indicator of the
company’s wealth and its perception of its
future. During its rise, even the old mill buildings
had wide, well-lit stairways.
he took over the helm and the company’s
decline accelerated, Palmer moved the company
headquarters from the old mill to a brand-new
building a mile away. Those of us who worked in
the same building noticed his flashy car in the
parking lot. Even the media took note of his Armani
suits and perfectly coiffed hair.
was most telling, however, was that while the
new headquarters building might have been flashier
on the façade, the stairways inside were
smaller, cramped and less abundant than those
in the old mill.
have since noticed this phenomenon in many of
my clients’ headquarters, in various industries
-- financial services, insurance, retail, consumer
products goods, health care providers, manufacturing
and other high tech firms. I have also observed
it at software and hardware vendors.
next time you’re wondering whether to make
that investment or take that job, remember that
stairways foretell the future of a company…or
at least they foretell it as well as an analyst’s
chart or an industry expert’s opinion.
The Vatican’s stairway pictured above certainly
foretold a long and prosperous future. I have
not yet been in any corporate headquarters with
a stairway this extravagant!