My first three computers were Tandy 1000s. They were new enough that you didn’t need a tape deck to run programs. I started my first business at 12 years old with that Tandy.
My story starts with the next Tandy. This one was a hand-me-down from my father’s work: Mrs. Fields Cookies. My father was a baker’s baker. He ran retail and commercial bakeries, could squeeze out an extra 3 dozen donuts out of a 100 lb bag of flour, and knew all these cool tricks (did you know that 2 bags of ice stirred into a huge vat of donut dough will retard the yeast during the summer perfectly? Me neither.)
When he managed a Mrs. Fields, they just transitioned from manual ordering to using computers in the stores. (While Debbie Fields made a good cookie, Randy Fields was a decent programmer and developed some of the first scheduling and ordering programs for retail stores.)
The computer system was a huge success. Mrs. Field’s was able to reduce staff hours and save on ingredient costs. They got more precise at having staff mix ingredients by putting them into pouches, so it was harder to mess up the cookie. And, they hired less experienced workers…
Next, they decided that they could improve the software AND forget the mixing all together, and instead have a frozen hockey puck of a cookie that could be baked off. Technology created leverage; they could hire lower skilled workers.
The new hockey puck kinda tasted like a hockey puck, decreasing quality while labor costs decreased.
Managers were also de-skilled over time. They didn’t have to make many decisions at all, certainly not baking decisions. The computer did the ordering. The staff dropped hockey pucks on cookie trays and upsold mall walkers on “buy 3 get one free” cookies.
That Tandy 1000 created an amazing amount of leverage. It was better for margins. But it also left the company exposed on service quality and more creative upselling.
This informal case really hasn’t been told in business schools, but if it were, I’d likely ask the questions:
When does de-skilling harm the corporation?
Where you want teams to think in unconventional ways (Break the Rules?) even when it seems like cheaper is better?
How can you tell how far to leverage before harming your core brand or value promise?