Posts filed under 'Stupidity'
At the beginning of April StrategyWorld pointed out Circuit City’s foolish strategy to fire experienced employees to cut costs.
Now it’s time to fire the decisionmakers who came up with this bright idea.
According to the Washington Post:
“…the Richmond electronics retailer says it expects to post a first-quarter loss next month, and analysts are blaming the job cuts.
The company, which on Monday also revised its outlook for the first half of its fiscal year ending Feb. 29, 2008, cited poor sales of large flat-panel and projection televisions. Analysts said Circuit City had cast off some of its most experienced and successful people and was losing business to competitors who have better-trained employees.”
Will they never learn?
Perhaps they need to attend our FAST strategy webinar… although I doubt anything can help this kind of blindness.
Speaking of ethics, how about Duke’s cheating scandal?
Listen to this:
A survey released last year by Rutgers University professor Don McCabe showed 56 percent of MBA students acknowledged cheating in 2005. In other fields, 47 percent of graduate students said they cheated.
Note: these were graduate students, not undergrads.
May 2nd, 2007
Lee Iacocca, former Republican?
That’s the verdict if you read the excerpt from his new book on leadership:
Where Have All the Leaders Gone?
Iacocca’s book describes the “Nine Cs of Leadership”:
- Curiosity
- Creativity
- Communication
- Character
- Courage
- Conviction
- Charisma
- Competence
- Common Sense
Wait, there’s more: the ability to deal with a Crisis
Maybe Iacocca ought to go buy Chrysler.
The book is written in his unmistakable voice:
Am I the only guy in this country who’s fed up with what’s happening? Where the hell is our outrage? We should be screaming bloody murder. We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, “Stay the course.”
He’s right. Much more here >>
April 14th, 2007
Here’s an interesting article from Knowledge@Wharton:
Short-Circuited: Cutting Jobs as Corporate Strategy
Apparently, Circuit City announced on March 28 that it cut 3,400 jobs, or 7% of its workforce, effective that day, because the salespeople were paid “well above the market-based salary range for their role.”
The folks at Wharton are not impressed:
“That’s the most cynical thing I’ve heard about in a long time,” says Peter Cappelli, management professor and director of the Center for Human Resources at Wharton. “I like to think I’m cynical, but sometimes it’s hard to keep up.”
Another risk is that a downsizing company can get rid of people whose knowledge and experience are vital. Wharton management professor Daniel A. Levinthal points out that Circuit City’s decision to cut 3,400 veteran sales people “sounds like a massive de-skilling” of the company. Since the people who will be hired to replace the laid-off workers probably will not know the merchandise as well as the workers who were dismissed, customers who want to know how to set up a high-definition TV or why one music player is better than another might not receive the best advice.
If this is the case, Circuit City might have a hard time differentiating itself from its competitors. “These new people will be order takers and have less knowledge [about the merchandise],” says Levinthal. “Circuit City would now be competing against e-commerce because it’s become similar to e-commerce and lost its differentiation as a bricks and mortar store.”
Say goodbye to Circuit City. They are stuck between Wal-Mart and Amazon.com, and this latest move will accelerate their demise.
At the core, this is a failure of imagination. But it may also represent the end of a whole slew of similar companies, in the retail industry (and not necessarily just in high tech).
So what might they have done? Suggestions?
Perhaps they should check to see if their leadership is paid “well above the market-based salary range for their role.”
April 5th, 2007
In 4 Sources of Advantage, authors Peter S. Cohan and Barry Unger tell us that technology leaders create success cycles by the way they perform four critical business processes – which they call “the four sources of advantage.”
The four processes are:
- Entrepreneurial leadership
- Open technology
- Boundaryless product development
- Disciplined resource allocation
So where does your company stand? If you’re seeking to accelerate your company’s, take this self-assessment and find out: [hint - A is good, B is bad]
Entrepreneurial leadership
1. Hiring
A. Hires engineers with strong technical skills and keen business sense; or
B. Hires engineers with strong technical skills and limited business sense.
2. Self-driven research
A. Gives engineers, say 10 per cent to 20 percent, of their time to work on projects they choose; or
B. Requires engineers to work exclusively on manager-directed projects.
3. Publishing
A. Allows engineers to publish current research in peer reviewed publications after appropriate patent disclosures have been made; or
B. Requires engineers to keep their research company confidential.
4. Peer recognition
A. Holds annual celebrations for engineers who develop innovative products; or
B. “Rewards” engineers who innovate by letting them keep their jobs.
5. Culture
A. Uses culture and supporting measurement and reward systems to emphasise how society benefits from its products; or
B. Uses culture and supporting measurement and reward systems to focus on enhancing shareholder value.
Open technology
6. Speed to market
A. Acquires companies or licenses technology to obtain rapid access to products its customers want to buy; or
B. Uses only internally developed technology to develop new products.
7. Customer perspective
A. Builds technologies that create customer value; or
B. Builds technologies that satisfy executive requirements.
Boundaryless product development
8. Cross-functional teams
A. Uses cross-functional teams of, say, engineering, manufacturing, sales, marketing, finance, and early
adopter customers, to design new products; or
B. Uses its engineering department to design new products.
9. Prototypes
A. Uses cross-functional team input to build new product prototypes; or
B. Manufactures product based solely on engineering blueprints.
10. Fast feedback
A. Redesigns prototypes using feedback from early adopter customers, manufacturing, and other functions; or
B. Redesigns products only after they’re out in the market.
Disciplined resource allocation
11. Timing discipline
A. Creates strong incentives to meet project milestones; or
B. Lets product development deadlines slide.
12. Expected value discipline
A. Validates development projects’ expected value (EV) via continuously updated market research and kills them if their EV goes negative; or
B. Once their budget has been set, sticks with development projects.
13. Learning discipline
A. Allocates resources and shares learning through control systems that measure competitive performance; or
B. Rewards those who tell the CEO what the CEO wants to hear and fires those who contradict the CEO.
14. Renewal discipline
A. Develops a deep bench of management talent; or
B. Dismisses ambitious managers to protect the CEO.
March 5th, 2007
The US Postal Service has taken customer service to the next level of incompetence.
Instead of fixing the problem - the long wait in line - it has decided to work on perception instead: 37,000 post offices across the country have removed their wall clocks from retail areas.
This as part of a “retail standardization program” launched last year.
A spokesman for the U.S. Postal Service says: “We want people to focus on postal service and not the clock.”
The USPS seems to have lost track of what it means to build a positive customer experience.
USPS Customers know that the USPS is not as fast as FedEx, for example, and they don’t expect to be. They’re not using the USPS for efficiency but for cost.
So what’s the big deal? My research tells me that the clock is a fundamental part of the checkout experience - whether you’re in a grocery store or the post office. And not having a clock actually makes the perception of service quality go down, not up.
Says service guru Leonard Berry, “It’s silly, I guess they think people don’t have watches.”
March 5th, 2007
Like many young Ph.D. students, while I studied at UCLA, I was deeply impressed with my own intelligence, wisdom and profound insights into the human condition. I consistently amazed myself with my ability to judge others and see what they were doing wrong.
Dr. Fred Case was both my dissertation adviser and boss. My dissertation was connected with a consulting project with that involved the city government of Los Angeles. At the time, Case was not only a professor at UCLA, but also head of the Los Angeles City Planning Commission. At this point in my career, he was clearly the most important person in my professional life. He had done amazing work to help the city become a better place, and also was doing a lot to help me.
Although he was generally upbeat, one day Case seemed annoyed. “Marshall, what is the problem with you?” he growled. “I’m getting feedback from some people at City Hall that you are coming across as negative, angry and judgmental. What’s going on?”
“You can’t believe how inefficient the city government is,” I ranted. I then gave several examples of how taxpayers’ money was not being used in the way I thought it should. I was convinced that the city could be a much better place if the leaders would just listen to me.
“What a stunning breakthrough,” Case sarcastically remarked. “You, Marshall Goldsmith, have discovered that our city government is inefficient. I hate to tell you this, Marshall, but my barber down on the corner figured this out several years ago. What else is bothering you?”
Undeterred by this temporary setback, I angrily proceeded to point out several minor examples of behavior that could be classified as favoritism toward rich political benefactors.
Case was now laughing. “Stunning breakthrough number two,” he said. “Your profound investigative skills have led to the discovery that politicians may give more attention to their major campaign contributors than to people who support their opponents. I’m sorry to report that my barber has also known this for years. I’m afraid that we can’t give you a Ph.D. for this level of insight.”
As he looked at me, his face showed the wisdom that can only come from years of experience. “I know that you think that I may be old and behind the times,” he said, “but I’ve been working down there at City Hall for years. Did it ever dawn on you that even though I may be slow, perhaps even I have figured some of this stuff out?”
Then he delivered the advice I will never forget: “Marshall, you are becoming a pain in the butt. You are not helping the people who are supposed to be your clients. You are not helping me, and you are not helping yourself. I am going to give you two options: Option A: Continue to be angry, negative and judgmental. If you chose this option, you will be fired, you probably will never graduate, and you may have wasted the last four years of your life. Option B: Start having some fun. Keep trying to make a constructive difference, but do it in a way that is positive for you and the people around you.
“My advice is this: You are young. Life is short. Start having fun. What option are you going to choose, son?”
I finally laughed and replied, “Dr. Case, I think it is time for me to start having some fun!”
He smiled knowingly and said, “You are a wise young man.”
Most of my life is spent working with leaders in huge organizations. It doesn’t take a genius to figure out that things are not always as efficient as they could be. Almost every employee has made this discovery. It also doesn’t take a genius to learn that people are occasionally more interested in their own advancement than the welfare of the company. Most employees have already figured this out as well.
I learned a great lesson from Case. Real leaders are not people who can point out what is wrong. Almost anyone can do that. Real leaders are people who can make things better.
Case’s coaching didn’t just help me get a Ph.D. and become a better consultant. He helped me have a better life, and his advice can help you too. First, think about your own behavior at work. Are you communicating a sense of joy and enthusiasm to the people around you, or are you spending too much time in the role of angry, judgmental critic? Second, do you have any co-workers who are acting like I did? Are you just getting annoyed with them, or are you trying to help them in same way that Case helped me? If you haven’t been trying to help them, why not give it a shot? Perhaps they’ll write a story about you someday.
Editor’s note: Marshall Goldsmith’s latest book has been the #1 business bestseller over the past month, as tracked by the New York Times, Wall Street Journal, and USA Today.
February 18th, 2007
Back in 1999, Peter Drucker wrote about “The Real Meaning of the Merger Boom.” In a punchy essay for the Conference Board’s Annual Report, the guru for all gurus proclaimed, “there is no merger boom today.” End of story.
In fact, he made clear that “in total dollar volume,” it was a zero sum game. De-mergers, unnoticed, were equal to the mergers. Moreover, “the majority of today’s mergers are defensive, the majority of yesterday’s were offensive.” If anything, this has simply become more the case in 2006 and 2007. For example, the major auto companies, so enamored of mergers for a while, have now taken to joint ventures. Many, many mergers today are consolidation plays, tactical efforts to hang on in dying businesses, pulling together wounded enterprises that think they can afford heart surgery when they are large enough to pay the bill.
Drucker could have gone on to point out that history is littered with mergers that subtracted value for shareholders and society. Even the wave of industry consolidations that have taken place from 2000-2007 may in the end prove strategically short-sighted –investments in dying industries without regard to tomorrow.
“The truly important developments in corporate and economic structure today are not the mergers and de-mergers. They are, largely unnoticed or at least unreported, new and different ways of corporate structure, corporate growth, and corporate strategy….the real boom has been in alliances of all kinds, such as partnerships, a big business buying a minority stake in a small one, cooperative agreements in research or marketing, joint ventures, and, often, ‘handshake agreements’ with few formal and legally binding controls behind them.”
Drucker spotted the real boom – alliances. But an utter fascination with the doings of Wall Street, even in our highest political councils, has distracted all of us, riveting us on merger headlines and concealing from us this deep enduring trend of our time.
The most adroit of a new breed of global chief executive gets it. Such is Carlos Ghosn who turned around Japan’s Nissan Auto, peeling away layers of fat instead of adding extraneous divisions. He went from massive losses to $7 billion in profits and wiped out $23 billion of debt. Nissan’s 11% operating profit margin has made it the most profitable of the world’s big automakers (See Economist, February 26, 2005, p. 66). Now to head Renault as well, Ghosn has said that the power of the alliance between them lies “in its respect for the identities of the two companies, and on the other, in the necessity of developing synergies.” If Nissan had been fused with Renault, failure would have followed.
We ourselves are very aware of the negatives that crop up with mergers. It was only a short time after Allegheny Airlines absorbed PSA and Piedmont Airlines (both better companies than it incidentally) that the combined market value of the three added up to less than the value of each of the components prior to their homogenization. This unhappy trinity, once known as Agony Airlines to wags in the Northeast, has since become the teetering bankrupt U.S. Airways, affectionately called UseLess Airways by its passengers. After many false re-starts, it is hoped that America West’s management, which took over U.S. Air, can run the new combined airline to better effect.
As well, one can not overestimate the size of the merger friction costs imposed by investment bankers, lawyers, and accountants who created and distorted this and other stillborn combinations. Reduced friction costs for continuing operations have traditionally been the excuse for bloated business combinations and expensive asset bases, but this does not at all account for the absolutely horrendous sunk costs imposed by middlemen in the merger/de-merger process. In fact, the mechanics of mergering themselves often distort the shape of the resulting enterprise, creating a lumbering creature nobody envisioned. But the financial and strategic costs that lard the merger process are well obscured by the middlemen and their sales people who make such a good living off of such transactions.
There are broad conceptual reasons as well why a collaborative model free of hierarchy and legalistic strictures is productive of much more economic value. With increasing amounts of the work to be done by corporations in advanced economies consisting of knowledge and professional services chores involving far different workflows, the fuel for business activity consists of pockets of intelligence that are broadly distributed throughout the world, often outside the corporation. One cannot accumulate the human resources one needs to play on a global scale within one’s walls. Organizations need to tap into a multitude of other organizations. And they need to avail themselves of workers strewn about the globe—some in outsourcing companies and others entirely on their own.
Charles Handy finds that “many organizations have more people working outside them than they have inside them.” Furthermore, “only about half the working population is working inside an organization.” The successful company, with perhaps only 20% of its workforce on its own payrolls, has to learn to virtually coordinate companies and independent workers who are bound to it by no more than a handshake. Handy chats about this brave new world in “The Future of Work in a Changing World” in an interview with Aurora Online.
For the past 10 years the goal of our own staff has been to divine the rules of the road for the still emerging collaborative enterprise. In every way, they fly in the face of all the dogmas we laid out for the corporation in the 20th century. For this reason, the postulates of collaboration are usually counter-intuitive. Consider here just two examples:
Rule 1: At best the chief executive should be a fish out of water. Take a look at Nissan. Carlos Ghosn was born in Brazil in a Lebanese immigrant family, then had a French education first in Lebanon and later at the Ecole Polytechnique where he studied engineering. For openers he turned around Michelin, the tire company, in Brazil to begin with, then in America. He went on to become a cost-cutter at Renault. Louis Schweitzer, the very original business mind who headed up Renault, posted him to Nissan with little in-France business experience and not even a smidgeon of Japanese grounding in his system. But he was effective because he could bring a pan-global outsider’s objectivity to Nissan. He succeeded in part because he was an alien from outer space. He was the stranger who could see what makes the natives tick and who had no sentimental ties to sever as he cleaned house.
Rule 2: The best alliances are very, very unlikely. For instance, Kirin Beer, once the IBM of the Japanese beer business, came to George Rathmann of Amgen as he was getting ready to ramp up production of Epogen. It contributed its fermentation production techniques to the biotech company, as well as a slug of capital. Rathmann has since acknowledged that its role was central to the growth of Amgen into a multi-billion dollar company. Most likely, a start up will find that the process knowledge it really needs lies 10,000 miles away in a dramatically different industry and in a vastly different culture. But, of course, the Japanese bring special skills and excellence to manufacturing which is why, as we used to say, that the American dream got interrupted by the Japanese clock radio.
Alliances are best, then, if they overcome all the inbreeding tendencies of conventional businessmen. The dynamics of mergerdom tend to preclude such unlikely alliances.
What’s at issue here is how to devise an organizational model that encourages rapid, insistent global learning by an organization. As we have said elsewhere in “Better Learning Networks,” (see item #187) researchers at the Santa Fe Institute have come to understand that there is an optimal coupling within an organization that encourages learning. It is simply too hard for knowledge to interpenetrate an organization where the bonds are made of steel rather than nervous tissue.
Those who think about software systems have come up with the same insight in respect to information systems. Ubiquity interviewed us about collaboration a while back. There we reference an article by John Seely Brown and John Hagel called “The Joy of Flex” in which they said, “”Loose coupling makes it easier to improvise without worrying about disruptions elsewhere in the system.” While hardwired systems afford short-term cost advantages, they are costly in the end, since they cannot accommodate the disruptions imposed by global realities. Likewise, we would contend, merged companies achieve a rigidity that is antagonistic to agile behavior.
If alliances are the fluid organizational form that should dominate our business activity, many head-in-the-sand executives don’t know it. Squabblers debate about the value of strategic alliances and how to make them work. This is all rather academic. Alliances are very much a fact of life in our lean business society, and so the only option for the business generalissimo is to saddle up the horse and see if he can ride this new kind of stallion.
Well, the future is always a bit uncomfortable until it is past.
January 29th, 2007