Management – Page 12 – artdiamondblog.com

“Western Union Bullied the Makers of Public Policy into Serving Private Capital”

Source of book image: online version of the WSJ review quoted and cited below.

(p. A13) Until now there has been no full-scale, modern company history. Joshua D. Wolff’s “Western Union and the Creation of the American Corporate Order, 1845-1893” ably fills the bill, offering an exhaustive and yet fascinating account.
. . .
If people today remember anything about Western Union, it is that its coast-to-coast line put the Pony Express out of business and that its leaders didn’t see the telephone coming. Mr. Wolff tells us that neither claim is exactly true. It was Hiram Sibley, Western Union’s first president, who went out on his own, when his board balked, to form a separate company and build the transcontinental telegraph in 1861; he made his fortune by eventually selling it to Western Union. And the company was very aware of Alexander Graham Bell’s invention, patented in 1876, but history had supposedly shown that it wasn’t necessary to control a patent to win the technology war. The company’s third president, William Orton, was sure that Bell and his “toy” would not get the better of Western Union: “We would come along and take it away from him.” They didn’t.
. . .
Mr. Wolff contends that the company’s practices set the template for today’s “corporate triumphalism,” not least in the way Western Union bullied the makers of public policy into serving private capital. Perhaps, but telecom competition today is so ferocious and differently arranged from that of the late 19th century that a “triumphant” company today may be toast tomorrow–think of BlackBerry–and can’t purchase help with anything like Western’s Union’s brazenness and scope. Western Union had friends in Congress, the regulatory bureaucracy and the press. Members of the company’s board of directors chaired both the 1872 Republican and Democratic national conventions. It seemed that, whatever the battles in business, politics, technology or the courts, the company’s shareholders won.

For the full review, see:
STUART FERGUSON. “Bookshelf; The Octopus of the Wires.” The Wall Street Journal (Mon., Dec. 23, 2013): A13.
(Note: ellipses added.)
(Note: the online version of the review has the date Dec. 22, 2013, and has the title “BOOKSHELF; Book Review: ‘Western Union and the Creation of the American Corporate Order, 1845-1893,’ by Joshua D. Wolff.”)

Book under review:
Wolff, Joshua D. Western Union and the Creation of the American Corporate Order, 1845-1893. New York: Cambridge University Press, 2013.

Concentrating on One Task Results in Better Thinking

“Clifford Nass studied how new technology affected people.” Source of caption and photo: online version of the NYT obituary quoted and cited below.

Nass focused on how interruptions from technology would reduce a person’s ability to think well. But doesn’t his research also imply that interruptions from other causes, including those from co-workers in open “collaborative” office designs, would likewise reduce a person’s ability to think well?

(p. 27) Clifford Nass, a Stanford professor whose pioneering research into how humans interact with technology found that the increasingly screen-saturated, multitasking modern world was not nurturing the ability to concentrate, analyze or feel empathy, died on Nov. 2 near Lake Tahoe. He was 55.
. . .
One of his most publicized research projects was a 2009 study on multitasking.
. . .
“We all bet high multitaskers were going to be stars at something,” he said in an interview with the PBS program “Frontline.” “We were absolutely shocked. We all lost our bets. It turns out multitaskers are terrible at every aspect of multitasking. They’re terrible at ignoring irrelevant information; they’re terrible at keeping information in their head nicely and neatly organized; and they’re terrible at switching from one task to another.”
He added, “One would think that if people were bad at multitasking, they would stop. However, when we talk with the multitaskers, they seem to think they’re great at it and seem totally unfazed and totally able to do more and more and more.”
With children doing more multitasking and people asked to do more of it at work, he said, “We worry that it may be creating people who are unable to think well and clearly.”
. . .
Dr. Nass found that people who multitasked less frequently were actually better at it than those who did it frequently. He argued that heavy multitasking shortened attention spans and the ability to concentrate.

For the full obituary, see:
WILLIAM YARDLEY. “Clifford Nass, Who Warned of a Data Deluge, Dies at 55.” The New York Times, First Section (Sun., November 11, 2013): 27.
(Note: ellipses added.)
(Note: the online version of the obituary has the date November 6, 2013.)

The famous study on multitasking that Nass authored is:
Ophir, Eyal, Clifford Nass, and Anthony D. Wagner. “Cognitive Control in Media Multitaskers.” Proceedings of the National Academy of Sciences (PNAS) 106, no. 37 (September 15, 2009): 15583-87.

Functional Stupidity Management

(p. 1194) In this paper we question the one-sided thesis that contemporary organizations rely on the mobilization of cognitive capacities. We suggest that severe restrictions on these capacities in the form of what we call functional stupidity are an equally important if under-recognized part of organizational life. Functional stupidity refers to an absence of reflexivity, a refusal to use intellectual capacities in other than myopic ways, and avoidance of justifications. We argue that functional stupidity is prevalent in contexts dominated by economy in persuasion which emphasizes image and symbolic manipulation. This gives rise to forms of stupidity management that repress or marginalize doubt and block communicative action. In turn, this structures individuals’ internal conversations in ways that emphasize positive and coherent narratives and marginalize more negative or ambiguous ones. This can have productive outcomes such as providing a degree of certainty for individuals and organizations. But it can have corrosive consequences such as creating a sense of dissonance among individuals and the organization as a whole. The positive consequences can give rise to self-reinforcing stupidity. The negative consequences can spark dialogue, which may undermine functional stupidity.

Source of paper abstract:
Alvesson, Mats, and André Spicer. “A Stupidity-Based Theory of Organizations.” Journal of Management Studies 49, no. 7 (Nov. 2012): 1194-220.

Interruptions and Distractions Disrupt Worker Productivity

Someday we will look back at open office plans as another way-overdone management fad. See also my earlier entry on the effects of workers switching tasks and my earlier entry on open offices.

(p. D2) Research led by Bing C. Lin, a doctoral candidate in industrial and organizational psychology at Portland State University in Oregon, found intrusions, or unexpected interruptions, increased exhaustion, physical strain and anxiety by one-third to three-fourths as much as the size of employees’ actual workloads. Bottling up frustration when someone barges into your cubicle worsens the strain, according to the study of 252 employees, published earlier this year in the International Journal of Stress Management.

For the full story, see:
SUE SHELLENBARGER. “WORK & FAMILY MAILBOX; Sue Shellenbarger Answers Readers’ Questions.” The Wall Street Journal (Weds., Nov. 13, 2013): D2.
(Note: the online version of the review has the date Nov. 12, 2013, and has the title “WORK & FAMILY; The Toll of Office Disruptions; Latest Research on Distractions and Worker Efficiency.”)

The Lin study summarized above is:
Lin, Bing C., Jason M. Kain, and Charlotte Fritz. “Don’t Interrupt Me! An Examination of the Relationship between Intrusions at Work and Employee Strain.” International Journal of Stress Management 20, no. 2 (2013): 77-94.

Google Was Lax in Killing Failed Projects

(p. 255) Oddly, whereas Google had built its data infrastructure to reroute around failure, it had no human infrastructure to deal with failed projects. “We didn’t know which ones they were, because we never paused to ask ourselves that question,” says Pichette. “The people working on that project know it’s failing– as senior management you have to say, ‘Let’s declare failure– let’s get the champagne out and kill this puppy. Then we can put you on stuff that’s really cool and sexy.'” That had always been part of Google’s philosophy, but whether from lack of rigor or just distraction, the company had been lax in actually issuing execution orders. One of the first puppies Pichette helped drown was a virtual-reality-style communications program called Lively.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

Google Gave YouTube Entrepreneurial Autonomy

(p. 250) But after the purchase [of YouTube], Google did something very smart. Almost as if acknowledging that overattention from the top had hobbled Google’s original video effort, the company made a conscious decision not to integrate YouTube. “They were edgy and small, and we were getting big,” says Drummond. “We didn’t want to screw them up.” (Google was also smarting from its $ 900 million acquisition of dMarc Broadcasting, a company dealing in radio advertising, which had not gone well. “They had tried more of a top-down approach with dMarc and considered that a disaster,” says Hurley.) YouTube would keep its brand and even stay in the building it had recently occupied in San Bruno, a former headquarters of the Gap.

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: bracketed words added.)

Google Used Auction Model to Allocate Internal Resources

(p. 202) Google’s chief economist, Hal Varian, would later explain how it worked when new data centers open: “We’ll build a nice new data center and say, ‘Hey, Google Docs, would you move your machines over here?’ And they say, ‘Sure, next month.’ Because nobody wants to go through the disruption of shifting. So I suggested we run an auction similar to what airlines do when they oversell a plane– they keep offering bigger vouchers until enough customers are willing to give up their seats. In our case, we offer more machines in exchange for moving. One group might do it for fifty new ones, another for a hundred, and another won’t move unless we give them three hundred. So we give them to the lowest bidder– they get their extra capacity, and we get computation shifted to the new data center.”
Google eventually devised an elaborate auction model for divvying up existing resources. In a paper entitled “Using a Market Economy to Provision Computer Resources Across Planet-wide Clusters,” a group of Google engineers, along with a Stanford professor of management science and engineering, reported a project that essentially made Google’s
computational resources into a silicon Wall Street. Supply and demand worked here not to fix stock prices but to place a value on resources. The system not only allowed projects at Google to get fair access to storage and computational cycles but identified shortages in computers, storage, and bandwidth. Instead of the Vickery auction used by AdWords, the system used an “ascending clock auction.” At the beginning, the current price of each resource would be displayed, and Google engineers in competing projects could claim them at that price. The ideal outcome would ensure sufficient resources for everyone, in which case the auction stopped. Otherwise, the automated auctioneer would raise the prices for the next “time slot,” and (p. 203) remaining competitors for those resources had to decide whether to bid higher. And so on, until the engineers not willing to stake their budgets on the most contested resources dropped out. “Hence,” write the paper’s authors, “the auction allows users to ‘discover’ prices in which all users pay/ receive payment in proportion to uniform resource prices.”

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.

Goldman I.P.O. Led to Pressure to Grow

Source of book image: http://s.wsj.net/public/resources/images/OB-ZF094_bkrvgo_GV_20131008133334.jpg

(p. B8) Steven G. Mandis, a Ph.D. candidate in sociology at Columbia University, takes a measured, academic approach to the question in a new book, “What Happened to Goldman Sachs,” an examination of the bank’s evolution from an elite private partnership to a vast public corporation — and the effects of that transformation on its culture.

. . .

Mr. Mandis said that the two popular explanations for what might have caused a shift in Goldman’s culture — its 1999 initial public offering and subsequent focus on proprietary trading — were only part of the explanation. Instead, Mr. Mandis deploys a sociological theory called “organizational drift” to explain the company’s evolution.
The essence of his argument is that Goldman came under a variety of pressures that resulted in slow, incremental changes to the firm’s culture and business practices, resulting in the place being much different from what it was in 1979, when the bank’s former co-head, John Whitehead, wrote its much-vaunted business principles.
These changes included the shift to a public company structure, a move that limited Goldman executives’ personal exposure to risk and shifted it to shareholders. The I.P.O. also put pressure on the bank to grow, causing trading to become a more dominant focus. And Goldman’s rapid growth led to more potential for conflicts of interest and not putting clients’ interests first, Mr. Mandis says.

For the full review, see:
PETER LATTMAN. “An Ex-Trader, Now a Sociologist, Looks at the Changes in Goldman.” The New York Times (Tues., October 1, 2013): B8.
(Note: ellipsis added.)
(Note: the online version of the review has the date SEPTEMBER 30, 2013.)

The book under review is:
Mandis, Steven G. What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and Its Unintended Consequences. Boston, MA: Harvard Business School Publishing, 2013.

“Steven G. Mandis is the author of “What Happened to Goldman Sachs.”” Source of caption and photo: online version of the NYT article quoted and cited above.

Push the Flywheel, in Business and Life

Jim Collins makes wonderful use of the flywheel analogy in his Good to Great book. His point is that many achievements in business require long, gradual work to build to a major achievement that finally gets noticed by the business press and the general public. The business press often assumes that the success is overnight, when it is in fact long-building.

(p. C14) Flywheels – weighted wheels used for absorbing, storing and releasing energy – get used in everything from pottery wheels to car engines. Lately, they have showed up in corporate spin.

“Our more than 19,000 store global footprint, our fast-growing CPG presence and our best-in-class digital, card, loyalty and mobile capabilities are creating a ‘flywheel’ effect elevating the relevancy of all things Starbucks, and driving profitability,” CEO Howard Schultz said in a statement accompanying quarterly earnings last month.
“So we have the flywheel spinning in the right direction because it is spinning one way and letting us generate these margins, contribution margins,” said Overstock.com CEO Patrick Byrne last month. “And so now we can give some of that back and that makes it easier to get it spinning faster.”
“We are at the one-mile market (sic) in a marathon,” commented Symantec CEO Steve Bennett in an earnings call with analysts last week, “and the flywheel is just starting to spin.”

For the full story, see:
JUSTIN LAHART. “Overheard.” The Wall Street Journal (Weds., Aug 6, 2013): C14.
(Note: the online version of the story has the date Aug 6, 2013, and had the title “Ride a Painted Pony, Let the Spinning Wheel Fly.” The print version did not identify an author. The versions were slightly different in two or three places–when different, the version quoted above follows the print version.)

The Collins book, mentioned above, is:
Collins, Jim. Good to Great: Why Some Companies Make the Leap… And Others Don’t. New York: HarperCollins Publishers, Inc., 2001.

Google’s Bathrooms Showed Montessori Discipline

(p. 124) You could even see the company’s work/ play paradox in its bathrooms. In some of Google’s loos, even the toilets were toys: high-tech Japanese units with heated seats, cleansing water jets, and a control panel that looked as though it could run a space shuttle. But on the side of the stall–and, for men, at an eye-level wall placement at the urinals–was the work side of Google, a sheet of paper with a small lesson in improved coding. A typical “Testing on the Toilet” instructional dealt with the intricacies of load testing or C + + microbenchmarking. Not a second was wasted in fulfilling Google’s lofty–and work-intensive–mission.
It’s almost as if Larry and Sergey were thinking of Maria Montessori’s claim “Discipline must come through liberty…. We do not consider an individual disciplined only when he has been rendered as artificially silent as a mute and as immovable as a paralytic. He is an individual annihilated, not disciplined. We call an individual disciplined when he is master of himself.” (p. 125) Just as it was crucial to Montessori that nothing a teacher does destroy a child’s creative innocence, Brin and Page felt that Google’s leaders should not annihilate an engineer’s impulse to change the world by coding up some kind of moon shot.
“We designed Google,” Urs Hölzle says, “to be the kind of place where the kind of people we wanted to work here would work for free.”

Source:
Levy, Steven. In the Plex: How Google Thinks, Works, and Shapes Our Lives. New York: Simon & Schuster, 2011.
(Note: ellipsis in original.)