Management – Page 16 – artdiamondblog.com

Some Tasks Are Done Better in Private Offices

Source of book image: http://timeopinions.files.wordpress.com/2012/01/quiet-final-jacket.jpg

(p. 4) When the R.C. Hedreen Company, a real estate development firm based in Seattle, commissioned a renovation of a 10,800-square-foot floor in an old downtown office building five years ago, it specified a perimeter of private offices. Collaborative spaces are provided for creative teamwork, but the traditional offices remain the executives’ home ports.

”Individually, a lot of our workday is taken up with tasks that are better served by working alone in private offices,” says David Thyer, Hedreen’s president.
Susan Cain, author of ”Quiet: The Power of Introverts in a World That Can’t Stop Talking,” is skeptical of open-office environments — for introverts and extroverts alike, though she says the first group suffers much more amid noise and bustle.
Introverts are naturally more comfortable toiling alone, she says, so they will cope by negotiating time to work at home, or by isolating themselves with noise-canceling headphones — ”which is kind of an insane requirement for an office environment, when you think about it,” she says.
Ms. Cain also says humans have a fundamental need to claim and personalize space. ”It’s the room of one’s own,” she says. ”Your photographs are on the wall. It’s the same reason we have houses. These are emotional safety zones.”

For the full story, see:
LAWRENCE W. CHEEK. “Please, Just Give Me Some Space: In New Office Designs, Room to Roam and to Think.” The New York Times, SundayBusiness Section (Sun., March 18, 2012): 1 & 4.

The book mentioned is:
Cain, Susan. Quiet: The Power of Introverts in a World That Can’t Stop Talking. New York: Crown, 2012.

Workers Want to See Compensation Related to Contribution

This is a great example contra (or at least qualifying) Daniel Pink’s claim that all you need do for knowledge workers is provide them enough money so that they can provide for the basic needs of themselves and their family.

(p. 145) The public offering process brought details of the intended allocation of Pixar stock options into view. A registration statement and other documents with financial data had to be prepared for the Securities and Exchange Commission and a prospectus needed to be made ready for potential investors. These documents had to be reviewed and edited, and it was here that the word apparently leaked: A small number of people were to receive low-cost options on enormous blocks of stock. Catmull, Levy, and Lasseter were to get options on 1.6 million shares apiece; Guggenheim and Reeves were to get 1 million and 840,000, respectively. If the company’s shares sold at the then-planned price of fourteen dollars, the men would be instant multimillionaires.

The revelation was galling. Apart from the money, there was the symbolism: The options seemed to denigrate the years of work everyone else had put into the company. They gave a hollow feel to Pixar’s labor-of-love camaraderie, its spirit that everyone was there to do cool work together. Also, it was hard not to notice that Levy, one of the top recipients, had just walked in the door.
“There was a big scene about all that because some people got (p. 146) huge amounts more than other people who had come at the same time period and who had made pretty significant contributions to the development of Pixar and the ability to make Toy Story,” Kerwin said. “People like Tom Porter and Eben Ostby and Loren Carpenter–guys that had been there since the beginning and were part of the brain trust.”
Garden-variety employees would also get some options, but besides being far fewer, those options would vest over a four-year period. Even employees who had been with the organization since its Lucasfilm days a decade earlier–employees who had lost all their Pixar stock in the 1991 reorganization–would be starting their vesting clock at zero. In contrast, most of the options of Catmull, Lasseter, Guggenheim, and Reeves vested immediately–they could be turned into stock right away.
“I decided, ‘Well, gee, I’ve been at this company eight years, and I’ll have been here twelve years before I’m fully vested,’ ” one former employee remembered. ” ‘It doesn’t sound like these guys are interested in my well-being.’ A lot of this piled up and made me say, ‘What am I doing? I’m sitting around here trying to make Steve Jobs richer in ways he doesn’t even appreciate.’ ”

Source:
Price, David A. The Pixar Touch: The Making of a Company. New York: Alfred A. Knopf, 2008.
(Note: italics in original.)
(Note: my strong impression is that the pagination is the same for the 2008 hardback and the 2009 paperback editions, except for part of the epilogue, which is revised and expanded in the paperback. I believe the passage above has the same page number in both editions.)

For Daniel Pink’s views, see:
Pink, Daniel H. Drive: The Surprising Truth About What Motivates Us. New York: Riverhead Books, 2009.

Simple Heuristics Can Work Better than Complex Formulas

(p. C4) Most business people and physicians privately admit that many of their decisions are based on intuition rather than on detailed cost-benefit analysis. In public, of course, it’s different. To stand up in court and say you made a decision based on what your thumb or gut told you is to invite damages. So both business people and doctors go to some lengths to suppress or disguise the role that intuition plays in their work.
Prof. Gerd Gigerenzer, the director of the Max Planck Institute for Human Development in Berlin, thinks that instead they should boast about using heuristics. In articles and books over the past five years, Dr. Gigerenzer has developed the startling claim that intuition makes our decisions not just quicker but better.
. . .
The economist Harry Markowitz won the Nobel prize for designing a complex mathematical formula for picking fund managers. Yet when he retired, he himself, like most people, used a simpler heuristic that generally works better: He divided his retirement funds equally among a number of fund managers.
A few years ago, a Michigan hospital saw that doctors, concerned with liability, were sending too many patients with chest pains straight to the coronary-care unit, where they both cost the hospital more and ran higher risks of infection if they were not suffering a heart attack. The hospital introduced a complex logistical model to sift patients more efficiently, but the doctors hated it and went back to defensive decision-making.
As an alternative, Dr. Gigerenzer and his colleagues came up with a “fast-and-frugal” tree that asked the doctors just three sequential yes-no questions about each patient’s electrocardiographs and other data. Compared with both the complex logistical model and the defensive status quo, this heuristic helped the doctors to send more patients to the coronary-care unit who belonged there and fewer who did not.

For the full commentary, see:
By MATT RIDLEY. “MIND & MATTER; All Hail the Hunch–and Damn the Details.” The Wall Street Journal (Sat., December 24, 2011): C4.
(Note: ellipsis added.)

A couple of Gigerenzer’s relevant books are:
Gigerenzer, Gerd. Gut Feelings: The Intelligence of the Unconscious. New York: Penguin Books, 2007.
Gigerenzer, Gerd. Rationality for Mortals: How People Cope with Uncertainty. New York: Oxford University Press, USA, 2008.

Big Data Opportunity for Economics and Business

(p. 7) Data is not only becoming more available but also more understandable to computers. Most of the Big Data surge is data in the wild — unruly stuff like words, images and video on the Web and those streams of sensor data. It is called unstructured data and is not typically grist for traditional databases.
But the computer tools for gleaning knowledge and insights from the Internet era’s vast trove of unstructured data are fast gaining ground. At the forefront are the rapidly advancing techniques of artificial intelligence like natural-language processing, pattern recognition and machine learning.
Those artificial-intelligence technologies can be applied in many fields. For example, Google’s search and ad business and its experimental robot cars, which have navigated thousands of miles of California roads, both use a bundle of artificial-intelligence tricks. Both are daunting Big Data challenges, parsing vast quantities of data and making decisions instantaneously.
. . .
To grasp the potential impact of Big Data, look to the microscope, says Erik Brynjolfsson, an economist at Massachusetts Institute of Technology’s Sloan School of Management. The microscope, invented four centuries ago, allowed people to see and measure things as never before — at the cellular level. It was a revolution in measurement.
Data measurement, Professor Brynjolfsson explains, is the modern equivalent of the microscope. Google searches, Facebook posts and Twitter messages, for example, make it possible to measure behavior and sentiment in fine detail and as it happens.
In business, economics and other fields, Professor Brynjolfsson says, decisions will increasingly be based on data and analysis rather than on experience and intuition. “We can start being a lot more scientific,” he observes.
. . .
Research by Professor Brynjolfsson and two other colleagues, published last year, suggests that data-guided management is spreading across corporate America and starting to pay off. They studied 179 large companies and found that those adopting “data-driven decision making” achieved productivity gains that were 5 percent to 6 percent higher than other factors could explain.
The predictive power of Big Data is being explored — and shows promise — in fields like public health, economic development and economic forecasting. Researchers have found a spike in Google search requests for terms like “flu symptoms” and “flu treatments” a couple of weeks before there is an increase in flu patients coming to hospital emergency rooms in a region (and emergency room reports usually lag behind visits by two weeks or so).
. . .
In economic forecasting, research has shown that trends in increasing or decreasing volumes of housing-related search queries in Google are a more accurate predictor of house sales in the next quarter than the forecasts of real estate economists. The Federal Reserve, among others, has taken notice. In July, the National Bureau of Economic Research is holding a workshop on “Opportunities in Big Data” and its implications for the economics profession.

For the full story, see:

STEVE LOHR. “NEWS ANALYSIS; The Age of Big Data.” The New York Times, SundayReview (Sun., February 12, 2012): 1 & 7.
(Note: ellipses added.)
(Note: the online version of the article is dated February 11, 2012.)

Personal Risk Lovers Make Better CEOs?

(p. C4) Chief executives with a penchant for personal risk-taking are also corporate risk-takers who take on more debt, aggressively pursue mergers and acquisitions, and make bold equity plays. But, in general, they are also more effective leaders who create more value in their organizations than their less risk-loving counterparts. And they do so, the researchers add, without additional incentives; they imprint their risk-loving natures on their companies because it’s simply who they are.

For the full summary, see:
DAVID DISALVO. “Management; For Effective CEOs, Look Up.” The Wall Street Journal (Sat., August 20, 2011): C4.

The article summarized is:
Cain, Matthew D., and Stephen B. McKeon. “Cleared for Takeoff? CEO Personal Risk-Taking and Corporate Policies.” SSRN eLibrary (2011).

Gentle Oshman Inspired Loyalty as He Made Work Fun in Silicon Valley

“M. Kenneth Oshman” Source of caption and photo: online version of the NYT obituary quoted and cited below.

(p. 19) M. Kenneth Oshman, who helped create one of the early successful technology start-up firms in Silicon Valley, one that embodied the informal management style that came to set the Valley apart from corporate America, died on Saturday in Palo Alto, Calif. He was 71.
. . .
In the 1970s and ’80s, Rolm was the best example of an emerging Silicon Valley management style that effectively broke down the barrier between work and play. Setting out to recruit the most talented technical minds, Rolm became known as a great place to work, so much so that it was nicknamed “G.P.W.”
Early on as chief executive, Mr. Oshman took funds normally used for company Christmas parties and used them to help construct a company recreational center, consisting of swimming pools, racquetball courts, exercise rooms and other amenities to attract new employees and underline the image that Rolm was a fun place to work.
But there was a tradeoff, said Keith Raffel, who left a staff position on Capitol Hill to become an assistant to Mr. Oshman at Rolm before starting his own company.
“The quid pro quo was you would be driven and work really hard,” he said.
With a gentle, understated style, Mr. Oshman stood apart from other well-known leaders in Silicon Valley, many of whom were seen as capricious and even tyrannical. He was a mentor to a generation of Silicon Valley technologists and able to inspire a kind of loyalty in his employees not frequently seen in high-tech industries.

For the full obituary, see:
JOHN MARKOFF. “M. Kenneth Oshman, Silicon Valley Mentor, Dies at 71.” The New York Times, First Section (Sun., August 10, 2011): A10.
(Note: ellipsis added.)
(Note: the online version of the obituary is dated August 10, 2011 and has the title “M. Kenneth Oshman, Who Brought Fun to Silicon Valley, Dies at 71.”)

More Firms Adopt ‘Bring Your Own Device’ (BYOD) Policies to Empower Workers and Cut Costs

“At Citrix Systems, Berkley Reynolds, left, uses his Alienware laptop, and Alan Meridian, his MacBook Pro, paid for with stipends.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) SAN FRANCISCO — Throughout the information age, the corporate I.T. department has stood at the chokepoint of office technology with a firm hand on what equipment and software employees use in the workplace.

They are now in retreat. Employees are bringing in the technology they use at home and demanding the I.T. department accommodate them. The I.T. department often complies.
Some companies have even surrendered to what is being called the consumerization of I.T. At Kraft Foods, the I.T. department’s involvement in choosing technology for employees is limited to handing out a stipend. Employees use the money to buy whatever laptop they want from Best Buy, Amazon.com or the local Apple store.
“We heard from people saying, ‘How come I have better equipment at home?’ ” said Mike Cunningham, chief technology officer for Kraft Foods. “We said, hey, we can address that.”
Encouraging employees to buy their own laptops, or bring their mobile phones and iPads from home, is gaining traction in the workplace. A survey published on Thursday by Forrester Research found that 48 percent of information workers buy smartphones for work without considering what their I.T. department supports. By being more flexible, companies are hoping that workers will be more comfortable with their devices and therefore more productive.
“Bring your own device” policies, as they are called, are also shifting the balance of power among electronics makers. Manufacturers good at selling to consumers are increasingly gaining the upper hand, while those focused on bulk corporate sales are slipping.
. . .
(p. B6) Letting workers bring their iPhones and iPads to work can . . . save companies money. In some cases, employees pay for equipment themselves and seek tech help from store staff rather than their company’s I.T. department. “You can basically outsource your I.T. department to Apple,” said Ben Reitzes, an analyst with Barclays Capital.
A similar B.Y.O.D. program at Citrix Systems, a software maker that also helps its clients implement such programs, saves the company about 20 percent on each laptop over three years. Of the 1,000 or so employees in Citrix’s program, 46 percent have bought Mac computers, according to Paul Martine, Citrix’s chief information officer. “That was a little bit of a surprise.”

For the full story, see:
VERNE G. KOPYTOFF. “More Offices Let Workers Choose Their Own Devices.” The New York Times (Fri., September 23, 2011): B1 & B6.
(Note: ellipses added.)
(Note: the online version of the article is dated September 22, 2011.)

Collins Says Successful CEOs Are Empirical and Disciplined

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

(p. A15) ‘Great by Choice” is a sequel to Jim Collins’s best-selling “Good to Great” (2001), which identified seven characteristics that enabled companies to become truly great over an extended period of time. Never mind that one of the 11 featured companies is now bankrupt (Circuit City) and another is in government receivership (Fannie Mae). Mr. Collins has a knack for analysis that business readers find compelling.

Mr. Collins’s new book tackles the question of how to steer a company to lasting success in an environment characterized by change, uncertainty and even chaos. Like his previous work, this book builds its conclusions on a framework of painstaking research, conducted over nine years and overseen by Mr. Collins and his co-author, Morten T. Hansen, a management professor at the University of California, Berkeley.
. . .
Messrs. Collins and Hansen draw some interesting and counterintuitive conclusions from their research. First, the successful leaders were not the most “visionary” or the biggest risk-takers; instead, they tended to be more empirical and disciplined, relying on evidence over gut instinct and preferring consistent gains to blow-out winners. The successful companies were not more innovative than the control companies; indeed, they were in some cases less innovative. Rather, they managed to “scale innovation”–introducing changes gradually, then moving quickly to capitalize on those that showed promise. The successful companies weren’t necessarily the most likely to adopt internal changes as a response to a changing environment. “The 10X companies changed less in reaction to their changing world than the comparison cases,” the authors conclude.
. . .
If “Great by Choice” shares the qualities that made “Good to Great” so popular, it also shares some that drew criticism. The authors’ conclusions sometimes feel like the claims of a well-written horoscope–so broadly stated that they are hard to disprove. Their 10X leaders are both “disciplined” and “creative,” “prudent” and “bold”; they go fast when they must but slow when they can; they are consistent but open to change. This encompassing approach allows the authors to fit pretty much any leader who achieves 10X performance into their analysis. Would it ever be possible, one wonders, to find a leader whose success contradicted their thesis?

For the full review, see:
ALAN MURRAY. “BOOKSHELF; Turbulent Times, Steady Success; How certain companies achieved shareholder returns at least 10 times greater than their industry.” The Wall Street Journal (Tues., OCTOBER 11, 2011): A15.
(Note: ellipses added.)

How Entrepreneurship Rebuilt San Francisco After the Fire

(p. 5) At 5:12 a.m. on April 18, 1906, Amadeo Peter Giannini felt an odd sensation, then a violent one, a slight, almost imperceptible shift in his surroundings coupled with a distant rumble like faraway thunder or a train! Pause. One second. Two seconds. Then-bang!-his house in San Mateo, California, began to pitch and shake, to, fro, up, and down. Seventeen miles north in (p. 6) San Francisco, the ground liquefied underneath hundreds of buildings, while heaving spasms under more solid ground catapulted stones and facades into the streets. Walls collapsed. Gas mains exploded. Fires erupted.

Determined to find out what had happened to his fledgling company, the Bank of Italy, Giannini endured a six-hour odyssey, navigating his way into the city by train and then by foot while people streamed in the opposite direction, fleeing the conflagration. Fires swept toward his offices, and Giannini had to rescue all the imperiled cash sitting in the bank. But criminals roamed through the rubble, prompting the mayor to issue a terse proclamation: “Officers have been authorized by me to KILL any and all persons found engaged in Looting or in the Commission of Any Other Crime.” With the help of two employees, Giannini hid the cash under crates of oranges on two commandeered produce wagons and made a nighttime journey back to San Mateo, where he hid the money in his fireplace. Giannini returned to San Francisco the next morning and found himself at odds with other bankers who wanted to impose up to a six-month moratorium on lending. His response: putting a plank across two barrels right in the middle of a busy pier and opening for business the very next day. “We are going to rebuild San Francisco,” he proclaimed.

Giannini lent to the little guy when the little guy needed it most. In return, the little guy made deposits at Giannini’s bank. As San Francisco moved from chaos to order, from order to growth, from growth to prosperity, Giannini lent more to the little guy, and the little guy banked even more with Giannini. The bank gained momentum, little guy by little guy, loan by loan, deposit by deposit, branch by branch, across California, (p. 7) renaming itself Bank of America along the way. In October 1945, it became the largest commercial bank in the world, overtaking the venerable Chase National Bank. (Note of clarification: in 1998, NationsBank acquired Bank of America and took the name; the Bank of America described here is a different company than NationsBank.)

Source:
Collins, Jim. How the Mighty Fall: And Why Some Companies Never Give In. New York: HarperCollins Publishers, Inc., 2009.

Collins’ “How the Mighty Fall” Is Useful Business Book

Source of book image: http://www.harpercollins.com/harperimages/isbn/large/9/9780977326419.jpg

Jim Collins’ business books are usually sensible, and are full of arresting examples and memorable hypotheses. His latest full-scale research effort (Great by Choice) is just out, but I have not yet read it. In the next few weeks, I will quote a few of the more thought-provoking or useful passages in his 2009 small book How the Mighty Fall.

Book discussed:
Collins, Jim. How the Mighty Fall: And Why Some Companies Never Give In. New York: HarperCollins Publishers, Inc., 2009.