Management – Page 22 – artdiamondblog.com

“Most Interview Processes Are Deeply Flawed”

(p. 129) Developing leaders begins with interviewing and assessing candidates. I’m not talking about overseeing the HR department and interviewing finalists; I’m talking about hands-on hiring. Most interview processes are deeply flawed. Some people interview well, and some people don’t. A person who doesn’t interview well may nonetheless be the best choice for the job. That’s why it’s so important to probe deeply, know what to listen for, and get supplemental data. It takes time and effort to drill down further, but it’s always worth the trouble.

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: the quotation is presented as being Bossidy’s.)

Robust Dialogue Fosters Creativity and Innovation

Omaha culture puts a huge emphasis on surface politeness. (When I first arrived here, I was sometimes thought to be from New York, a thought that I took as a complement, although that was not how it was intended.)
Bossidy and Charan emphasize that harmony is an over-rated virtue–that what they call “robust dialogue” is important for getting things done.

(p. 102) You cannot have an execution culture without robust dialogue—one that brings reality to the surface through openness, candor, and informality. Robust dialogue makes an organization effective in gathering information, understanding the information, and reshaping it to produce decisions. It fosters creativity—most innovations and inventions are incubated through robust dialogue. Ultimately, it creates more competitive advantage and shareholder value.
. . .
(p. 103) . . ., harmony—sought by many leaders who wish to offend no one—can be the enemy of truth.

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: ellipses added.)

In Many Capitalist Companies “People Think They’re Involved in Socialism”

Empirical comparisons between capitalism and socialism are in some ways unfair to capitalism, because many capitalism managers act as though they believed in socialist ideas. The difference in productivity and economic growth would be even greater, if capitalist managers consistently acted as though they believed in capitalism. Consider the following, from a portion of Execution written by Larry Bossidy:

(p. 73) Larry: When I see companies that don’t execute, the chances are that they don’t measure, don’t reward, and don’t promote people who know how to get things done. Salary increases in terms of percentage are too close between top performers and those who are not. There’s not enough differentiation in bonus, or in stock options, or in stock grants. Leaders need the confidence to explain to a direct report why he got a lower than expected reward.
A good leader ensures that the organization makes these distinctions and that they become a way of life, down throughout the organization. Otherwise people think they’re involved in socialism. That isn’t what you want when you strive for a culture of execution. You have to make it clear to everybody that rewards and respect are based on performance.

Source:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.
(Note: in the book, the quotation is presented as being Bossidy’s.)

Uncommon Common Sense: Bossidy Execution Book

Source of book image: http://a1055.g.akamai.net/f/1055/1401/5h/images.barnesandnoble.com/images/8280000/8285699.jpg

Bossidy and Charan’s book is not exactly a page-turner of unexpected insights, but the authors say some things that need saying.
Business gurus often forget that success depends on more than vision and inspiration. It depends on courage (to face brutal facts, and to fire the lazy or incompetent), and it requires persistent attention to enough of the details to know what needs to be done, and to know who is doing it.
Much of their practical advice is way easier said than done, but maybe it’s still worth saying.
It occurred to me while reading this book, that I sometimes write and speak as though innovation and economic growth are inevitable with the right institutions. But that is not so.
Even under the best institutions, progress still requires entrepreneurs and managers who work very hard, demonstrate courage, and who care about getting the job done.

Reference to book:
Bossidy, Larry, Ram Charan, and Charles Burck. Execution: The Discipline of Getting Things Done. New York: Crown Business, 2002.

Creative Sparks Arise from Opportunistic Innovation

Source of book image:
http://ecx.images-amazon.com/images/I/51vovIVI5sL.jpg

(p. D16) One of the insights of “Strategic Intuition” is that business makes progress by following the opportunistic innovation model, while governments and international-aid agencies aim repetitively at rigid social goals. Such rigidity happens partly for a reason that Mr. Duggan is too polite to mention — bureaucrats, by nature, rarely give off a creative spark. Mr. Duggan prefers to emphasize a structural cause: The public demands solutions to problems of great social importance; thus bureaucrats get stuck with fixed objectives. Yet Mr. Duggan also shows that social progress often happens by emulating the opportunism of business. Among the most powerful of his examples is Muhammad Yunus’s invention of microcredit.
. . .
If there are still businessmen who feel compelled to follow a fixed-goal plan — missing out on the profits of opportunistic flexibility — then at least there is the free market to punish them. Market feedback is surely one big reason that we have so many innovative entrepreneurs. Where the old approach does most of the damage is in social policy, where the feedback is either fuzzy (as in domestic policy) or absent (foreign aid). Social policy could use a lot fewer commencement speakers and a lot more creative sparkers.

For the full review, see:
WILLIAM EASTERLY. “BOOKSHELF; Surprised by Opportunity.” The Wall Street Journal (Weds., November 14, 2007): D16.
(Note: ellipsis added.)

The reference to the Stratetic Intuition book is:
Duggan, William. Strategic Intuition: The Creative Spark in Human Achievement. New York: Columbia University Press, 2007.

Persistence and Efficiency Matter More than Teamwork and Enthusiasm, for CEO Success

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

(p. B3) What are the traits that chief executives of successful companies share? A new study suggests that hard-nosed personal virtues such as persistence and efficiency count for more than “softer” strengths like teamwork or flexibility.

The findings are sure to intensify debate about how much toughness is appropriate in a CEO. Some famously hard-charging bosses of big companies have retired or been shunted aside in recent years. Successors at companies such as General Electric Co., International Business Machines Corp. and Hewlett-Packard Co. are seen as quieter, less strident team-builders.

But the new study, by three University of Chicago business-school professors, draws on detailed personal assessments of 313 CEO candidates to present a starker view of good leadership’s ingredients. Of these candidates, 225 were hired. Their subsequent performance fuels most of the study’s conclusions.

“We found that ‘hard’ skills, which are all about getting things done, were paramount,” says lead author Steven Kaplan, a professor of finance and entrepreneurship. “Soft skills centering on teamwork weren’t as pivotal. That was a bit of a surprise to us.”

Prof. Kaplan and colleagues Mark Klebanov and Morten Sorensen didn’t size up the CEOs themselves. Instead, they tapped into a consultant’s database long coveted by academic researchers. It contains assessments of individuals’ strengths and weaknesses compiled by ghSmart Inc. The Chicago management-assessment company evaluates CEO candidates on behalf of corporate clients.

For the full story, see:

GEORGE ANDERS. “THEORY & PRACTICE; Tough CEOs Often Most Successful, A Study Finds.” The Wall Street Journal (Mon., November 19, 2007): B3.

Included with the WSJ article was an interesting summary table:

LEADING PROFILE

Here are five CEO traits that correlate most closely with business success at buyout companies — and five that score lowest, according to University of Chicago researchers.

Traits that matter…

• Persistence
• Attention to detail
• Efficiency
• Analytical skills
• Setting high standards

…and not so much

• Strong oral communication
• Teamwork
• Flexibility/adaptability
• Enthusiasm
• Listening skills

Alaska Air Used Skunk Works to Develop Check-In Innovation

Source of graphic: online version of the WSJ article cited below.

The innovation described in the article excerpted below is credited as arising from a ‘skunk works’ project. There’s a neat book called Skunk Works that describes how Lockheed set up an autonomous unit to develop the first stealth air force technology. (Their plant was in a smelly part of town, so it was dubbed the ‘Skunk Works.’)

Clayton Christensen has recommended that established incumbent companies set up skunk works operations in order to develop disruptive technologies that would not survive if they were developed within the main corporate culture and infrastructure.

(In the article excerpted below, it is puzzling to read that Alaska Air went to the trouble to take out a patent, even though they apparently have no intention of enforcing it.)

(p. B1) ANCHORAGE, Alaska — When the Ted Stevens Anchorage International Airport was planning a new concourse, prime tenant Alaska Airlines insisted on a counterintuitive design: "The one thing we don’t want is a ticket counter," said Ed White, the airline’s vice president of corporate real estate.

So the 447,000-square-foot Concourse C, which opened in 2004, has only one small, traditional ticket counter, even though the carrier’s 1.2 million Anchorage passengers checked in through that area last year. This unconventional approach — which uses self-service check-in machines and manned "bag drop" stations in a spacious hall that looks nothing like a typical airport — has doubled Alaska’s capacity here, halved its staffing needs and cut costs, while speeding travelers through the building in far less time.

. . .

(p. B4) Alaska’s design in Anchorage has turned heads in the industry, and in 2006 the airline was awarded a U.S. patent for the check-in process, something it calls the two-step flow-through. Mr. White says his company isn’t trying to keep competitors from going down the same path, but pursued the patent more to reward the many employees who helped to bring the idea to fruition.

Other airlines quickly sent scouts up to Anchorage to check out the new concourse, including a team from Delta Air Lines Inc., Mr. White says. A few months ago, Delta completed a $26 million renovation of its check-in hall at Hartsfield-Jackson Atlanta International Airport, and the finished product looks remarkably similar to that of Alaska Airlines. Greg Kennedy, Delta’s vice president for customer service there, says the new layout has enabled the airline to process passengers checking in during the peak spring break travel period in 20 to 30 minutes at most, compared with two or three hours three years ago — and all in the same amount of square footage but 50% more usable space. Mr. Kennedy says he isn’t aware of a visit to Anchorage but doesn’t dispute it.

. . .

Alaska, the nation’s ninth-largest carrier by traffic, started a "skunk works" lab a decade ago to figure out how to use technology to make air travel less of a hassle for passengers. Out of that effort came the airline’s ground-breaking ability to sell tickets on the Internet and allow fliers to check in online, developments other carriers quickly followed.

For the full story, see:

SUSAN CAREY. "Case of the Vanishing Airport Lines; Alaska Air Speeds Up Flow Of Passengers by Jettisoning Traditional Ticket Counters." The Wall Street Journal (Thurs., August 9, 2007): B1 & B4.

Source of graphic: online version of the WSJ article cited above.

“We’re Not Looking to Achieve Incremental Advances”

Genentech CEO Dr. Arthur D. Levinson. Source of image: online version of the WSJ article cited below.

(p. B1) WSJ: You have multiple blockbuster biotech drugs on the market and more on the way. In such an uncertain business, how do you manage scientists to achieve that kind of success?

Dr. Levinson: We are first and foremost committed to doing great science. If a drug can’t be the first in class or the best in class, we’re just not interested. We’re not looking to achieve incremental advances or extend patents or do X, Y, Z unless it is going to really matter for patients. That allows us to bring in phenomenal scientists and encourage them to do the basic and translational research.

We decided 15 years ago that we would be committing (p. B2) to oncology, which at the time for us was new. We are now the leading producer of anticancer drugs in the United States. We took a lot of risks. In many cases, those risks paid off. We are now also in immunology. Again, the role of management here is to set the broad direction and then hire absolutely the best scientists and bring them in and say, ‘Do your stuff.’

For the full interview, see:

MARILYN CHASE. The Wall Street Journal "How Genentech Wins At Blockbuster Drugs CEO to Critics of Prices: ‘Give Me a Break’." The Wall Street Journal (Tues., June 5, 2007): B1 & B2.

Source of graph: online version of the WSJ article cited above.

A Competent, Caring, Ultimate Authority Needed for Open Source to Work: Linux and Wikipedia

The excerpt below is from a WSJ summary of an article from the Summer issue of the journal Strategy + Business.

Linux’s success isn’t as egalitarian as it seems, says Mr. Carr. In 1997, Mr. Raymond praised Linux’s founder, Linus Torvalds, for realizing that "given enough eyeballs, all [software] bugs are shallow." However, Linux has always had a central authority — originally, Mr. Torvalds himself; later, a small group of engineers — that synthesized the work of the volunteers.

Similarly, the expansiveness of Wikipedia’s entries lies in its contributors’ wide range of interests. However, the encyclopedia is slowly putting together a management team to identify and improve poorly written articles and correct imbalances like the one where the "Flintstones" entry is twice as long as the one on "Homer."

For the full summary, see:

"Informed Reader; TECHNOLOGY; Small Teams Advance Open-Source Effort." The Wall Street Journal (Weds., June 6, 2007): B5.

With Right Incentives, Workers Make Better Tech Purchases Than Managers

(p. A7) Corporate technology managers usually pick laptops, software and other technology for employees. Now some tech managers are finding workers can do a better job when they choose and buy the equipment themselves.

At KLM Royal Dutch Airlines, a unit of Air France-KLM SA, employees had expressed frustration at the company’s policy of providing and supporting only one type of laptop, the Lenovo A30 (formerly IBM), and one smartphone, the Nokia 6021. Last November, Martien van Deth, a senior technology officer in the Amsterdam office, tried a new system: He gave 50 information-technology staffers an allowance of $203, covering two years, to buy cellphones for corporate use. Those who picked more expensive phones paid the extra. Those who chose cheaper phones kept the change. As long as the phone ran Microsoft Corp.’s Windows Mobile version 5 or 6 operating system, KLM guaranteed access to corporate email. The catch: Users had to deal with technical problems themselves and replace phones that broke.

Not only did the program cost less than the $231 the company paid (p. A9) for phones and support over the same period, it was a hit with employees — some of whom bought phones with fancy ringtones and video players. Now "no one can complain that their corporate phone doesn’t have a camera," says Mr. van Deth, who plans to offer a tech allowance to KLM’s entire 1,000-person IT department later this summer, and wants to take the program companywide. He’s also about to start a tech-allowance program for laptops.

For the full story, see:

BEN WORTHEN. "Office Tech’s Next Step: Do It Yourself." The Wall Street Journal (Tues., July 3, 2007): A7 & A9.