Category: Management

GE Replaces Annual Performance Review with Frequent Feedback

(p. B8) General Electric Co. is getting rid of ratings.
The industrial giant’s salaried employees will no longer be given one of five labels–ranging from “role model” to “unsatisfactory”–as part of their annual performance review. The changes, to be announced to employees Tuesday, breaks with a system GE has used in some form or another for the last 40 years.
Chief Executive Jeffrey Immelt is undertaking a bid to refocus on the company’s core industrial business. To spur these efforts, GE has spent the past few years reimagining the way its 310,000 employees work, placing new emphasis on experimentation and risk-taking. A new performance-management system asks employees and managers to exchange frequent feedback via a mobile app called PD@GE, in person or by phone. The messages are compiled into a performance summary at the end of the year.

For the full story, see:
RACHEL EMMA SILVERMAN. “GE Scraps Staff Ratings to Spur Feedback.” The Wall Street Journal (Weds., July 27, 2016): B8.
(Note: the online version of the story has the date July 26, 2016, and has the title “GE Does Away With Employee Ratings.”)

Letter to a Crony Capitalist

(p. B4) . . . , an excellent read is “Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism,” by Jeff Gramm, owner and manager of the Bandera Partners hedge fund and an adjunct professor at Columbia Business School. This book explores the rise of activist investors like Carl C. Icahn and Daniel S. Loeb.
Mr. Gramm has collected a series of deliciously rich letters, many of which were never before published, sent to chief executives by investors by everyone from Warren Buffett to Ross Perot. They are eye-opening, often chilling and include fascinating lessons about business.
My personal favorite is this letter from Mr. Loeb to the chief executive of Star Gas Partners: “It seems that Star Gas can only serve as your personal ‘honey pot’ from which to extract salary for yourself and family members, fees for your cronies and to insulate you from the numerous lawsuits that you personally face due to your prior alleged fabrications, misstatements and broken promises. I have known you personally for many years and thus what I am about to say may seem harsh, but is said with some authority. It is time for you to step down from your role as C.E.O. and director so that you can do what you do best: retreat to your waterfront mansion in the Hamptons where you can play tennis and hobnob with your fellow socialites. The matter of repairing the mess you have created should be left to professional management and those that have an economic stake in the outcome.”

For the full commentary, see:
Sorkin, Andrew Ross. “DEALBOOK; Tell-Alls, Strategic Plans and Cautionary Tales.” The New York Times (Tues., JULY 5, 2016): B1 & B4.
(Note: the online version of the commentary has the date JULY 4, 2016, and has the title “DEALBOOK; A Reading List of Tell-Alls, Strategic Plans and Cautionary Tales in Finance.”)

The book praised by Sorkin in the passage quoted above, is:
Gramm, Jeff. Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism. New York: HarperBusiness, 2016.

Tech Support Causes Rage By Taking Away Sense of Control

(p. B4) Especially frustrating when talking to tech support is not being understood because you are trying to communicate with machines or people who have been trained to talk like machines, either for perceived quality control or because they don’t speak English well enough to go off-script.
“It’s utterly maddening because the thing about conversations is that when I say something to you, I believe I’m having influence on the conversation,” said Art Markman, professor of psychology at the University of Texas at Austin and co-host of the podcast “Two Guys on Your Head.” “And when you say something back to me that makes no sense, now I see that all these words I spoke have had no effect whatsoever on what’s happening here.”
When things don’t make sense and feel out of control, mental health experts say, humans instinctively feel threatened. Though you would like to think you can employ reason in this situation, you’re really just a mass of neural impulses and primal reactions. Think fight or flight, but you can’t do either because you are stuck on the phone, which provokes rage.
Of course, companies rated best for tech support often charge more for their products or they may charge a subscription fee for enhanced customer care so the cost of helping you is baked in, as with Apple’s customer support service, AppleCare, and the Amazon Prime subscription service.
You can also find excellent tech support in competitive markets like domain name providers, where operators such as Hover and GoDaddy receive high marks. Also a good bet are hungry upstarts trying to break into markets traditionally dominated by large national companies. Take regional internet and phone service providers like Logix and WOW, which rank near the top in customer support surveys.

For the full story, see:
KATE MURPHY. “Why Help on Tech Is Unbearable.” The New York Times (Mon., July 4, 2016): B1 & B4.
(Note: the online version of the story has the date July 3, 2016, and has the title “Why Tech Support Is (Purposely) Unbearable.”)

The Lucky Success of the Half-Blind “Becomes the Inevitable Coup of the Assured Visionary”

(p. B1) The most fun business book I have read this year? “Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley,” by a former Facebook executive, Antonio García Martinez. I was sent a galley copy several months ago and picked it up with no intention of reading more than the first couple of pages. I don’t think I looked up until about three hours later.
This is a tell-all of Mr. Martinez’s experience in venture capital and later at Facebook, filled with insights about Silicon Valley — what he calls “the tech whorehouse” — mixed with score-settling anecdotes that will occasionally make you laugh out loud. Clearly there will be people who hate this book — which is probably one of the things that makes it such a great read.
The dedication page includes this gem: “To all my enemies: I could not have done it without you.” Mr. Martinez is particularly incisive when it comes to illustrating how failed ideas that happen to work are often spun into great successes: “What was an improbable bonanza at the hands of the flailing half-blind becomes the inevitable coup of the assured visionary,” he writes. “The world crowns you a genius, and you start acting like one.”

For the full commentary, see:
Sorkin, Andrew Ross. “DEALBOOK; Tell-Alls, Strategic Plans and Cautionary Tales.” The New York Times (Tues., JULY 5, 2016): B1 & B4.
(Note: the online version of the commentary has the date JULY 4, 2016, and has the title “DEALBOOK; A Reading List of Tell-Alls, Strategic Plans and Cautionary Tales in Finance.”)

The book praised by Sorkin in the passage quoted above, is:
Martinez, Antonio Garcia. Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley. New York: Harper, 2016.

Ten Quit, or Were Fired, “to Honor the Other 290”

(p. 1) A hellbent quest for authenticity produced some indelible on-set moments for Alejandro G. Iñárritu as he directed “The Revenant,” his two-and-a-half-hour opus of death, love and improvised surgery in the American West of the 1820s.
. . .
(p. 20) There were enough grumblings from the crew about delays, safety and overall misery that The Hollywood Reporter published an article in July in which one source described the experience as “a living hell.” Ten people either quit or were fired during filming, Mr. Iñárritu said, and he will not apologize for that.
“I have nothing to hide,” he said. “Of the 300 we started with, I had to ask some to step away, to honor the other 290. If one piece in the group is not perfect, it can screw the whole thing up.”
. . .
“Standing in a freezing river and eating a fish, or climbing a mountain with a wet bear fur on my back — those were some of the most difficult sequences for me,” said Mr. DiCaprio, who is considered a strong contender for an Oscar nomination for his performance. “This entire movie was something on an entirely different level. But I don’t want this to sound like a complaint. We all knew what we were signing up for. It was going to be in the elements, and it was going to be a rough ride.”
. . .
In person, . . . , Mr. Iñárritu has the chilled-out affect of a man who meditates every day and loves long walks. The only hint of intensity, and just a tinge of anger, comes when he discusses other movies. Too many of them today are like the products of fast-food chains, he said, ordered up by corporations that prize predictability and sameness over all else.
“What about going to a restaurant to be surprised?” he all but shouted. “That’s the risk that everybody avoids! In the context of cinema now, this movie is a bet.”
Raised in Mexico City, Mr. Iñárritu, 52, is the son of a banker who would eventually file for bankruptcy and end up selling fruit and vegetables to hotels and restaurants. The younger Iñárritu started off as a radio host, playing music and writing provocative, comical sketches with a political bent. He studied theater and learned to direct by shooting brand-identity commercials for a television station. By the time he landed his first feature, “Amores Perros,” released in 2000, he had spent hundreds of hours behind a camera. Then came “21 Grams” (2003), “Babel” (2006) and “Biutiful” (2010).

For the full story, see:
DAVID SEGAL. “That Bear and Other Threats.” The New York Times, Arts&Leisure Section (Sun., DEC. 27, 2015): 1 & 20.
(Note: ellipses added.)
(Note: the online version of the story has the date DEC. 22, 2015, and has the title “About That Bear: Alejandro G. Iñárritu Discusses Making ‘The Revenant’.”)

Innovators Need Time for Tedious Tasks

(p. 3) Innovation isn’t all about eureka moments. In fact, the road to creative breakthroughs is paved with mundane, workaday tasks. That’s the message of a recent study that might as well be titled “In Praise of Tedium.”
In the study, researchers sought to examine how extended periods of free time affect innovation. To do this, they analyzed activity on Kickstarter, the crowdfunding website, in nearly 6,000 American cities.
. . .
Over a period of about nine months, the researchers found a sharp increase in the number of new projects posted during the first few days of school break periods. The spike, they suggest, is tied to people having more time to perform the administrative aspects of Kickstarter projects — working on a manufacturing plan, say, or setting up a rewards schedule. While people may be using some stretches of free time to nurture those much lauded light bulb moments, the process of innovation also appears to require time to carry out execution-oriented tasks that are not particularly creative but still necessary to transform an idea into a product, the study indicates.

For the full story, see:
PHYLLIS KORKKI. “Applied Science; Good Ideas Need Time for Tedious Legwork.” The New York Times, SundayBusiness Section (Sun., AUG. 16, 2015): 3.
(Note: ellipsis added.)
(Note: the online version of the story has the date AUG. 15, 2015, and has the title “Applied Science; Looking for a Breakthrough? Study Says to Make Time for Tedium.”)

The academic paper summarized in the passages quoted above, is:
Agrawal, Ajay, Christian Catalini, and Avi Goldfarb. “Slack Time and Innovation.” Rotman School of Management Working Paper #2599004, April 25, 2015.

Only a Founder Has the Moral Authority to Shake Up a Company

(p. B1) SAN FRANCISCO — Shortly after Twitter’s board of directors began its search for a new chief executive in June [2015], it said it would only accept someone willing to commit to the job full time. It was a not-so-subtle message to Twitter’s co-founder and interim boss, Jack Dorsey, that he would have to give up his job running Square, a mobile payments start-up, if he wanted to run Twitter on a permanent basis.
On Monday [Oct. 5, 2015], the eight-member board reversed itself, announcing that it had decided to allow Mr. Dorsey, its chairman, to head both companies after all.
. . .
(p. B8) This is Mr. Dorsey’s second go-round as Twitter’s chief executive.
Evan Williams, a board member and co-founder of Twitter who was instrumental in firing him in 2008, noted that the board considered many candidates before settling on Mr. Dorsey.
“I honestly didn’t think we’d land on Jack when we started unless he could step away from Square,” Mr. Williams wrote in a post on Medium, the social media site he now runs. “But ultimately, we decided it was worth it.”
In the end, Mr. Dorsey made a compelling case that he had matured and grown as a leader and that only a founder would have the moral authority to truly shake up a company that has been struggling to attract new users and compete for advertising dollars.

For the full story, see:
VINDU GOEL and MIKE ISAAC. “Delegating, Dorsey Will Lead Twitter and Square.” The New York Times (Tues., OCT. 6, 2015): B1 & B8.
(Note: ellipsis, and bracketed dates, added.)
(Note: the online version of the story has the date OCT. 5, 2015, and has the title “Delegating, Jack Dorsey Will Lead Twitter and Square.”)

Hiring Based on What People Can Do, Instead of Their Credentials

(p. B4) Compose Inc. asks a lot of job applicants. Anyone who wants to be hired at the San Mateo, Calif., cloud-storage firm must write a short story about data, spend a day working on a mock project and complete an assignment.
There is one thing the company doesn’t ask for: a résumé.
Compose is among a handful of companies trying to judge potential hires by their abilities, not their résumés. So-called “blind hiring” redacts information like a person’s name or alma mater, so that hiring managers form opinions based only on that person’s work. In other cases, companies invite job candidates to perform a challenge–writing a software program, say–and bring the top performers in for interviews or, eventually, job offers.
Bosses say blind hiring reveals true talents and results in more diverse hires. And the notion that career success could stem from what you know, and not who you know, is a tantalizing one.
. . .
“We were hiring people who were more fun for us to talk to,” says Mr. Mackey. Trouble was, they were often a poor fit for the job, according to the CEO.
So the company, which was acquired by International Business Machines Corp. last year, added an anonymous sample project to the hiring process. Prospective hires spend about four to six hours performing a task similar to what they would do at Compose–writing a marketing blog post for a technical product, for example.
. . .
The sample projects have unearthed hires who have turned out to be top performers, says Mr. Mackey.

For the full story, see:
RACHEL FEINTZEIG. “Why Bosses Are Turning to ‘Blind Hiring’.” The Wall Street Journal (Weds., Jan. 6, 2016): B4.
(Note: ellipses added.)
(Note: the online version of the article has the date Jan. 5, 2016, and has the title “The Boss Doesn’t Want Your Résumé.”)

Open Offices Are “an Absurd Attack on Concentration”

(p. A11) Mr. Newport acknowledges the good intentions behind open offices: They are meant to encourage serendipity and teamwork. But he argues that burdening workers with perpetual distractions constitutes “an absurd attack on concentration” that creates “an environment that thwarts attempts to think seriously.” Sure, there’s collaboration–not least the unspoken camaraderie among coworkers who have shared in the cringe-inducing experience of hearing a colleague castigate her spouse over the phone.
Mr. Newport, a computer science professor at Georgetown, is the unusual academic who will sully himself with matters as practical as: How can a talented employee rack up the rarefied and acute skills–writing, coding, scouring the latest mergers and acquisitions–that make someone indispensable? His answer? Expanding your capacity for “deep work,” ruthlessly weeding out distractions and regularly carving out stretches of time to sharpen abilities. Mr. Newport explains why honing an ability to concentrate can yield enormous professional payouts. Then he lays out rules for becoming one such rare bird.
Most corporate workers, Mr. Newport argues, don’t have clear feedback about how to spend their time. As a result, employees use “busyness as a proxy for productivity,” which Mr. Newport describes aptly as “doing lots of stuff in a visible manner”–blasting out emails, for instance, or holding meetings on superficial progress on some project.
. . .
The book’s best example is the Pulitzer Prize winning Lyndon Johnson biographer Robert A. Caro, known for working on a meticulous schedule in his Manhattan office dressed in a coat and tie “so that he never forgets when he sits down with his research that he is going to work,” as one profile of Mr. Caro put it.

For the full review, see:
KATE BACHELDER. “BOOKSHELF; Will You Please Be Quiet, Please?; Yes, open offices cultivate camaraderie–among coworkers who all cringe as a colleague shouts at her soon-to-be ex-husband over the phone.” The Wall Street Journal (Weds., Jan. 20, 2016): A11.
(Note: ellipsis added, italics in original.)
(Note: the online version of the review has the date Jan. 19, 2016.)

The book under review, is:
Newport, Cal. Deep Work: Rules for Focused Success in a Distracted World. New York: Grand Central Publishing, 2016.

The Bet in Alphabet Is that Autonomy Will Work

(p. B4) To see how Google Inc. Chief Executive Larry Page hopes to turbocharge a growing fleet of speculative projects under a new holding company, look at Nest Labs.
After Google acquired the maker of connected-home devices for $3.2 billion in 2014, Nest kept its own recruiters and its own system for vetting job candidates, skirting Google’s famously deliberate hiring process. Nest still rents computer servers from Amazon.com Inc., rather than use Google’s data centers. Nest co-founder and CEO Tony Fadell also curbed some Google perks, such as free food, to maintain Nest’s scrappy vibe.
Mr. Fadell and co-founder Matt Rogers negotiated unusual autonomy for Nest. Now, as Google reorganizes and creates a new parent company, Alphabet Inc., it is using Nest as a model for running its other startup operations–the “bets” in Alphabet–according to people familiar with the plan.
The restructuring separates Google’s core businesses–including Internet search, the Android operating system and YouTube–from newer unrelated businesses such as Nest, Google Life Sciences and Fiber, the fast Internet service. Mr. Page will remain CEO of the Alphabet holding company, but step back from running Google’s core to oversee the other units, which will operate more independently.
. . .
“If Google can deliver more broadly what it gave Nest, that predicts success for the rest of the Alphabet projects,” said Max Levchin, a co-founder of PayPal Holdings Inc. who spent more than a year at Google after it bought his social startup Slide in 2010.

For the full story, see:
ALISTAIR BARR. “At Google, Breathing Room for New Ideas.” The Wall Street Journal (Fri., Oct. 2, 2015): B4.
(Note: ellipsis added.)
(Note: the online version of the article has the date Oct. 1, 2015, and has the title “At Google, Breathing Room for New Ideas.”)

Koch Employees Motivated by the Fulfillment of Meaningful Work

(p. A11) . . . , Mr. Koch defines “principled entrepreneurship” as the effort to maximize profit by “creating superior value,” as well as by “acting lawfully and with integrity.” What is good for business, he says, is good for society–another aspect of good profit.
The culture of a company is formed, Mr. Koch observes, when employees internalize such principles and practices. Although employees should be urged, he says, to be agents of change, to think critically and, when necessary, to challenge the decisions of their bosses, they will find that their most significant motivation is a sense of accomplishment and fulfillment. “We cannot ignite a passion for creating the greatest value,” Mr. Koch writes, “if there is no meaning in our work.”

For the full review, see:
JOSEPH MACIARIELLO. “BOOKSHELF; The Company He Keeps; Respect means treating people on their merits–not according to the rigid categories of identity politics. Merit will always create value.” The Wall Street Journal (Fri., Oct. 23, 2015): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date Oct. 22, 2015.)

The book under review, is:
Koch, Charles G. Good Profit: How Creating Value for Others Built One of the World’s Most Successful Companies. New York: Crown Business, 2015.