Management – Page 18 – artdiamondblog.com

Carnegie Liked Partnership More than Incorporation

(p. 480) “Don’t want anything to do with a corporation as long as I am in business–Partnership is the only thing–no one man can manage well–every one needs the companionships of equals in business to contradict and differ from him–one advises the other… I who write you thus have grown gray in the service and speak the words of soberness and wisdom.”

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: ellipsis in original.)
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

The Young, with Managerial Experience, Are Most Likely to Become Entrepreneurs

(p. A13) In a current study analyzing the most recent Global Entrepreneurship Monitor (GEM) survey, my colleagues James Liang, Jackie Wang and I found that there is a strong correlation between youth and entrepreneurship. The GEM survey is an annual assessment of the “entrepreneurial activity, aspirations and attitudes” of thousands of individuals across 65 countries.
In our study of GEM data, which will be issued early next year, we found that young societies tend to generate more new businesses than older societies. Young people are more energetic and have many innovative ideas. But starting a successful business requires more than ideas. Business acumen is essential to the entrepreneur. Previous positions of responsibility in companies provide the skills needed to successfully start businesses, and young workers often do not hold those positions in aging societies, where managerial slots are clogged with older workers.
In earlier work (published in the Journal of Labor Economics, 2005), I found that Stanford MBAs who became entrepreneurs typically worked for others for five to 10 years before starting their own businesses. The GEM data reveal that in the U.S. the entrepreneurship rate peaks for individuals in their late 20s and stays high throughout the 30s. Those in their early 20s have new business ownership rates that are only two-thirds of peak rates. Those in their 50s start businesses at about half the rate of 30-year-olds.
Silicon Valley provides a case in point. Especially during the dot-com era, the Valley was filled with young people who had senior positions in startups. Some of the firms succeeded, but even those that failed provided their managers with valuable business lessons.
My co-author on the GEM study, James Liang, is an example. After spending his early years as a manager at the young and rapidly growing Oracle, he moved back to China to start Ctrip, one of the country’s largest Internet travel sites.

For the full commentary, see:
EDWARD P. LAZEAR. “The Young, the Restless and Economic Growth; Countries with a younger population have far higher rates of entrepreneurship.” The Wall Street Journal (Mon., Dec. 23, 2013): A13.
(Note: the online version of the commentary has the date Dec. 22, 2013.)

The Lazear paper mentioned above, is:
Lazear, Edward P. “Entrepreneurship.” Journal of Labor Economics 23, no. 4 (October 2005): 649-80.

Solitude May Allow “Making Novel Connections Between Far-Flung Ideas”

Source of book image: http://ffbsccn.files.wordpress.com/2013/12/focus.jpg

(p. 16) What appears to be most at risk is our ability to experience open awareness. Always a rare and elusive form of thinking, it seems to be getting rarer and more elusive. Our modern search-engine culture celebrates information gathering and problem solving — ways of thinking associated with orienting and selective focus — but has little patience for the mind’s reveries. Letting one’s thoughts wander seems frivolous, a waste of practical brainpower. Worse, our infatuation with social media is making it harder to hear the mind’s whispers. Solitude has fallen out of fashion. Even when we’re by ourselves, we’re rarely alone with our thoughts.

In the end, we may come to see the flights and fancies of open awareness as not only dispensable but pathological. Goleman points out that the brain systems associated with creative mind-wandering tend to be “unusually active” in people with attention-deficit disorder. When they appear to be “zoning out,” they may actually be making novel connections between far-flung ideas.

For the full review, see:
NICHOLAS CARR. “Attention Must Be Paid.” The New York Times Book Review (Sun., November 3, 2013): 16.
(Note: the online version of the review has the date November 1, 2013.)

Book under review:
Goleman, Daniel. Focus: The Hidden Driver of Excellence. New York: HarperCollins Publishers, 2013.

William Abbott Thought Tom Carnegie Was a “Better Business Man” than Andrew

The relationship between Andrew and Tom Carnegie sketched in the passage below seems, in some ways, similar to the relationship between Walt and Roy Disney.

(p. 138) William Abbott, who knew both Carnegies from their early days at the Pittsburgh iron mills, thought Andrew a genius, but regarded Tom as the “better business man.” Tom, Abbott told Burton Hendrick, “was solid, shrewd, farseeing, absolutely honest and dependable.” The two brothers had very different notions about business. Andrew was the ambitious one, (p. 139) filled with new ideas; Tom “was content with a good, prosperous, safe business and cared nothing for expansion. He disapproved of Andrew’s skyrocketing tendencies, regarded him as a plunger and a dangerous leader. Tom wanted earnings in the shape of dividends, whereas Andrew insisted on using them for expansion.” There were other differences as well. While Andrew sought out publicity, Tom ran away from it. He was silent, retiring, “not a mixer in society, was tongue-tied at dinner parties and social gatherings.”

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

Peck Shows that Job Interviews Do Not Identify Good Hires

(p. A18) Don Peck looked at how companies assess potential hires in an essay in The Atlantic called “They’re Watching You at Work.”
Peck demonstrates something that most of us already sense: that job interviews are a lousy way to evaluate potential hires. Interviewers at big banks, law firms and consultancies tend to prefer people with the same leisure interests — golf, squash, whatever. In one study at Xerox, previous work experience had no bearing on future productivity.
Now researchers are using data to try again to make a science out of hiring. They watch how potential hires play computer games to see who is good at task-switching, who possesses the magical combination: a strict work ethic but a loose capacity for “mind wandering.” Peck concludes that this greater reliance on cognitive patterns and game playing may have an egalitarian effect. It won’t matter if you went to Harvard or Yale. The new analytics sometimes lead to employees who didn’t even go to college. The question is do these analytics reliably predict behavior? Is the study of human behavior essentially like the study of nonhuman natural behavior — or is there a ghost in the machine?

For the full commentary, see:
DAVID BROOKS. “The Sidney Awards.” The New York Times (Fri., December 27, 2013): A18. [National Edition]
(Note: the online version of the commentary has the date December 26, 2013, and has the title “The Sidney Awards, Part 1.”)

The article praised by Brooks is:
Peck, Don. “They’re Watching You at Work.” The Atlantic (Dec. 2013).

Gates Is Only One Who Can Reshape Microsoft’s Culture

(p. 1D) Bill Gates should serve as Microsoft Corp.’s chief executive officer for a year as the software company he co-founded seeks a replacement for Steve Ballmer, Charles Schwab said Wednesday [November 20, 2013] at a conference in Chicago. . . . “I think it would behoove Gates to go back for at least a year,” Schwab said. “He’s the only guy who can really reshape the cultural aspects. Otherwise the organization will spit anybody out, anybody coming in.”

For the full story, see:
“Schwab Suggests Gates Return as CEO.” Omaha World-Herald (THURSDAY, NOVEMBER 21, 2013): 1D.
(Note: ellipsis, and bracketed date, added.)

Buffett’s Returns Not Due to Ability to Pick Good Managers

(p. B7) Investors for years have been searching in vain for a formula to replicate Warren Buffett’s legendary returns over the past 50 years.
The wait could be over.
A new study that claims to have uncovered this formula was published [in November 2013] . . . by the National Bureau of Economic Research in Cambridge, Mass. Its authors, all of whom have strong academic credentials, work for AQR Capital Management, a firm that manages several hedge funds and other investment offerings and has $90 billion in assets.
The study’s authors analyzed Mr. Buffett’s record since he acquired Berkshire Hathaway in 1964.
. . .
One factor that is conspicuous in its absence from the formula is anything to account for Mr. Buffett’s significant investments in privately owned companies. But that isn’t necessary, according to the researchers, because the public companies in which he has invested have outperformed the private ones.
This is somewhat surprising, given that Mr. Buffett has often trumpeted his abilities to pick good managers. Yet the researchers nevertheless find that his “returns are more due to stock selection than to his effect on management.”

For the full commentary, see:
MARK HULBERT. “Hulbert on Investing; Can the Buffett Investing Formula Really Be Bottled?” The Wall Street Journal (Sat., Dec. 14, 2013): B7.
(Note: ellipses, and bracketed words, added.)
(Note: the online version of the commentary has the date Dec. 13, 2013, and has the title “WEEKEND INVESTOR; How to Invest Like Warren Buffett; How can investors emulate Warren Buffett’s approach?”)

The National Bureau of Economic Research (NBER) paper that is discussed above:
Frazzini, Andrea, David Kabiller, and Lasse H. Pedersen. “Buffett’s Alpha.” NBER Working Paper # 19681, November 2013.

“Carnegie Watched, Listened, Learned” from Scott’s Process Innovations

(p. 65) Later in life, Scott would be better known for his political skills, but he was, like his mentor Thomson, a master of cost accounting. Together, the two men steadily cut unit costs and increased revenues by investing in capital improvements–new and larger locomotives, better braking systems, improved tracks, new bridges. Instead of running several smaller trains along the same route, they ran fewer but longer trains with larger locomotives and freight cars. To minimize delays–a major factor in escalating costs–they erected their own telegraph lines, built a second track and extended sidings alongside the first one, and kept roadways, tunnels, bridges, and crossings in good repair.
Carnegie watched, listened, learned. Nothing was lost on the young man. With an exceptional memory and a head for figures, he made the most of his apprenticeship and within a brief time was acting more as Scott’s deputy than his assistant. Tom Scott had proven to be so good at his job that when Pennsylvania Railroad vice president William Foster died unexpectedly of an infected carbuncle, Scott was named his successor.

Source:
Nasaw, David. Andrew Carnegie. New York: Penguin Press, 2006.
(Note: the pagination of the hardback and paperback editions of Nasaw’s book are the same.)

“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.