Management – Page 18 – artdiamondblog.com

Delta Overcomes Obstacles that Ground Other Airlines

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

Cancellations due to mechanical failures, piliot illness and government regulations are often announced as though they were acts of God, outside the possible control of airlines, for which the airline is blameless. But airlines can take actions, and improve processes, to reduce the frequency and consequences of such cancellations. In airlines, and in other firms, there is not a sharp line between what can and what cannot be under the firm’s control.

(p. D3) Atlanta

The crew of Delta Air Lines Flight 55 last Thursday couldn’t legally fly from Lagos, Nigeria, to Atlanta unless they waited a day due to new limits on how much pilots can fly in a rolling 28-day period. The trip would have to be canceled.
Instead, Delta headquarters told the captain to fly to San Juan, Puerto Rico, which they could reach within their duty limits. There, two new pilots would be waiting to take the Boeing 767 on to Atlanta. The plane arrived in San Juan at 2:44 a.m., quickly took on fuel and pilots, and landed in Atlanta only 40 minutes late.
The episode, unorthodox in the airline industry, illustrates the fanaticism Delta now has for avoiding cancellations. Last year, Delta canceled just 0.3% of its flights, according to flight-tracking service FlightStats.com. That was twice as good as the next-best airlines, Southwest and Alaska, and five times better than the industry average of 1.7%.
. . .
Managers in Delta operations centers move planes, crews and parts around hourly trying to avoid canceling flights. How well an airline maintains its fleet and how smartly it stashes spare parts and planes at airports affect whether your flight goes or not.
Delta thinks it has come up with new analytical software and instruments that can help monitor the health of airplanes and predict which parts will soon fail. Empty planes are ferried to replace crippled jets rather than waiting for overnight repairs.
Mechanics developed a vibration monitor to install on cooling fans for cockpit instruments. A plane can’t be sent out on a new trip with a broken fan.
Now when vibration starts to increase, indicating that a bearing may be wearing down and getting close to failing, a new fan is swapped in. The wobbly fan goes to the shop for new bearings. That has reduced canceled flights.
So has spending $2 million to have spare starters for Boeing 767 engines at all 767 stations abroad. Starters last about five years. While each plane has two and both engines can be started with one, you can’t send a plane out on a long trip over oceans with only one working.

For the full story, see:
SCOTT MCCARTNEY. “THE MIDDLE SEAT; A World Where Flights Aren’t Canceled; How Smartly an Airline Stashes Spare Parts and Planes at Airports Affects Whether or Not Your Flight Takes Off.” The Wall Street Journal (Thurs., April 3, 2014): D3.
(Note: ellipsis added.)
(Note: the online version of the story was updated April 2, 2014, and has the title “THE MIDDLE SEAT; A World Where Flights Aren’t Canceled; Inside Delta’s new strategies to avoid stranding fliers.”)

Managing Engaged Edison Only Half as Much as Inventing

(p. 146) In 1885, three years after the start of service at Pearl Street, a director of the company who chose to remain anonymous complained to the Philadelphia Press that Edison insisted on taking an active part in the management of the company “although he is not a bit of a business man.” He gave an example of Edison’s poor judgment: Edison had proposed installing a new cable in Manhattan that would cost nearly $30,000 a mile, oblivious to the fact that Western Union had one with similar capacity in operation that had only cost $500 a mile. “If he would leave it to practical business men to make money out of it and stick to his inventions,” the director said, “the company would in time become very rich.”
For Edison, “sticking to his inventions” full-time would mean relinquishing control of Edison Electric, which was anathema. Managing his company did not engage him half as much as creating it, but he could not bring himself to let go of the captain’s chair. Edison’s intellectual interests, however, wandered from one minor project to the next. He had always done best when attempting something both entirely new and gargantuan in scale, but in the mid-1880s he could not find a suitable project.

Source:
Stross, Randall E. The Wizard of Menlo Park: How Thomas Alva Edison Invented the Modern World. New York: Crown Publishers, 2007.
(Note: italics in original.)

Strategic Conversations: Vital to Creative Adaptation or Reinforcers of Lazy Consensus?

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

(p. A15) “Moments of Impact” is at its best on the importance of promoting different perspectives. Businesses need to look at the world through as many disciplinary lenses as possible if they are to cope with the fast-changing threats that confront them. But day-to-day corporate life is all about fences and silos. Strategic conversations give companies a chance to examine their business models from the outside–and, as the authors put it, to “imagine operating within several different yet plausible environments.”
. . .
Mr. Ertel and Ms. Solomon argue that companies increasingly face a choice between what Joseph Schumpeter called creative destruction and what they call creative adaptation–and that strategic conversations are vital to creative adaptation. Perhaps so. But strategic conversations can also reinforce lazy consensus, as people try to justify their jobs and protect their turf. Many bold decisions are driven by the opposite of “conversations”–by senior managers deciding to lop-off functions or take the company in a radically new direction.

For the full review, see:
ADRIAN WOOLDRIDGE. “BOOKSHELF; Go Ahead, Strategize; The best ‘strategy meetings’ unleash fresh thinking and offer maverick views; the worst and dull, unstructured time-sucks.” The Wall Street Journal (Thurs., March 27, 2014): A15.
(Note: ellipsis added.)
(Note: the online version of the review has the date March 26, 2014, and has the title “BOOKSHELF; Book Review: ‘Moments of Impact,’ by Chris Ertel and Lisa Kay Solomon; The best ‘strategy meetings’ unleash fresh thinking and offer maverick views; the worst and dull, unstructured time-sucks.”)

The book under review is:
Ertel, Chris, and Lisa Kay Solomon. Moments of Impact: How to Design Strategic Conversations That Accelerate Change. New York: Simon & Schuster, 2014.

In Hard Times Entrepreneurs Need Advice on How to Fire

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

(p. A13) Every entrepreneur has experienced what Ben Horowitz terms “the struggle.” That’s when things are going really, really badly. It’s when, as he puts it in “The Hard Thing About Hard Things,” “people ask you why you don’t quit and you don’t know the answer.” But there always is a way, Mr. Horowitz believes, and it’s the ability to spot the next move during the struggle that separates winners and losers.

Mr. Horowitz has authority on this subject. He was a successful tech CEO, having co-founded the pioneering cloud-computing company LoudCloud and subsequently overseen its evolution into a software firm, Opsware. He’s also one half of the venture-capital firm Andreessen Horowitz. Among the firm’s winning bets: Facebook, Skype and Twitter.
. . .
The book, the author says, is written primarily for “wartime CEOs”–those like the late Steve Jobs, who returned to Apple in 1997 at a time when the company was verging on bankruptcy. Jobs recognized that to survive, Apple had to ditch most of its products and focus singularly on just four computer models.
Wartime CEOs don’t need classic management books that “focus on how to do things correctly, so you don’t screw up,” Mr. Horowitz argues. What the author offers instead is “insight into what you must do after you have screwed up. The good news is, I have plenty of experience at that and so does every other CEO.”
. . .
Parts of the book are dedicated to providing practical leadership advice: how to hire, fire and scale and when to sell and when to spurn offers. Some of the advice is counterintuitive. He dismisses the “don’t bring me a problem without bringing me a solution” management maxim by asking: If an employee can’t solve the problem he encounters, do you really want him to hide it?

For the full review, see:
DANIEL FREEDMAN. “BOOKSHELF; Business Tips From Karl Marx; Born to a family of Marxists, Ben Horowitz now invests in tech startups. Among his winning bets: Twitter and Facebook.” The Wall Street Journal (Fri., March 7, 2014): A13.
(Note: ellipses added.)
(Note: the online version of the review has the date March 6, 2014, and has the title “BOOKSHELF; Book Review: ‘The Hard Thing About Hard Things,’ by Ben Horowitz; Born to a family of Marxists, Ben Horowitz now invests in tech startups. Among his winning bets: Twitter and Facebook.”)

The book under review is:
Horowitz, Ben. The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers. New York: HarperCollins Publishers, 2014.

Disabled Workers Are More Likely to Be Free Agent Entrepreneurs

“Kevin Hartford, right, and a colleague at his factory. He started his business after employers failed to hire him.” Source of caption and photo: online version of the NYT article quoted and cited below.

HR departments have incentives to avoid hiring risky employees. But a determined high-risk employee can hire themselves by becoming a free agent entrepreneur. If we want to truly help the disabled, we should remove obstacles to entrepreneurship, such as burdensome regulations and high taxation.

(p. B4) Mr. Hartford, the father of two sons, thrived as a business consultant in his 20s and 30s. He was used to flying first class, staying at swank hotels and advising CEOs. Then the consulting firm unraveled in the mid-1990s. When he began looking for a new job, a stuttering problem–something he had always considered manageable–put off potential employers.

“I applied for job after job after job,” says Mr. Hartford, now 58. “I was one of two finalists; I was one of three finalists. But I never got the job.”
In the end, Mr. Hartford concluded that his only shot at a satisfying job was to create a company. He is now president and co-owner of Alle-Kiski Industries, which makes parts, such as exhaust pipes for train locomotives and prototype truck wheels, for larger manufacturers, including Alcoa Inc. and General Electric Co.
Like many before him, Mr. Hartford discovered that one option for people who don’t fit into large organizations is to start a small one. That is particularly true for people with disabilities. About 11% of disabled workers are self-employed, compared with 6.5% of those with no disabilities, according to Labor Department data.
. . .
The business has grown to 38 employees from a dozen when Messrs. Hartford and Newell started in 2005. They own more than $2 million of equipment used to drill, groove and otherwise shape metal, arrayed in a 27,000-square-foot factory with an American flag hanging from one of the beams. Last year’s sales of $6 million were the highest yet, Mr. Hartford says, and the company is building a 4,000-square-foot addition to house more equipment.

For the full story, see:
JAMES R. HAGERTY. “Entrepreneur Let No Impediment Stop Him; Out-of-Work Consultant Started His Own Company After Discovering His Stutter Put Off Employers.” The Wall Street Journal (Thurs., Jan. 16, 2014): B4.
(Note: ellipsis added.)
(Note: the online version of the story has the date Jan. 15, 2014.)

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.)