Management – Page 26 – artdiamondblog.com

Bert Sutherland Was the “Hero of Xerox PARC”

The failure of Xerox to take advantage of the innovations developed at Xerox PARC, is a legendary example of management failure. A couple of books have been written on the subject that I hope to read sometime.

(p. 194) Beyond his efforts in VLSI design, Bert Sutherland had supported the work at Xerox PARC that led to the “windows” and the “mouse” on nearly every workstation and many personal computers, from Apple and Atari to Apollo and Sun. He formed the research department that made Ethernet the dominant small computer network and that conceived the “notebook” lap computer. Xerox’s lead in IC design gave the company the tools–if the firm had only understood them–to lend new special features to every copier and printer and even to create the kind of electronic “personal copiers” later pioneered by Canon.

Bert Sutherland was the hero of Xerox PARC: that is history. But that was not life. In real life, Xerox fired him in 1979. While he worked day and night on the novel projects in Palo Alto that were to give Xerox an indelible role in the history of computer technology, jealous rivals conspired against him at headquarters. They said that his research, which would fuel the industry for a decade, was irrelevant to the needs of the company. In corning years, the research leadership that replaced him would make the company nearly irrelevant to the needs of the world.

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

Microsoft Hired Good People and Gave Them the Space and Privacy to Think

Not Microsoft. “Mark Clemente, a Steinreich Communications vice president, in the firm’s smaller Hackensack, N.J., office.” Source of caption and photo: online version of the WSJ article quoted and cited below.

The article quoted below documents the trend in business toward small, and more open offices. I believe that this trend is largely a mistake.
Another trend in business (see Levy and Murnane 2004) is for more jobs to involve thinking and creativity. Thinking and creativity are harder in an environment of noise and frequent and unpredictable interruptions.
David Thielen’s book on the secrets of Microsoft’s success that said that Microsoft emphasized hiring really good people, and then respected them enough to give them an office with a door, so they could have the space and privacy to think and create (e.g., pp. 17-35 & 147-150).
Microsoft had the right idea.

(p. B7) The office cubicle is shrinking, along with workers’ sense of privacy.

Many employers are trimming the space allotted for each worker. The trend has accelerated during the recession as employers seek to cut costs and boost productivity.
. . .

Tighter quarters and open floor plans also can present challenges. David Lewis, president of OperationsInc LLC, a Stamford, Conn., provider of human-resources services to more than 300 U.S. companies, says open floor plans and low cubicle walls can create discord and lead to increased turnover.
“Now everybody knows everybody else’s business,” he says. “It actually starts to create a level of tension in an office that never existed before. People can’t focus on work because they’re on top of each other.”

For the full story, see:
SARAH E. NEEDLEMAN. “THEORY & PRACTICE; Office Personal Space Is Crowded Out; Workstations Become Smaller to Save Costs, Taking a Toll on Employee Privacy.” The Wall Street Journal (Mon., DECEMBER 7, 2009): B7.
(Note: ellipsis added.)

The Levy and Murnane book mentioned above, is:
Levy, Frank, and Richard J. Murnane. The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton, NJ: Princeton University Press, 2004.
The Thielen book is:
Thielen, David. The 12 Simple Secrets of Microsoft Management: How to Think and Act Like a Microsoft Manager and Take Your Company to the Top. New York: McGraw-Hill, 1999.

“If I Listened to Logical People I Would Never Have Succeeded”

We may never know if Gilder’s optimism about Takahashi’s DRAM initiative was prescient or misguided. Takahashi died of pneumonia at age 60 in 1989, the same year that Gilder’s Mircocosm book was published. (Takahashi’s successor abandoned the DRAM initiative.)

(p. 154) Many experts said it could not be done. DRAMs represent the most demanding feat of mass production in all world commerce. None of the complex procedures is easy to automate. Automation itself, moreover, is no final solution to the problems of dust and contamination. Machines collect and shed particles and toxic wastes nearly as much as people do. Chip experts derided the view that these ten-layered and multiply patterned electronic devices, requiring hundreds of process steps, resembled ball bearings in any significant way.

Takahashi knew all that. But experts had derided almost every decision he had made throughout his career. “Successful people,” he says, “surprise the world by doing things that ordinary logical people (p. 155) think are stupid.” The experts told him he could not compete in America with New Hampshire Ball Bearing. He ended up buying it. The experts and bankers had told him not to build his biggest ball-bearing plants in Singapore and Thailand. Those plants are now the world’s most productive. The experts told him not to buy two major facilities in the United States, full of obsolescent equipment and manned by high-priced workers. But those facilities now dominate the American market for precision ball bearings. Now the experts told him he couldn’t make DRAMs. He knew he could. “If I listened to logical people,” he says, “I would never have succeeded.”

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.

Did Fairchild Fail Due to Bad Management or Disruptive Technology?

Clayton Christensen has shown how good management, following respected practices, can fail in the face of disruptive technologies. It would be interesting to investigate whether Fairchild was an example of what Christensen is talking about, or whether it just did not have good management.

(p. 89) Andrew Grove . . . had played a central role in bringing Fairchild to the threshold of a new era. But Fairchild would not enjoy the fruits of his work. Following the path of venture capital pioneer Peter Sprague were scores of other venture capitalists seeking to exploit the new opportunities he had shown them. Collectively, they accelerated the pace of entrepreneurial change–splits and spinoffs, startups and staff shifts–to a level that might be termed California Business Time (“What do you mean, I left Motorola quickly?” asked Gordon Campbell with sincere indignation. “I was there eight months!”).

The venture capitalist focused on Fairchild: that extraordinary pool of electronic talent assembled by Noyce and Moore, but left essentially unattended, undervalued, and little understood by the executives of the company back in Syosset, New York. Fairchild leaders John Carter and Sherman Fairchild commanded the microcosm: the most important technology in the history of the human race. Noyce, Moore, Hoerni, Grove, Sporck, design genius Robert Widlar, and marketeer Jerry Sanders represented possibly the most potent management and technical team ever assembled in the history of world business. But, hey, you guys, don’t forget to report back to Syosset. Don’t forget who’s boss. Don’t give out any bonuses without clearing them through the folks at Camera and Instrument. You might upset some light-meter manager in Philadelphia.
They even made Charles Sporck, the manufacturing titan, feel like “a little kid pissing in his pants.” Good work, Sherman, don’t let the big lug put on airs, don’t let him feel important. He only controls 80 percent of the company’s growth. Widlar is leaving? Great, he never fit in with the corporate culture anyway. Sporck has gone off with Peter Sprague? There are plenty more where he came from.
“It was weird,” said Grove, “they had no idea about what the company or the industry was like, nor did they seem to care. . . . Fairchild was just crumbling. If you wish, the semiconductor division management consisted of twenty significant players: eight went to National, eight went into Intel, and four of them went to Alcoholics Anonymous or something.” Actually there were more than twenty and they went into startups all over the Valley; some twenty-six new semiconductor firms sprouted up between 1967 and 1970. “It got to the point,” recalled one man quoted in Dirk Hanson’s The New Alchemists, “where people were practically driving trucks over to Fairchild and loading up with employees.”

Source:

Gilder, George. Microcosm: The Quantum Revolution in Economics and Technology. Paperback ed. New York: Touchstone, 1990.
(Note: the first ellipsis was added; the others were in the original. The italics were also in the original.)

Videos of Routines Are Better than Focus Groups and Surveys

Source of book image: http://bobsutton.typepad.com/.a/6a00d83451b75569e20120a5fa1e26970c-800wi.

(p. W8) Mr. Brown argues . . . emphatically for the close observation of users in their natural habitats. Traditional market-research tools–focus groups, surveys–rarely produce breakthrough findings, he claims. IDEO and others follow users around–making video recordings of them as they go about their routines, recording conversations with them–to build an understanding of what they really need. An IDEO employee in the health-care area, for instance, pretended to have a foot injury and checked himself into an emergency room with a hidden video camera to get a better view of the patient experience. This anthropological form of market research, Mr. Brown notes, has been adopted by companies such as Intel and Nokia.

For the full review, see:
DAVID A. PRICE. “The Shape of Things to Come; Design is more than aesthetics and ease of use. It’s a way of doing business.” The Wall Street Journal (Fri., OCTOBER 9, 2009): W8.
(Note: ellipsis added.)

Reference the book being reviewed:
Brown, Tim. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. New York: HarperBusiness Publishers, 2009.

Monty Python Success Arose from Freedom, Not Plans

“The unusual suspects, 1969: top row from left, Graham Chapman, Eric Idle and Terry Gilliam; bottom row from left, Terry Jones, John Cleese and Michael Palin.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 24) “A lot of contemporary comedy seems self-conscious,” Mr. Palin said. “It’s almost documentary, like ‘The Office.’ That’s a very funny show, but you’re looking at the human condition under stress. The Pythons made the human condition seem like fun.”

He added: “I’m proud to be a Python. It’s a badge of silliness, which is quite important. I was the gay lumberjack, I was the Spanish Inquisition, I was one-half of the fish-slapping dance. I look at myself and think that may be the most important thing I’ve ever done.”
Mr. Cleese and Mr. Jones, in rare agreement, both suggested that one reason the Pythons have never been successfully imitated is that television executives nowadays would never let anyone get away with putting together a show like theirs. When they began, they didn’t have an idea what the show should be about or even a title for it. The BBC gave them some money, and then, Mr. Cleese joked, the executives hurried off to the bar.
“The great thing was that in the beginning we had such a low profile,” he said. “We went on at different times, and some weeks we didn’t go on at all, because there might be a show-jumping competition. But that was the key to our feeling of freedom. We didn’t know what the viewing figures were, and we didn’t care. What has happened now is the complete reverse. Even the BBC is obsessed with the numbers.”
So obsessed, Bill Jones pointed out, that in the case of “Monty Python: Almost the Truth” some people encouraged the documentarians to see if they couldn’t squeeze the six hours down to one.

For the full story, see:
CHARLES McGRATH. “Television; On Comedy’s Flying Trapeze.” The New York Times, Arts & Leisure Section (Sun., October 4, 2009): 1 & 24.
(Note: ellipses added.
(Note: the online version of the article is dated September 30, (sic) 2009.)

“Above from left, Mr. Jones, Mr. Gilliam, Mr. Cleese, Mr. Idle and Mr. Palin at the premiere of “Spamalot.”” Source of caption and photo: online version of the NYT article quoted and cited above.

Justice Department is Creating Barriers to Companies Trying to Create New Technologies

Intel CEO Craig Barrett. Source of caricature: online version of the WSJ article quoted and cited below.

(p. A9) Craig Barrett is spending the last days of his tenure as Intel chairman the same way he spent his previous 35 years at the corporation: moving at a superhuman pace that leaves exhausted subordinates in his wake.

Mr. Barrett has maintained this lifestyle since he replaced Andrew Grove as CEO of Intel in 1998. “Was it hard to follow a legend?” he asks himself in his typical blunt way, adding, “What do you think?” Mr. Barrett barely broke pace when he became chairman in 2005, and shows no sign of slowing even now, at age 69, as he faces retirement.
. . .
The latest thing that has him animated is the record $1.45 billion antitrust fine levied against Intel by the European Union this week. Mr. Barrett shakes his head and says, “The antitrust rules and regulations seem designed for a different era. When you look at high-tech companies, with the high R&D budgets, specialization and market creation they need to hold their big market shares, it’s so very different from the old world of oil companies and auto makers that the antitrust regulations were designed for. They are out of sync with reality.
“And how do you reconcile European regulators, who don’t believe that any company should have more than 50% market share — even a market that company created — with the way we operate here? Of course, now it seems as if our Justice Department is preparing to march in lock-step behind Europe. In the end, all they are going to do is create barriers to companies growing, entering into new markets, and bringing new technologies into those markets. And when we stop being the land of opportunity, all of those smart immigrant kids getting their Ph.D.s here are going to start heading home after they graduate. Then watch what happens to our competitiveness.”

For the full story, see:
MICHAEL S. MALONE. “OPINION: THE WEEKEND INTERVIEW with Craig Barrett; From Moore’s Law to Barrett’s Rules; Intel’s chairman on antitrust silliness and the secrets of high-tech success.” Wall Street Journal (Sat., MARCH 16, 2009): A9.
(Note: ellipsis added.)

Berkshire BYD Technology Bet Based on Munger’s View of BYD Manager

“BOOK VALUE: Berkshire Hathaway’s Charles Munger reads businesses well — and, as a bibliophile, he goes through several books a week.” Source of caricature and caption: online version of the WSJ article quoted and cited below.

At a Berkshire Hathaway annual meeting a few years ago, I remember hearing Warren Buffett say that he stays away from technology stocks because he does not know how to judge which technologies are likely to succeed in the long-run. So I was a bit puzzled by the news that Berkshire Hathaway was investing in BYD, a Chinese company producing an electric car.
The passages quoted below may partially solve the puzzle: the investment in BYD was pushed by Charlie Munger and David Sokol, and was based more on a judgment about the quality of BYD’s management, than the prospects for BYD’s technology.

(p. C1) Mr. Munger’s views have pushed Berkshire into some surprising directions. Several years ago, Mr. Munger learned of an obscure Chinese maker of batteries and automobiles called BYD Inc., which hopes to create a cheap, functional electric car.

A Chinese tech company is nothing like the shoe and underwear makers Berkshire had been buying. But Mr. Munger was enthusiastic, less about the technology than about Wang Chuanfu, who runs BYD. Mr. Wang, Mr. Munger says, is “likely to be one of the most important business people who ever lived.”
Mr. Buffett was skeptical at first. But Mr. Munger persisted. David Sokol, chairman of Berkshire utility MidAmerican Energy Holdings Co., paid a visit to BYD’s factory in China and agreed with Mr. Munger’s assessment. Last year, MidAmerican paid $230 million for a 10% stake in BYD.
“BYD was Charlie’s idea,” Mr. Buffett said. “When he encounters genius and sees it operating in a practical way, he gets blown away.”

For the full story, see:

SCOTT PATTERSON. “Here’s the Story on Berkshire’s Munger.” Wall Street Journal (Fri., MAY 1, 2009): C1 & C3.

“Every Organization Has Too Many Meetings”

“Reid Hastie, a professor at the University of Chicago, contends that “every organization has too many meetings, and far too many poorly designed ones.” ” Source of photo and caption: online version of the NYT article quoted and cited below.

The author of the following wise words is a Professor of Behavioral Science at the School of Business at the University of Chicago. One of the main points of the commentary, in the language of economics, is that meeting planners often fail to consider the opportunity cost of attendees’ time:

(p. 2) As a general rule, meetings make individuals perform below their capacity and skill levels.

This doesn’t mean we should always avoid face-to-face meetings — but it is certain that every organization has too many meetings, and far too many poorly designed ones.
The main reason we don’t make meetings more productive is that we don’t value our time properly. The people who call meetings and those who attend them are not thinking about time as their most valuable resource.
. . .
Probably most important, we are blind to lost time opportunities. When we choose where to invest our time, as opposed to where to invest money, we are more likely to neglect what else we could have done with it.

For the full commentary, see:
REID HASTIE. “Preoccupations – Meetings Are a Matter of Precious Time.” The New York Times, SundayBusiness Section (Sun., January 18, 2009): 2.
(Note: ellipsis added.)

Steuben Saw “The Genius of this Nation”

“German soldier of fortune and American ally Baron von Steuben (1730-94)” Source of caption and photo: online version of the WSJ review quoted and cited below.

(p. W9) The essence of Steuben’s achievement was his modification of the brutal, robotic precision of the Prussian system to fit American conditions. He was able to do this because he was one of the first foreign observers, military or civilian, to grasp an essential strain of the American character. “The genius of this nation,” he wrote a European friend, “is not in the least to be compared with that of the Prussians, Austrians or French. You say to your soldier, ‘Do this,’ and he doeth it. I am obliged to say, ‘This is the reason why you ought to do that,’ and then he does it.”
. . .
While Mr. Lockhart tends to soft-pedal some of Steuben’s more dubious deeds — ignoring, for instance, his attempt to interest Prince Henry of Prussia, Frederick the Great’s younger brother, in becoming king of the independent colonies before the adoption of the Constitution — the author generally treats his subject with balance, understanding and great good humor, aptly concluding that, “although he blurred a few details of the past in order to seek preferment in the United States, somewhere between his arrival and the achievement of American independence, the Baron became something very much like the man he had pretended to be.”

For the full review, see:
ARAM BAKSHIAN JR. “BOOKS; Revolutionary Scamp.” The Wall Street Journal (Sat., NOVEMBER 8, 2008): W9.
The reference to the book under review is:
Lockhart, Paul. The Drillmaster of Valley Forge. New York: HarperCollins Publishers, 2008.

Source of book image: http://robertos-book-picks.blogspot.com/2008/11/drillmaster-of-valley-forge-baron-de.html

New Business Model for Promoting Disruptive Innovation

“Clayton M. Christensen” Source of caption and photo: online version of the WSJ interview quoted and cited below.

(p. R2) BUSINESS INSIGHT: . . . There must be, . . . , cases where concerns about the market cause companies to abandon their plans for new products or really retrench. Or do you see that happening less these days as companies realize the importance of keeping up with changing markets?
DR. CHRISTENSEN: In the next two years, I think the answer will hinge quite a bit on the role that hedge funds play in driving stock prices. By now, 95% of all trades on the stock exchange are executed by hedge funds, mutual funds or pension funds that you could not call shareholders. They’re share owners, but they don’t even hold the shares long enough, on average, to vote the proxy. And long-term shareholders are always better for innovation than the short-term people are.
BUSINESS INSIGHT: So we might see innovation more from private companies?
DR. CHRISTENSEN: Absolutely right. And there’s another business model toward which more and more companies need to move. It’s a business model you see with Li & Fung in Hong Kong, Tata Sons in India, and Cox Enterprises in Atlanta. In this model, the holding company is privately held, and then certain of the subsidiary companies that have the right characteristics take their shares public on the market.
What that allows those companies to do is, when they have a disruptive innovation that they need to launch, they can just do it under the private umbrella of the holding company, and not have it reduce the near-term performance of the publicly held subsidiaries.

For the full interview, see:
Martha E. Mangelsdorf, interviewer. “Executive Briefing; How Hard Times Can Drive Innovation.” Wall Street Journal (Mon., DECEMBER 15, 2008): R2.
(Note: ellipses added.)