Category: Management

Chinese Communists Extend Control of Firms by Buying “Golden Shares”

(p. A1) In its uneasy dance with China’s private sector, the Communist Party is moving away from a public battle with some of the country’s biggest companies. Instead, it is inching toward a quieter form of control.

At the center of the effort is a push by various levels of government to take stakes in the private companies that have long driven Chinese innovation and job creation.

The government stakes are sometimes very small, like the 1% holding that a fund of Beijing’s cyberspace watchdog recently took in the digital-media unit of e-commerce giant Alibaba Group Holding Ltd. But they tend to give the government board seats, voting power and sway over business decisions. Colloquially, they are known as golden shares.

For the companies, there is little choice: Selling such a stake to a government entity that seeks one is crucial for staying in business. For the state, the stakes mean more direct involvement in some of China’s most high-profile companies—digital cornerstones of Chinese life and, in some cases, darlings of global investors.

. . .

(p. A9) One result of the new normal of subtle influence is that the boundary between the party-state and the private sector is getting increasingly muddled. That reverses a trend dating to the late 1970s, when Chinese leader Deng Xiaoping had the party-state step back from business control and let entrepreneurs flourish.

For the full story, see:

Lingling Wei. “Stakes in Firms Give Beijing New Control.” The Wall Street Journal (Thursday, April 11, 2023): A1 & A9.

(Note: ellipsis added.)

(Note: the online version of the story has the date March 8, 2023, and has the title “China’s New Way to Control Its Biggest Companies: Golden Shares.”)

Firing an Actor “Early Could Be a Motivator for the Remaining Cast”

The ability to fire at will gives the entrepreneur (and the movie director) the ability to put together the right team for a project. Keeping those employed who are not doing their jobs, can be demoralizing for those who are doing their jobs.

(p. C1) When the writer and director Mike Nichols was young, he had an allergic reaction to a whooping cough vaccine. The result was a complete and lifelong inability to grow hair. One way to read Mark Harris’s crisp new biography, “Mike Nichols: A Life,” is as a tender comedy about a man and his wigs.

. . .

(p. C5) Harris is the author of two previous books, “Pictures at a Revolution: Five Movies and the Birth of the New Hollywood” and “Five Came Back: A Story of Hollywood and the Second World War.” He’s also a longtime entertainment reporter with a gift for scene-setting.

He’s at his best in “Mike Nichols: A Life” when he takes you inside a production. His chapters on the making of three films in particular — “The Graduate,” “Silkwood” and “Angels in America” — are miraculous: shrewd, tight, intimate and funny. You sense he could turn each one into a book.

Nichols was an actor’s director. &nbsp. . .  But he had a steely side.

He fired Gene Hackman during week one on “The Graduate.” Hackman was playing Mr. Robinson and it wasn’t working, in part because, at 37, he looked too young for the role.

Sacrificing someone early could be a motivator for the remaining cast, he learned. He fired Mandy Patinkin early in the filming of “Heartburn,” and brought in Jack Nicholson to play Meryl Streep’s faithless husband.

For the full review, see:

Dwight Garner. “BOOKS OF THE TIMES; The Wit and Wigs Of a Star-Studded Life.” The New York Times (Tuesday, January 26, 2021): C1 & C5.

(Note: ellipses added.)

(Note: the online version of the review was updated Jan. 29, 2021, and has the title ‘BOOKS OF THE TIMES; ‘Mike Nichols’ Captures a Star-Studded Life That Shuttled Between Broadway and Hollywood.”)

The book under review:

Harris, Mark. Mike Nichols: A Life. New York: Penguin Press, 2021.

Musk Says M.B.A.s Lack Creative Focus on Products and Services

(p. B3) What is wrong with American corporations? Elon Musk says too many M.B.A.s. are polluting companies’ ability to think creatively and give customers what they really want.

His comments criticizing M.B.A.s came amid a broader conversation about leadership before an online audience during The Wall Street Journal’s CEO Council annual summit, where he also encouraged executives to step away from their spreadsheets and get out of the boardroom and onto the factory floor.

“I think there might be too many M.B.A.s running companies,” the Tesla Inc. chief executive said. “There’s the M.B.A.-ization of America, which I think is maybe not that great. There should be more focus on the product or service itself, less time on board meetings, less time on financials.”

For the full story, see:

Patrick Thomas. “Musk Decries ‘M.B.A.ization’.” The Wall Street Journal (Thursday, Dec. 10, 2020): B3.

(Note: the online version of the story was updated December 9, 2020, and has the same title “Elon Musk Decries ‘M.B.A.-ization’ of America.”)

Elon Musk Got Rich the Old-Fashioned Way, He EARNED It

(p. B4) Elon Musk is tired, his back hurts and his mom wants him to get some sleep.

. . .

A self-described nanomanager, Mr. Musk has long waded deeply into the weeds of the companies he runs, including SpaceX and Tesla Inc., green up pointing triangle routinely working late into the night and sleeping little. His tenacity has led to superhuman-like accomplishments, such as landing space rockets and making electric cars sexy.

. . .

Since taking ownership of Twitter Inc. in late October [2022], Mr. Musk’s workload has exploded to more than 120 hours a week from as much as 80 hours before, he told investor Ron Baron in November at a conference.

“I go to sleep, I wake up, I work, go to sleep, wake up, work—do that seven days a week,” Mr. Musk said.

. . .

Even before buying Twitter, Mr. Musk wasn’t a “chill, normal dude,” as he once joked on “Saturday Night Live.” Mr. Musk has said he usually goes to sleep around 3 a.m. and typically gets six hours of shut-eye before waking and immediately checking his phone for any new emergencies.

These days, Mr. Musk has said he is sleeping at Twitter headquarters in San Francisco. He has even provided beds for employees.

. . .

Concerns about Mr. Musk’s health had circulated a few years ago, ignited by photos of him that appeared to show a new scar on his neck. In 2020, he confirmed he had two surgeries, the first a failure, to address neck pain.

His pain, Mr. Musk has said, traces to a birthday party thrown years ago by his second wife that was attended by a sumo wrestler.

Mr. Musk took to the ring and—according to him—managed to throw the 350-pound opponent, resulting in an injury to his spine. “It cost me smashing my c5-c6 disc & 8 years of mega back pain!” Mr. Musk said on Twitter last year.

. . .

Entrepreneur Arianna Huffington at one point in 2018 pleaded with Mr. Musk to take better care of himself.

. . .

He responded with a tweet sent at 2:32 a.m.: “Ford & Tesla are the only 2 American car companies to avoid bankruptcy. I just got home from the factory. You think this is an option. It is not.”

For the full story, see:

Tim Higgins. “Musk’s Frantic Schedule Comes at a Personal Cost.” The Wall Street Journal (Monday, Feb. 6, 2023): B4.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story was updated February 5, 2023, and has the title “When Does Musk Sleep? He Speaks of Limits to Fixing Twitter, Back Pain.”)

E.S.G.–“Extremely Silly Grandstanding”

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

(p. B1) E.S.G. — which refers to environmental, social and governance standards — has become a point of contention for red-state legislators defending the fossil fuel industries that employ their residents.

. . .

(p. B4) So what is E.S.G., anyway? As investors rename their firms and their funds in a race to ride the E.S.G. wave, cynics see the debate over the term’s definition as degenerating into everyone seeing gibberish. Because funds can define E.S.G. nearly any way they want, they have come to resemble an extra-strange goulash. Sometimes, these new or newly rebranded operations are just elegantly simple greenwashing and nothing more.

For the full commentary, see:

Ron Lieber. “YOUR MONEY; Bankers Are Suing Lawyers In Kentucky’s E.S.G. Battle.” The New York Times (Saturday, February 25, 2023): B1 & B4.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date February 24, 2023, and has the title “YOUR MONEY; The E.S.G. Fight Has Come to This: Bankers Suing Lawyers.”)

Elon’s “Musketeers” Will Gladly Commit to “Long Hours at High Intensity”

(p. A12) Your boss probably hasn’t demanded a loyalty pledge and almost certainly doesn’t own a rocket ship, but the person calling the shots at your company might be more like Elon Musk than you realize.

. . .

What is consistent—and alluring to some bosses—is the billionaire’s unapologetically high standard for employees. He spelled it out last week in an emailed ultimatum, saying that Twitter employees must commit to “long hours at high intensity” or leave with three months’ severance.

. . .

Managers who think the working world has gone soft in recent years, with all the talk of flexibility and work-life balance, say they envy Mr. Musk’s unfiltered style and share his craving for maximum effort—even if they wouldn’t act quite as forcefully as the world’s richest person.

. . .

. . . he is the rare CEO with a fan base—“Musketeers,” as this male-dominated bunch is known—and might be able to fill the company’s ranks with devotees who believe in his vision of a more freewheeling and profitable platform and are willing to grind.

. . .

“He can do whatever he wants, and everyone that has an opinion about it can piss off,” says Derek Grubbs, director of sales development at Crux Informatics, a software company. “If everybody exits from Twitter, there are plenty of other people who will be ready to enter because it pays well, and working for Elon Musk has a flair to it.”

For the full commentary, see:

Callum Borchers. “ON THE CLOCK; The Bosses Who Want to Emulate Elon Musk.” The Wall Street Journal (Wednesday, November 23, 2022): A12.

(Note: ellipses added.)

(Note: the online version of the commentary has the date November 22, 2022, and has the title “ON THE CLOCK; Is Elon Musk Your Boss’s Anger Translator?”)

As Sole Owner Musk Was Able to Act Quickly to Cure Twitter’s “Systemic Paralysis”

(p. A17) Since Elon Musk purchased Twitter, he has undertaken a rapid restructuring that few large technology companies would attempt unless faced with an immediate liquidity crisis. Minutes after closing his purchase of the company, he started a process that reduced the workforce from 7,500 to 2,500 in 10 days.

Media pundits immediately slammed him, arguing that his slash-and-burn strategy would destroy one of the world’s most important social-media platforms—already in danger under the burden of $14 billion in debt. Much of this criticism came in the form of tweets, as the irony of using Twitter to denounce Twitter apparently escaped Mr. Musk’s critics. But the restructuring of Twitter won’t destroy the company.

Mr. Musk is trying to cure a degenerative corporate disease: systemic paralysis. Symptoms include cobwebs of corporate hierarchies with unclear reporting lines and unwieldy teams, along with work groups and positions that have opaque or nonsensical mandates. Paralyzed companies are often led by a career CEO who builds or maintains a level of bureaucracy that leads to declines in innovation, competitive stature and shareholder value.

Mr. Musk set his new tone immediately. He eliminated a 12-member team responsible for artificial-intelligence ethics in machine learning, the entire corporate communications department, and a headquarters commissary that cost $13 million a year (despite prior management’s pandemic decree that Twitter employees would be “remote forever”).

Three attributes give Mr. Musk a better chance of rebuilding Twitter into an innovative force in social media: He is an operator, an engineer and a sole owner.

For the full commentary, see:

Rob Wiesenthal. “Elon Musk Slashes Bureaucracy, Giving Twitter a Chance to Soar.” The Wall Street Journal (Friday, Dec. 9, 2022): A17.

(Note: the online version of the commentary has the date December 8, 2022, and has the same title as the print version.)

Workers Who Feel They Matter Are More Satisfied with Their Lives and Are “Less Likely to Quit”

(p. C5) So how do you know if your employees and co-workers feel that they matter? In a 2021 study published in the Journal of Positive Psychology, researchers developed a scale to measure mattering in the workplace. In online surveys involving nearly 1,800 full-time employees at a variety of companies, participants were asked to rate on a 5-point scale how much they agreed with statements such as “My work contributes to my organization’s success” and “The quality of my work makes a real impact on my organization.” Other statements had to do with feeling valued and recognized: “My organization praises my work publicly” and “My work has made me popular at my workplace.”

Participants were also asked about job satisfaction, recent raises or promotions, and whether they intended to leave their job. What the researchers found was that mattering isn’t only good for employee well-being, it’s also good for a company’s bottom line. Employee turnover is costly and disruptive, and “when employees feel like they matter to their organization, they are more satisfied with their jobs and life, more likely to occupy leadership positions, more likely to be rewarded and promoted and less likely to quit.”

. . .

Research by Dr. Prilleltensky and colleagues shows that being treated fairly increases workers’ sense of mattering, . . .

For the full commentary, see:

Jennifer Breheny Wallace. “The Power of Mattering at Work.” The Wall Street Journal (Saturday, Dec. 3, 2022): C5.

(Note: ellipses added.)

(Note: the online version of the commentary has the date December 1, 2022, and has the same title as the print version.)

Jack Welch’s Protégés “Were Just Cost Cutters”

(p. 8) . . . in more than 100 conversations for “The Man Who Broke Capitalism,” my new book, from which this article is adapted, a broad range of people said some version of the same thing: While it has been more than two decades since Mr. Welch was C.E.O. of G.E., his legacy still affects millions of American households.

. . .

For a time in the early 2000s, five of the top 30 companies in the Dow Jones industrial average were run by men who had worked for Mr. Welch. “That’s why they got hired,” said William Conaty, G.E.’s longtime chief of human resources. “Because they had the playbook. They had the G.E. tool kit. And boards back then thought that was the answer.”

. . .

The Welch protégés who struck out on their own rarely fared well. At Home Depot, Albertson’s, Conseco, Stanley Works and many other companies, the same story seemed to repeat itself ad infinitum.

A G.E. executive was named C.E.O. of another company. News of the appointment sent the stock of that company soaring. The incoming leaders were lavished with riches when they took their new jobs, signing multimillion-dollar contracts that ensured them a gilded retirement, no matter how well they performed. A period of job cuts usually ensued, and profits sometimes rose for a few quarters, or even a few years. But inevitably, morale cratered, the business wobbled, the stock price sank and the Welch disciple was sent packing.

“A lot of G.E. leaders were thought to be business geniuses,” said Bill George, the former C.E.O. of Medtronic. “But they were just cost cutters. And you can’t cost cut your way to prosperity.”

For the full essay, see:

David Gelles. “Jack Welch and the Rise of C.E.O.s Behaving Badly.” The New York Times, SundayBusiness Section (Sunday, May 22, 2022): 1 & 7-8.

(Note: ellipses added.)

(Note: the online version of the review was updated June 27, 2022, and has the title “How Jack Welch’s Reign at G.E. Gave Us Elon Musk’s Twitter Feed.”)

The essay quoted above is adapted from Gelles’s book:

Gelles, David. The Man Who Broke Capitalism: How Jack Welch Gutted the Heartland and Crushed the Soul of Corporate America―and How to Undo His Legacy. New York: Simon & Schuster 2022.

Office Space Designers Finally Pull Back from Extreme “Open” Space that Forces Collaboration at the Price of Blocking Concentration

(p. 1) First there were individual offices. Then cubicles and open floor plans. Now, there is a “palette of places.”

. . .

. . . the move toward pure open floor plans that packed more workers into less and less space . . . was supposed to drive collaboration, but many experts agree it often went too far, with row upon row of desks and workbench-style seating more likely to generate ennui than efficiency.

. . .

The new model is largely open, but not entirely. Under the revised thinking, breaking down walls to bring people together is good, but so are “team spaces” and standing tables, comfortable couches and movable walls.

Privacy is also good, particularly for tasks that require intense concentration, the thinking goes. That doesn’t mean a return to the glory days of private offices, but it does mean workers have more space and more places to seek solitude than in the neo-Dickensian workbench settings. The new designs often include “isolation rooms,” soundproof phone booths, and even lounges where technology is forbidden.

. . .

(p. 4) But in 2010, Microsoft started testing open designs with a quarter of a floor, and then expanded. Since 2014, it has opened 10 renovated buildings without offices, including four this year.

Microsoft, Mr. Ford said, has taken a test-and-learn approach. It learned, for example, that its early designs were too open plan, with 16 to 24 engineers in team-based spaces. Engineers found those spaces noisy and distracting, and concentration suffered. Too much openness can cause workers to “do a turtle,” researchers say, and retrench and communicate less — colleagues who retreat into their headphones all day, for example.

Today, there are more private spaces, and the team areas hold only eight to 12 engineers. “That’s the sweet spot for Microsoft,” Mr. Ford said.

The company thinks it is working. Microsoft’s Azure cloud software business has surged in the last few years, as has the company’s stock price. Mr. Ford said about 20 percent of the workplaces have been redone on Microsoft’s campus in Redmond, Wash., and the surrounding area. Within five years, he said, he expects the renovated share to reach 80 percent.

For the full story, see:

Steve Lohr. “Don’t Get Too Comfortable at That Desk.” The New York Times, SundayBusiness Section (Sunday, October 8, 2017): 1 & 4.

(Note: ellipses added.)

(Note: the online version of the story has the date Oct. 6, 2017, and has the same title as the print version.)

Both Insourcing and Outsourcing Can Be Successful Strategies

(p. A13) In “Profit From the Source,” four Europe-based partners at Boston Consulting Group—Christian Schuh, Wolfgang Schnellbächer, Alenka Triplat and Daniel Weise—make the case for drastic change. Procurement, they assert, has been badly neglected: “When the boss offers someone a job in procurement, they know they’re on the fast track to nowhere.” Top executives, they claim, spend far too little time with suppliers, even though purchasing swallows more than half of the average company’s budget. “That’s a mismatch with potentially existential consequences,” they write. Instead, they insist, companies should put procurement at the center of corporate strategy.

. . .

Serving up familiar stories about the likes of Apple and Tesla, the authors write admiringly: “The world’s most successful companies . . . make virtually nothing themselves. They are, in effect, the consumer-facing, brand-owning centripetal force at the core of a business ecosystem.” But many companies have been moving in the opposite direction. In recent years, Facebook (now Meta) began designing chips for the servers in its data centers; Costco built a slaughterhouse to ensure its stores’ supply of chickens; and Cleveland-Cliffs bought steel mills to supply from its iron mines. Much of the business world seems to think that outsourcing has gone too far. Should the chief procurement officer help identify ways to bring parts of the supply chain back in house? The authors don’t say.

For the full review, see:

Marc Levinson. “BOOKSHELF; Consider The Supplier.” The Wall Street Journal (Saturday, July 29, 2022): A13.

(Note: ellipsis between paragraphs, added; ellipsis within paragraph, in original.)

(Note: the online version of the review has the date July 28, 2022, and has the title “BOOKSHELF; ‘Profit From the Source’ Review: Consider the Supplier.”)

The book under review is:

Schuh, Christian, Wolfgang Schnellbacher, Alenka Triplat, and Daniel Weise. Profit from the Source: Transforming Your Business by Putting Suppliers at the Core. Boston, MA: Harvard Business Review Press, 2022.