Category: Management

Workers With Little Choice in the Hours They Work Are Twice as Likely to Seek a New Job

(p. A11) . . . new survey data this week shows that full-time workers have more work-related stress and anxiety than their hybrid and remote counterparts.

Overall satisfaction with their workplace declined by 1.6 times as much for those working five days in the office compared with the other groups, according to the report from Future Forum, a consortium funded by Slack Technologies Inc., Boston Consulting Group and MillerKnoll.

The survey of more than 10,800 knowledge workers across about 20 industries including financial services, consumer goods and technology, comes as companies have been calling workers back to their desks at a higher rate than at any other time during the pandemic.

The discontent reflected in the data among those working in the office every day highlights risks that companies take by giving priority to face time and in-office culture over worker preferences for flexibility coming out of the pandemic, says Brian Elliott, executive leader of Future Forum.

“We were kind of shocked that it was as bad as it was,” he says. “It’s going to impact people’s tendency to resign.”

Of the workers surveyed, about 5,000 are based in the U.S. The share of those workers who are now back in the office five days a week rose from 29% in the last quarter of 2021 to 35% in the first quarter of this year.

Workers with little to no ability to set their own hours were more than 2½ times as likely to look for a new job in the coming year as those who have some say in when they work, according to the survey.

For the full story, see:

Katherine Bindley. “For Many, the Optimal Workweek Is One or Two Days in the Office’.” The Wall Street Journal (Monday, April 25, 2022): A11.

(Note: ellipsis added.)

(Note: the online version of the story was updated April 22, 2022, and has the title “What if the Optimal Workweek Is Two Days in the Office?”)

Executive Chose “Exciting” Entrepreneurship, and Failed

We read the stories of those who choose entrepreneurship and succeed. The stories of those who choose entrepreneurship and fail, are less often told. Those who fail do not always regret their choice, nor should they.

(p. A21) Alex Mandl was a leading contender for the chief executive job at AT&T Corp. in 1996 when he defected to head a wireless-telecommunications startup that became Teligent Inc.

. . .

Heading a startup, he said, was “the most exciting thing to do.”

Teligent had ambitious plans to undercut prices of traditional phone companies by setting up a microwave network that would beam voice and data to business users via rooftop antennas. But Teligent had technical problems, losses piled up and investors fled. Mr. Mandl resigned as chief executive in April 2001, shortly before the company filed for Chapter 11 bankruptcy.

For the full obituary, see:

James R. Hagerty. “Executive Risked Career on a Startup.” The Wall Street Journal (Saturday, April 2, 2022): A21.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date April 1, 2022, and has the title “Alex Mandl, Who Gave Up a Top AT&T Job to Lead a Startup, Has Died at Age 78.”)

Silicon Valley Pioneer at Age 16 Survived on 5 Cents of Carrots a Day

(p. A23) Jay Last, a physicist who helped create the silicon chips that power the world’s computers, and who was among the eight entrepreneurs whose company laid the technical, financial and cultural foundation for Silicon Valley, died on Nov. 11 [2021] in Los Angeles.

. . .

Ultimately, he agreed to join the Shockley Semiconductor Laboratory because it sat in the Northern California valley where he had spent a summer harvesting fruit after hitchhiking there from his home in Pennsylvania steel country.

But he and seven of his collaborators at the lab clashed with Dr. Shockley, who later became infamous for his theory that Black people were genetically inferior in intelligence to white people. They quickly left the lab to create their own transistor company. They later came to be called “the traitorous eight,” and their company, Fairchild Semiconductor, is now seen as ground zero for what became known as Silicon Valley.

. . .

With the blessing of his parents — and carrying a letter from the local police chief saying he was not running away from home — he hitchhiked to San Jose, Calif., which was then a small farming town. He had planned on making a little money picking fruit, but he arrived before the harvest began.

Until it did, he lived, as he often recalled in later years, on a nickel’s worth of carrots a day. Whenever he faced a difficult situation, he said in an interview for the Chemical Heritage Foundation (now the Science History Institute) in 2004, he told himself, “I got through that when I was 16, and this is not that bad a problem.”

. . .

Using materials like silicon and germanium, Dr. Shockley and two other scientists had shown how to build the tiny transistors that would one day be used to store and move information in the form of an electrical signal. The question was how to connect them together to form a larger machine.

After using chemical compounds to etch the transistors into a sheet of silicon, Dr. Last and his colleagues could have cut each one from the sheet and connected them with individual wires, much like any other electrical device. But this was enormously difficult, inefficient and expensive.

One of the founders of Fairchild, Robert Noyce, suggested an alternative method, and this was realized by a team Dr. Last oversaw. They developed a way of building both the transistors and the wires into the same sheet of silicon.

This method is still used to build silicon chips, whose transistors are now exponentially smaller than those manufactured in the 1960s, in accordance with Moore’s Law, the famous maxim laid down by another Fairchild founder, Gordon Moore.

For the full obituary, see:

Cade Metz. “Jay Last, 92, Physicist and a Pioneer of Silicon Valley.” The New York Times (Monday, November 22, 2021): A23.

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

(Note: the online version of the obituary has the date Nov. 20, 2021, and has the title “Jay Last, One of the Rebels Who Founded Silicon Valley, Dies at 92.”)

Boeing Maximized Short-Term Profits Instead of Long-Term Quality (and Profits)

(p. A19) Boeing remains one of America’s leading manufacturers, but it is reduced in reputation as well as equity. The “fall” that Mr. Robison’s subtitle alludes to is the corrosion of a culture that had emphasized quality.

. . .

Mr. Robison is upset that Boeing followed the unremarkable philosophy of the Business Roundtable (recently revised under woke pressure) that the first duty of any company is to its shareholders. He says that Boeing focused on metrics that “tend to favor investors over employees and customers.” This is an easy but misworded critique. In the long term, the interests of shareholders and customers are aligned. A manufacturer that disregards either customers or employees will eventually not have profits to distribute.

In fact, Boeing forgot that its long-term success depended on its reputation for superior engineering. Executives like Alan Mulally, project leader in the 1990s for the costly but highly successful Boeing 777, were passed over for the top job. The corporate metamorphosis was accelerated by the 1997 merger with rival McDonnell Douglas. The executive suite was colonized by such figures as McDonnell’s Harry Stonecipher, a Jack Welch protégé who was explicit about changing the culture. His intent, he said, was to run Boeing “like a business rather than a great engineering firm.” Increasingly that meant doing whatever it took to hike the share price. Phil Condit, the CEO who orchestrated the merger, pushed his managers to quintuple the stock in five years, which suggested that his eye was on Wall Street and not on the planes.

. . .

Test flights showed a tendency for the MAX to pitch up. Designers corrected the problem on the cheap, with software that pushed the nose down. Somewhat perilously, a single sensor measuring the angle of the wings against oncoming air could force the plane into a downward trajectory. An optional cockpit indicator—alerting pilots that the sensor might be faulty—was not included on cheaper models. And the sensors, which sat outside the plane, were vulnerable to bird strikes or improper installation.

. . .

. . ., the FAA, as Mr. Robison shows, was compromised by years of having adapted its regulatory role to promote manufacturers. Even after the first plane went down, it kept the MAX flying—despite an agency analysis predicting more crashes.

For the full review, see:

Roger Lowenstein. “BOOKSHELF; Downward Trajectory.” The Wall Street Journal (Monday, Nov. 29, 2021): A19.

(Note: ellipses added.)

(Note: the online version of the review has the date November 28, 2021, and has the title “BOOKSHELF; ‘Flying Blind’ Review: Downward Trajectory.”)

The book under review is:

Robison, Peter. Flying Blind: The 737 MAX Tragedy and the Fall of Boeing. New York: Doubleday, 2021.

Firm Founders May Be More Innovative Than Professional Managers

(p. B11) In tech, there is often a visionary premium and it is at least somewhat justified. Tracking public companies’ performance over 25 years, Bain & Co. found the companies that best maintained profitable growth over the long term were disproportionately those at which the founder was still running the business, was still involved or where the founders’ operational focus was still in place. Based on an analysis of S&P 500 companies done in 2014, Bain found that founder-led companies generated over three times the indexed total shareholder return of other companies in the preceding 15 years. One wonders how much the study is affected by survivorship bias, though—those who flopped early aren’t in the sample.

Founders certainly are bolder. A 2016 study out of the Krannert School of Management at Purdue University found that founder CEOs are more likely to take their companies in a new technological direction, providing evidence that innovations of founder CEO-managed firms create more financial value than the innovations of professional CEO-managed firms.

Apple, which languished as a computer company in the years after its co-founder Steve Jobs was ousted, offers a twist on this phenomenon. Mr. Jobs returned as a savior. Among other things, he changed the company’s name from Apple Computer Inc. to Apple Inc., signaling an expansion of focus to a legacy that now includes the likes of the iPod, iPhone, Apple TV and more.

. . .

Mr. Dorsey’s major shortcoming at Twitter actually was a lack of such bold innovation. Activist investors who began calling for his departure years before it came have long pushed for faster product development and bigger revenue and user targets. They also took issue with the fact that Mr. Dorsey split his time as the chief of two publicly traded companies. When questioned at a shareholder meeting about his split time, Mr. Dorsey responded that it wasn’t a function of time, but of prioritization. During his second stint as chief executive over the course of more than six years, Twitter’s stock rose just one-fifth as much as the S&P 500.

Perhaps he prioritized his payments company, which is around 20 times as valuable today than it was in late 2015 when it went public. There are many current examples of tech companies still excelling with a founder or co-founder at the top. Nvidia and Shopify, which have returned more than 80,000% and nearly 6,000% to shareholders, respectively, since their public debuts, come to mind.

For the full commentary, see:

Laura Forman. “HEARD ON THE STREET; Many Tech Founders Can’t Stay Too Long.” The Wall Street Journal (Tuesday, December 7, 2021): B11.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date Dec. 6, 2021, and has the title “HEARD ON THE STREET; Should Investors Ride Tech Founders to the Moon?”)

I cannot find evidence that the Krannert School of Management paper mentioned above has been published. An abstract appeared as:

Lee, Joon Mahn, Jongsoo Jays Kim, and Bae Joonhyung. “Are Founder CEOs Better Innovators? Evidence from S&P 500 Firms.” Academy of Management Annual Meeting Proceedings 2016.

Firms Nimbly Pivot to Build Innovative Products That Use Fewer Chips

(p. A1) Manufacturers struggling with a shortage of semiconductor chips are finding workarounds, executives said, redesigning products, shipping uncompleted units and focusing on older, lower-tech models.

. . .

Boss Products typically used hand-held controls with computer chips to angle snow truck blades. The company, which is owned by Toro Co., hasn’t been able to find enough chips. So employees started looking for ways to use fewer of them. Some remembered that joysticks, without computer chips, were used to control these features until electronics became affordable and commonplace.

“Let’s go back to the old design,” said Rick Rodier, a Toro executive. “It still does the job. It was done this way for 30 years. It was reliable. It was fine. It was just a little more cumbersome to build and assemble.”

. . .

(p. A6) T3 Motion, which makes electric stand-up vehicles for airport and university security officers, is redesigning its products to use fewer computer chips and electronics.

William Tsumpes, the company’s CEO, said instead of multiple components to control features like batteries, lighting and sirens, the redesigned vehicle will use a centralized, integrated board with a single processor to control all the parts of the vehicle. This move will eliminate the other five individual circuit boards, he said. Mr. Tsumpes said it was tough to quickly execute the redesign, but the moves, and an engine change, will lead to increased vehicle range.

“It’s spurring innovation,” Mr. Tsumpes said.

For the full story, see:

Austen Hufford. “Chip Shortage Leads to Redesigned Products.” The Wall Street Journal (Monday, Nov. 15, 2021): A1 & A6.

(Note: ellipses added.)

(Note: the online version of the story has the date November 14, 2021, and has the title “Chip Shortage Sees Manufacturers Pitch Lower-Tech Models.”)

Intel Commits $50 Billion to Expand Chip Output

(p. B1) Less than six months into the job, Intel Corp. INTC -0.53% Chief Executive Officer Pat Gelsinger’s approach to reviving the chipmaker’s fortunes is emerging: move quickly and carry a big checkbook.

. . .

Mr. Gelsinger’s answer, effectively, has been an emphatic ”no.” He has committed Intel to not only make its own semiconductors but also become a so-called foundry, a maker of chips for others—underwritten with more than $50 billion in financial commitments, if Intel’s exploratory talks to acquire chip-making specialist GlobalFoundries come to fruition. The Wall Street Journal on Thursday reported Intel is considering an acquisition that would value GlobalFoundries at roughly $30 billion.

. . .

(p. B14) A GlobalFoundries takeover would come after Mr. Gelsinger, after little more than a month in the top job, committed Intel to making $20 billion in chip-plant investments in Arizona. Less than two months later, he added a $3.5 billion expansion plan in New Mexico. The Intel CEO has said more financial commitments are on the drawing board, both in the U.S. and overseas.

. . .

The global chip shortage has put semiconductor production in the spotlight like rarely before.

. . .

Intel is betting the chip boom is lasting. Mr. Gelsinger has said the market to make chips for others should become a $100 billion market by 2025.

For the full story, see:

Aaron Tilley. “Intel Bets Billions on Rising Chip Demand.” The Wall Street Journal (Saturday, July 17, 2021): B1 & B14.

(Note: ellipses added.)

(Note: the online version of the story has the date July 16, 2021, and has the title “Intel CEO’s Chip-Building Plan Has a $50 Billion-Plus Price Tag.”)

Water Cooler Encounters May Help More on Less-Developed Projects than Mature Projects

(p. 1) A key scientific breakthrough that would eventually help protect millions from Covid-19 began with a chance meeting at a photocopier — in 1997, between Professor Katalin Kariko and Dr. Drew Weissman, whose work laid the foundation for the Pfizer and Moderna vaccines.

It’s exactly the type of story that has executives itching to get people back to offices. Chance meetings like this are essential for innovation, the theory goes. “Remote work virtually eliminates spontaneous learning and creativity because you don’t run into people at the coffee machine,” Jamie Dimon, the chief executive of JPMorgan Chase, recently told shareholders.

Creativity is hard to quantify. But research, including studies of companies working remotely during the pandemic, supports Mr. Dimon’s argument only up to a point. The data shows that in-office work is helpful at one part of the creative process: forming initial relationships, particularly with people outside your normal sphere.

. . .

(p. 5) A new analysis of announcements by the 50 largest public video game companies, by Ben Waber and Zanele Munyikwa, found that companies that moved to remote work during the pandemic had more delays in new products than before the pandemic, while those that worked in person did not.

The researchers have a hypothesis about why. They also tracked billions of communications — email, chat and calendar data — among information employees at a dozen large global companies over recent years. They found that while working remotely, individual workers were more productive than before, and communicated more with people at different levels of the company and with close colleagues. But they communicated 21 percent less with their weak ties. Perhaps the video game developers lost the benefit of asking a co-worker from a different department to test a prototype, for example, or of running into someone from marketing and brainstorming ideas for selling a new game.

“I do think eventually technology will help here, but the stuff that’s widely available today just doesn’t do it,” said Mr. Waber, co-founder of Humanyze, a workplace analytics company started at M.I.T. Media Lab, where he got a Ph.D. “It probably would be fine if those initial water cooler conversations happened remotely. It’s just less likely they would.”

. . .

Another study, using location tracking technology to follow scientists and engineers at a global manufacturing firm, found that people who often walked by one another in the office, like on their way to the printer or the restroom, were significantly more likely to end up collaborating, especially at the beginning of projects.

“For most collaboration, takeoff is the most challenging bit, and that’s when we find co-location is most helpful,” said Felichism W. Kabo, a research scientist at the University of Michigan and the study’s author. “When people have a prior relationship, it’s much easier to sustain that virtually.”

. . .

For Professor Kariko, there was a long period when it seemed that her research on messenger RNA would never get funding. It was so different from that of her close colleagues, she has said, that it had little support. It took that encounter at the copy machine — meeting Dr. Weissman, who brought a different perspective and a desire to make a vaccine — to change that.

For the full commentary, see:

Claire Cain Miller. “Is the Water Cooler a Font of Inspiration?” The New York Times, SundayBusiness Section (Sunday, September 5, 2021): 1 & 5.

(Note: ellipses added.)

(Note: the online version of the commentary was updated Sept. 4, 2021, and has the title “When Chance Encounters at the Water Cooler Are Most Useful.”)

The article by Waber and Munyikwa mentioned above is:

Waber, Ben, and Zanele Munyikwa. “Did Wfh Hurt the Video Game Industry?” Harvard Business Review (2021).

The article by Kabo mentioned above is:

Kabo, Felichism W. “A Model of Potential Encounters in the Workplace: The Relationships of Homophily, Spatial Distance, Organizational Structure, and Perceived Networks.” Environment and Behavior 49, no. 6 (2017): 638–62.

Anderson Led NCR to Disrupt Its Own Cash Register Technology

I believe that Clayton Christensen (with Raynor) in The Innovator’s Solution, used the NCR transition from mechanical cash registers to electronic cash registers as an example of creative destruction that was NOT an example of his disruptive innovation. Alternatively, should this be considered a rare case where a firm succeeds in disrupting itself, especially rare because it was not implemented by the firm founders? (The usual case of rare self-disruption is HP disrupting its laser printer by developing the ink jet printer.)

(p. A9) The same self-belief that kept Mr. Anderson alive as a POW gave him confidence he could save NCR.

“The most important message I try to get across to our managers all over the world is that we are in trouble but we will overcome it,” he told Business Week, which reported that he had the “stance and mien of a middleweight boxer.”

Founded in 1884, NCR was comfortably entrenched as a dominant supplier of mechanical cash registers and machines used in accounting and banking. It underestimated the speed at which microelectronics and computers would wipe out its legacy product line. By the early 1970s, NCR was losing sales to more nimble rivals.

A factory complex covering 55 acres in Dayton made hundreds of exceedingly complicated machines rapidly becoming obsolete. Mr. Anderson found that NCR was using about 130,000 different parts, including more than 9,000 types and sizes of screws. For 1972, his first year as president, NCR took a $70 million charge, largely to write down the value of parts and inventory and replace outdated production equipment.

Mr. Anderson slashed the payroll and invested in new products, including automated teller machines and computers. Profitability recovered, and NCR reported record revenue of $4.07 billion for 1984, the year he retired as chairman.

For the full obituary, see:

James R. Hagerty. “Former POW Revived National Cash Register.” The Wall Street Journal (Saturday, July 10, 20211): A9.

(Note: the online version of the obituary has the date July 6, 2021, and has the title “Former Prisoner of War Saved NCR From Obsolescence.”)

The Christensen co-authored book mentioned above is:

Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.

Musk Pushed Hard to Achieve Sustainable Scale at Tesla

(p. B1) This was Mr. Hunter’s big moment: His team had scheduled 1,700 people to pick up their Model 3s in the coming days—a record—and he was proud to announce the achievement. The compact Model 3 was Mr. Musk’s bet-the-company shot at transforming Tesla into a mainstream auto maker and ushering in a new era of electric vehicles—and at that moment, Tesla needed to move thousands of them to stay afloat.

Mr. Hunter had set a record, but Mr. Musk wasn’t happy. The Tesla chief executive ordered Mr. Hunter to more than double the number the next day or else he’d personally take over.

There was more. Mr. Musk said he’d heard that Mr. Hunter’s team had been relying on phone calls to schedule car pickups. That stopped now. Nobody likes talking on (p. B6) the phone, Mr. Musk said; it takes up too much time. Text customers instead. That would be faster. If he heard about any calls being made the next day, Mr. Hunter was fired.

Mr. Hunter’s wife and children had only recently joined him in Las Vegas; they had just finished unpacking their boxes. Now Mr. Musk was threatening to fire him if he didn’t do the impossible in 24 hours.

Tesla was 15 years old, and it was running out of time and money.

. . .

The sales organization didn’t have hundreds of company cellphones that Mr. Hunter’s sales team could use to send text messages, as Mr. Musk demanded, and they didn’t want their employees using their own personal phones.

Overnight, Mr. Hunter and other managers pieced together a solution, employing software that allowed his team to text from their computers. They stopped the practice of walking customers through the reams of sales paperwork that would eventually need to be completed and signed. If Mr. Musk’s goal was to have people in a queue to pick up their cars, then that’s what they would do. They’d just start assigning pickup times for customers: Can you come in at 4 p.m. on Friday to get your new Model 3?

Often, Mr. Hunter didn’t even wait for any response before putting a customer on the list for pickup. If the customer couldn’t make it, she might be told she would lose her spot in line for a car that quarter. Customers became more motivated to complete the tedious paperwork needed to complete a sale when there was a Model 3 dangled in front of them. Mr. Hunter’s team began telling customers to have it all completed 48 hours before delivery.

The team raced through their list of customers, assigning times at pickup centers around the U.S. By 6 p.m. the next day, they had reached 5,000 appointments. Mr. Hunter gathered the team to thank them for their work. He fought back tears. He hadn’t told them that his job was on the line; all they knew was that it was super-important to schedule a bunch of deliveries. That night on the call, Mr. Hunter reported the results to Mr. Musk.

“Wow,” Mr. Musk said.

. . .

As the clock ticked down to the end of September [2020] and Tesla’s outrageous sales goal seemed out of reach, Mr. Musk turned to Twitter to make an unusual request to his loyal customers: Help us deliver vehicles.

Longtime owners showed up at stores around the country. They focused on showing customers how to operate their new cars, and explained life with an electric vehicle, freeing up paid staff to handle the overflow of paperwork. Mr. Musk and his new girlfriend, pop musician Grimes, worked at the Fremont delivery center, joined by board member Antonio Gracias. Mr. Musk’s brother, Kimbal, also a member of the board, showed up at a store in Colorado. It was truly an all-hands-on-deck moment. Surrounded by friends and kin, Musk seemed at his happiest, one manager recalled: “It was like a big family event…. He likes that—he likes loyalty.”

The company was ready to tabulate the quarter’s final delivery results. It was close. Deliveries reached 83,500—a record that exceeded Wall Street’s expectations but that was more than 15% shy of the internal goal of 100,000. (It was also uncannily close to the estimate by the head of customer experience, who had seemingly been ousted for suggesting it.) Almost 12,000 vehicles were still en route to customers, missing the deadline for the third quarter.

For the full essay, see:

Tim Higgins. “The Race to Rescue Tesla.” The Wall Street Journal (Sat., July 31, 2021): B1 & B6.

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

(Note: the online version of the essay has the date July 30, 2021, and has the title “Elon Musk’s ‘Delivery Hell’.”)

The essay quoted above is based on Higgins’s book:

Higgins, Tim. Power Play: Tesla, Elon Musk, and the Bet of the Century. New York: Doubleday, 2021.

Elon Musk Says He Prefers Being an Engineer to Being Boss of Tesla

If Musk really prefers being an engineer, why doesn’t he resign as CEO and take a job as an engineer? Maybe like many entrepreneurs, he complains, but in his heart he prefers being an entrepreneur?

(p. B3) WILMINGTON, Del.—Elon Musk said Tesla bought SolarCity Corp. for one fundamental reason: to become more than a car company.

The Tesla Inc. chief executive made the argument as he wrapped up two days of sometimes feisty testimony in court, defending the roughly $2.1 billion tie-up completed in 2016 at a time both Tesla and SolarCity were financially struggling.

. . .

Though the grilling focused largely on what information Tesla shareholders were given about the financial condition of SolarCity, Mr. Musk at times veered farther afield in answering, particularly when it came to whether he exerted too much control over the purchase, a key question in the trial.

On Monday he said that he didn’t enjoy being the boss of Tesla. “I rather hate it, and I would much prefer to spend my time on design and engineering, which is what intrinsically I like doing,” he said.

When Mr. Baron on Tuesday asked Mr. Musk whether he had lied about when a core SolarCity product would be ready to sell in large volume, he responded, “I have a habit of being optimistic.” Mr. Baron fired back: “This is more than optimistic. This is just plain out false.”

For the full story, see:

Dave Michaels and Rebecca Elliott. “Musk Says Deal Helped Diversify.” The Wall Street Journal (Weds., July 14, 2021): B3.

(Note: ellipsis added.)

(Note: the online version of the story was updated July 13, 2021, and has the title “Elon Musk Defends SolarCity Deal: ‘The Goal Is Not to Be a Car Company’.”)