EclecticLip

My attendance at a (pricey) lecture Peter Senge gave on The Necessary Revolution in 2009 was the germinal cause which led to a spate of business reading, and eventually the idea of creating a business book club at work.  As such, it was natural to eventually return to that text, in the course of book club readings.

Like other tomes in the “business adventures in sustainability” genre, Senge discusses DuPont’s 70% reduction in GHG emissions from 1990 to 2005, and Xerox’s redesign of a new copier design for 93% refurbishability, and 97% recyclability.  He supplements these with suggestions on how coalitions can be built from the bottom up, to drive organizational behaviour and develop system-wide solutions.

The book mentions Darcy Winslow, a past Director of Sustainability at Nike, who led the charge to eliminate SF6 (the most potent greenhouse gas known to man!) from the air pockets of “Nike Air” footwear.  In private correspondence, she explained the importance of reframing designers’ perceptions of the need to remove SF6: they initially perceived it as a legislative burden they didn’t want to work on, but she was able to get buy-in for the project by pushing it as a proof point of Nike’s design genius — devising a harmless alternative would prove yet again that they were the world’s best shoe designers.

As always, if you enjoy the summary, please consider supporting the author by purchasing the book. 

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The Necessary Revolution - summary

A colleague forwarded me this Washington Post article, asking my thoughts on the argument that even first-world countries need manufacturing.

I agree with the overarching premise: a country should have a manufacturing base.  After all, not everyone is destined to be a white-collar information worker; nor should we strive to create a society where everyone is.

I suspect part of Germany’s manufacturing strength comes from their proactive public policy on cleantech, but will allow that my thinking may be biased.    Though most PV panels are made in China and installed in Germany, I imagine there’s still a lot of local manufacturing done for inverters and other subsystem components.  Best of all for Germany, by adopting first, their manufacturing firms will have an advantage over French, Spanish, and other nearby counterparts when they eventually adopt the technology.

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A few days before that article, Andy Grove got some column inches in an opinion piece about how high-tech doesn’t grow as many jobs as it used to, basically because web2.0 doesn’t involve manufacturing.  Which makes sense: apps are all “knowledge work” — there’s no physical manufacturing involved.

I’d like to think Grove is arguing that there’s an overarching benefit to having some manufacturing and its associated skill sets in one’s country.  Mainly because that’s my feeling.   

There should be market niches where in-country manufacturing is cost-competitive with overseas manufacturing — especially in emerging fields where you might want to keep the IP and know-how close.  Most of W.L. Gore’s plants are in the US, for example.  And earlier-stage high-tech companies will probably want to keep manufacturing close to their technical experts — until they’ve mastered the process well enough that the factory can largely run on their own. 

To be clear, lower-tech manual assembly work will drift to the cheapest qualified labour pool (continuing its trend over the years) and there’s no advantage trying to stem that tide.  But that’s no reason for a society not to seek opportunities to develop manufacturing capabilities where know-how still counts.

A story caught my eye on July 7, about how IBM has a microchip assembly and testing facility — in Quebec.  (That’s high-cost-of-labour-environment Quebec — not low-cost-of-labour-environment China.)

The reason it’s able to do so, is because of the relentless kaizen (continuous improvement) practised there: they’re able to compete in what should be a largely outsourceable industry, through innovation.  Kaizen was one of the underpinnings of earlier book club selection, The Toyota Way.
 
While innovation won’t insulate you fully from arbitrage of labour prices, I think this example shows that (innovative, high-cost labour) can compete better than most people think, against (non-innovative, low-cost labour) and especially (non-innovative, high-cost labour).  Some excerpts from the article include:

The factory, 75 kilometres east of Montreal, started out in 1972 making Selectric typewriters. It has worked its way up to become IBM’s biggest facility for testing and assembling advanced microchips. Its products go into the planet’s most popular video-game consoles and fastest supercomputers…

“We don’t compete on labour rates, we compete on skill, on innovation, on time to market,” said Mr. Leduc, a veteran from the typewriter days, who was appointed last year to be a part-time adviser to Canada’s National Research Council…

While Canada’s productivity has crept ahead by only about 0.7 per cent a year during the past decade, managers at Bromont say their ability to harness the creativity of their work force has allowed some units to boost productivity by an impressive 10 per cent or more a year… 

“One of the greatest competitive edges a company can give themselves, especially these days, is getting each staff member to see their role in contributing to positive change,” Mr. Reid said. “There’s a massive difference between just doing the job and being a high-performance culture.”

Note: that emphasis there was my editorial contribution. 

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I suspect there’s a valid analogy to be made in the economic sphere.  An economy stocked with a million entrepreneurs, each trying to improve their business’s success, is probably going to do better over time than one where a small group decides what’s to be done and how.  That’s the basic difference between a market economy and a command economy (”central planning” is a case where the aforementioned small group is the government). 

The Koreas provide a great example.  As chronicled in Ha-Joon Chang’s Bad Samaritans, back in the day North Korea was richer; it was the industrial area.  South Korea exported seaweed.  Over a few decades, the South Korean government used a market economy to become unimaginably richer than its northern rival.  (Note: like virtually every other industrialized country, its government supported target industries — a practise known as indirect planning — but it let the homegrown competitors fight it out in the marketplace.)

Pulling back from global economics to the corporate level, I’d bet that — just as South Korea ultimately surpassed North Korea, despite its initial disadvantage — companies where ideas for improvement bubble up from all levels, will tend to enjoy more success, longer, than their “everybody just doing the job” counterparts.

Which sort of goes to the root of the book club.  I see it as a way I can suggest improvements, to help myself and others be that little bit more effective; speaking only for myself, I’ve got a lot of “just doing the job” years to make up for.

A fan of the sort-of-sequel, Now Discover Your Strengths, to which I’d been pointed by a workplace mentor, I was delighted to find a pristine copy of First Break All The Rules at a used bookstore.  And further pleased to find it a satisfying read.  Since its advice would have been useful to me early in my career, it was an intuitive choice for the book club, given its first focus of broadening the horizons of younger engineers. 

Clearly, some people in my firm’s HR department have read the book as well; the checklist of questions included in the book (and appended to the end of the book review) are perennially included in our regular “employee surveys”.

As always, if you enjoy the book, please consider supporting the author by purchasing a copy. 

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First Break All The Rules - summary 

Workplaces, like consumer products, involve the interplay of multiple systems: everything from accounting to manufacturing to research to… uh… the zeitgeist-tracking of a marketing department needs to work together reasonably smoothly.

The book was found on a pilgrimage to Powell’s Books in late 2009 and immediately targeted as a future book club read.  While most companies work together reasonably smoothly, those companies whose departments function with seamless ease, are likelier to enjoy greater success.  (Such is the Darwininan nature of business.)  As such, learning more about how complex systems function, was thought to be of high value.

As always, if you find the summary useful, please consider supporting the author by purchasing the book. 

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Thinking in Systems (summary)

I was recently told that two local behemoths — BC Hydro and Best Buy — brought consulting firm Accenture in, to run their IT groups.  The idea is that Accenture’s expertise will enable them to provide the IT function cheaper than the two aforementioned behemoths would be able to, even with a profit margin.

This immediately made me think of mitochondria, the “engines” of living cells.  The thinking is that a couple billion years ago, advantages accrued to cells which had assimilated / “swallowed” mitochondria: the latter were very efficient at generating ATP, a chemical used by the cells for energy.

In the corporate analogue, BC Hydro and Best Buy would be the host cells, and Accenture (or other outsourced IT service providers like IBM) would be the mitochondria.  The key measure is whether the aforementioned firms do indeed enjoy advantages through this activity — or whether they decide to return to the DIY path, down the road…

Ori Brafman and Rod Beckstrom’s The Starfish and the Spider was the ninth book club selection.  It was selected based on a desire to learn about decentralized team structures.  A positive review on military analyst John Robb’s blog Global Guerrillas, also helped.

As of June 2010, it has proven to be one of the most cross-referenced texts in subsequent book summaries and discussion.

As always, if you consider the review useful, please consider supporting the authors by purchasing the book. 

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The Starfish and the Spider - summary

Geoffrey Moore’s Crossing the Chasm was chosen as the seventh book for the book club.  I’d come across it in an undergraduate course, and thought its treatment of the technology adoption lifecycle was relevant in light of the book club members being in the tech sector.

Moore’s insight was that, for disruptive innovations, there was a large gap — the titular “chasm” — between innovators and early adopters.  To mangle my metaphors in the manner of Thomas Friedman, many a would-be tech titan has shipwrecked itself trying to cross the chasm to the Shangri-La of profitability.

As usual, if you consider the review useful, please consider supporting the author by purchasing the book — or by enlisting his consultancy’s services. 

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Crossing the chasm - summary

(Originally written May 28.  Posted with minor amendments, June 17.) 

Updates have been short the past couple weeks on account of work responsibilities.  Taking a quick scan, Apple recently surpassed Microsoft in market capitalization — meaning Apple’s total value (number of shares x price-per-share) is higher than Microsoft’s.  No doubt many Mac fanatics around the world will get together this weekend to celebrate… the purchase of their iPads.  Oh, and that market cap thing too.

A major rule-of-thumb in business is that the leader in one generation of technology, rarely stays the leader for the next.  (A famous business book, The Innovator’s Dilemma, was written about this.)  Basically, companies with a lot of customers… have to spend a lot of time supporting those customers / dealing with their needs.  As such, they tend to miss out on the Next Big Idea.

Perhaps the most infamous modern example is the Maginot Line, which France built to stop another German invasion.  France was on the winning side of World War I, so they reinvested in the trench-warfare military concept.  The Germans lost, and were therefore open to new ideas.  In the interwar period, military analysts in several countries had written about “blitzkrieg” tactics leading up to World War II, but outside Germany, the world’s militaries largely maintained the trench-based status quo.  After all, from their perspective, the strategies weren’t broke, and didn’t need fixing.  Similar things could be said about US military spending nowadays; stealth bombers and aircraft carriers are ineffectual against terrorists.  What they need is counterterrorism and intelligence units.

Along the above lines, it’s not surprising that Microsoft has entered the “utility” phase of its existence, since computing is moving off the desktop.  Redmond isn’t really a growth story, nor is it doing exciting stuff; it’s living off its existing customer base and has modest growth prospects.  I’ve read that it has 94% of the desk/laptop computer OS market… but only 8% or so, of smartphone OS.  (Indeed, it looks like Google is positioning itself to be the Microsoft of smartphones, with its efforts on the Android OS.)  Microsoft owning a minority share of Facebook reinforces that “utility” perspective: it’s like how phone utility Bell Canada owned Nortel before eventually spinning it off.

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The seeds of Microsoft’s decelerating growth can be spotted in this review of Bill Gates’ predictions from 15 years ago, in his book The Road Ahead.  (I borrowed that tome from the Dow Chemical plant library in Fort Saskatchewan in 1998.  I suppose technology’s tendrils reach into any business, so a prudent plant manager wanted a copy.)

The columnist gave Gates a 2.5 / 8 in terms of predictions.  Admittely, that’s probably better than the rest of us could manage.  The crucial “miss” was that Gates didn’t accurately foresee the internet — perhaps ideologically bound to the desktop model of computing, at which his company was so successful.  The first glimmerings of that came when Microsoft had to go all-out to win the browser war against Netscape. 

Indeed, Microsoft completely underestimated Google, in no small part because the latter had remained a privately-held firm for a relatively long time, and was therefore able to cloak its rising power.  As Sun Tzu put it in his incontestably supreme strategy manual, The Art of War, what Google did was “pretend inferiority and encourage [Microsoft’s] arrogance”.

Thomas Stanley and William Danko’s bestseller The Millionaire Next Door was chosen as the sixth book club selection, as a light-hearted diversion from business topics.  Though not without possible selection bias, it was considered a good vehicle for learning about the wealthy — a demographic to which many young professionals aspire. 

As usual, if you consider the review useful, please consider supporting the authors by purchasing the book.

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 The Millionaire Next Door - Summary