EclecticLip

Phil Rosenzweig’s The Halo Effect was the 21st book covered by the book club, and was deliberately chosen to complement (and contrast with) Good to Great, read some weeks prior.

Rosenzweig’s contribution to management literature has been to illuminate the irrigourous thinking that underlies much business/management popular wisdom and their associated memes.  More precisely, his contribution has been to write a popular book on the subject (no doubt many perfectly-obscure authors pointed this out before him).

In a business context, the “Halo Effect” for which the book is named is the phenomenon of observing successful businesses / business people, and concluding the common traits are what make them successful.  A more perspicatious researcher would test whether these common traits are present in unsuccessful companies, and whether these traits are quantifiable or merely qualitative.  Business writers also tend to succumb to a steady-state fallacy — the assumption that success can be codified into permanence — when mean reversion happens to even the best companies, given sufficient timeframes.

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

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The Halo Effect - summary

We read The Human Side of Enterprise recently, wherein Douglas McGregor (that’s McGregor, not MacArthur!) contained the wisdom nugget that:

“management gets the labour relations it deserves”.

I doubt McGregor coined the expression — it’s the kind of pithy phrase that floats around for years before being credited to a famous person — but it rings no less true. 

The general theme is a karmic one: if management mistreats labour, labour will eventually form a feisty union.  And contrarily, if management treats its employees well, union relations will tend to be amicable (if there even is a union).  Furthermore, while trust and respect grow slowly over time (like pearls!), bad memories have a way of lingering for a very. long. time.

In that context, I wonder if management in the West is still paying for the bad karma it earned during the Industrial Revolution.  If the explosion of industrial wealth was shared more equitably, or barons weren’t so slow to improve working conditions / recognize workers’ rights, perhaps labour unions wouldn’t've become so militantly anti-management.  Heck, maybe Marx and Engels wouldn’t've even been inspired to write their little pamphlet!

I’m perfectly unfamiliar with labour relations / extent of union militancy in other countries, but it would shock me if the Nordic economies (or Japan, with its fairly egalitarian corporate pay scales) have similarly confrontative labour relations.  After all, it’s difficult to have a class struggle if the different “classes” of employees (management, labour) enjoy reasonably equitable pay, and decent working conditions.  And I’d expect that economies with a heritage in the British Industrial Revolution tradition (US, UK, Canada, Australia) would have more confrontative unions.  After all, those union traditions would’ve been born in a desperate context of obscene wealth and even-more-obscene squalor.

So it would seem reasonable to consider militant unions a form of karma — a carryover from the bad ol’ days (correction: the very bad old days) of the Anglo economic tradition, when owners really should’ve cared more about their employees.  And given how long it can take for bad karma to dissipate, I imagine confrontational labour relations will be a feature of industry in these cultures, for a long time to come.

Roger Martin’s The Responsibility Virus was the book club’s 20th selection, marking a return to the theme of organizational dynamics, previously visited in First Break All The Rules (book 12).

Though the author makes strained analogies to the laws of physics, the book offers dead-on insights as to the process by which individuals abdicate or usurp responsibility for workplace initiatives.  Examples might be how employees buy out of a management initiative (as opposed to buying into it), or how a supervisor might meddle intrusively in a struggling subordinate’s project.

Fortunately, the book offers suggestions — born from Martin’s experience as a consultant — to resolve these issues.  And more fortunately still, the methods are of the “ensuring everyone’s concerns are met” variety, as opposed to the ever-popular “manipulate others’ behaviour” type.

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

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The Responsibility Virus - summary

David Allen’s personal productivity guide Getting Things Done was chosen as the 18th book club selection.  An invaluable guide to navigating a world awash in email, it is to the past decade what The Seven Habits of Highly Effective People was to the 1990’s.  But while Steven Covey’s opus provides an overarching framework for being more effective at work, Allen’s book is an SOP from a guru of desktop jiujitsu.

Earlier in my career, I implemented several of Covey’s ideas — without success.  In the end, I found my four “quadrants” (a 2×2 matrix of important and urgent tasks) got bogged down with a torrent of ideas.  In the past couple years, I’ve enjoyed sustained success with the ideas from Getting Things Done.  Particularly useful were the “waiting for” folder for tasks where I was waiting a response, and the “next actions” folder, for items awaiting my next move.  Prefacing each item with a due date has allowed me to avoid a sense of overload, as I can pre-schedule activities months in advance, knowing that their presence on the list is okay, because they’re post-dated.

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

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Getting Things Done - summary

Jim Collins’ Good to Great was selected as the seventeenth book for the book club.  A monster best-seller, it popularized the idea that companies should be “hedgehogs” — focusing only on areas where they could beat their competitors.  It was commendable for trying to pair great companies with mediocre counterparts, in an attempt to discern those characteristics that distinguished the two. 

The book has also come under fire.  Not all of the eleven “good to great” companies maintained their market-outpacing greatness in the decade following publication (being 2000 to 2010) — indeed, three of them went bankrupt or needed bailouts.  As a nod to the critics, for its 21st volume, the book club covered The Halo Effect.

Despite its flaws (and indeed, what human endeavours lack them?) the book represents an earnest attempt to study corporate success, and some of its insights — e.g. that “stop doing” lists are as important as “to do” lists — disclose a valuable wisdom.

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

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Good to Great - summary

(Originally written August 4; posted Sept 5) 

While shopping on the weekend, I noticed some funny packaging on the Hellman’s mayonnaise containers.  So, like a piqued bee browsing the flowers, I wandered over for a closer look.

Turns out that in North America, all Hellman’s “half the fat” mayonnaise now uses free-range eggs — thirty million jars’ worth in fact.  They’d attached some promotional stuff to their mayonnaise jars; clearly, in my case it worked. 

While light mayonnaise is their only product using free-range eggs in North America, all Hellman’s mayonnaises in Europe switched over last year.  The reason we’re behind the times… is because they weren’t sure if there was enough North American supply for their full product line (!). 

This is an excellent example of how activists can co-opt private enterprise into behaving better.  Free-range eggs are more expensive because the hens have access to the outdoors, instead of being cooped up under terrible conditions; they’re also more humane, for the same reason.  By getting enough “early adopters” to to pay a premium for the free-range product, activists created a big enough market signal for behemoth corps to take notice.

In this case, Unilever has decided to get an edge on Kraft (”Miracle Whip”) by making this change.  Hopefully, Kraft will respond by trying to one-up Unilever in the “ethical sourcing” sweepstakes.  The incremental cost of free-range eggs is largely irrelevant to the products’ profitability, as both Hellman’s Mayonnaise and Miracle Whip are brands, and are priced as such.  They don’t compete with no-name spreads, just as Coke doesn’t worry about “PC cola” and BMW doesn’t care that Kia’s are cheaper. 

Other food examples include fair trade coffees and Cadbury’s fair trade sourcing of chocolate for all its British “Dairymilk” bars.  On the consumer side, after a Greenpeace campaign Apple recently beat its PC competition to removing arsenic, mercury, PVC and brominated fire-retardants from various components.  And the success of the first-generation Toyota Prius (despite its Aztek-esque aesthetics) prompted automakers to start looking into hybrid technology.

While cynics point out that hybrid lifecycle costs are probably higher in North America, we’re a bit of an anomaly.  Since Texas used to be the Saudi Arabia of crude, and Alberta promises to be the next Saudi Arabia of oil, it seems unlikely we’ll see the kinds of gas taxes found elsewhere in the world.

The final book in the book club’s (first?) energy trilogy was Peter Tertzakian’s A Thousand Barrels a Second.  The book came on the recommendation of a colleague, and the author’s metaphor of an energy evolution cycle seemed particularly relevant given the firm’s positioning in the clean tech / clean energy sector.

In addition, the book seemed complementary to Jeff Rubin’s Why Your World is About to Get a Whole Lot Smaller — it was thought that exposure to a second perspectives would add significant value and context for book club members who don’t ordinarily trawl the “energy” section of bookstores, libraries, or the web.

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

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A Thousand Barrels - summary

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.