Archive for February, 2010

Why “Undercover Boss” is dramatic, and why that’s a bad thing for business

Thursday, February 25th, 2010

7-11 undercover bossI finally got a chance to check out “Undercover Boss” this week, after being curious about it since first hearing about it at the Super Bowl. It follows many reality show conventions, including dramatic music, montages and strategic repetition (I heard, “Those items are supposed to be going to charity!” at least three times).

Why, though, is “Undercover Boss” dramatic? In short, it’s based on an assumption that big-company CEOs are completely disconnected from the front lines of their businesses. Only by the CEOs being out of touch can these shows create the surprise and drama they depend on. Seeing Joe DePinto, CEO of 7-11, struggling to make coffee is funny, but it’s also telling. Selling coffee is how 7-11 makes money. According to DePinto, the store he works in serves 2500 cups per day. DePinto spends his days attending meetings and reading reports, not making coffee, and it shows.

I saw a terribly sad example of the “undercover boss” last week while watching “The Hurt Locker.” One of the soldiers meets with a psychologist colonel who is counseling him for his stress-related illness, caused by his daily encounters with IEDs and their carnage. The soldier teases the colonel that he doesn’t know what it’s like out on the streets. The colonel replies that he’s been out on the front lines earlier in his career. One morning, surprisingly, the colonel shows up and offers to accompany the group on their daily missions. The tragic ending of this amazing scene really struck me and pointed up in an extreme way the costs of the out-of-touch boss. How can one lead when he has no idea what it’s like where the rubber meets the road?

Related posts:
Business Book Hall of Fame: War & Peace
Time to start listening to front-line employees
A method for gathering and using insight from front-line staff

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Posted in leadership | Comments

Creative Destruction Slide Show 2

Wednesday, February 24th, 2010

For the past year, I’ve collected a photo history of two local sites undergoing what Joseph Schumpeter would call “creative destruction.” I’ve collected the various photos into a set of slide shows. Here’s the second:

Creative Destruction Slide Show 2
View more presentations from jmcaddell.

[A collection of all the Creative Destruction posts can be found here, and here is the first slide show.]

Posted in business | Comments

Two blogs you should read about the future of business

Tuesday, February 23rd, 2010

Two bloggers on Harvard Business Review’s website (http://hbr.org) in very different voices are helping to define the next era of business, post-crash. Umair Haque provokes and hyperbolizes, while Roger Martin writes sober, crafted prose, yet both say much of the same thing: business as usual – shareholder value maximization, “greed is good,” arbitrage- and exploitation-based commerce – needs to go. In its place will be socially-aware businesses that profit by garnering their workers’ best efforts and delivering distinctive, thick value to customers.

Samples:

Haque:

Hypercompetition — and hypercollaboration — is accelerating. The people formerly known as consumers are now your peers. Regulators have a keener eye and a longer arm. Stakeholders went from being hippie pacifists to shark-toothed activists. In this world, mere innovation and “strategy”are commodities. Globally, naked consumption must transition into durable investment. Meaning is the new cornerstone of advantage: Does what you produce actually make anyone meaningfully better off?

Martin:

as corporations have ballooned in size, the [CEO's] community has become far more impersonal and distant. Customers and employees have become more dispersed and distant and the home city has become less central — even expendable, as Boeing’s abandonment of Seattle demonstrated. And perhaps most important, a company’s owners have become a group of distant professionals who trade their holdings at the click of a button. Many large shareholdings, in fact, aren’t even managed by people.

Are they seers, or delusionists? I hope it’s the former. But you should read them both and decide for yourself.

Related posts:
Prior mention of Umair Haque
Posts mentioning Roger Martin

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Posted in business | Comments

Creative Destruction Slide Show 1

Monday, February 22nd, 2010

For the past year, I’ve collected a photo history of two local sites undergoing what Joseph Schumpeter would call “creative destruction.” I’ve collected the various photos into a set of slide shows. The first is here:

Creative Destruction 1
View more presentations from jmcaddell.

[A collection of all the Creative Destruction posts can be found here.]

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Posted in creative destruction | Comments

The refurb economy

Friday, February 19th, 2010

Now mister the day my number comes in I ain’t ever gonna ride in no used car again. Bruce Springsteen, “Used Cars”

The MacBook Pro on which I’m composing this post was bought from the Apple online store two and a half years ago, a refurbished model. After our coffeemaker died, rather than buy a new one we sent the old one back to be remanufactured for $75, shipping included.

And, of course, our “new” car is now eight years old.

If one thing has happened to us and people we know in the recent, long recession, it’s this: we no longer fetishize new things. In the 1980s, when Springsteen wrote the lyrics excerpted above, and earlier, the purchase of a new anything, but especially a new car, was a symbol of affluence, of making it. The hunger for the new led to planned obsolescence and a throwaway society.

It’s a bit of return to older values, I think, that more business will be associated with repair, refurbishment and other services intended to keep our things working longer, as opposed to stamping out millions of shiny new thingies that won’t last.

If that’s an outcome of the recent crisis, that’s OK with me.

Our old car

Our "old car"

Related post:
Midlife crisis, 21st century style

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Posted in economics | Comments

Regular posting will start again soon…

Wednesday, February 17th, 2010

Posts have been coming irregularly for the past month, and here’s an explanation. I’ve had some significant (but good) upheaval workwise and have been searching for the rhythm (and subject matter) to keep blogging. Don’t worry. I’ve been collecting ideas and continuing to read. I’ve been on the road a lot, which is conducive to reading. I’ve also been thinking about what to focus on, or whether to focus on anything at all.

Anyway… stay tuned. I’ll be back shortly.

Posted in randomness | Comments

Time to retire shareholder value maximization strategies. How about focusing on customers instead?

Thursday, February 11th, 2010

In the current Harvard Business Review, Rotman school dean Roger Martin (author of “The Opposable Mind” and “The Design of Business,” both books endorsed by this blog) argues that it’s time for a new overarching goal for the firm (”The Age of Customer Capitalism“). Martin argues that since the 1980s companies have been focused on the wrong objective: shareholder value. He states that shareholders are frequently short-term holders and overwhelmingly indirect (i.e., you buy a share of a mutual fund that invests a fraction of that share in a particular firm). Therefore, the side effects of shareholder maximization strategies are short-term thinking and lack of concern for anything not directly financially-related.

Reading Martin’s piece brought to mind the chill that went through me years ago when I read Michael Jensen’s (the godfather of shareholder maximization) 1980s HBR article “The Eclipse of the Public Corporation.” In this piece Jensen argued vociferously that older, low-debt versions of company capitalization were antiquated, and the companies of the future would be highly leveraged in order to tightly tie owners to the performance of their companies.

We see where that got us. Perhaps there were others who also instigated the era of private equity, but I first and foremost blame Jensen. He got what he wished for and as a result saddled the rest of us with an unmitigated disaster – an economy teeming with overleveraged investments – which looked great as long as the economy kept growing, but which changed into albatrosses around our collective neck when the (inevitable?) downturn came.

Now, says Martin, it’s time to redefine the relationship between a company and its stakeholders. Shareholders are one, and not the primary, audience for company strategy. Customers come first.

Well, hallelujah!

[Martin has an interesting companion piece to this on the HBR website, "What We All Lost When Business Lost Respect." ]

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Posted in Uncategorized | Comments

If you read this blog, you could have seen Toyota’s problems coming…

Thursday, February 4th, 2010

Does anyone remember this post from nearly 3 years ago?

Toyota: The Inevitable Decline Starts Now
18 Feb 2007

It’s Toyota’s PR person’s dream: a front-page story in the Sunday New York Times magazine (by Jon Gertner), depicting your company as a comic-book superhero, slaying its competitors amid exclamatory sound effects (VVRRRMM!). And the article’s teaser hailing your company as not only “not only the best automaker in the world but also maybe the best corporation.”

The PR dream is the executive’s nightmare. Not only is it difficult to build from the pinnacle Toyota has reached; it’s impossible. The life cycle of industry titans lasts decades, but a life cycle it is. Ask NCR, Kodak, Xerox, Western Union, Sony.

Ask General Motors.

Forces beyond those under the control of any corporation conspire to bring it down, once it’s reached such an apex. The forces are shifts in demographics, culture, science–more than technology. Somewhere out there, those forces are at work, humming below the range of hearing, undermining the business model that Toyota has perfected over the past fifty years.

And, no, it won’t be a combined GM-Chrysler that eventually humbles Toyota. The US auto companies are deader than dead as far as the future’s concerned. Instead it will be a new company, perhaps born in a rural area not unlike Toyota’s home, failing humbly, learning lessons, remaining persistent, getting better, creating a vision for the far future, a vision far beyond the passenger automobile. Not unlike what Toyota itself once did.

Who are they? We’ll know in twenty years’ time.

(Illustration by Nathan Fox for the New York Times)

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Posted in automobiles | Comments