Noise Between Stations

Category: Humans

Wal-Mart enters the consulting biz

This is interesting…

Wal-Mart Stores, whose all-in-one retailing model has forced scores of competitors to close their doors over the last 40 years, is turning to an unusual business plan: helping its rivals.

The giant discount retailer, under increasing assault by critics, announced a wide-ranging effort yesterday to support small businesses near its new urban stores, including the hardware stores, dress shops and bakeries with which it competes.

Wal-Mart said it would offer those businesses financial grants, training on how to survive with Wal-Mart in town and even free advertising within a Wal-Mart store.

…

Wal-Mart will hold seminars to coach the businesses on how to compete with the giant discount stores — by, for example, intensifying customer service, for which Wal-Mart often receives low marks. An annual report on trends in Wal-Mart’s business will be distributed exclusively to those companies.

Setting cynical PR claims aside, this plan both makes a lot of sense and very little sense. Teaching businesses unfamiliar with differentiation is great, and just what they need to compete with Wal-Mart. But who wants customer service advice from a company that sucks at customer service? I’d bet the best form of training would be a collection of video case studies (no classrooms, no books) of small businesses that continued to succeed even after Wal-Mart came to town. Simply amplifying messages from managers of successful small businesses will be more valuable — and more authentic — than anything Wal-Mart itself could say.

4/6/2006
Charan’s “10 Tools of Profitable Revenue Growth”

Ram Charan’s book Profitable Growth Is Everyone’s Business seems to be closely related to (and a summation of) Peters and Waterman’s In Search Of Excellence. Charan’s book in turn is summed up on his site.

3/21/2006
U.S. jobs aren’t shorter, but they are riskier
James Surowiecki’s Lifers reviews some statistics and concludes that — contrary to popular belief — long-term employment in the U.S. hasn’t disappeared at all. But what has changed is the amount of risk employees are expected to shoulder in terms of…
1. Benefits: Health benefits and pensions have decreased
2. Stratification: “Companies now tie compensation more closely to performance, so that people at the top take home much more, relative to their colleagues, than did the high-fliers of thirty-five years ago.“
3. Unemployment: “People who are unemployed stay unemployed, on average, about fifty per cent longer now than they did in the seventies, and only about half as many receive unemployment insurance as did so in 1947.“
Yale political scientist Jacob Hacker has called this “the great risk shift.”
2/5/2006
The Bells remind Google who runs the Internet

From the Wall Street Journal today:

Phone Companies Set Off A Battle Over Internet Fees

Large phone companies, setting the stage for a big battle ahead, hope to start charging Google Inc., Vonage Holdings Corp. and other Internet content providers for high-quality delivery of music, movies and the like over their telecommunications networks.

Ah, the value chain. Expect to see Google buy the rest of it.

1/6/2006
10 years of influential business ideas
To celebrate s+bâ€™s 10th anniversary, they looked back at the conceptual breakthroughs that appeared in the magazine — and invited readers to vote on which were most likely to last.
1. Execution
2. The Learning Organization
3. Corporate Values
4. Customer Relationship Management
5. Disruptive Technology
6. Leadership Development
7. Organizational DNA
8. Strategy-Based Transformation
9. Complexity Theory
10. Lean Thinking
12/8/2005
SarbOx flawed, but fixable
James Surowiecki’s Sarboxed In?…
- The Sarbanes-Oxley Act was a political knee-jerk even the Republicans couldn’t avoid, in reaction to Enron, Worldcom, etc.
- The complexity of the new rules went too far, requiring six figure enforcement costs, and possibly hindering small companies from going public. There are now talks of easing enforcement or modifying the Act.
- But the problem SarbOx addresses is very real: to fake earnings and revenue, companies made acquisitions and hires they didn’t need. Two researchers estimate that companies who restated financials fired between two hundred and fifty thousand and six hundred thousand people between 2000 and 2002, slashing payrolls by more than twenty-five per cent, while other companies cut them by just 1.5 per cent.
12/5/2005
Katzenbach and Smith’s team guidelines
Since I’ve been working on how to structure teams to do innovation work, I thought it would be a good time to revisit the basics in the form of The Wisdom of Teams by Jon Katzenbach and Douglas Smith. One point they make is to differentiate between “performing teams” structured in a mindful way and other groups of people merely working together. A performing team has certain characteristics…
- It is small in number
- The members have complementary skills
- They are all working towards a commonly identified purpose
- They have group performance goals, in addition to individual goals
- They have a common approach to working together
- They hold themselves mutually accountable, not just individually.
In the book and article The Discipline of Teams, they identify three kinds of teams:
1. those that recommend things — task forces or project groups
2. those that make or do things — manufacturing, operations, or marketing groups
3. those that run things — groups that oversee some significant functional activity.
For managers, the key is knowing where in the organization these teams should be encouraged.
11/21/2005
Bill Swanson’s 25 Unwritten Rules of Management
Raytheon CEO Bill Swanson offered his 25 Unwritten Rules of Management and Jim Collins asks, “I wondered, how would his rules stack up against the behavior and leadership styles of the successful CEOs profiled in Good to Great? …the overall fit appears quite positive.”

For posterity, here’s Swanson’s list:
1. Learn to say, “I don’t know.” If used when appropriate, it will be often.
2. It is easier to get into something than it is to get out of it.
3. If you are not criticized, you may not be doing much.
4. Look for what is missing. Many know how to improve what’s there, but few can see what isn’t there.
5. Viewgraph rule: When something appears on a viewgraph (an overhead transparency), assume the world knows about it, and deal with it accordingly.
6. Work for a boss with whom you are comfortable telling it like it is. Remember that you can’t pick your relatives, but you can pick your boss.
7. Constantly review developments to make sure that the actual benefits are what they are supposed to be. Avoid Newton’s Law.
8. However menial and trivial your early assignments may appear, give them your best efforts.
9. Persistence or tenacity is the disposition to persevere in spite of difficulties, discouragement, or indifference. Don’t be known as a good starter but a poor finisher.
10. In completing a project, don’t wait for others; go after them, and make sure it gets done.
11. Confirm your instructions and the commitments of others in writing. Don’t assume it will get done!
12. Don’t be timid; speak up. Express yourself, and promote your ideas.
13. Practice shows that those who speak the most knowingly and confidently often end up with the assignment to get it done.
14. Strive for brevity and clarity in oral and written reports.
15. Be extremely careful of the accuracy of your statements.
16. Don’t overlook the fact that you are working for a boss.
17. Promises, schedules, and estimates are important instruments in a well-ordered business.
18. Never direct a complaint to the top. A serious offense is to “cc” a person’s boss.
19. When dealing with outsiders, remember that you represent the company. Be careful of your commitments.
20. Cultivate the habit of “boiling matters down” to the simplest terms. An elevator speech is the best way.
21. Don’t get excited in engineering emergencies. Keep your feet on the ground.
22. Cultivate the habit of making quick, clean-cut decisions.
23. When making decisions, the pros are much easier to deal with than the cons. Your boss wants to see the cons also.
24. Don’t ever lose your sense of humor.
25. Have fun at what you do. It will reflect in your work. No one likes a grump except another grump.
©2003 Raytheon

Links courtesy Pete Behrens.
11/2/2005
Bloomberg and the open office

I’m a big proponent of tearing down the walls and cubicles in offices to encourage teamwork. Even Herman Miller, who introduced cubicles decades ago, is opening up the cubes and shaving down the partitions.

So I love the story of how New York mayor Michael Bloomberg replicated the trading floor atmosphere at City Hall…

Wandering through the cavernous Board of Estimate chamber on the building’s second floor, Mr. Bloomberg said he would make his office there, forsaking an ornate private enclave that was the inner sanctum for previous mayors and their closest aides. The mayor-elect said he would create a huge workspace that would be just like the open-air trading room in which he worked at Salomon Brothers and later recreated at his private company, Bloomberg L.P.

He would put his desk in the middle of the room and seat his top deputies and staff members around him, he said. Dozens of other aides would sit at cubicles placed side by side, ensuring the access of lower-ranking managers to the mayor’s inner circle and bringing with it more accountability.

Mr. Bloomberg said the office setup had been critical to his management style. “It promotes cooperation,” he said. “When people aren’t happy, you see it. When people aren’t getting along, you see it.”

10/21/2005
Scott Hirsch, Young Mogul

My partner Scott’s pretty face — arguably the second most handsome in our company — graces the front cover of this month’s Red Herring magazine. The story profiles 20 Outstanding Entrepreneurs Under 35 including great minds like Steward Butterfield and Andrew Zolli.

They would have called me first, of course, but I’m a middle-aged mogul.

8/21/2005
BusinessWeek on challenges in China & India

I applaud BusinessWeek for promoting serious discussion of the social problems in China, and India as well. A sample:

A Big, Dirty Growth Engine (on polution in China)

Waking Up To Their Rights (on workers rights)

The State’s Long Apron Strings (on Chinese multinationals’ relationship to the Communist Party)

8/14/2005
Flying High, part II
More notes from Flying High:
- “You can call every day to United and get a different price (for a ticket). The reality is you get nickel-and-dimed. And more importantly, the customer thinks â€˜Youâ€™re screwing me.â€™ So itâ€™s better to just ask one price. You want to keep the service offerings very simple. The whole key is keeping trust in the system.“
- Three elements that ‘insure’ customers to a brand: First, flawless execution. Second, make things right with customers when things go wrong, because no matter how flawless you try to be, sometimes things will go wrong. And third, a company needs employees that are ambassadors for their brand, who are proud to belong to the organization.
- Behind the scenes, there’s a surprising amount of lean-but-progressive use of technology, such as a paperless cockpit. They own everything from their own booking system to the LiveTV, both of which they license to other airlines.
- Basic metrics: “…the airline looks at the impact on CASM (cost per available seat mile), the industryâ€™s standard metric of efficiency. This is the expense of flying one passenger one passenger one mile. Available seat miles (ASM), a benchmark of an airlineâ€™s total capacity, is calculated by multiplying the total of all seats available on every route by the length of the routes. If you divide an airlineâ€™s total operating costs by the ASM, the result is the CASM. Airlines also pay close attention to RPM, or revenue per passenger mile. RPM is the number of seat miles for which the airline is actually filling a seat and making money. Divide the RPM by the ASM and the result is the airlineâ€™s load factor.”
- “…the marketing departmentâ€™s funds come under the operations budget, reflecting a company philosophy Curtis-McIntyre strongly endorses: ‘Product and marketing should be intimately involvedâ€”in each otherâ€™s face and on the same side of the fence.’ “
- On putting mission statements into use: “If subordinate workers feel a leader is not living up to these principles, they are encouraged to ask supervisors how the conduct in question complies with the principles, thereby providing for accountability.”
- “Neeleman insists he doesnâ€™t pay much attention to how much shares are trading for in the open market. â€œHerb Kelleher at Southwest Airlines said something very insightful,â€ Neeleman relates. â€œAt the time it sounded shocking. He said, â€˜I donâ€™t care about my shareholders.â€™ â€˜What do you mean you donâ€™t care about shareholders?â€™ â€˜Because I just take care of my employees. I know if I take care of my employees, theyâ€™ll take care of my customers, and my customers will take care of my shareholders.’ “
Also notable for the approach of culture fueling product is this quote from Gareth Jones, VP, Corporate Communications about their competition…

Song isn’t the success you might have heard it is from Delta. We’ve trounced them on any route we’ve shared. They copied the wrong things. They copied the obvious. They don’t focus on the human experienceâ€¦they focused on the cosmetic. Ted is United with a different coat of paint.
7/26/2005
Flying High
Just finished James Wynbrandt’s Flying High: How JetBlue Founder and CEO David Neeleman Beats the Competition… Even in the World’s Most Turbulent Industry. I’d give it 3 stars out of 5 for being engaging enough to finish (something I rarely do anymore) and educational while a little light in critical point of view. Wynbrandt is clearly a fan, and he lays on the cheerleading a little heavy at times.

Part I of some notes:
- Moments of Truth, a 1987 book by SAS CEO Jan Carlzon, influenced Neeleman with a tale of turning around a declining carrier by transforming the operation into a customer-focused operation, radical at the time.
- A low-fare airline shouldn’t equal cheap operations: Neeleman bet on the low-maintainance of brand new planes to keep costs down.
- In deciding to base operations at Kennedy airport in New York, he went against the perception that it was crowded and hard to get to via top-down market sizing, estimating that even if only they only sold within the 5 million people who live closest to Kennedy (excluding all of Manhattan) JetBlue would still be a success.
- Learning from an early experience where his first business suddenly failed due to undercapitalization, he way overcapitalized JetBlue, raising $130 million. At the beginning all the investors and vendors were waiting for everyone else to make the first risky move, so Neeleman prodded them all into action by investing $5 million of his own money.
- When courting investors, the management team honestly said they weren’t out to make a killing, aiming for a margin of “between 15 and 20 percent, but not more than 20 percent. If our margin is higher than that, we’re either gouging customers or not paying our staff enough.“
7/25/2005
Lance Armstrong’s giant heart

It turns out that intense, long-term cardio training actually enlarges the heart and therefore the amount of oxygen-rich blood that can be delivered to the muscles, according to this long-term study at the University of Texas…

Lance Armstrong…improved his cycling efficiency by a phenomenal 8% as he matured from age 21-28 years… There is no doubt that Lance now possesses a big and strong heart that can beat over 200 times a minute at maximum and thus pump a exceptionally large volume of blood and oxygen to his legs. There are probably 100 other men on earth who have comparable abilities while each assumedly must have performed intense endurance training for at least 3 years and are now between the ages of 18-40 y. In testing hundreds of competitive cyclists over 20 years at UT, Dr. Coyle has found two other individuals with the physiological potential of Lance.

An additional factor in Lance’s improvement over the years is that he has learned how to reduce his body weight and body fat by 10 pounds (5 kg) prior to each of his victories in the Tour de France. Therefore, over all his power per kg of body weight has increased 18% while climbing-up the steep mountains in France.

There’s definitely a metaphor here for business, as companies that excel over time consistently apply themselves to excellence until it is rooted in their culture and not just the occassional project success.

7/25/2005
Kitchen as management microcosm

If you’ve only seen Gordon Ramsay as the Donald Trump figure in Hell’s Kitchen, you’re missing out on what he really has to teach. In Ramsay’s Kitchen Nightmares on BBC he goes into a slumping restaurant and tries to turn it around in one week. As a manager he can see the whole system: kitchen, menu, balance sheet, product portfolio, interior design, customer service… sometimes he’ll even do wayfinding analysis. As a leader he uses a variety of approaches to teach, from jokes to insults. And while his get yer fookin’ bullocks goin’ style probably only works in the kitchen or construction sites, his sense of management is impressive. Fookin’ brilliant.

If you don’t get BBC/BBC America, I hear it might be out there on the internet somewhere (ahem).

Thanks to Scooter for pointing it out.

7/23/2005