A Lean Guy Reads the WSJ, Nov 30 Edition
Some days, it seems the WSJ is a treasure trove of tangentially Lean related articles. Similar to “blog carnivals,” this is sort of a WSJ carnival for 11/30/09. Some of the themes include real “value” versus the perception of it, leadership and incentives, outsourcing versus vertical integration, and error proofing.
I know this feature is of less value to those of you without WSJ subscriptions, but here goes:
It's been trendy for decades (so it's not a passing fad) to blindly outsource manufacturing. Want to move everything to China for cheap labor? This WSJ article from today points out some possible pitfalls.
Seems nobody wants to build stuff anymore, it's not cool to make stuff (except for those getting back in via “vertical integration,” per this WSJ article from today). But what now about companies also looking to outsource innovation?
When should companies try to come up with new ideas themselvesâ€”and when should they give the job to outside experts?
It's a question many companies are facing these days. As budgets tighten, businesses are outsourcing research and development and the creation of new products as a way to slash costs, speed development time and tap into top talent outside the company.
I guess we're getting closer to the executive ideal state — just have a website and let the bonus checks roll in!
I really respect entrepreneurship, especially considering the role that new companies play in creating jobs. How does a new company establish credibility with investors? Call me old fashioned, but you'd think it would be your products, your market and customers, and your personal characteristics (the idea that investors invest in people being a popular notion).
No, this WSJ article channels Billy Crystal's “Fernando” character by saying it's basically better to look good than to feel good to investors.
Location, location, location. The old adage also holds true here: Executives should secure the most desirable spot possible for their offices. Of course, not everyone can afford this, but there are ways to save. For instance, some entrepreneurs in our study arranged to meet in impressive surroundingsâ€”such as fancy hotelsâ€”or they rented shared offices in tony neighborhoods. Again, this serves a twofold purpose. Practically speaking, it's cheaper than getting very expensive digs. It also has valuable symbolic meaning. As one entrepreneur explained, “When we asked [our investors] why they had given us this chance, rather than some of our perhaps better-established competitors, they told us that they were so impressed that we were obviously a business of substance, because we had such a large, well-appointed office. They didn't know that we had a very, very small office, just in a large building.”
A fool and their money are soon parted, even if that fool's business card says “Venture Capital.” So much for creating value, let's just put up appearances. Blah.
BRI = Bagel Related Injuries, a major cause of sliced fingers and cut hands. This article details how people don't know how to use knives properly and they especially don't know how to cut bagels. Lack of standardized work and lack of training, apparently?
I got much more comfortable in the kitchen (I love to cook) when I learned a bit of proper knife technique (and knife sharpening technique especially, as a dull knife is a dangerous knife).
This article talks about devices to help “error proof” bagel cutting, including the “bagel guillotine.”
Management expert Henry Mintzberg says bluntly:
These days, it seems, there is no shortage of recommendations for fixing the way bonuses are paid to executives at big public companies.
Well, I have my own recommendation: Scrap the whole thing. Don't pay any bonuses. Nothing.
He says the process simply can't be fixed. Bonuses and the dysfunction created by them have dragged down the economy and caused more harm than good.
The failings of the current systemâ€”and the executives who live by itâ€”are painfully obvious. Although these executives like to think of themselves as leaders, when it comes to their pay practices, many of them haven't been demonstrating leadership at all. Instead they've been acting like gamblersâ€”except that the games they play are hopelessly rigged in their favor.
Mintzberg writes that even trying to tie incentives to the long-term is troublesome, because what measure do you use?
I love the idea that you use bonuses as a screening tool – Mintzberg writes that if the CEO candidate demands a bonus, you eliminate them from consideration. He writes:
I believe that if you do pay bonuses, you get the wrong person in that chair. At the worst, you get a self-centered narcissist. At the best, you get someone who is willing to be singled out from everyone else by virtue of the compensation plan. Is this any way to build community within an enterprise, even to foster the very sense of enterprise that is so fundamental to economic strength?
It will be interesting to see what kinds of comments that column draws (seven as of this writing, early Monday evening). What are your thoughts on that topic or the others from yesterday's Journal?