Don Thurston Blog

Prepared means more than boy scouts and mustard (based on a true story)

Early in the twentieth century, newcomers from across the world arrived in Western Canada. Ollie was from Sweden as was his friend Henrick.  Bill Selick hailed from the United Kingdom, sent by his family to forge a better life and get out of their hair. These new arrivals were referred to as remittance men. Eric Schumacher was a recent arrival from Germany. Gordon, a young Canadian-born school teacher, completed the roster.

On this occasion the task was to build a school. The need was clear, the construction skills not so much. Framing was progressing well enough as Ollie took to raising the ridge pole. Alas the structure began to show instability. Henrick , sensing a complete collapse, bellowed “Yump Ollie Yump”. Ollie’s loud and agonized reply was “How can I yump when I got no place to stood?”

One can relate to Ollie’s dilemma. Preparedness is fundamental.  According to mothers everywhere, being prepared is the eleventh commandment, likely not included because there was no room left on the tablet. Consider the efforts made by a mother to prepare her child for life. When subtracted from everything, almost nothing is left.

Count the quotes. Be prepared to meet your maker; An ounce of prevention is worth a pound of cure; Hope for the best, prepare for worst ; Good luck is the residue of prevention; To fell a tree in four hours spend the first two sharpening your axe.

Mistakes because of ill-preparedness abound. Most notable is the boneheads who designed and operated the nuclear plant at Chernobyl. Successes include the allied invasion of Europe in 1944. An unofficial motto was “If the enemy has one tank we must have ten”. Preparation was everything for an initiative where failure was not an option.

Preparing is a quixotic concept. For example if nothing ‘goes wrong, can this be attributed to extensive ground work ahead of time? A modern day example was the panic ahead of the digital world changing from the twentieth century to the twenty-first. Date and time systems were going to implode, resulting in massive disarray. We are left wondering if there was a problem in the first place.

Let us not lose sight of the value of blunders. Even a bad example contributes to the learning process.

Returning to Ollie; he was not prepared. If prepared he had been, then he would have had a place to stood before raising the ridge pole. The positive outcome is Ollie’s prophetic reminder to “make sure you have a place to stood before you yump.”

 

 

Don Thurston Blog

Tinkers to Evers to Chance

With a runner on first base, the batter hits a ground ball to Tinker, who is playing shortstop. If he fields the ball successfully, Evers and Chance know exactly what to do. Evers moves to second base, catches the throw from Tinker, touches second base and relays the ball to Chance at first base who touches first base. If the ball arrives at second base and first base ahead of the runners, then the double play is successfully completed.

There is more going on as well. The left fielder will be backing up the third baseman, the center fielder is backing up the second baseman and the catcher backing up the first baseman. This is all done in the case of any errant throws. Baseball is the poster sport for rituals.

Communion, graduation exercises, court proceedings, marriages; most things which have a repetitive nature are liturgical in nature. Rituals give a measure of comfort and reassurance within a chaotic environment and provide some measure of predictability. Once initiated, what follows is easy to foretell.

Business harbours many rituals. A shareholder’s insurgency is a good example. Experienced professionals with deep pockets are organized to identify public companies that are languishing and not reaching their potential.  Often the company will be “under performing” in comparison with its peers, its share price will be  sluggish, and the common shares will be widely held with no controlling shareholder.

An investment banker will buy a substantial equity position, agitate for board representation, and lead a charge to change senior management. A vigorous reorganization will follow coupled with major cost reductions on all fronts. Earnings will increase. All other parameters being equal the share price will rise.

So far so good. In keeping with the ritual, a capital reorganization is the next phase. A debt issue will follow. The resulting cash infusion provides management with a very substantial cash war chest, some of which will be applied to a share-repurchase initiative. This reduces the number of outstanding shares out standing and is intended to be accretive to the price.

At this point the investment banker will initiate a selling program timed to generate a profit, generous enough to compensate for the associated risk.

Once Tinkers, Evers, Chance and the investment banker have a playbook that works, repetition is sure to follow.

What Do You Mean, Get In Line?

Line-ups are a part of every day life. Banks, grocery stores, licensing bureaus, and box offices all conspire to complicate daily chores. By now almost all queues go from a single line directly to a multiple choice of servers. A relatively new concept, banks traditionally followed the multiple line formats whereby each teller served a dedicated line.  

Enter queuing theory. Mathematicians constructed models which demonstrated that a single line up, fanning out to various tellers was more efficient.  A side benefit was eliminating the frustration of customers of  choosing the slowest moving line up. Queue jumping is now a lost art. The puzzle remains as to why most grocery stores stay with the older process.

Elevator efficiency. Under trial is a system which asks the passengers for a destination, say a law office, assigns  a specific elevator and transports the user more or less directly,  to the floor selected. The math says that travel time and energy use go down.  A more pleasant journey ensues by reducing the stops along the way.

Who would have thought that transport cost and time would be reduced by gathering parcels addressed to a common destination, offloading them then reloading them and sending them on their way to their ultimate destination?  Once again math sent Fedex on the road to success.

Just in time inventory management is a product of a quantifying model. The object is to have the required item arrive precisely as needed.  Presto, inventories, space requirements, working capital, interest, and losses from obsolete inventory are substantially reduced. Not only are cost reduced, management is relieved of the agonies of storage and retrieval.

Eliminating disruptive comments   like “Hey Mac get to the back of the line” are justification enough for operations research let alone the resulting efficiency improvements.

What is this thing called management?

Post World War 1 mangers and psychologists started to pay attention to management as a separate activity, distinct from the day to day business at hand. Industrial engineering was popularized.  Attention centered on the assembly floor including worker efficiency, time and motion studies and employee satisfaction surveys.  The Hawthorne experiments were undertaken by Western Electric.  Work performance was evaluated under different parameters in an effort to determine optimum conditions.  Surprisingly, productivity increased independent of the changes made.  The reason:  Management took an interest in the workers! Companies, including Lincoln Electric and Procter and Gamble implemented profit sharing programs throughout.

The Alfred P.Sloan School of Management began at MIT in 1914 to create a program specially designed to train men to be managers of business. Douglas McGregor of MIT soon appeared with his Theory X and Theory Y models that contrasted dictatorial practice to one of a more participative style. Peter Drucker, surely the management guru all time, introduced management by objectives and proved its benefits..

One of the more ubiquitous management concepts blossomed in the 1960s. The idea: Management practices could be applied beneficially to all organizations regardless of their field and function. This concept was a contributor to the rapid evolution of conglomerates.  One prelude was that Robert McNamara and his “Whiz Kids” had moved into Ford in the 1950s.  The company was in need of a remake and modern management concepts and techniques were to be the solution.

Business schools became universally popular, lead largely by Harvard. Research and analysis into management generated a whole spectrum of theories and practices, providing insight into organizational behavior and the elusive concept of leadership.

 Students and faculties  struggled with effective exploitation of new technology.  A case study : Edgar Villchu,  inventor of the acoustic suspension audio speaker (today’s standard) could generate no interest from the industry giants in the 1950s, so he and partner Henruy Kloss  launched Acoustics Research Inc in 1954. Exploitation of advanced ideas and the accomodation of the inventors was not at all understood at the time.

Mnagement of technology and the values of the inventors are much better undwerstood now. Today The Geekettes of Berlin are young female new entrepreneurs finding and giving partnering and mentoring in high tech businesses. The Tokyo (technological) starts up dating salons are similar incubators for new technological ventures. Would –be collaborators find like minded partners in both of the centers. New cultures are being created, particularly in Tokyo where risk taking and the value of new ideas are paramount. These centers have attracted sources of financing and other business functions to complete the picture.

The technology boom opened a huge management vista. Coincidentally IBM became ensnarled in difficulties. Louis Gerstner was charged with a remake.  He observed: “The people running our competitors are without a doubt the next generation of hyper-capitalists: Bill Gates, Steven Jobs, Larry Ellison, and Scott McNealy. These guys were hungry and they stayed hungry no matter how much money they accumulated.  It was awe-inspiring the way they ran their companies, the people they attracted, and how they paid them. The work ethic of these young, aggressive, flexible  managers and employees was awesome. They gladly worked around the clock to achieve  their objectives. The whole Silicon Valley ethos – lightening speed to market with just-good enough products wasn’t simply foreign to IBM, it was an entirely new game”.

This is another but certainly not the last chapter in the management book.