You know, I thought long and hard about the title of this blog entry. I read a lot as well (I told you that already, right?).
I just finished an article in this month's Fortune magazine entitled "What Were They Smoking?". Great title. And very appropriate given the subject nature of the article. It's a wonderful story about plain old-fashioned corporate greed. The sub-plot though is an observation on human nature. How does the saying go? "Success has many parents and failure is a bastard child". A new CEO was named for Citi, one of the largest "losers" in the sub-prime mortgage mess. First thing out of the gate what did this new CEO do? Not only blame his predecessor, but profess his innocence and ignorance to the multi-billion dollar mess being created. Now, I will profess not to have much understanding in the doings of Wall Street and billion dollar CDO deals, but if the guy claims a pay check in the $17 million dollar range (just for last year) I would think he would pay attention to something that was gobbling up $40 billion of his company's investment strategy. It's a great article, I would highly recommend picking up a copy. By the way, it looks like Citi is getting bailed out in the short term my some middle east investors. Citi will pay a huge amount of interest (and give up 11% of the company), but hey, their short term books will look a lot better. Time to put in my sell order.
So, today's post is really about two subjects. Firstly, what I call the "blame game". Secondly, the inefficiencies of human organization.
Let's talk about the blame game. This one is easy and I know I'm probably just being a master of the obvious. On the Dawgvent, we call this "germans". As in "Remember, when the Germans bombed Pearl Harbor?!?!" from Animal House. I feel the need though to point out some obvious observations.
I was having this discussion over the Thanksgiving break with my wife's father. So, what happens if we "succeed" (definition questionable) in Iraq? The Republicans will take the credit, well but then again the Democrats will as well. Include a smattering of independents, libertarians and general wackos (Cynthia McKinney) in this and no one will have done anything wrong or made any mistakes in judgement (apologies to the almost 4000 brave men and women who have lost their lives and the estimated 300,000 civilian casualties). On the other hand, what happens if we "fail" (again, definition questionable). The safe money bet here again is that the finger pointing will begin. Ring a bell? Just like what is happening at Citi. (The before-mentioned Fortune article spends most of its newsprint talking about what is about to happen at Merrill - so watch out, here we go again.) Now, other than just general human nature being what it is, how did this come about?
That question brings me to my second subject. I swear I did not read this in any management book. If anyone can post a reference I will respectfully give credit and apologize to the author.
Whenever a human organization (corporation, club, government, political party, etc) reaches 1000 people in size its effectiveness becomes maximized at that level. Any subsequent growth of 1000 people reduces it effectives by 25%. And so on and so on. Why 1000? Completely based on observation - I have absolutely no statistical data to justify this (see my previous post on statistics). I have really enjoyed working for companies with less than 100 people, everyone has a job, everyone knows that if it's "nobody's responsibility" then it becomes their own. If they don't pull their own weight they are obviously recognizable and (with good management practices) cut from the fold. In large corporations (greater than 10,000 employees) the less talented, the less intelligence, frankly the less entrepreneurial can find a nice little hole for themselves, defer, deflect and generally avoid any and all responsibility - and probably end up making a pretty nice life for themselves. I call these people "hobbits". You know them, you've dealt with them before. They pick up the phone when you call customer "service", they process your expense reports, they "help" make your corporate travel reservations while constantly reminding you of "corporate policy".
Hey you can't buy that plane ticket that gets you to the client 3 hours earlier! It costs $100 more and corporate policy plainly states that you must buy the lowest coach ticket available for that day's travel. No, it doesn't matter that you are billing $200/hr and will therefore miss $600 of revenue opportunity, it is against policy.
Airlines are great examples of this. A friend recently arrives in Atlanta on a connecting flight. By some miracle, his original flight actually gets to Atlanta early! (wow) He walks to the gate of his connection to find a earlier flight (empty) and boarding for his final destination. The airline agent at the gate (I won't name the airline, but they are the biggest airline in/out of Atlanta) says the flight is available and he will get home almost 3 hours early - great! The only bad news is they want to charge him an additional $50 for this privilege. This airline has an empty flight, it costs them nothing to put him on the earlier flight. They also miss out on the opportunity to potentially sell his original seat on the later flight (which is nearly full) to someone else for more money.
This is what I mean by being anti-entrepreneurial. This is inefficient, this is why foreign entities are kicking our butts in the business arena. Face it folks, we have lost "it". You know, the thing that made us business giants? "It" does not involve finger pointing - "it" demands responsibility. "It" does not involve inefficiencies at every turn and hiring non-entrepreneurial personnel. "It" is something that CAN be taught, you don't have to be born with "it".
As Americans frankly, we need to do better. I'm committed to "it", are you?
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