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  • “You may ask yourself, well, how did I get here?”

    Posted by onparkstreet on January 4th, 2012 (All posts by )

    Commenter Lynn Wheeler writes at zenpundit:

    “….Boyd would comment in the 80s that the approach was having significant downside on American corporations as former WW2 officers climbed the corporate ladder, creating similar massive, rigid, top-down command&control infrastructures (along with little agility to adapt to changing conditions, US auto industry being one such poster child).”

    Wheeler’s comment reminded me of the following post that I had meant to blog earlier:

    One occasion in particular in the late 1970s brought this home to me. McNamara had come to one of our staff meetings in the Western Africa Region of the World Bank, where I was a young manager, and he had said he would be ready to answer any questions.
     
    I felt fairly secure as an up-and-coming division chief and a risk-taking kind of guy. So I decided to ask McNamara the question that was on everyone’s lips in the corridors at the time, namely, whether he perceived any tension between his hard-driving policy of pushing out an ever-increasing volume of development loans and improving the quality of the projects that were being financed by the loans. In effect, was there a tension between quantity and quality?
     
    When the time came for questions, I spoke first at the meeting and posed the question.
     
    His reply to me was chilling.
     
    He said that people who asked that kind of question didn’t understand our obligation to do both—we had to do more loans and we had to have higher quality—there was no tension. People who didn’t see that didn’t belong in the World Bank.

    Steve Denning

    This too from a speech by Robert McNamara, “Security in the Contemporary World”:

    The rub comes in this: We do not always grasp the meaning of the word “security” in this context. In a modernizing society, security means development.
     

    Security is not military hardware, though it may include it. Security is not military force, though it may involve it. Security is not traditional military activity, though it may encompass it. Security is development. Without development, there can be no security. A developing nation that does not in fact develop simply cannot remain “secure.” It cannot remain secure for the intractable reason that its own citizenry cannot shed its human nature.
     

    If security implies anything, it implies a minimal measure of order and stability. Without internal development of at least a minimal degree, order and stability are simply not possible. They are not possible because human nature cannot be frustrated beyond intrinsic limits. It reacts because it must.
    [break]
    Development means economic, social, and political progress. It means a reasonable standard of living, and the word “reasonable” in this context requires continual redefinition. What is “reasonable” in an earlier stage of development will become “unreasonable” in a later stage.
     

    As development progresses, security progresses. And when the people of a nation have organized their own human and natural resources to provide themselves with what they need and expect out of life and have learned to compromise peacefully among competing demands in the larger national interest then their resistance to disorder and violence will be enormously increased.

    Think about this in terms of the “armed nation building” of the past decade or so and in terms of successive Clinton, Bush, and Obama administration policies. Really not that much difference if you look at it in terms of securing stability through development – armed or otherwise. Not a novel observation in any way, but bears in mind repeating as the 2012 Presidential campaign continues its “running in place” trajectory….

    Update:“Running in place” and “trajectory” don’t really go together, do they? Oh well. You all know what I mean….

     

    24 Responses to ““You may ask yourself, well, how did I get here?””

    1. david foster Says:

      “a rigid, top-down command&control structure (that assumed nobody at the bottom know what they were doing”

      Is this really correct? My reading of WWII history suggests that a very significant role was played by individual initiative on the part of subordinate leaders, from division commanders down through squad leaders.

    2. Michael Kennedy Says:

      I think the problem was seen by those at a lower level who believed they knew the answers frustrated at higher up intransigence. That’s where SNFU came from.

      Secondly, there was a belief that Africans and Indians and Other “undeveloped” people were just like the Marshall Plan Europeans who shared our bourgeois values. Under that dark skin, they were middle class, just like us. A similar fantasy gave us the housing meltdown.

    3. david foster Says:

      One very serious problem with leadership today: too many people who have spent most of their careers in “staff” positions (doing analysis and making recommendations, but without actual decision authority & accountability) into very important “line” positions (those that DO have ultimate decision authority) without first gaining sufficient experience and being tested adequately in lower-level “line” positions where failure would be less catastrophic.

      McNamara would probably have been both a better president of Ford, and a better Secretary of Defense, if he’d had experience actually commanding a bomber squadron and running a car dealership or a department within an auto plant.

    4. Jonathan Says:

      Yes, I’m not sure if the correct inference here is that certain institutional activities are to be avoided. Perhaps a better inference might be that it’s important to select leaders who have extensive operational experience within the institutions they manage or similar ones.

    5. Cris Says:

      David and Jonathan are spot on. Success in any field requires some “hands-on” experience. I’m plowing through Mungo Melvin’s bio of Erich von Manstein, the golden boy of the German General Staff. Early in Manstein’s career (regimental staff, WWI), he was wounded severely, having asked to participate in an attack. He found himself facing a Russian bayonet charge.
      (Being carried to the rear on a stretcher, he passed his colonel, who remarked, “That’ll teach you.”)
      Even as a Field Marshall, Manstein made it a point to be as close as possible to the front.

    6. Anonymous Says:

      I remember reading some years ago about the best run corporations in America – I forget the title. But they all had a couple of things in common – a decentralized command structure and top people willing to “get their hands dirty” wandering the premises seeing what even the lowest thought.

      There’s a funny story about Bill Hewlett cleaning a closet (unrecognized by a fellow employee at HP) but that story will have to come another time – back to work…

      Bill (incognito)

    7. Brian Dunbar Says:

      McNamara would probably have been both a better president of Ford, and a better Secretary of Defense, if he’d had experience actually commanding a bomber squadron and running a car dealership or a department within an auto plant.

      Not knowing much about the man, when I read that he was ‘President of Ford’ I assumed he _did_ have a lot of experience as a manager – running a department at a plant or _something_.

      I just now wikied. He did work at From from 1946 – 1960, true. But he was only president of Ford for a month before become SecDef. Reading between the lines it seems his work at Ford was a lot like his work for the Army in WWII: staff weenie.

    8. david foster Says:

      This discussion thread at Neptunus Lex touches on the problem of over-enthusiastic promotion of people based mainly on their staff experience…note especially this comment from G-man:

      “We’ve all had a CO who was tactically inept, couldn’t fly the aircraft, didn’t know NATOPS (and failed his NATOPS and his re-check eval), couldn’t land at the boat at night, and couldn’t navigate from Cecil to Mayport without a TACAN, flight following and a CAVU day. Yet they had O-3-O-4 staff experience, War College, flag aide or more staff, and got selected for command. No RAG tours, no back to back sea tours. And the coffee mess was the best in the wing, and the passageways glistened, and the names painted on the parking light were always like-new. And they could give great wardroom speeches. But they couldn’t lead, and they couldn’t fight. And they couldn’t handle things NOT THEIR WAY. Warnocrats.”

    9. Michael Kennedy Says:

      Everybody needs to read “Once an Eagle.”

      One very serious problem with leadership today: too many people who have spent most of their careers in “staff” positions (doing analysis and making recommendations, but without actual decision authority & accountability) into very important “line” positions (those that DO have ultimate decision authority) without first gaining sufficient experience and being tested adequately in lower-level “line” positions where failure would be less catastrophic.

      This is probably why doctors are unwelcome in the ranks of health care leaders. We are seen as rich entrepreneurs who have no corporate or organizational skills. Hospital administrators hate us because we are always in the way of their masterful plans to streamline healthcare. Streamlining, of course, excludes the patient (or customer) as a factor. Read about the coming demise of Best Buy<. I'm not sure it's true but I just bought a 60 inch TV at a Best Buy and was not impressed.

    10. Shannon Love Says:

      I think the real problem is that organizations are simply growing to large for one individual to lead successfully. It’s really hard to find an individual who has both intuition and feel but also the ability organize, process and absorb the vast amounts of information needed to understand a large enterprise. Steve Jobs is a recent example of someone who could.

      The staff officer type and the front line type have different and complementary skill sets. The staff officer knows how to process and organize large amounts of information and the front line has the intuitive feel needed to understand how far data and reality diverge. The front line also has an intuitive feel for the Clausewitzian “friction” which the more abstract oriented staff officer type lacks. Conversely, the front line type can be drowned by too much data and complexity.

      What we really need is twin-team management system like the old imperial army which paired an aristocrat selected primarily for social class and a commoner selected primarily by promoted merit e.g. Hindenburg and Ludendorff. The aristocrat often had the intuition and the commoner the new fangled book learning.

      Not sure how you would enforce that in business. People like to be large and in charge.

    11. Lynn Wheeler Says:

      I got blamed for online computer conferencing on the internal network in the late 70s & early 80s where there similar discussion about large bureaucracies that weren’t agile and adaptable with rigid top-down command&control structure (internal network was larger than the arpanet/internet from just about the beginning until sometime late ’85 or early ’86). I also sponsored Boyd’s briefings at IBM in the 80s.

      I’ve more recently done some work at the National Archives on my wife’s father status reports from WW2 … he was command of 1154th engineering combat group in ETO … which seemed exception with extremely fluid organization with different battalions constantly being added and removed from the group.

      With regard to the auto industry, there was a article (Washington Post?) in the early 80s calling for 100% unearned profit tax on the industry. The story was that congress had imposed quotas on imports to reduce competition and provide profits to the industry for use to completely remake themselves … instead they pocketed the money and continued business as usual.

      In the 1990 time-frame the industry had C4 task force to (finally?) look at completely remaking themselves. They were planning on heavily leveraging technology as part of the effort and so several technology vendors were invited to send participants. The industry could articulate all the issues (including foreign competition was significantly more agile and adaptable) and what needed to be done … but they still couldn’t remake themselves.

    12. Cousin Dave Says:

      I don’t think that the problem isn’t “getting hands dirty” so much as it is being insulated from the consequences of one’s decisions, good or bad. Barack Obama has certainly gotten his hands dirty in politics, community organizing and all that. But prior to becoming President, he had never once in his adult life made a decision that wasn’t pre-approved by someone above him, and so he had never had to either defend or explain the consequences of a decision. Now that he has no one above him to bless or cover for his decisions, he’s lost at sea.

    13. Brian Dunbar Says:

      I think the real problem is that organizations are simply growing to large for one individual to lead successfully.

      Lots of past examples of large organizations that functioned well. The Union Army had over a million men under arms in 1865, for example.

      Perhaps the problem with dysfunctional orgs now is that they ignore prior how-to examples, betting on X to change the (sorry) paradigm for getting things done.

    14. David Foster Says:

      Shannon….”I think the real problem is that organizations are simply growing to large for one individual to lead successfully”

      Carefully-thought-out organization design can partly address this issue, by structuring responsibilities such that most decisions, even more important decisions, are not limited by the mental bandwidth of a single individual. Often there is a tradeoff between this goal and the achievement of certain economies of scale.

      For example, a structure involving multiple fairly-autonomous business units will allow many decisions to be made at the business-unit general manager level which in a strictly functional organization would need to be made by the CEO. On the other hand, separate engineering and sales organizations for each business unit will at least theoretically lose out on some economies which could occur if they were consolidated into common company-wide functions.

    15. Lynn Wheeler Says:

      Neither “Confessions of an Economic Hit Man” http://www.amazon.com/Confessions-Economic-Hit-Man-ebook/dp/B001AFF266/ref=tmm_kin_title_0 nor “Westmoreland: The General Who Lost Vietnam” http://www.amazon.com/Westmoreland-General-Lost-Vietnam-ebook/dp/B005OCG11Q/ref=tmm_kin_title_0 were particular kind to McNamara

    16. Lynn Wheeler Says:

      Late last century, before GLBA and repeal of Glass-Steagal had kicked in … I reviewed an industry publication that gave numbers for the avg of the largest regional banks compared to the largest national banks … possibly several thousand items (no analysis just raw measures) … but the regional numbers were slightly better than the national numbers. This was before “too-big-to-fail” … one explanation was national banks were already too big to be optimally operated.

      Possibly only justification was size of compensation to top executives .. there was report in last couple years claiming ratio of top executive compensation to employee compensation exploded to 400:1 after having been 20:1 for a long time (and 10:1 for most of the rest of the world).

    17. onparkstreet Says:

      Thanks for the comments everyone and thanks for stopping by, Lynn Wheeler! I’m sorry I haven’t had time to respond properly. Maybe in another post.

      @ David Foster: I especially wanted to hear your comment because of your interest/expertise in management! Thanks for linking that thread.

      - Madhu

    18. Lynn Wheeler Says:

      Boyd in his briefings would contrast US army, rigid, top-down, command&control structure with Guderian’s direction “verbal orders only” for the blitzkrieg (supposedly to encourage commander on the spot to make decision w/o having to worry about CYA and after action reviews). About the time I first sponsored Boyd’s briefings with IBM … I had gotten embroiled with people doing a security audit who found the following definition laying around and complained that it was specifically to ridicule them:

      [Business Maxims:] Signs, real and imagined, which belong on the walls of the nation’s offices:
      1) Never Try to Teach a Pig to Sing; It Wastes Your Time and It Annoys the Pig.
      2) Sometimes the Crowd IS Right.
      3) Auditors Are the People Who Go in After the War Is Lost and Bayonet the Wounded.
      4) To Err Is Human — To Forgive Is Not Company Policy.

      “Age of Greed” http://www.amazon.com/Age-Greed-Triumph-Finance-ebook/dp/B004DEPF6I/ref=tmm_kin_title_0 has long section on Welch (@ GE) includes comment about his trying to offset corporate command&control structure. However, much of the section was about how he cut expenses, things like R&D needed for long term viability, in exchange for short-term benefits (which really started to be felt after he retired).

    19. David Foster Says:

      Lynn..it is impressive that IBM was able to recover successfully from the disruptions caused by microprocessors, the rise of independent system software companies, the Internet, etc. I’d be interested in any thoughts you have as to why/how they succeeded while so many other companies have failed at such turning points.

    20. Lynn Wheeler Says:

      Mid-80s, senior management was predicting that revenue would double from $60B to $120B (approx. $250B in today’s dollars) in few short years … mostly based on mainframe hardware sales … and started massive internal bldg program to double mainframe manufacturing capacity … this was at a time when indications that microprocessors was already started to drive mainframe business in the opposite direction. A few short years later, company goes into red (doesn’t double revenue).

      IBM Sees A Big Boost As It turns 100 http://www.npr.org/2011/12/28/143834727/ibm-sees-a-big-boost-as-it-turns-100

      has 83% of its business in services and software … means that only 17% is everything else … including all kinds of hardware including mainframe.

      It sort of reminds me of observation in Silicon Valley about startup business plans … that most common characteristic of startups, that had survived two years, were that they had completely changed their business plan at least once. In IBM’s case it wasn’t a startup and it wasn’t w/o a lot of pain. Contributing characteristic was that even with massive migration to microprocessors … there are many core critical infrastructures that still heavily use mainframes (even if that part of the business has been relatively stagnant)

    21. Lynn Wheeler Says:

      possibly accelerating the downturn was along with the massive bldg. program there was also a big uptick in the executive “fasttrack” program (mostly young MBAs). business operations got six-month turn-over of the anointed ones, which maximized their “mistake” learning experiences. However, the frequent fasttrack executives churn and all the mistakes had downside for the victim business operations.

    22. David Foster Says:

      Lynn…in his book about his experiences at IBM, Gerstner said he was amazed to find that “hundreds” of senior and mid-level managers had administrative assistants who had been drawn from the ranks of highly-promotable young managers but were basically performing secretarial chores for their principals…this was viewed as a key rung on the promotion ladder. One of these AAs had left a **sixty page document** for his successor, a guide for how to be the AA for whoever his executive was, which makes pretty funny reading.

    23. Lynn Wheeler Says:

      there is folklore that the top several hundred executives spent the last half of ’92 shifting expenses from following year into ’92. The issue was that bonuses were paid on dubious definition of “improvement”; the shift drove ’92 further into the red (for which there wasn’t any bonus) but allowed moving the following year slightly into the black … and as a result, the bonuses were more than twice the previous largest bonus ever paid (in effect the executives made more money by taking the company into the red) … all before Gerstner.

      “Age of Greed” describes KKR (& Gerstner’s stint at KKR) turn-around formula that enormously benefits the top executives at the expense of the majority of employees … and only rarely actually benefits the victim corporation (somewhat being played out in the current BAIN Capital discussions).

    24. Lynn Wheeler Says:

      some of the LBO/private-capital/take-over scenarios during “Age of Greed” … also plays out: https://plus.google.com/u/0/102794881687002297268/posts/3RkrnmcA7Nq and http://globalguerrillas.typepad.com/globalguerrillas/2011/10/journal-why-the-us-middle-class-is-broken.html and http://www.amazon.com/Buyout-America-Private-Equity-Credit/dp/1591842859/