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  • Archive for the 'Business' Category

    25 Stories About Work – Plains Blizzard

    Posted by Carl from Chicago on 2nd October 2014 (All posts by )

    I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)…

    Somewhere in Iowa, the 90′s…

    I was an auditor for a long since merged together utility. We used to fly in and out every week, leaving Sunday night (in your suit, in case your luggage was lost by the airlines) and leaving the office at 5pm Friday and driving to an airport 3 hours away to arrive home about 10pm Friday. We did this every week for the “busy season” which lasted about 3 months or so.

    For Thanksgiving weekend one time we left on a Wednesday. A giant storm was coming up over the plains as we drove across Iowa into Nebraska where the airport was for flights into Chicago. At the time we didn’t really have cold weather gear, we just had long wool coats and leather gloves to go over our suits. We didn’t even have boots, just work shoes.

    We stopped at a gas station and the wind was really whipping across the plains. When I got out to pump gas I was almost knocked flat on my back. While shivering in the car after pumping gas I told them we ought to turn back and just give up for the night and stay in Iowa.

    I was the lowest ranking guy so I was overruled. There were obvious reasons why everyone wanted to get home for Thanksgiving and away from work in Iowa.
    Read the rest of this entry »

    Posted in Business, Personal Narrative | 1 Comment »

    The Restaurant and Bar Business

    Posted by Carl from Chicago on 27th September 2014 (All posts by )

    I am far from an expert on the Restaurant and Bar Business segments but as a long time resident of Chicago in various areas packed with these establishments from Wrigleyville to Bucktown to River North I am at least a frequent regular qualified to throw my 2 cents in. I hadn’t thought too much about the economics of this until I talked to a friend who recently opened two great pizza places where he is the owner about what you get when you buy a used restaurant.

    You get nothing… you have to re-model and start over the food concept. And when you sell, the next guy does the same.

    What makes a good restaurant as a business? There are a lot of variables and I am only speculating, but certainly timing and location are key elements. For instance you have the Twisted Spoke, a bar on Grand Avenue in what used to be a pretty sketchy part of town that is rapidly gentrifying, and they have the iconic “skeleton on a motorcycle” on permanent rotation in front. This bar has survived for a long time with a mix of hipster / biker cool, an astoundingly good drink / beer mix, and surprisingly good food and interesting / witty / iconic employees. I’d bet that back in the day this place was actually full of bikers but nowadays the crowd looked like the usual hipsters in plaid shirts. And don’t forget the enormous benefit of a rooftop – it astounds me how many bars / restaurants ignore the fact that Chicago people LOVE to sit outside during the few nice days that we receive every year and they drink like fish and eat until they can’t even move.

    Read the rest of this entry »

    Posted in Business, Chicagoania | 35 Comments »

    Peter Thiel and George Gilder debate on “The Prospects for Technology and Economic Growth”

    Posted by Lexington Green on 26th September 2014 (All posts by )

    This is an excellent dialogue between George Gilder and Peter Thiel, from 2012, regarding two different versions of what the future will look like.

    It is a little over an hour, and I highly recommend you listen to it.

    Gilder is a thorough-going optimist. He sees a world where everything is good and getting better, and critiques of technological change are generally wrong-headed. That is a brutal over-simplification, of course. Gilder is a seasoned speaker, debater and writer. He makes a decent case, better than I am suggesting here.

    Theil makes a more subtle case. He says that technology, other than the technology has stalled for decades. He says that the fields of engineering that deal with “stuff” have been — and this is a strong word — “outlawed.” As a result, the only areas where technological change is happening are in finance and computing. Nuclear engineering, for example, would have been a suicidal career choice if you made it a generation ago.

    So, Theil is one hand a pessimist. He sees a decay in the rate of technological development, a decay in standards of living and real wages, a decline in optimism and expectations for a better future.

    However, he does not conclude, “so, we are doomed.”

    What he says instead is that we cannot pretend that technological progress grows on trees. He says that we need to address the obstacles to technological change which are thwarting the potential for a better future.

    All of that seems correct.

    The vision Jim Bennett and I depict in America 3.0 is one in which the excessive regulatory obstacles to technological progress, capital formation, and new business formation have been greatly reduced. Under that scenario, much of the halted progress in the world of “stuff” should resume. This is particularly the case because, as Gilder correctly notes, the extraordinary advances in computing power will enhance the potential of all of these areas. The potential for rapid development, leading to rapid economic growth and rising living standards, is within our reach. It is being held back by political and regulatory obstacles, not technical or scientific ones.

    That has to change. But, it might not. Nothing is inevitable.

    It is up to us to make it happen.

    I have not yet read Thiel’s new book Zero to One: Notes on Startups, or How to Build the Future. It is en route from Amazon as I type this, however. Here is the web page for the book.

    Posted in America 3.0, Book Notes, Business, Tech | 8 Comments »

    “Culture Mapping” Essay by Jonathan Fletcher Applies Emmanuel Todd’s Analysis, Reaches Conclusions Consistent with America 3.0

    Posted by Lexington Green on 22nd September 2014 (All posts by )

    Jonathan Fletcher

    I strongly recommend that you read the excellent essay Culture-mapping: A framework for understanding international B2b decision-making, by Jonathan Fletcher who is the Group Managing Director of Illuminas. Mr. Fletcher’s expertise lies in part in “analysing and interpreting market research data.”

    In his paper Mr. Fletcher presents “a framework for understanding decision-making in different business cultures that will enable B2b researchers confronted with a new market to ask the right questions quickly and not waste time and money looking in the wrong places for the wrong things.” Mr. Fletcher finds that culture is “the hidden dimension” which has a “significant influence on economic and industrial behaviour and performance, but a large part of culture is implicit, unconscious and hidden from direct view.”

    Read the rest of this entry »

    Posted in America 3.0, Anglosphere, Arts & Letters, Book Notes, Business, History, Society, USA | 4 Comments »

    Worthwhile Reading & Viewing

    Posted by David Foster on 21st September 2014 (All posts by )

    Some great spiderweb pictures

    Glacier National Park pictures from D L Sly, who writes at Villainous Company

    High school principal bans Chik-fil-A at Booster Club events.  She justifies her decision on grounds of “inclusivity and diversity.”  Well, I guess that could be one translation of the German term Gleichschaltung.

    SWAT team raid on barbershop rebuked by appeals court

    Wishful science:  ”if there’s little incentive to publish negative results, whatever reigning paradigm is operating in a given field will be very resistant to change”

    Years ago, Arthur Koestler asserted that human beings are basically crazy and that maybe it would be possible to develop a sanity-improving drug and put it in everyone’s drinking water.  I was reminded of Koestler’s suggestion by this:  Should we all take a bit of lithium?

    Avoiding managerial groupthink with the right kind of diversity

    People succeed where systems fail

    Arguing with Leftists:  How narratives trump everything

    Making subway cars in Yonkers:  a photo essay

    Posted in Business, Civil Liberties, Education, Human Behavior, Law Enforcement, Leftism, Management, Photos | 6 Comments »

    Sign of a New Peak for Stocks?

    Posted by Carl from Chicago on 20th September 2014 (All posts by )

    Back in the woeful years of the dot.com boom and bust I worked for a company with a dubious distinction. The value of that company in the stock market was less than the value of the cash we had on our books. What the market was essentially saying is that the sum total of all our efforts as employees was NEGATIVE – we would be worth more if we just shut down immediately and gave back the cash to investors. The fate of that company, of course, was to go bankrupt.

    Today there are some other major signs of froth in the market. Yahoo is a classic web / advertising / technology stock with a solid market capitalization of $40 billion. Yahoo’s CEO, Marissa Mayer, was a Google alumna and has been receiving a lot of press for her intelligence and drive to change the company, as well as her good looks.

    Screen Shot 2014-09-20 at 8.43.59 AM

    However, all is not as it seems.  The primary value for Yahoo isn’t its online advertising, email, or users – it is the stakes that they amassed in the hot Chinese e commerce company Alibaba (NYSE: BABA) and also Yahoo Japan.  In fact, the value of Yahoo is less than the value of these stakes, which are approximately $45B, partially due to the reason listed in this Bloomberg article:

    While the market value is large for Yahoo’s Asian assets, that doesn’t necessarily reflect the value available to investors and the company because of taxes, said Ben Schachter, an analyst at Macquarie Securities USA Inc. Yahoo, which would have made $8.3 billion by selling Alibaba shares at the IPO, only reaped around $5.1 billion after taxes.

    Taxes are ‘‘one of the big issues,” Schachter said.

    While it is true that $45B in investment value isn’t worth $45B because of the after-tax implications, it certainly implies that the market isn’t valuing Yahoo at very much at all.  It is also possible that the market thinks that Alibaba is over-valued at its current price of near $100 (after a huge run-up from its IPO price of $68, another huge sign of froth in the market) but the two stocks will generally track closely together now.  Yahoo is sort of a broken “tracking stock” for this value.
    Read the rest of this entry »

    Posted in Business, Economics & Finance | 7 Comments »

    GE has sold its Appliance business

    Posted by David Foster on 9th September 2014 (All posts by )

    …to Electrolux, for $3.3 billion.

    Today’s WSJ story on the sale began with the words “General Electric, which commercialized the electric toaster and self-cleaning oven”…sounds sort of trivial  Actually, household appliances have been an important factor in the liberation of human energies and in social change.

    Owen Young, who was GE’s chairman from 1922-1939, grew up as a farm boy.  To his biographer Ida Tarbell, he described what life had been like on each Monday–wash day:

    He drew from his memory a vivid picture of its miseries: the milk coming into the house from the barn; the skimming to be done; the pans and buckets to be washed; the churn waiting attention; the wash boiler on the stove while the wash tub and its back-breaking device, the washboard, stood by; the kitchen full of steam; hungry men at the door anxious to get at the day’s work and one pale, tired, and discouraged woman in the midst of this confusion.

    Posted in Business, History, Society, Tech | 16 Comments »

    Massive Disruption to the Cable Industry Coming – Part II

    Posted by Carl from Chicago on 9th September 2014 (All posts by )

    Recently I wrote about the impact to the cable industry that is coming in the form of Microwave Fixed Wireless here.

    While on vacation in Door County I noticed a small store front office in Bailey’s Harbor for Door County Broadband. The first thing I thought of is how would a company like this operate out of a small storefront with just one truck (parked outside)? Then I realized that this firm is the local upstart providing Microwave Fixed Wireless against the incumbent phone / cable company in that region, Frontier. Unlike the local phone / cable company (who really are one and the same nowadays), you can run a microwave fixed wireless broadband company with few employees because you don’t have to pay for all the same physical infrastructure (telecom poles, physical connections) when you are doing a wireless model; you just need to 1) get the physical infrastructure (towers) in place and then 2) hook up the dish in the homes and point it at the tower. This model needs far fewer “boots on the ground” than the traditional model.

    While researching this further, I came across this document called

    America’s Broadband Heroes:
    Fixed Wireless Broadband Providers
    Delivering Broadband to Unserved and Underserved Americans

    This document is clearly biased in favor of the upstart fixed wireless providers, but has many interesting and sourced facts about the industry and is highly recommended reading.

    While wireline and mobile wireless carriers focus on regulatory gaming and manipulation of the Universal Service Fund to benefit their bottom lines, many Americans are left without access to broadband services because they reside in places that are deemed to be unprofitable by traditional carriers. Even more Americans have substandard or overpriced broadband access and no alternatives for obtaining better service because of the lack of competition in the broadband market. It is clear that the current system is broken, and the absence of competition, abuse of USF and the lack of access to critical network facilities for competitive entrants puts our nation into a position of disadvantage compared to other OECD countries.
    Read the rest of this entry »

    Posted in Big Government, Business, Economics & Finance | 10 Comments »

    Symbol, Toy, Brand

    Posted by David Foster on 6th September 2014 (All posts by )

    In World War I and especially in World War II, the phrase “GI Joe” became a generic term for US soldiers.  In the early 1960s, GI Joe also became a toy (“action figure”) sold by Hasbro, and was later licensed to Paramount for film production.

    This article tells the story of Mitchell Paige, a real US Marine whose face became the model for that of the GI Joe action figure.  It also tells us that in a new movie, Paramount plans to make a change in GI Joe’s identity…specifically, he will be turned into an acronym.  ”GI Joe” will now stand for “Global Integrated Joint Operating Entity,” a multinational force based in Brussels.  The marketing geniuses at Paramount apparently believe it necessary to “eliminate Joe’s connection to the US military”  for the film to succeed big time with international audiences.

    Barack Obama and the Democrats have been quick to denounce as “unpatriotic” those American companies which modify their organization structures to take advantage of lower non-US tax rates.  Do you think maybe they will denounce Paramount as unpatriotic for this genericization of an American symbol?

    (Link via our friend Bill Brandt at  The Lexicans)

    Posted in Business, History, Media, USA, War and Peace | 11 Comments »

    Massive Disruption To The Cable Industry Coming

    Posted by Carl from Chicago on 28th August 2014 (All posts by )

    Things that are often obvious in hindsight don’t seem so clear at the time. For instance I didn’t understand why anyone would want to send around a PDF file when you had Microsoft Word. And it wasn’t obvious to me that mobile phones would completely displace land lines.

    We are about to see something similar happen to the cable industry, which is at its oligopolist apex right now.  I don’t know when or how long it will take to have an effect, but in the end I believe that the outcome will be significant.

    MICROWAVE FIXED WIRELESS

    For large condominium buildings in Chicago, it is now the norm, not the exception, to go with Microwave Fixed Wireless for internet in the building, rather than fiber. Here is one company (I just found them on the internet, don’t know anything about them) that attempts to describe the benefits:

    Telephone and cable companies have been positioning fiber optics as the ultimate internet technology for some time, but the truth is that fiber has some inherent disadvantages that have been addressed by wireless microwave-based internet solutions. Experts across the globe are starting to acknowledge what the engineers at JAB Broadband have long been touting: microwave is a faster, lower latency, lower cost alternative to fiber and you don’t have to wait until someone decides to light up your building.

    Not to be confused with the appliance you use for heating your leftovers, microwave wireless networks transmit and receive radio signals through the air enabling high-speed data transmission with very limited latency. Benefits include:

    Limited infrastructure required on site
    Faster speeds because data travels over a direct path (point-to-point)
    Low logistical and operation costs
    Expanded availability
    Low latency

    There are many companies in Chicago that provide this service for condominium buildings and businesses. You need to have a rooftop with line of sight access to a provider and you put a dish on the roof. This dish connects to the main network of the building and is distributed just like internet service that you’d receive from a standard fiber optics provider (such as a cable company). The traditional downside of microwave transmission was unreliability – if the line of sight was obscured by heavy rain, for instance, then you don’t receive any signal. This happens today with DirectTV if the weather is bad – you receive the “all or part of this program did not record” message when you pull it up on your DVR (or it is jumpy and impossible to watch if you are looking at “live” programming). Note that DirectTV has a much more complex problem to fix with its satellites than a condo building does in Chicago because their satellites are in orbit rather than nearby with simple line of sight needs, so these problems are conceptually similar but actually very different in terms of difficulty to solve.

    The reliability issue has mostly been solved and barring catastrophic weather, your point to point wireless internet is as reliable as fiber brought into your building. Don’t forget that fiber, too, can be cut by local construction crews and other means and is also susceptible to failures of various sorts.

    Once you cut over to Fixed Wireless (microwave transmission), you have effectively moved out of the cable orbit as far as internet service.  Many facilities offer 10 meg, 50 meg, and even 100 meg connections for each condo unit, which means that the provider needs to bring that speed times the number of units with some overall reduction since everyone won’t be using the full internet all the time.
    Read the rest of this entry »

    Posted in Business, Chicagoania | 10 Comments »

    Miami Condo Boom

    Posted by Jonathan on 15th August 2014 (All posts by )

    Funny how this kind of thing sneaks up on you.

    Prepare to be overwhelmed with the most comprehensive bus tour of the nearly 60 new condo towers proposed for Greater Downtown Miami.
     
    Miami condo expert Peter Zalewski – who has been cited more than 1,000 times by local, state, national and international news outlets – is scheduled to narrate the 10 AM morning tour of the Greater Downtown Miami preconstruction condo market where more than 17,300 new units are proposed. The 2 PM afternoon tour of Greater Downtown Miami is narrated in Spanish by licensed Florida real estate broker Jenny Huertas. Zalewski will ride on the afternoon tour to answer any questions.

    17,000 new units. Of course it’s unlikely that all of them will be built, but still. And this time around the developers aren’t borrowing so much, and many of the buyers are paying cash, but still. Wasn’t it just last week that we were in the midst of an endless economic stagnation? Or maybe it was a bubble. It’s easy to lose track.

    It looks like there’s a lot more US dollars in Latin America than anyone thought. Or could it be inflation? Nah. If there were inflation we’d see crazy stuff like the Dow at 17k and $12 hamburgers. . .

    I’m sure it will all end well.

    Posted in Business, Economics & Finance, Human Behavior, Markets and Trading | 8 Comments »

    Book Review: Nice Work, by David Lodge

    Posted by David Foster on 12th August 2014 (All posts by )

    Nice Work by David Lodge

    —-

    What happens when an expert on 19th-century British industrial novels—who is a professor, a feminist, and a deconstructionist–finds herself in an actual factory?

    This not being a time-travel novel, the factory is a contemporary one for the book’s setting in mid-1980s Britain.  It is a metalworking plant called Pringle’s, run by managing director Vic Wilcox.  Vic is not thrilled when his boss  (Pringle’s is owned by a conglomerate) suggests that he participate in something called the “shadow” program, designed to make academics and businesspeople better-acquainted with one another, but he goes along with the request.

    Robyn Penrose, literature professor at a nearby university, is also not thrilled about her nomination to participate in the program, but she is concerned about her job in an era of reduced university funding, and also thinks she had better do as asked.  The way the program works is that Robyn will be Vic’s “shadow,”  joining him at the plant every Wednesday, sitting in on his regular activities, and learning just a bit about what is involved in managing a business.

    Vic is a self-made man, not well-educated and with few interests outside work.  He is acutely aware of the danger that faces Pringle’s under the current economic climate, and is resolved that his factory will not join the long list of those that have been tossed on the scrapheap.

    There is nothing quite so forlorn as a closed factory–Vic Wilcox knows, having supervised a shutdown himself in his time.  A factory is sustained by the energy of its own functioning, the throb and whine of machinery, the unceasing motion of assembly lines, the ebb and flow of workers changing shifts, the hiss of airbrakes and the growl of diesel engines from wagons delivering raw materials at one gate, taking away finished goods at the other.  When you put a stop to all that, when the place is silent and empty, all that is left is a large, ramshackle shed–cold, filthy and depressing.  Well, that won’t happen at Pringle’s, hopefully, as they say.  Hopefully.

    Robyn and Vic dislike each other on first meeting:  Vic sees Robyn’s profession as useless, which Robyn sees Vic’s managerial role as brutal and greedy.  She is appalled by what she sees in her first tour of the factory..especially the foundry:

    They crossed another yard, where hulks of obsolete machinery crouched, bleeding rust into their blankets of snow, and entered a large building with a high vaulted roof hidden in gloom.  This space rang with the most barbaric noise Robyn had ever experienced…The floor was covered with a black substance that looked like soot, but grated under the soles of her boots like sand.  The air reeked with a sulphurous, resinous smell, and a fine drizzle of black dust fell on their heads from the roof.  Here and there the open doors of furnaces glowed a dangerous red, and in the far corner of the building what looked like a stream of molten lave trickled down a curved channel from roof to floor…It was the most terrible place she had ever been in her life.  To say that to herself restored the original meaning of the word “terrible”:  it provoked terror, even a kind of awe.  To think of being that man, wrestling with the heavy awkward lumps of metal in that maelstrom of heat, dust and stench, deafened by the unspeakable noise of the vibrating grid, working like that for hour after hour, day after day….That he was black seemed the final indignity:  her heart swelled with the recognition of the spectacle’s powerful symbolism.

    But still:

    The situation was so bizarre, so totally unlike her usual environment, that there was a kind of exhilaration to be found in it…She thought of what her colleagues and students might be doing this Wednesday morning–earnestly discussing the poetry of John Donne or the novels of Jane usten or the nature of modernism, in centrally heated, carpeted rooms…Penny Black would be feeding more statistics on wife-beating in the West Midlands into her data-based, and Robyn’s mother would be giving a coffee morning for some charitable cause…What would they all think if they could see her now?

    Read the rest of this entry »

    Posted in Academia, Book Notes, Britain, Business, Human Behavior, Management | 12 Comments »

    Worthwhile Reading & Viewing

    Posted by David Foster on 7th August 2014 (All posts by )

    Knitted footwear…may have significant implications for the global shoe industry

    US Civil Rights commissioner uses “science” to argue for restricting the free speech rights of college students.  (Is anyone surprised that he was formerly an aide to Nancy Pelosi?)

    College professor accuses program about gardening of being “racist”

    Functional geniuses and business idiots

    Fuel cells as a major energy source:  for real this time?

    Sea and sand from the sky.  More here.

    The Social Pathologist is back!

    Posted in Academia, Business, Civil Liberties, Civil Society, Energy & Power Generation, Management, Photos | 13 Comments »

    Investing Related Items

    Posted by Carl from Chicago on 3rd August 2014 (All posts by )

    Over at Trust Funds for Kids I’ve been updating the portfolios and researching relevant topics for detailed analysis.

    One interesting item to me is ADR’s or American Depository Receipts, which represent foreign stocks trading in US markets. “Sponsored” ADR’s trade on NYSE and NASDAQ and “unsponsored” ones trade on the OTC or “pink sheet” markets. Recently one of my stocks (Siemens) went from a sponsored to non-sponsored ADR status and I started researching it here.

    I also researched the impact of currency moves on a portfolio, focusing on the Australian dollar vs. the US dollar and its effect on a particular Australian Bank Westpac. It is interesting to view the two elements in an intertwined fashion, since the US dollar was a poor performer over the last 5 years relative to many other currencies.

    Finally I look a bit at performance over the last year and marvel about how easy it is to assess performance these days with free graphing and overlay tools, compared to the manual effort in past years’. It still is difficult to always properly factor in dividends and the timing of cash flows (investments), but that’s a different story.

    Cross posted at LITGM

    Posted in Business, Investment Journal | 5 Comments »

    Cool Video of a CNC Machine Tool at Work

    Posted by David Foster on 23rd July 2014 (All posts by )

    Here’s a motorcycle helmet of fairly complex design being fabricated out of a single block of aluminum by a computer-numerically-controlled machine tool:

    LINK

    There’s been a lot of excitement lately about 3-D printing, and rightly so, but the hype level in some quarters may be getting a little extreme.  I think a lot of journalists lack an appropriate context into which to put this emerging technology, and, in particular, fail to understand just how much flexibility and universality is already provided by the numerically-controlled machine tools which have been in common use for the last several decades.

    See also my post on 3-D printing from 2013.

    Posted in Business, Tech | 5 Comments »

    Words and Phrases I Dislike: “Middle-Skilled Jobs”

    Posted by David Foster on 20th July 2014 (All posts by )

    WSJ has a good article about three people who have put themselves on good career trajectories without benefit of 4-year college degrees.  One is a welder, one is a nurse, and one is an owner of franchised fast-food restaurants.  Unfortunately, however, the article uncritically uses the term “middle-skilled jobs,” which is seen increasingly in articles about the job market.  These jobs are said to be those which require more than high school and less than four years of college, and typically involve some sort of technical or practical training.

    “Middle-skilled”….really?  Is the job of a toolmaker in a factory really less-skilled than the entry-level job likely to be obtained by someone with an undergraduate Sociology degree?  Is a nurse’s job less-skilled than the work likely to be assigned to someone hired on the basis of his English degree?  Does owning and operating a food truck really require less skill than the kind of tasks typically assigned to an undergraduate Business major?  Is the work of an air traffic controller less-skilled than the kind of a job likely to result from a major in Victim Studies?

    It is good that there is increasing recognition of good career paths not requiring college degrees; however, the term “Middle-Skilled Jobs” is misleading and contributes to the continuation of credential-worship.

    Posted in Academia, Business, Economics & Finance, Education, Media, Tech | 17 Comments »

    Words and Phrases I Dislike: “Controls X Percent”

    Posted by David Foster on 18th July 2014 (All posts by )

    …as in, “Universal Entities controls 73% of the Gerbilator market.”

    Uh, no, actually they probably don’t.  IBM once had something like 70% of the market for computer hardware, software, and services.  The big integrated steel companies, Bethlehem Steel and US Steel, once had a very high share of the American steel market.  Sears once had a high share of the retail market.  These examples could be multiplied easily and almost endlessly.

    A seller into a market does not control that market, or its position in that market, absent direct violence (the Mafia and various drug cartels, for example) or heavy government intervention–and even the latter is unlikely to be reliable in the long term, as the owners of TV station licenses facing first cable competition, and later Internet competition as well, found out, and as the owners of taxicab franchises facing Uber and similar competition are now discovering.

    The phrase “controls X percent,” when applied to a market, is almost always intellectually lazy, and is used far too often by writers who should know better.

    Posted in Business, Economics & Finance, Media | 9 Comments »

    The Roboticization of Customer Service

    Posted by David Foster on 16th June 2014 (All posts by )

    (Ran into this 2006 post while searching for an old Photon Courier post, and realized it had never been posted on Chicago Boyz.  It is unfortunately still quite relevant.)

    Almost every day, one encounters some business that is attempting to micromanage the interactions between its employees and its customers.

    At lunchtime a couple of weeks ago, I was in the mood for bacon & eggs, so I went to a restaurant (part of a local chain) that has breakfast items all day long. The interaction went something like this:

    Waitperson: Welcome to Snarfers-by-the-Lake, my name is Linda, I’ll be your server today.

    Me: Hi, Linda. I’m kind of in a breakfast mood, so I think I’ll have the bacon & eggs.

    WP (looks confused, as if she’d never heard of this dish before): Bacon & eggs? I don’t think…Oh, that would be our “eggs any style.”

    Me: OK…style I like ‘em is over medium, with the bacon pretty crisp.

    WP: Over medium…and would you like bacon or sausage with that?

    Me: Bacon…pretty crisp.

    WP: And our soup today is cream of broccoli.

    Me: Soup with breakfast? That would be something different!

    WP: I know it’s silly, but they make me say it.

    I know it’s silly, but they make me say it. In how many consumer-oriented businesses could employees say the same thing?

    Also a couple of weeks ago, I had to call my local telco, always a dreaded experience. After I had finally gotten through the levels of the voice response menu and got a person, it was:

    CS Agent: Thank you for calling, how may I provide you with exceptional service today?

    How may I provide you with exceptional service today? You can bet the agent didn’t come up with this phrase all by herself. And I doubt if her management came up with it all on their own. No, I detect the fine hand of a consultant here–maybe the pointy-haired guy in Dilbert went into the CS consulting business.

    What imaginable purpose is there in requiring this phrase to be used in thousands of calls per day? Customers will decide if the service is “exceptional” or not based on what gets done or not done. You’re not going to convince them by using the word. And from the standpoint of the CS agents, this kind of thing can only breed cynicism.

    Read the rest of this entry »

    Posted in Business, Customer Service, Human Behavior, Management | 32 Comments »

    The Rule of Credentialed “Experts”

    Posted by David Foster on 14th June 2014 (All posts by )

    Lead and Gold links an article by Noemie Emery:

    They had a dream. For almost a hundred years now, the famed academic-artistic-and-punditry industrial complex has dreamed of a government run by their kind of people (i.e., nature’s noblemen), whose intelligence, wit, and refined sensibilities would bring us a heaven on earth. Their keen intellects would cut through the clutter as mere mortals’ couldn’t. They would lift up the wretched, oppressed by cruel forces. Above all, they would counter the greed of the merchants, the limited views of the business community, and the ignorance of the conformist and dim middle class…Their stock in trade was their belief in themselves, and their contempt for the way the middle class thought, lived, and made and spent money: Commerce was crude, consumption was vulgar, and industry, which employed millions and improved the lives of many more people, too gross and/or grubby for words.

    These attitudes, Emery notes, explain the passionate attraction that so many academics and journalists felt toward Barack Obama:

    Best of all, he was the person whom the two branches of the liberal kingdom—the academics and journalists—wanted to be, a man who shared their sensibilities and their views of the good and the beautiful. This was the chance of a lifetime to shape the world to their measure. He and they were the ones they were waiting for, and with him, they longed for transcendent achievements. But in the event they were undone by the three things (Fred) Siegel had pegged as their signature weaknesses: They had too much belief in the brilliance of experts, they were completely dismissive of public opinion, and they had a contempt for the great middle class.

    Much of the “expertise” asserted by people in the academic-artistic-and-punditry complex is entirely imaginary, as far as the organization and management of social institutions goes.  L&G cites one of my old posts at Photon Courier:

    In university humanities departments, theory is increasingly dominant–not theory in the traditional scholarly and scientific sense of a tentative conceptual model, always subject to revision, but theory in the sense of an almost religious doctrine, accepted on the basis of assertion and authority. To quote Professor “X” once again: “Graduate “education” in a humanities discipline like English seems to be primarily about indoctrination and self-replication.”… 

    Becoming an alcolyte of some all-encompassing theory can spare you from the effort of learning about anything else. For example: if everything is about (for example) power relationships–all literature, all history, all science, even all mathematics–you don’t need to actually learn much about medieval poetry, or about the Second Law of thermodynamics, or about isolationism in the 1930s. You can look smugly down on those poor drudges who do study such things, while enjoying “that intellectual sweep of comprehension known only to adolescents, psychopaths and college professors” (the phrase is from Andrew Klavan’s unusual novel True Crime.)

    See also L&G’s post How We Live Now: The Rule of Inept Experts.

    I  believe that the overemphasis on educational credentials has played a major part in shifting the power balance between Line and Staff in organizations of all types…here, I am using “Line” to refer to people who have decision-making authority and responsibility, and corresponding accountability for outcomes, while “Staff” refers to people who analyze, study, and advise, but are not themselves decision-makers.  It was once pretty well understood that one should not take a person whose entire experience is in Staff positions (however exalted) and put him in a high-level Line position, where the consequences of failure will be very serious, without first having him gain experience and prove his performance in lower-level Line positions where the consequences of failure will be less-devastating to the entire organization.  This seems to be much less well-understood today, the ultimate example of course being the career path of Barack Obama.

    Fred Siegel, mentioned in Noemie Emery’s article, is the author of the very interesting book The Revolt Against the Masses, which is on my (long) list of books that need reviewing.

    Posted in Academia, Big Government, Book Notes, Business, Civil Society, Management, Media, Political Philosophy, Politics, USA | 17 Comments »

    Picketty’s Introduction

    Posted by TM Lutas on 9th June 2014 (All posts by )

    Thomas Piketty has written a monster of a book, Capital in the Twenty-First Century. I find myself in strange agreement with Brad DeLong, that the collective conservative response is weak. I had a patch of time that left me twiddling my thumbs waiting for some pretty long database operations to finish over the past four days. So I went and decided to fisk the book. I just finished the introduction. It took four posts, Part I, Part II, Part III, Part IV and overran the spare time I had available from a database import and indexing task by about 12 hours.

    Now I know why the criticism is so weak. Piketty is a target rich environment and doing a line by line analysis is simply exhausting. But it’s the only way to be sure.

    Posted in Book Notes, Business, Economics & Finance, Public Finance, Society, Taxes, USA | 18 Comments »

    My Books and the End of My Printed Books

    Posted by Carl from Chicago on 7th June 2014 (All posts by )

    An important event in my household is the spring planting of everything that is going into our garden on the balcony of our condo. They are grown inside under a grow light (mostly, except for items like lettuce and carrots) and then they get put outside.

    The tomato plants grow by leaps and bounds! So what is used every day to keep up with their vigor? Why my old books, of course.

    There you can see the usual suspects on my nightstand… some WW2 (Van Der Vat is a great author), of course America 3.0 by our good friend Michael Lotus, and “Africa’s World War” on the Congo. Then you have a couple of architecture books and finance books like the classsic “The Myth of the Rational Market”.

    I’ve switched over (mostly) to the kindle now and haven’t been buying new books in hardcover. I bought a book on New Yorker cartoons in hardcover since I figured that would be the type of coffee table book that people might actually pick up and look at. I also might buy an occasional architecture or infographic book in softcover or used, as well. But that’s about it.
    Read the rest of this entry »

    Posted in Blogging, Book Notes, Business | 18 Comments »

    I Give Advice… And They Don’t Take It

    Posted by Carl from Chicago on 1st June 2014 (All posts by )

    For many years I worked as a consultant across a variety of industries. While there are many ways to describe the type of work I did, my favorite (when talking to a teenager or child) was

    I give advice, and they don’t take it

    This article from Today’s NY Times titled “Why You Hate Work” provided a pithy antecdote that summarized this situation:

    Several years ago, we did a pilot program with 150 accountants in the middle of their firm’s busy tax season. Historically, employees work extremely long hours during these demanding periods, and are measured and evaluated based on how many hours they put in.

    Recognizing the value of intermittent rest, we persuaded this firm to allow one group of accountants to work in a different way — alternating highly focused and uninterrupted 90-minute periods of work with 10-to-15-minute breaks in between, and a full one-hour break in the late afternoon, when our tendency to fall into a slump is higher. Our pilot group of employees was also permitted to leave as soon as they had accomplished a designated amount of work.

    With higher focus, these employees ended up getting more work done in less time, left work earlier in the evenings than the rest of their colleagues, and reported a much less stressful overall experience during the busy season. Their turnover rate was far lower than that of employees in the rest of the firm. Senior leaders were aware of the results, but the firm didn’t ultimately change any of its practices. “We just don’t know any other way to measure them, except by their hours,” one leader told us. Recently, we got a call from the same firm. “Could you come back?” one of the partners asked. “Our people are still getting burned out during tax season.”

    This brief example has it all:
    1) the client has diagnosed the situation (people are getting burned out and quit)
    2) the consulting firm develops an alternative course of action
    3) the pilot was successful
    4) the client disregards the recommendation (over some period of time) and is back where they started

    While there are many jokes about consultants such as “they borrow your watch and tell you the time” it is important to note that every consultant needs a client and the clients are the “root” of the problem. Why commission a study if you don’t intend to follow through on the results?

    Lots of reasons. For starters – the act of “trying to do something” or “conducting an analysis” buys time and inaction, which is a precious commodity at most companies. It is very difficult to get something done, and it is even MORE difficult to get something done when an alternative hypothesis is under way (such as a consulting effort). In the end, usually the client knows how to solve the underlying problem, but the effort that it would take and the corresponding rewards to those managers tasked with carrying out the solution is too meager to justify the organizational resistance that will occur.

    All of these organizational problems are compounded by short-term thinking; executives want results NOW, this quarter, not improved performance 2-3 years down the road. They may talk about the long term, but the short term consumes 90% of their waking hours, and the next quarterly earnings release. Changing a culture or implementing a wrenching solution that differs from the status quo 1) is hard 2) takes time 3) is met with systemic and subtle resistance at every turn. The final bullet in change internally are external events; even if you can somehow make progress against your current ills, a “new” external shock will take away the focus and organizational oxygen from YOUR issue unless you can implement a rapid and permanent solution (i.e. close something down, sell it, “burn the ships”) before your organizational capital melts away.

    Here’s the part where someone often asks “what’s the solution?” and tries to summarize it all up. I don’t know. It is hard enough to figure out the long term arc of consulting, a multi billion dollar business, and how it survives jibes and efforts to extinguish it, without trying to think about how to make it better.

    Generally the types of corporations that rely on consultants to do their thinking for them don’t last long, unless they are somehow protected from competition (government, non-profit, unionized, utilities, much of financial services, etc…). It is these sorts of enterprise, along with the dying, that provide much of the consultants’ income. You don’t hear Google and Amazon or even GE talk about how consultants are helping them; they solve their own problems. I guess this is the underlying solution – be a better company.

    Cross posted at LITGM

    Posted in Business | 4 Comments »

    Geography and Entrepreneurship

    Posted by David Foster on 23rd May 2014 (All posts by )

    …an interesting discussion at Ricochet:

    Imagine a Republican governor slashed Pennsylvania’s regulations and taxes.  Imagine a Republican President and Congress slashed federal regulations and taxes.

    Would that do anything to ensure a tech boom in central Pennsylvania?

    No.

    Why? Go try to convince an Ivy League computer engineer to move to the near suburbs of NYC. No prob. Now try to pitch them on moving 3 hours from NYC to Amish country. Impossible. Charles Murray’s Super Zips win every time.

    Put another way: Rand Paul might be able to solicit Silicon Valley donor dollars to Kentucky, but he’ll never export Kentucky values to the Valley.

    RTWT, and the comments.

    Posted in Business, Human Behavior, Politics, Tech, USA | 45 Comments »

    Corporate Culture, George Westinghouse, and Ford’s New CEO

    Posted by David Foster on 10th May 2014 (All posts by )

    Bill Waddell writes about a product-quality decision made by Mark Fields, who will shortly become CEO at Ford…and about the reaction of then-and-current CEO Alan Mulally:

    Early on his tenure at Ford Mulally implemented a process in a weekly review meeting whereby the execs color coded their status reports – green for those on target, yellow for those running behind and red for any project in serious trouble.

    No one had ever brought a red project to the meeting when Fields learned that there was a serious defect in the roll out of the first Edge cars.  Customers and dealers were anxiously waiting for the Edge and it was a critical part of Ford’s strategy.

    According to “Once Upon a Car” – a great book about the crises in the auto industry when the economic bottom fell out in 2008:

    “Fields had two choices, neither one of them good. He could ship the Edges that worked, restart production, and hope the glitch could be found and fixed on the fly. Or he could delay the launch and be the first executive to go into Mulally’s Thursday-morning meeting with a big fat red dot on his weekly progress sheet. He sat down with his team in Dearborn and made the call. “We are not going to ship a vehicle before it is ready,” he said. ‘We just can’t . We have to delay it. I’m going to have to call it a red.’ His staff members looked at him. He could almost feel their pity.

    At the next business review, Fields took his seat, right next to Mulally. As luck would have it, he was the first executive to present. His mind raced. I’m going to get killed here , he thought. Then he took a deep breath and showed everyone the launch page with a large red dot on it. ‘The Edge launch is red,’ he said. ‘And we’re delaying it.’

    Fields thought he felt people moving their chairs away from the table, away from him. Bringing bad news to senior management at Ford was typically avoided at all costs. Nobody wanted to even be near the culprit. The Thunderbird Room got very quiet. Everyone looked at Mulally, waiting for his reaction. A few seconds passed. Then Mulally turned toward Fields, stood up, and started clapping.

    This reminds me of a story about entrepreneur/inventor/industrialist George Westinghouse, which I posted years ago as part of my Leadership Vignettes series, and re-posted more recently:

    The date, sometime during the late 1800s. The scene, a Westinghouse Electric factory complex in Pittsburgh, with an unpaved yard between buildings. A young laborer–a recent immigrant–is trundling a wheelbarrow, filled with heavy copper ingots, over an iron slab which serves as a track across the yard. The wheelbarrow goes off the track and into the mud. As the laborer struggles to get it back on the track, other workers begin mocking him.

    At that moment, a man in formal clothing is crossing the yard. It is George Westinghouse, founder and chief executive of the company. He wades into the mud and helps the man get the wheelbarrow back on the slab.

    Not a word was said, but powerful messages were transmitted: when someone is having problems, you don’t laugh at him–you help him. When things go wrong, no one is too important to dive in and get his hands dirty.

    This is a splendid example of how good organizational cultures are created: through the power of example. Think how much more effective Westinghouse’s action was than the mere posting of a “corporate values statement” containing phrases such as “we must respect our fellow employees at all times.” Not that such things lack value, but they are meaningless unless backed up by action.

    It would have been very easy for Westinghouse to simply ignore the incident and continue on his way. After all, he was heading to a meeting about something–a multi-million-dollar bond issue, say–compared with which a wheelbarrow stuck in the mud would seem to pale in importance. But his instincts were the right ones.

    (The story is from Empires of Light, by Jill Jonnes)

    And similarly, Alan Mulally’s action in applauding Mark Fields’ bad news was far more effective than any poster or e-mail tag line to the effect that “transparency is our highest value,” or some such phrase.

    Disclosure: I’m a Ford shareholder.

     

    Posted in Book Notes, Business, Management | 8 Comments »

    Give Me Land, Lots of Land

    Posted by Sgt. Mom on 24th April 2014 (All posts by )

    This would appear to be the new theme song for the Fed-Gov’s Bureau of Land Management – that bane of ranchers like Cliven Bundy – as well as a whole lot of other ranchers, farmers, loggers, small landowners, and owners of tiny bits of property on the edge of or in areas of spectacular natural beauty, west of the Mississippi and between the Mexican and Canadian borders.
    Read the rest of this entry »

    Posted in Americas, Big Government, Business, Civil Society, Current Events, Entrepreneurship, Environment, Law, North America | 11 Comments »