The issue is that the bean counters count beans and not creativity. Can we think of a way to connect and individual’s creativity to money flow? As an engineer I am most productive when I solve a business need without writing code. How can I associate my contributions with measurable profit?
Code and documentation are debts, Features divided by lines of code is a good metric.
Dear god.
Once that metric becomes anything close to a target the monstrosities it would bring ae horrific!
>> Having dealt with 2 PE exists, rarely is the proposal something as upfront and silly as slash everyones pay. Agreed, but a gradual erosion can occur over the course of several years. PEGs and the operating company's management team have massive incentives to hit their growth metrics. If decreasing 401K contributions helps management hit their EBITDA target, many would argue that they should do exactly that. Howeve…
The reality is that this kind of stupidity is built into accounting systems. It's not even the people with the spreadsheets. They're doing what they've been taught to do. It just happens to be completely wrong-headed - if you're interested in tangible long term growth and not quarterly plunder which moves money around without seeding genuine real value. Which is why companies can "grow" in accounting terms while actu…
Just look at Intel to see a company that was managed by the accounting people. Great numbers for a few years, large dividend, etc, but now they have to spend billions and billions to put the company back on track and give it a future.
All the lean sigma stuff seems like another useless management fad to me that only benefits consultants. Is that what you're saying here?
Like many management system fads, it started as a useful kernel of wisdom or obvious maxim that idiots ran with and turned into a monster. In the case of six sigma, the idea is about constantly optimizing your workflows and not accepting "we've always done it this way" as an excuse. But most people lack the critical thinking skills to correctly apply wisdom when necessary and instead need a solid framework to operate…
> we've always done it this way
What was done for some time is at least to some extent proven o work. Any new way is not yet proven to work and can be worse (or can be better but it is not granted)
Quick story: I was the CFO for a company that sold to a private equity group (PEG). I took over as the CEO as the founders retired, leaving me to deal with the PEG. It quickly became apparent that the PEG managers looked at everything through the lens of an Excel spreadsheet. These guys were brilliant attorneys and analysts but lacked experience building businesses and managing teams. Ultimately, they couldn’t add mu…
Granted bean counters fail as leaders (typically) but I would strongly argue it's the job of leaders to explain up front costs and value to been counters. E.g. yes not providing free/cheap coffee/drinks in the office saves money, but it has a damaging cost in terms of employee attitudes and getting people to talk openly in a friendly environment about what they're working on and being able to ask for help. These thin…
When company stops providing free coffee/snacks many employees will see this as a signal that a company is going down and it is time to look for a new job. Such signals are hard to quantify but they are real.
McNamara basically admits this himself in the documentary The Fog of War: https://en.wikipedia.org/wiki/The_Fog_of_War It's worth a watch but it's very soft on him and his role. Still a very good documentary.
Great documentary. I felt it was a person trying to come clean and ease his conscious on his death bed.
If that was him on his death bed he must have been seriously sharp in his prime.
Quick story: I was the CFO for a company that sold to a private equity group (PEG). I took over as the CEO as the founders retired, leaving me to deal with the PEG. It quickly became apparent that the PEG managers looked at everything through the lens of an Excel spreadsheet. These guys were brilliant attorneys and analysts but lacked experience building businesses and managing teams. Ultimately, they couldn’t add mu…
this is basically the micro example behind the deindustrialization of the United States. Mitt Romney type corporate raider MBAs outsourcing everything to China for cost savings to maximize short term profit expand this over 50 years by 1000s of similar groups of people doing the same thing and you go from the "Arsenal of Democracy" to begging China for masks and ventilators
That, and the industrial base lobbying to allow "free trade" and subsidize expansion into countries which have high levels of corruption, low environmental protections and worker's rights.
> Getting a cheaper rate on labor is far more beneficial to the company than say making sure it's employees are happy. Whoa, citation needed. I’m fairly certain yhis isn’t true unless you are optimizing for just the next month.
Companies exist for the stockholders, not the employees or the public at large.
Quick story: I was the CFO for a company that sold to a private equity group (PEG). I took over as the CEO as the founders retired, leaving me to deal with the PEG. It quickly became apparent that the PEG managers looked at everything through the lens of an Excel spreadsheet. These guys were brilliant attorneys and analysts but lacked experience building businesses and managing teams. Ultimately, they couldn’t add mu…
I worked at a company that started to go through the "you can't improve what you don't measure" phase. In general it was good for the org I was in, but I used to have to remind management that there's a corollary to that saying, which is: you necessarily improve things you measure at the expense of the things which are difficult or impossible to measure. This seems to be a hard one for some types to truly grok. A com…
there's another issue with measuring too much: if you only derive value of that you can measure, you will constantly feel bad when doing things that have no apparent measurable value.
So then you say to yourself, relaxing on the sofa has value because it makes you perform better to have breaks. But do you really believe this? And in any case, you still can't help measuring value into relaxing because you are brainwashed into thinking everything must be quantified in order to justify something. So even relaxing or playing video games must be seen in such a context in order for you not to feel bad. it's becoming rediculous.
The reality is that this kind of stupidity is built into accounting systems. It's not even the people with the spreadsheets. They're doing what they've been taught to do. It just happens to be completely wrong-headed - if you're interested in tangible long term growth and not quarterly plunder which moves money around without seeding genuine real value. Which is why companies can "grow" in accounting terms while actu…
Just look at Intel to see a company that was managed by the accounting people. Great numbers for a few years, large dividend, etc, but now they have to spend billions and billions to put the company back on track and give it a future.
Disagree. Intel has had continuous dividends for at least 30 years.
Few giant American companies have been as consistently successful as Intel. I can think of only Microsoft, one or two energy conglomerates like ExxonMobil, a telecom or two like Verizon, and maybe a bank like Goldman Sachs.