Greek Complexity

Whither 8-hour days?

Kathy Sierra makes an impassioned case for treating employees well. But I have to say, I had no idea 8 hours a day was still considered standard in the US. I thought only places like Germany and France still had 8-hour work days.

In Singapore, most people work more than 8 hours a day as a general rule. (I'm not counting people like receptionists and bank tellers because those people's roles are tied closely to traditional work hours.) And apart from the office, I know that many people put in at least a couple of hours from home on most days.

Link: Creating Passionate Users: When clients (and bosses) go bad...

Why is it that some companies have such an unhealthy relationship with their clients (which means an equally unhealthy relationship with their employees)? It's not like we won't work our butts off for the right reasons, but when it becomes standard to put in 10 hour days and work at least a part of every weekend, simply to keep up with the insane deadlines, our creative energy drops to zero. You're getting labor but no passion. Productivity with no creativity. And we'll switch jobs in a nanosecond if we get the chance. The worst is when you're expected to work like a dog and the culture discourages complaining or even questioning.

Great blogging quote

Jonathan Schwartz, COO of Sun Microsystems quoted in the FT:

The idea that a senior executive could do their job without a blog is like saying they could do it without e-mail. I'm sure they could, but they would be less effective.

Link: FT.com / Industries / IT - A blog reveals the mind of Sun (subscription required)

Work

Morality and music

Barry Ritholtz writes a killer piece on how the music industry is dealing with the threat of P2P, and why it's doing it all wrong.

He starts with:

Apologists for the industry are replacing the catchphrase “Its illegal” with a new mantra.

“Its morally wrong.”

He then proceeds to demolish this view utterly and completely. Before one realises where the thunderstorm came from, he ends with:

I’m all for moral behavior. However, I have no patience for an ethics lectures from a corrupt and incompetent ring of real pirates.

The English language does not contain the superlative that can do the article justice. Bravo.

READ: The Big Picture: New Arguments Against P2P: The Phony Moral Debate

"Scale-free" networks

TheFeature writes about research showing that so-called "scale-free" networks are better, more robust designs than the alternative.

Using e-mail rather than SMS as the messaging medium for mobile phones has made mobile Internet services in Japan more successful than in the West, says an industry expert -- a claim supported by recently discovered mathematical properties of networks.

A scale-free network is one that consists of a few large "hubs" and many distributed "nodes". This isn't as abstract as it sounds. One example is simply the way people are organised socially. For instance, cultural information spreads easily across the world, without being dependent on a central arbiter or dispenser of information.

The researcher profiled in the article says that the same concept needs to be put to use when building communication networks. He says that email networks are scale-free whereas SMS networks are inherently hobbled by their network design. One quick-and-dirty measure of this difference in efficiency is that sending a message to 1000 people by email costs the same as sending the same message to 1 person, whereas SMS costs are proportional to the number of recipients. This, he says, is a lesson that designers of future networks must keep in mind for truly scalable architectures.

Interestingly, the same lesson is applicable to business as well, or even societies. A "value web" is likely to be far more robust and valuable than a value chain. I remember reading a study of the European mobile industry landscape about a year ago which made this very point -- that the industry is organised as a web rather than a vertical chain. I imagine the same is true of other fast-changing industries such as software, semiconductors and even media.

Link: TheFeature :: Email, Scale-Free Networks, and the Mobile Internet

FT: I-banks need to recognise the new world order

Frank Partnoy in today's FT:

After years of shelter, Morgan Stanley and its peers are finally confronting the changes in markets that have so dramatically reshaped the rest of the business world, while Wall Street has calcified. Banking league tables, which tabulate market shares in various areas, have remained virtually unchanged, even as most other industries have been crushed and reformed by competition, deregulation, and disintermediation.

One reason the basic landscape of Wall Street has remained unchanged is the success of powerful chief executives, who have dodged shareholders and market forces by rewarding other constituents, particularly board members and senior employees. The residual claimants of an investment bank are not primarily shareholders but employees, who capture marginal gains through bonuses. The directors of banks benefit substantially from supporting chief executives: they are clients as much as monitors.

But the main reason for the eventual demise of banks in their current form, says Mr Partnoy, is that the world is immeasurably more complex than it used to be and banks have failed to keep up. He ends with a solemn prediction:

An alternative to costly and complex banks is an atomised market, where individuals and institutions do business without a large financial intermediary. Banks may merge to survive this inevitable transition; but in the long run many of their functions will disappear.

The sharpest minds from old Morgan Stanley say the company's leader [Philip Purcell] is steering it in the wrong direction. But wherever he goes, the core functions of any Wall Street bank cannot remain inside the same complex and costly shell forever. Mr Purcell's fate is beside the point. The franchise is coming down, but not for the reason eight angry shareholders think. Watch carefully - the venerable firm of yore is waving goodbye.

Link: FT.com / Comment & analysis - Wall Street's franchise is fading (subscription required)

Leadership: ability and legitimacy

Read a couple of articles in the FT about leadership.

Article #1 considers how leadership ability comes about. It also defines different kinds of leaders: "a  'strategist' is someone with long-term vision who sees barriers to change as a series of challenges to be overcome and an 'alchemist', someone who can reinvent an organisation and draw people to share his or her vision almost effortlessly". Excerpt:

Leadership requires good raw material to work with, and leaders must have some inherent ability if training and development are to make a difference. Nonetheless, virtually every successful leader in history has had a tutor or served an apprenticeship that taught them necessary skills. Alexander the Great studied under Aristotle; in modern times, Jack Welch trained as a junior engineer at General Electric before rising to become its leader. Both men's approaches to leadership were shaped by their early experiences. Natural intelligence and ability are essential for leading, but it is just as essential that these qualities be developed and enhanced.

Article #2 is differently positioned. John Kay examines the question of how and why business leaders and large companies acquire legitimacy in their leadership of the world. His conclusion is:

The governance of large companies is a public as well as a private matter. When a company says: "we seek to create shareholder value", it is proper to ask: "what gives you the right to do that?" The case for capitalism is not a moral one derived from abstract notions of freedom of contract but a pragmatic argument rooted in the success of the system in promoting efficiency and innovation. Modern business and the people who lead it achieve authority through, and only through, their success. The legitimacy of their authority is achieved - literally - by delivering the goods.

Links: FT.com / Business life - Leadership training lacks vision and John Kay: Business leaders have no natural authority

When competitors are acquired...

Interesting comments from BeyondVC and A VC about how to react when one's competitor is acquired.

A VC:

Stand Up and Cheer. Loudly.

BeyondVC:

Usually when a competitor is bought at a huge price the first reaction is why it wasn't me.  The second reaction usually becomes fear as you begin to worry about what your competitor's product will do in terms of market share with a huge sales force and partner channel, strong brand name, and global infrastructure to support the customer growth.

But, he says:

First of all, the majority of acquisitions fail.  Secondly, your competitor will be inwardly focused and quite distracted for the first 6 months trying to integrate with the parent company.  Finally, depending on how the acquisition was completed, employees will begin to leave as soon as they get the bulk of their money off of (sic) the table.

Last year, for example, one of my companies was able to build an incredible sales team overnight [when a competitor was acquired], saving us six months of hiring and giving us an opportunity to hit the market harder and faster.

Must discuss this with my M&A classmates!

Links: When competitors are acquired..., Stand Up and Cheer

Whence leadership? Whence power?

I have been fortunate over the past couple of years to have met a fair number of quite senior people, whom one could describe as powerful and wealthy industry leaders. I also know people that I am certain will be the leaders of tomorrow based on their current track record.

In my naivete, and having met these people up close and personal, I expected to see some special distinguishing mark that set them apart from others. I almost expected them to be physically bigger than everyone else, or at the very least to have some personality trait that set them apart from others. I had the same feeling when I watched my first live India-vs-WI cricket match at Wankhede Stadium in Bombay.

Instead, I came away with the feeling that these were "just" people. No common factor among their personalities, which spanned the spectrum from engaging to soft-spoken to intellectual. Not one of these people threw his weight around with others. Not one made a big show of his wealth. In fact, I am fairly certain that were I to have a conversation with two people, one an average joe and the other an industry titan, and if the conversation was restricted to the weather, then I would not be able to tell the titan apart from the joe.

So what sets apart some people from others? Is it brains, hard work and some measure of good luck or is there also some special x-factor involved (which I obviously am not capable of seeing!)?

After Nick Leeson

An interesting article from the Financial Times. Excerpts:

So what are the lessons a decade on [from Barings' collapse]? When people talk about lessons from such events, they usually mean ways to stop them recurring.

No, the lesson I take from Barings is more human - about how to cope when disaster strikes, as it occasionally will. Most people who run banks, even if they acknowledge the theoretical possibility, do not think it will happen to them. They cannot believe they would make such juvenile errors in believing a rogue trader's lies.

The first instinct of some [Barings executives] was to deny they were to blame. Then there was what has become known in US corporate trials as the "30,000-feet defence" - that those at the top could not have been expected to know what was going on.

[But] when companies do well, not many executives go around arguing that they have nothing to do with the achievements of people at the bottom of the organisation. Taking responsibility when things go wrong comes with the territory.

[Also], it is easier on the psyche to admit to yourself that you messed up. Otherwise, you will be doomed to keep droning on about all the mitigating factors to sceptical listeners.

Link: John Gapper: Human lesson of Nick Leeson's fraud