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The Management Myth

60 replies on 5 pages. Most recent reply: May 24, 2012 10:49 PM by Kuruvilla Abraham

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James Watson

Posts: 2024
Nickname: watson
Registered: Sep, 2005

Re: The Management Myth

Posted: Mar 16, 2010 8:00 AM

> I was trained as an econometrician

Robert-

Can you recommend a introductory econometrics text?

thanks,

-Jmaes

robert young

Posts: 361
Nickname: funbunny
Registered: Sep, 2003

Re: The Management Myth

Posted: Mar 16, 2010 12:03 PM

> > You're wrong on that last part: it was the very
> existence
> > of a blue-collar middle class that made the US economy
> > strong (when it was). To understand that, one need
> only
> > compare economic progress in plantation style countries
> to
> > the US and Europe post WW-II. These economies, up to
> the
> > first oil shock in 1973, grew internally and
> organically,
> > due almost entirely to a 600 lb. gorilla middle class.
> > Without that, you end up like China, where the few
> > w exploit the many in the export of widgets to ... wait
> > for it .... middle class economies. Without the US and
> > Europe, China would still be in the 16th century.
> Pillage
> > enough of the Western middle classes, and the whole
> > edifice crumbles. Wait, it is. Fancy that.
>
> I don't disagree with you on this in general, but in the
> case of GM, they were paying 80K a year to line workers
> who who were retired. There's nothing wrong with that per
> se but it's hard to break even, much less make a profit
> when you are doing that, especially in a competitive
> industry. In their case, when they dealt with the union
> decades ago they would offer big pension and retirement
> packages. That is, they put off paying these costs. In a
> way, it's a pretty good example of screwing the union and
> the taxpayers. They made all kinds of promises that they
> would never be able to make good on. Then they go
> bankrupt and the taxpayers now foot the bill for the
> pensions but at a decreased rate for the union.

A rather more balanced view, and one with which I basically agree. The problems are: a deal's a deal, and the use of wage arbitrage is, so far as I am concerned, both unethical and anti-American. For some recent history and insight, read up the NY Times for the last week (there have been multiple articles and columns) or so on the machinations of the Chinese. In a nutshell (you don't have to believe me, of course, just do the reading), China (and India, for that matter) is a fascist state propping up a handful of capitalists (and many more foreign ones) by exploiting their own people and the West's through subsidizes in China and currency manipulation.

A middle-class socio-economy can only exist if the Middle Class does get most of the income; when only the few get most of it (and our 1% get 24%) you have some form of fascism, by whatever name. The problem has been exacerbated by the laissez faire attitude of the Right Wing since Reagan/Thatcher, wherein productivity gains have gone almost exclusively to capital. That's part of the shift to the 1%. The other major part of the shift is the destruction of blue-collar middle class through the move of real capital to China (and BRIC, generally).

What capitalists never get is that the point of production isn't money (which is ephemeral, even specie), but barter. Without real production on both sides of trade (intra- and inter-national), collapse is inevitable. China hoards Western currencies, in the apparent thought that it holds something valuable; it doesn't. By destroying the West's productive capacities, all it holds (at most) is leaves of paper (really, just bits in some machine). Trade is of goods, not money.

robert young

Posts: 361
Nickname: funbunny
Registered: Sep, 2003

Re: The Management Myth

Posted: Mar 16, 2010 12:18 PM

Wonnacott and Wonnacott is what I used (I think it's still in print, even if Amazon doesn't):
http://www.amazon.com/Econometrics-Probability-Mathematical-Statistics-Wonnacott/dp/047105514X/ref=sr_1_1?ie=UTF8&s=books&qid=1268766576&sr=1-1

http://www.amazon.com/Applied-Econometrics-R-Use/dp/0387773169/ref=sr_1_27?ie=UTF8&s=books&qid=1268766342&sr=1-27

This is much newer, and uses R, which is OS. I've been trying R out recently, and it compares quite well with SAS/SPSS. R's only significant shortcoming is that it is memory bound, without some fancy footwork, so really large datasets don't work. For most data that an econometrician would see, it'll be fine. I haven't used the book, however.

http://www.amazon.com/Theory-Practice-Econometrics-Probability-Statistics/dp/047189530X/ref=sr_1_35?ie=UTF8&s=books&qid=1268766784&sr=1-35

This is current, and from Wiley; you can't (mostly) go wrong with Wiley math/stat texts. Again, I haven't got it. It does come up on Amazon as 4 stars.

robert young

Posts: 361
Nickname: funbunny
Registered: Sep, 2003

Re: The Management Myth

Posted: Mar 16, 2010 12:31 PM

http://www.amazon.com/Elements-Econometrics-Second-Jan-Kmenta/dp/0472108867/ref=sr_1_1?ie=UTF8&s=books&qid=1268767745&sr=1-1

This is the one I used in grad school. Not so introductory, if you've not done maths recently.

James Watson

Posts: 2024
Nickname: watson
Registered: Sep, 2005

Re: The Management Myth

Posted: Mar 16, 2010 1:16 PM

> A rather more balanced view, and one with which I
> basically agree. The problems are: a deal's a deal, and
> the use of wage arbitrage is, so far as I am concerned,
> both unethical and anti-American.

Just in case it wasn't clear, my point is that even though there is some truth to the idea that GMs employment costs were out-of-control, this doesn't make them a victim of the unions. They created the situation themselves. Perhaps if they had been more focused on producing really good products instead of short-term profit-taking, they might have been able to dig themselves out of the hole but all-in-all, it was poor management that caused their problems, not the unions. Even the existence of a union is possibly the fault of the carmakers, at least in current management thought. 'Union avoidance' might sound fascist until you understand that really it's about treating your employees well even if it seems that you don't need to. In other words, don't give them a reason to want to unionize.

David Moffat

Posts: 1
Nickname: uncled
Registered: Mar, 2010

Re: The Management Myth

Posted: Mar 28, 2010 3:40 PM

I have a (cynical) saying:
"Those who can't do, manage.
Those who can't manage, reorganize.
Those who can't reorganize, consult."

A business prof at UNC has a saying:
"Advertising is your way of getting more than your fair share."
Business school ethic?

robert young

Posts: 361
Nickname: funbunny
Registered: Sep, 2003

Re: The Management Myth

Posted: Mar 29, 2010 8:50 AM

> > A rather more balanced view, and one with which I
> > basically agree. The problems are: a deal's a deal,
> and
> > the use of wage arbitrage is, so far as I am concerned,
> > both unethical and anti-American.
>
> Just in case it wasn't clear, my point is that even though
> there is some truth to the idea that GMs employment costs
> were out-of-control, this doesn't make them a victim of
> the unions. They created the situation themselves.
> Perhaps if they had been more focused on producing really
> y good products instead of short-term profit-taking, they
> might have been able to dig themselves out of the hole but
> all-in-all, it was poor management that caused their
> problems, not the unions. Even the existence of a union
> is possibly the fault of the carmakers, at least in
> current management thought. 'Union avoidance' might sound
> fascist until you understand that really it's about
> treating your employees well even if it seems that you
> don't need to. In other words, don't give them a reason
> to want to unionize.

One point I always forget to mention, but is the most important one, is that the Right Wingnut Capitalist Apologists always invoke Adam Smith as justification for what they do. What none of them mention is what Smith actually had to say about capital and capitalists (he wasn't fond of them, on the whole), which was that the return on capital was only going to be (in his description of the world) just enough to lure folks from earning wages. The notion that capitalists would consume gargantuan percentages of national income simply wasn't possible in his "model". Smith was overwhelmingly naive, of course. But that suited capitalists ever since.

Cameron Purdy

Posts: 186
Nickname: cpurdy
Registered: Dec, 2004

Re: The Management Myth

Posted: Mar 29, 2010 11:57 AM

> Just in case it wasn't clear, my point is that even though
> there is some truth to the idea that GMs employment costs
> were out-of-control, this doesn't make them a victim of
> the unions. They created the situation themselves.
> Perhaps if they had been more focused on producing really
> good products instead of short-term profit-taking, they
> might have been able to dig themselves out of the hole but
> all-in-all, it was poor management that caused their
> problems, not the unions.

This is a naive argument.

In reality, the unions colluded with management, and they both got what they wanted:

* The unions got large (and impossible to sustain) concessions from management that allowed them to continue to wield the aggregate power of worker representation, and take a percentage from each worker

* The management got the workers back to work (and lived very well off of GM in the short term)

On the other hand, lets see who gets screwed:

* More recent employees (kind of like the late-comers to the tulip bulb craze).

* Shareholders (who lost almost 100% of their investments!), many of which were workers and former workers!

* Taxpayers, who -- despite not necessarily having healthcare -- have to pay for the healthcare benefits that GM promised, and for the bailout.

So follow the money, and you'll see that the employee who retired at 48 years old and continued to receive pay and full benefits until he died at 100 years old in 2005 did very well. So did all the execs who left years ago to pillage other corporate entities (or retire). And (for years) so did the unions and their leadership. And they are all culpable. Not just management. Not just the unions.

You see much the same story (with different players) in the financial sector .. and with our government ..

Peace,

Cameron.

William Mason

Posts: 1
Nickname: platypus
Registered: Jun, 2006

Re: The Management Myth

Posted: Mar 30, 2010 8:25 AM

Hello Bruce,

I always like your stuff. "Thinking in C++" has always been one of my main referrals when folk ask how to get into programming. I also passionately feel that non-agreement is the spice of innovation and discovery -- In other words it is (imho) healthy to not agree with each other. This is a particularly good thing when one considers philosophy and science.

I grew-up on science and engineering (I consider engineering; applied science), I thrived on philosophy ... And I graduated in mathematics (in computer science, oy ve). I was part of teams that take care of small and cool things in my country and more interesting but less cool things internationally (eg. like voice mail or your banking).

Later I graduated in business (MBA) and marketing (MMkt) -- I specialised in 'innovation and technology'; I will add my personal interest in things like systems analysis/design, business process engineering and project management which I trained in (too) ... These skills only 'work' after a few years in the trenched (imho). I recognise what you describe in this article, and who are the people you want to refute . . . Human beings?

'Management Science' has so far created the good bad and ugly from: TQM (Honda, Boeing, Volvo); ISO9000 (most NGO, government, pharmacutical, and military organisations); SixSigma (GE, 3M, Intel); Logistics and Supply chains (Amazon, UPS, FedEX); ISO Risk Management (WHO, (US) DOD, (UK) MOD, EU), BPM (IBM, Microsoft, SAP, , even Model Driven Architectures (and things like OASIS) to NGO-s like FairTrade Oxfam, and EarthHour.

The key message in 'management science' is make it science. ONE top ten 'management science' top performer would be "Save the Children Fund", whom I've supported since 2001 -- How many of Matthew Stewart's champions have papers published in the Harvard Business Review (which is a world class peer reviewed journal). 'Save the Children' has seminal papers published in the HBR and in reprints -- Life saving, Open Source, business processes. You and/or Stewart would find it difficult to refute Oxfam's record in governance or management science also, I believe.

However, because I feel solid ground beneath my feet, concerning the Steward book, I would like to comment on what others have already identified as 'science' versus 'philosophy of science'.

Your blog's description puts the Stewart book in the 'philosophy of science' camp -- Identifying issues of rhetoric or logic and ignoring substance (or discounting substance, to be fair[/]). One day, when I find a blog site I can trust, I want to start a blog on "How Writing Software Improves my spiritual Sense of Grace".

A real management consultant is either an expert in an industry or kind of business (eg. retail, mining, etc); a systems analyst or engineer; or an experienced person (in that industry) like a: project manager, lawyer, CPA (accountant). Lots of skills are transferable -- There is No doubt. 200 years of econometric research show us that transferable skills require knowledge of 'on the ground dynamics'.

While 'on the ground dynamics' should be a no brainier, it means you can know everything about baseball but not what the wind is like, hot how the pitcher's hangover feels, or an umpire's venereal itch, etc, etc. on the day. I think Bruce wrote about dynamic code recently -- Same thing basically.

After my 2nd review of this column, to be honest; I wanted to 'defend' what I saw a my ground as an~ systems analyst. My best mentor is a Naval Architect and my dad was a Marine Engineer. If you saw 'Titanic', you probably get why I felt that getting the WHOLE dynamic picture is valuable.

Responsing to the Eckel blog (not necessarily Stewart, because I haven't digested these things) ...

* When I studied Chinese language, business and culture; I took time to compare the business culture and social dynamics using my two favourite models -- "Conflicting Values" framework and "Social Distance" (derived from Hertzberg).

* I / we used these tools to compare western and eastern cultures. Emerging industrial infra-structures with mature ICT frameworks. I can add too that in my personal dealings with people from Thailand, India, Singapore, Malaysia, China, Korea and Japan versus (say) USA, Hawaii/Alaska, Mexico, Peru, UK, France, Finland, Norway, Greece, Germany (EU places) .... There IS a difference in 'management science' (or Business Process Engineering) across local government areas -- Forget country or cultural distinctions.

* A few simple things are consistent:
-- RoI: A $1 brings you a Return (say: $1.50 out)
-- Employee engagement: Is 'Sally happy' (0-5) now? Is Sally feeling excited (0-5) by her work?
-- Personal value: Is my job making a difference (0-5) in the world at large?
-- Are my parents and children proud?

* Quite many sad things are also true; around issues of influence, corruption, politics and power that have only one link to science through the pathology of neurosis and pathology. Here I like to tell folk to go hire: "The Smartest Guy in the Room" (ennron dvd).

* About Business Processes and ICT -- I've been to the shows: Vegas, Hannover, Bonn, New York, ... talk with 'operators' (customers).
-- People usually ask for he same thing: Will it work? Will it do what I SAY? That's got nothing to do with systems analysis.
-- Systems analysis says we can do what you did last year Faster/Cheaper/Less humanely -- No problem.

* TQM says we can (instead) ...
-- Do what you did last year Faster/Cheaper/more humanely -- with benefits.

I shall stop here, because -- People in mainstream ICT don't yet have real experience of 'management science' per se.

Nor should they because 'management science' a concept applied to replaceable human units (process workers, wet backs, etc.). One day robots and machines will do that job and the programmer will be the management science person - BUT. If culture SHIFT-s ... I still don't see people allowing programmers that power((???))

Grady Booch (UML fame, [paraphrased]): You can't hide complexity you can only make middle-ware (systems), which can reduce the apparent complexity.

Aloha /w

James Watson

Posts: 2024
Nickname: watson
Registered: Sep, 2005

Re: The Management Myth

Posted: Mar 30, 2010 10:47 AM

> So follow the money, and you'll see that the employee who
> retired at 48 years old and continued to receive pay and
> full benefits until he died at 100 years old in 2005 did
> very well. So did all the execs who left years ago to
> pillage other corporate entities (or retire). And (for
> years) so did the unions and their leadership. And they
> are all culpable. Not just management. Not just the
> unions.

And some people go to the casino and win a huge payout from the 10 slot machine. First of all, how many people in the union made out like this? I don't think you really understood the point. The management of GM should have known that this would be unsustainable in the long run. It was their job.

art src

Posts: 33
Nickname: articulate
Registered: Sep, 2005

Re: The Management Myth

Posted: Apr 5, 2010 7:16 PM

My understanding is that German car workers are highly unionized and German car companies have had some success. Is this accurate?

The quality employee relations matters a lot, and its form - union or other is less important.

Cameron Purdy

Posts: 186
Nickname: cpurdy
Registered: Dec, 2004

Re: The Management Myth

Posted: Apr 11, 2010 8:10 PM

> > So follow the money, and you'll see that the employee who
> > retired at 48 years old and continued to receive pay and
> > full benefits until he died at 100 years old in 2005 did
> > very well. So did all the execs who left years ago to
> > pillage other corporate entities (or retire). And (for
> > years) so did the unions and their leadership. And they
> > are all culpable. Not just management. Not just the
> > unions.

> I don't think you really
> understood the point. The management of GM should have
> known that this would be unsustainable in the long run.
> It was their job.

"Should have"?

The management totally understood. That's my point .. and IMHO so did the unions.

As for everyone else, a 10 second evaluation of the situation would have shown it to be unsustainable. The rest of us knew it! Why didn't they?

There's no one that was involved that's not culpable. To claim otherwise is to defend willful ignorance.

robert young

Posts: 361
Nickname: funbunny
Registered: Sep, 2003

Re: The Management Myth

Posted: Apr 12, 2010 5:36 AM

> As for everyone else, a 10 second evaluation of the
> situation would have shown it to be unsustainable. The
> rest of us knew it! Why didn't they?
>
> There's no one that was involved that's not culpable. To
> claim otherwise is to defend willful ignorance.

What those who propound the non-sustainability argument fail to acknowledge is one simple fact: without the pressure of unions to establish a massive middle class (spreading the wealth around), there never would have been a post war expansion. The 1950's would be just like today: a few increasingly rich and many increasingly poor. You may like the today version of history, but that's no reason to claim it's superior in any way.

Cameron Purdy

Posts: 186
Nickname: cpurdy
Registered: Dec, 2004

Re: The Management Myth

Posted: Apr 12, 2010 6:38 AM

> What those who propound the non-sustainability argument
> fail to acknowledge is one simple fact: without the
> pressure of unions to establish a massive middle class
> (spreading the wealth around), there never would have been
> a post war expansion. The 1950's would be just like
> today: a few increasingly rich and many increasingly
> poor. You may like the today version of history, but
> that's no reason to claim it's superior in any way.

I'm referring to specific companies (e.g. GM) and specific agreements, and at this point in time, it's not a "non-sustainability argument"; it's simply an irrefutable fact of history. Anyone can look back on it and evaluate it; anyone can see that it was not sustainable -- because even with many billions of dollars, the company known as GM is finished (i.e. it was not sustained). Coincidentally, there is some new company that happens to be called "GM", but it is a different company.

I'm not sure whom you are arguing with, but it's not the presence of the unions that made it non-sustainable. There are excellent examples all over the world of companies with unionized work forces that are successful in the long term. We know what a world without unions looks like from history, and no one who has seriously studied that era would want to go back to those labor conditions.

As for the "few increasingly rich and many increasingly poor," that has been shown to be a fallacy as well (at least in the USA), as the "poor" have tended in real terms over time to increase their standard of living. In other words, they are not getting poorer. (Note that this is not necessarily true in the short term, e.g. the current recession.)

On the other hand, it is statistically correct to say that for most of the past several decades, the rich have been getting richer at a pace much faster than the poor are getting richer. Eat the rich? ;-)

http://www.amazon.com/Eat-Rich-Treatise-Economics-ORourke/dp/0871137607

Peace,

Cameron Purdy | Oracle Coherence
http://coherence.oracle.com/

robert young

Posts: 361
Nickname: funbunny
Registered: Sep, 2003

Re: The Management Myth

Posted: Apr 12, 2010 12:32 PM

> As for the "few increasingly rich and many increasingly
> poor," that has been shown to be a fallacy as well (at
> least in the USA), as the "poor" have tended in real terms
> over time to increase their standard of living. In other
> words, they are not getting poorer. (Note that this is not
> necessarily true in the short term, e.g. the current
> recession.)

It's not just the Great Recession; see below.

>
> On the other hand, it is statistically correct to say that
> for most of the past several decades, the rich have been
> getting richer at a pace much faster than the poor are
> getting richer. Eat the rich? ;-)

Yumm. Tasty. Tastes like cake.

Since wealth, as well as intelligence and most attributes of humans, is relative, what you've said is that the poor *are* getting poorer. You just don't know it. Fact is, since the 1973 oil embargo, median income of the USofA has barely moved and since the advent of Reagan hasn't moved at all (or declined, depends on when you stop measuring). To argue that the USofA's poor aren't as bad off as the sub-Saharan Africans... well, that's specious (although parts of the South...).

http://en.wikipedia.org/wiki/Median_household_income

http://en.wikipedia.org/wiki/Gini_index

The point: if you're content living in a police state (just check on the countries with gini values near the USofA's to see that this is true), then by all means condone what's been going on. If you're certain that you will live out your life in the top 1% (in houses surrounded by walls topped with broken glass and razor wire), don't worry, be happy. On the other hand, if you want a society that is fit for your kids to live in, pay attention. This does, as it happens, relate to the Management Myth. The concentration of power in corporate management tracks exactly with the experience of economic (in)equality across the larger society. The management multiple over median wage has increased in lock step with the overall inequality measures; it's not a coincidence. Whether these two are artifacts of other forces, or direct cause and effect is less important. Virtue begins at home.

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