Posts filed under ‘Henley’
Henley in LinkedIn (a sensible thing to do and syndrome to avoid too)
At least there’s a Henley group in LinkedIn. A top-10 business school such as Henley Management College (see the forthcoming Economist Intelligence Unit ranking when available) couldn’t do without a LinkedIn group.
But why? What is LinkedIn? LinkedIn is a social network website, where you can keep a brief resume on-line and link your resume with your colleagues, fellow students, acquaintances. That way you don’t have to keep old-fashioned business cards or simply lose contact with people that you know, value or care about.
Everybody should have a LinkedIn profile. The fact that not everybody does have one makes the thrashing away of those old-fashioned business cards difficult, not mentioning that LinkedIn is not the only networking website. From the teen-oriented facebook to the competing Xing or Ecademy. I personally believe that LinkedIn is the most efficient of them all.
But give the cards some time and they’ll be outdated, while LinkedIn pages will be kept fresh and anew (or so one can hope).
The idea of belonging to a group is also important. Not only because of the fact of the feeling of belonging to a group but because that enables you to contact, get acquainted with and ultimately link to other people of your organisation. Otherwise you’d need to have something else in common with them: same school, made some business together or know their personal email.
So, do you have a LinkedIn profile? Maybe you should check mine then. And, does your business / organisation have a group there too? Maybe that’s something to consider 
But there are two sides to every story, and the social networks, as everything, can be used and abused. It’s sensible to have the connecti0ns to the people you know, and those connections add up to make a figure, the number of people connected to you.
As every measurable quantity, many people just make an objective of it, adding people indiscriminately, the more the better. But, where is the purpose of having hundreds of links to people that you just don’t know? Let me tell you: there is none.
As happens in management: people tend to be focused on hard issues that can be measured, and forget many soft issues, it’s not the links but the quality of them, the value they add you, the resemblance to the real network. But those qualities are difficult to measure.
Those are the social spammers. People that will try to add you because you have been working in the same company (along with 20.000 fellow workers), because you studied at the same university (without ever actually meeting) or because they just want more links.
That’s also known as the Pokemon syndrome: you need to have them all.
If they ever were too much, imprinting the network, then being “linkedout” would become a sensible option.
Best regards to all
The matrix in our heads
Lately I’ve been too busy. Let me tell you why. I’ve had a peak of work, one of those moments that my organisation needs me more than usual (or so I think) and I’m busier than usual. If you add the time for studying and having a life, the equation requires suppressing other things, such as sleeping or free time. My own time economy requires an equilibrium.
As any project goes towards completion, people start getting nervous. Contractors see their deadlines come closer. And, as coordination gets tougher, many of them seek the chance to justify their delays on other contractors (sometimes they are even right), chances to renegotiate contracts and get additional money. It’s business after all.
These days we have received reinforcements. Twenty five more people to add to our hordes of engineers to keep contractors tight. But they are a contractor themselves, as this technical assistance has been awarded through a tendering process too. How do you streamline that? How can you digest another contractor and make it become an extension of you so that they can keep the others in line?
Being a matter of strategy too, it has been a good chance to use the matrix structure, one of the most famous. Many times praised and many times blamed, the matrix structure breaks vertical hierarchy adding another horizontal dimension.
The figure shows an example from a project management perspective. In our case it’s a bit more complicated because we are not managing projects, but contractors, resources and people. But the structure still stands. At the same time our contractor must respond to the organisation about the global use of their resources and needs to be able to serve all the resources, skills and ability that have been contracted.
You know, it’s not simple to work this way, but the other options are simply worse. Authority works to a certain extent, but our work is different every day, project-based, dealing with uncertainty, with incomplete and asymmetric information and in a complex organisational background.
Sometimes my role resembles a stakeholder manager, simply trying to seek equilibriums between all parts to take the project forward.
But let’s go back to practice. Sometimes the main problem for implementing a matrix structure, and that is my direct experience these days, is that a structure is only that, a structure. Something theoretical, written in a paper or imprinted on an excel spreadsheet, but names are not enough, roles are not enough, organisational charts are not enough.
And I guess that’s what many companies encountered when they tried to implement matrix structures.
What is missing? I have a possible answer: culture. How do you implement matrix structures in hierarchical organisations? How do you share responsibilities when you are not used to? when you have never done so? when you are used to giving orders?
In a project-focused organisation people must be empowered and initiative fostered. There’s no other way. Power must be distributed, principles established, assumptions shared. If you are used to give orders, don’t expect your people to do other things than following them. If you don’t nurture their ability to decide, it’s no wonder they won’t decide anything.
I won’t hide I’ve been having discussions about this, specially with someone that doesn’t want to let go. But he needs to. He tries to resist, but reality is stubborn, too stubborn. And I am too. In fact I’m a little sorry for him. Maybe I’ve even been too harsh with him, but then I tell to myself there’s no good in hiding reality, there’s no gain with no pain… although I can’t help seeing his inability to adapt to the situation and his suffering disguised behind an iron mask. And I feel a bit guilty to be breaking his iron mask.
But the traditional hierarchical way of being a manager is not valid here, not anymore. People have to change. People have to adapt. People should be selected, not only because their technical abilities but by their ability to adapt, to learn, to embrace change.
Fortunately some people understand, and I have my allies into this new adventure. I’ve already established my links with many of the new people, shared my vision. And they understand. Adaptation is in the way.
Organisations are nothing without people. And matrix organisations require people to understand the matrix in their heads, not to try to hold it to their ground. This is a shared ground, there is only one master: a successful completion of the project.
Mental ramblings at the end of Summer
There’s one date that I always long to: the end of summer. Leaving behind that excessive warmth and and welcoming a cooler weather. The beach is empty again, no more noisy crowds. Yet it’s still warm enough to sit between the trees and wander around so many thoughts that I’ve been gathering lately. Quiet enough to think, to reflect, to digest, or to simply relax, procrastinate or do nothing.
Barcelona’s beach in Autumn
This time it was a three-day weekend, long enough to escape from the big city to what once was a small village before the arrival of hordes of tourists. Around this time of the year, the fishermen used to await the “bootcleaner”, a big storm that signalled the end of the warmest days. Autumn was finally coming. They laid their nets and boats close to the beach so they would be rained clean. Then they inspected everything, made due reparations and got everything ready for the forthcoming year.
This year there has been more than one storm, but the weather is still fairly good. A nice September. Actually, the perfect moment to have a bath in the sea, is when you least expect it. After a cloudy day, then the sun suddenly shines, the air is perfectly clean and the waters are crystal clear again, a bit cooler I might say. And it’s all for you, your family, your friends.
With the distance that a fresh bath can provide, but still being in your MBA mind frame, you can see and feel how we have diverted from the way that people should be treated, respected or enabled. Close to nature and far from stress, it’s easy to envision the good nature in people, McGregor’s Theory Y that Rousseau would surely have endorsed, the Harvard approach to HRM, and forget for a while Hobbes view, name it Theory X, Taylorism or the Michigan approach to HR.
If we don’t believe in the inherently good human nature, how are we going to trust anyone? and then, who are we going to rely on? Will we have to do everything ourselves? how it will be possible to delegate? to enable? to empower? We won’t be able to grow.
If we believe that all humans just seek the greater economic gain, shouldn’t we stop using the collaborative words and concepts? We’d have to keep our information private and secret, stop writing learning journals or blogs, stop thinking aloud… always scared to become or be seen like sheep, we’d end up being wolves.
The end of summer is a good moment to reflect, to start anew, to free yourself from long held assumptions and misconceptions. To believe. For sometimes it’s necessary to forget in order to be able to learn.
Maximising shareholder value (a mantra that is half a lie)
The main goal of a company is to maximise shareholder value. If you write something like this just a few will disagree. But the fact is that this commonly accepted truth (“commonly accepted” should be disqualifying enough for something to be called truth) contains a great deal of ideology and political positioning. Should we question it then?
Chartered companies were created in Europe as regulated companies, with obligations and rights, that thrived in the 16th century. They were thought to facilitate new enterprises such as international trade and exploration in a time that the world was much bigger than it is today and, seen from the European world-view, unexplored. Usually they were awarded with monopolies resulting from the discovering of new lands. The challenge was to discover, open the new routes and make them profitable. Shareholders provided capital and benefited from profits. There were even “good government” dispositions (yes, that was prior to Enron).
They evolved. They originated the modern limited-liability companies. That was already the 19th century. They required (and still require) an official registration of a constitution document signed by its creators and first shareholders. Before they were only partnerships, some people operating together. But then they could be taxed and could own assets. They bear the consequences of their actions, not their owners. That way any loss would be limited.Those corporations would protect their shareholders, limiting their losses to the capital that had been invested. And they had rights to part of the benefits: dividends.
Corporations thus existed per se, and were accountable to different kinds of stakeholders: not only their shareholders but also their customers, their employees (and that included their managers), their suppliers, the communities where they operate, and the whole of society. The company had to think of all of them.
But in some moment, probably in the same wave of thought that I described in the previous post The darker side of economics (how well intended theories can get the worst out of MBAs) things simply changed.
Shareholder value became anything. Superinflated-ego-CEOs came into view as the media cherished and the public agreed. We became used to greed, to super-heros that, by themselves, transformed companies into successes (yes, like if CEOs did everything all alone, and the shareholders owned everything). They began earning more and more, from stock options to huge sums of money, while employees were either laid-off or with raises along with inflation levels.Somewhere along the road we assumed that the CEOs were the companies and the shareholders owned the assets. Neither is true. The CEOs just have a small share of the work, but in every company there’s much more human capital than the CEO. And it’s the company that owns the assets, shareholders just contribute with another kind of capital in return for a share of the benefits, similarly to what banks do in return for interests. But shareholders can buy and sell at any time in the capital markets. Usually shareholders have no implication at all with the company, being funds that replicate an index or people that invest their savings and have no knowledge of the business at all (neither wish to have).
Shareholders provide funds, assume risks and, of course, expect value. But they are not the only ones to assume risks and expect value: so do employees, that cannot swap jobs as easy as selling stock on the market. And so do banks, and so do countries that, in the first place, enabled their charters and their limited responsibilities.
If they were all theirs, why should the rest of us grant them limited-liabilities? If owners could do whatever they wish with the assets, they should be registered to their names, and assume the whole range of consequences. A world were a few could do anything and still be protected wouldn’t be fair. Risk must be rewarded, for sure, but not just the shareholders’ that surely deserve their retributions: customers that buy must be taken care of because customers that feel that they are only cash cows or cheated won’t be loyal, as employees that feel that loyalty has stopped being reciprocal.
Companies are more than profit machines. There are dilemmas to be solved, stakeholders to be considered and prioritise, there’s more than cost/benefit analysis. They are more than isolated units. And they don’t have to be greedy, as we don’t have to be. There’s still room for principles, for integrity, for loyalty. And that’s for employees, for shareholders, for managers and for CEOs.
Being a sponge (or a hot-air-balloon)
These days I’m working a lot. But, even being tired, I’m still looking forward to having some free time to jump into my HRM and Operations books and texts and devouring them.
I’m enjoying the readings a great deal. The more I read, the more I want to read. I know that makes that “eureka moment” that my fellow student Andy described as when you can effectively focus on your assignments go further away and, at some point, pragmatism will have to be imposed, but not yet.
The operations book is really nice to read, the CD-Rom included is very interesting. I’ve also bought a copy of “HRM in a business context” by Price, referred many times through the text and, the more I read it, the more I’m interested in HRM. And there are the dozens, or even hundreds of articles that I’ve been given… some of them open new amazing doors… and I really feel like crossing all of them.
I do know that eventually I’ll have to focus on the assignment, but I’m trying not to think about that. The later the better. I already have the idea, and I think all the activities applied to it.
When I meet an interesting idea I reflect upon it, and I try to apply it to my experience.I beginning to think about situations that have happened under a different focus and devise different outcomes. Even the blog is suffering of lack of dedication because of my smoking knowledge. I see my colleagues and myself now acting under a different light. And that makes it even more interesting.
I visualise myself as a huge sea sponge that wants to grow more and more. A hot-air-balloon that swallows more and more hot air getting ready to ride. And I’m having a lot of fun.
No beach this weekend, no gardening, just some gym, some herbal infusions (yes, that’s my kitchen), maybe a movie, maybe some friends around… but especially my sofa, my desk and my book companions 
Private equity and the subprime crisis (bad news that could be good after all)
The subprime crisis has arrived. Yes, many anticipated so. That’s what happens when economy depends on expectations. They take some time to change and, when they change, they do it abruptly. Like those subprime mortgages that have transformed from “hot products” to “hot potatoes”.
Overall is not a matter of solvency but liquidity. I agree, tell that to those that will not be able to afford the mortgages, maybe up to 500.000 people in the US. But investors do not worry much about them. Investors just get scared and they stop pouring endless capital… until they start to do the same somewhere else.
Because companies still report record earnings and the price of gold has been rising non-stop. That means that the machine is still working.
But let’s not be too complacent. A wider crisis can still arise. If gold is “hot”, ABS are cooler than ever. ABS are asset-backed securities, financial products made up of mortgages and things alike that are covered by a real asset, such as your home. These are a way for banks to get cheap financing and externalise risks, because the default risk is transmitted by the ABS, while it wouldn’t be with debt, for instance.
If banks get increasingly difficult to finance, they will transmit this additional cost to companies and consumers. And that’s an entry point to generate a widespread crisis. Central banks should add additional liquidity to the system by lowering rates, but that seems unlikely given their current policies.
But, what about private equity? Now it will be more difficult for them to get cheap capital to finance, that’s for sure. But that doesn’t mean they have no future. On the contrary, they are now more needed than ever, because they are the ones to provide that leaning, that additional shakedown that companies needed in times of more expensive credit.
Remember, there’s much more to private equity than leveraged buy-outs, they have an important role in the markets, and that means they have an important role to play in this new situation.
PD: I read this morning in “The Economist” that the US were thinking of “relief measures” for the crisis. Then I changed to a Spanish newspaper and read about the Popular Party (centre-right and opposition and presumed liberal) to propose the right not to pay mortgages during a year for the unemployed. Alarmed by both news I couldn’t help the thought: regulation must ensure that the system is not abused but, let the market regulate itself. Although some regulations will be painful, it’s the most effective way we’ve come to know.
The darker side of economics (how well intended theories can get the worst out of MBAs)
Those that hold a degree in economics will surely know three different and diverse theories: (just follow the link to know more about them)
- The agency theory: that describes how managers and shareholders pursue different objectives and thus need to be aligned through both control and appropriate rewards. Shareholders will want returns and value, managers will want their own returns, power, and to increase their personal value.
- Transaction cost economics, defined like the additional costs to a product than those to produce it, that is to control its fair use and distribution, the cost of formalising the relationships between the product and the user, to prosecuting breaches of contract and punishing offenders.
- The five forces analysis, by Porter. This one needs no presentation. This model describes the strategic positioning based on the bargaining power of customers, the bargaining power of suppliers, the threat of new entrants, and the threat of substitute products as well as the level of competition in an industry.
I could mention many more. But those three are specially interesting. What do they have in common?
Sumantra Ghoshal (1948-2004) is known about his theories about transnational companies, and the matrix structure (my beloved matrix structure, I must say, this morning I was proposing using it for a new project… but thats a whole new story)
Ghoshal worked in a couple of well known business schools, and ended up founding the Indian School of Business, so he was not an enemy of the MBA spirit, but he directly blamed corporate scandals such as Enron on MBA courses. Why?
Because business is a social science. (Remember the reflection I made, long ago, about Economy as a Science?) Well, sciences must be held with care. Sciences must be thoroughly studied, interpreted and understood.
Specially social sciences. Those do not only describe reality, but they are also able to change it. I reflected long ago on how a science like Economics could rewrite itself (See the Phillips Curve in the previous link). Ghoshal thought the same. In fact Ghoshal thought that the (incomplete) knowledge of a social science could change our mindset. Like those that can be taught in a fast, practical course such as an MBA.
Now let’s go back to the question I left unanswered. Yes, there is something in common between those theories…
They distrust people. They focus on the darker side of humanity: managers will cheat, companies won’t collaborate, customers will breach the contracts… all of them need badly to be controlled, sometimes even prosecuted. That’s the way. Some cheat, some control and the bottom line: it’s all a trade-off.
Those that excel are those that are able to play with the system and not to get caught. Does that ring a bell? Enron’s managers got it very clearly. They played, they tried, they lost. And not only them, many more did.
The title focused on MBAs but that can be true for any executive education. Our mindset defines our behaviour. And even well intended theories can made us adopt an incorrect mindset, inadvertently. A mindset that can make managers behave opportunistically, drawing conclusions from incorrect assumptions: people will try to cheat you.
And if you, as a manager, interiorise that, to hell with positive theories about managing people.
Well, some people will try to cheat you, but some will not. It’s not a definite behaviour. What about ethics? People do have a choice! And people can still have integrity. And you have the choice to manage with integrity.
Giving value to the customer… really?
I’m tired of reading everywhere about businesses worrying about the customers. But, do they really worry about them or they simply say so? The expression “customer needs” is always ready, and everywhere. But how many business are really focusing customer needs and doing everything in their hands to address them?
Sometimes I tend to think that most business just use the concept of “customer needs” to justify their already-taken decisions. How convenient to have some unknown customer originating a certain need. This undefined customer can’t be blamed, and neither ourselves for our misaligned decisions.
Don’t you feel that customers sometimes are just excuses to dilute responsibilities? This is a question that every company should ask itself.
Long ago, customers wanted price. And then quality. But it’s not like that any more. Customers have become more and more complex, more diverse, more demanding, more unpredictable. How many companies do seriously engage their needs?
There’s a good way to spot this kind of companies. They have measured themselves up against customers expectations and, in doing so, they have changed the expectations themselves. That way they have assured themselves a leadership position and they have undermined their competitors position.
Ikea is a good example of that. By giving more to its customers they have strained the whole supply chain and their market segment. And their competitors have perceived that strain. You can easily see how they have changed customers expectations. Don’t you change your way of buying furniture when you get to know Ikea? And not only you, the customer, but their whole sector has changed.
Another good example is Nike. They appeared in a well established sector leaded by Adidas and changed it completely. They even changed what the customers wanted, raising expectations. Then Adidas found themselves trailing, trying to cope with a new winning product: Nike Air.
What did those companies do? Just some marketing? Not quite. They redesigned their processes completely to be able to cope with new requirements. That was not an incremental change but a radical one instead. A new approach to customers, even breaking some previous rules. This kind of things that can be easily dismissed. This kind of things that so often new entrants do better than incumbents.
I bet someone said something like “this will never work here”. But then you see millions of customers all over the world just carrying this:
And far from feeling alienated, customers keep coming back for more. They get used to more value, less price, and don’t care about becoming themselves part of the operation, doing the picking and the unpacking. It just works.
Scared of changing your delivery system? Think of Dell: that’s how he outsmarted Compaq or IBM. How many companies dare to do so?
Four ways of thinking I: utilitarianism or thinking about the consequences (Stuart Mill and Bentham)
We make decisions all the time. And when we don’t, usually, problems become graver problems.As you know, it’s better to make the wrong decision than to make no decision at all.
But, on what basis do we construct our decisions? Some people are more practical than others, some people think more on the human side, some people abide to their principles no matter what, and some worry a lot about the consequences.
In fact the most considerable bulk of humans, and that includes me, just mix different ways of thinking and making decisions. We are not pure in our decision making. And the proportions change from one person to another. They depend on the mindsets, the circumstances, temperaments or even circumstantial moods.
We always think of our decisions as the most rational ones. We tend to perceive ourselves as non-biased. But we can’t help seeing the world through our filters. We reflect what we are on the decisions we make.
In this series of four posts, that altogether configure a meme, or a basic cultural unit, I want to identify four basical thinkers that defend very specific ways to make decisions.
These four basic ways of thinking are present in each one of us. They configure an important part of our decision making process, impersonating four different perspectives to every decision.
Think about them. They will help you understand the mental process that makes you consider different options and thus four different ways to weight outcomes. And they will help you in knowing yourself better and, why not, into making better decisions or at least understanding your decisions better.
The first way of thinking is consequentialism or utilitarianism.
One of the thinkers that most effectively impersonates utilitarianism is John Stuart Mill (1806-1873). Many things can be said about him. In fact he is worth much more than one post, being his thought configured by his father James Mill and his father’s friend Jeremy Bentham.
Stuart Mill was a deep boned liberal, fending for a slimmer and democratic government limited by individual freedom.
How would he reason? He’d think of the consequences of the actions. Thus, when we impersonate Mill we think how what we are about to do will affect on others. The concepts of utility and happiness come into front view. They become important under utilitarianism.
In fact he followed the ideas of Bentham, close friend to his father and mentor to the young John.
Jeremy Bentham was also British, and lived from 1748 to 1832. He can be considered the father of utilitarianism He was a liberal, defending the most basic rights, from the right to freedom in a world that still practised slavery, to the suppression of physical punishment, widely practised not only in prisons but also in schools, and specially the right of the individual not to be limited by the state in any way short of affecting negatively his fellow citizens.
In fact he’d be happy today to see that some of the subjects that he was worried about are being considered today. He supported the equality of women in every way, animal rights, the right to divorce and even homosexual rights. And that was 200 years ago! Education was essential for Bentham too.
In the economic sphere he abhorred of monopolies and usury, free trade, inheritance taxes, pensions and insurances. Both Stuart Mill and Bentham are usually regarded as proclaimers of a minimal state, but that’s not true. The individual freedom is paramount, but the states must guarantee basic rights and a basic equality to protect those who suffer. At the same time, the states must foster economic growth so as to facilitate a minimal subsistence level and encourage wealth.
Most of all, he incised decisively in a society, the British society, so fond of its traditional approach, initiating a wave of change, a progressive change towards a new idea: the well being of the majority. Well being that could even be translated to happiness. So the decisions in Britain had to be taken thinking of the population, and those who were affected by them.
The following quote from Bentham defines good and bad, moving closer to hedonism.
“Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do as well as to determine what we shall do. On the one hand, the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne.”
Consequentialism was thus being born, shaking the foundations of the British society and starting a movement to change the laws -another sphere of decisions- to have them aligned with the majority, not with the privileged ones. That was a huge leap towards progress and a fairer society. This wish for reform would help Britain to evolve further, no longer being constrained by mediaeval concepts. And with Britain, more nations followed in the will-be-developed world. No wonder Bentham supported both the American Independence and the French Revolution.There are differences between Bentham and Mill. The first thinks of the majority fostering the critique about the majority dictatorship. The second is able to modulate all that into a more sensible and respectful approach for the minorities. Stuart Mill had more time to elaborate and adapt his thoughts, and had an increased social component in his thought.
But, back to decision making, what counts is that we make the decision thinking of the consequences, not out of principles or rules inherited over the centuries, not faith or revelation. There’s not statu quo to preserve, good intentions or psychological reasons, there’s only utility, general utility. The more useful the better.
Reflecting II (letting go)
I’ve been thinking too much lately. Constant mind ramblings, wanderings and meanderings. I just can’t get enough of it. Usually without leading anywhere.
But, where did I want to go? What was it that was keeping me that busy? Well, I guess I’ve put a lot of strain on myself the last months and, suddenly, I let go, took a much needed rest. And now this. It’s getting hard to keep up with a strong pace again. It feels hard to do so many things. Sometimes I even wonder if I really can.
However, you know, I’m an optimist by nature. I firmly believe that I can tackle with complex challenges, and, believe me, going back to work and study without loosing grip of your life is not a simple challenge.
One of the things I’ve thought about is Ackoff’s spectrum of learning, which I wrote about a couple of months ago. It was something like this:
data -> information -> knowledge -> understanding -> wisdom
Remember? The idea is quite simple. Don’t stop at gathering information but draw your own conclusions from data, make it yours, reflect about it as a way to develop a deeper understanding, try to connect everything, try to find the real meaning, try to doubt everything, try to insert the ideas in different systems and see how they work, try to view them from different mindsets, try to change them, to challenge them… at the end of this process you, somehow, get to wisdom.
Sounds exhausting. But it is not. Reflecting needs an acute and unstrained state of mind. And you can’t get it in midst of your always bubbling day-to-day.
The recipe is still the same. When you feel overwhelmed it’s time to take another step back, look around, let go those fears and insecurities that hold you back. But don’t ever loose your path.
Want to go always forward? then learn to walk like a turtle. Sometimes you’ll even need to retrace, but in the end, as long as you’re heading on the right direction, you’ll reach your goals.
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