Tuesday, January 24, 2017
UNCLE HENRY, CHARLIE KELLSTADT, AND DONALD TRUMP
As President Trump has focused on persuading certain specific companies to increase their US employment (or at least to refrain from decreasing it as much as originally planned), concerns have been raised about his ability to operate above the level of the single case and to think in terms of framing general policies. I do share this concern to a certain extent.
But I’m also reminded of Peter Drucker’s story about two old-line merchants.
The first of these, called “Uncle Henry” by those who knew him, was the founder and owner of a large and succesful department store. When Drucker met him, he was already in his eighties. Uncle Henry was a businessman who did things by intuition more than by formal analysis, and his own son Irving, a Harvard B-School graduate, was appalled at “the unsystematic and unscientific way the store was being run.”
Drucker remembers his conversations with Uncle Henry. “He would tell stories constantly, always to do with a late consignment of ladies’ hats, or a shipment of mismatched umbrellas, or the notions counter. His stories would drive me up the wall. But gradually I learned to listen, at least with one ear. For surprisingly enough he always leaped to a generalization from the farrago of anecdotes and stocking sizes and color promotions in lieu of markdowns for mismatched umbrellas.”
Drucker also knew another leading merchant, Charles Kellstadt (who had once run Sears.) Kellstadt and Drucker served together on a Department of Defense advisory board (on procurement policy), and Kellstadt told “the same kind of stories Uncle Henry had told.” Drucker says that his fellow board members “suffered greatly from his interminable and apparently pointless anecdotes.”
On one occasion, a “whiz kid” (this was during the McNamara era) was presenting a proposal for a radically new approach to defense pricing policy. Kellstadt “began to tell a story of the bargain basement in the store in Chillicothe, Ohio, where he had held his first managerial job, and of some problem there with the cup sizes of women’s bras. he would stop every few sentences and ask the bewildered Assistant Secretary a quesion about bras, then go on. Finally, the Assistant Secretary said, “You don’t understand Mr. Kellstadt; I’m talking about concepts.” “So am I,” said Charlie, quite indignant, and went on. Ten minutes later all of us on the board realized that he had demolished the entire proposal by showing us that it was far too complex, made far too many assumptions, and contains far too many ifs, buts, and whens.” After the meeting, another board member (dean of a major engineering school) said admiringly, “Charlie, that was a virtuoso performance. but why did you have to drag in the cup sizes of the bras in your bargain basement forty years ago?” Drucker reports that Charlie was surprised by the question: “How else can I see a problem in my mind’s eye?”
Friday, January 20, 2017
THE BALLPOINT PEN AS AN ECONOMIC CASE STUDY
Chinese Premier Li Keqiang has lamented China’s inability to “make ballpoint pens with a smooth writing function.” After five years of research, a state-owned steel company now says it can.
WSJ notes that 80% of the world’s ballpoint pens are made in China…but that thus far, China has not been making all of the pen’s components. Specifically:
The tip of a high-quality ballpoint demands metal work involving high-precision machinery and very hard, ultrathin steel plates. So 90% of pens made in China have imported tips. China’s leaders want “self-sufficiency,” in pens as in semiconductors. Now they claim they’ll have it.
This little story is interesting from at least three angles.
First–as the WSJ story points out, China’s desire to control the entire ballpoint pen supply chain indicates that their leaders still value economic autarky, and that Chinese leadership denunciation of President Trump on grounds of his insufficient respect for free trade carry more than a whiff of hypocrisy.
Second–the ballpoint pen example makes the point that the apparent simplicity of a product does not necessarily reflect the complexity or lack thereof involved in manufacturing it. American economic commentators often fail to grasp this point when they assert that America’s future must lie in producing “advanced high-technology products.”
Third–the example should also clarify the point that the highest value in a product supply chain does not necessarily lie in the assembly of the final product. The final product assembly is usually the most visiblepart of the supply chain, but very often the creation of components that go into that chain involves more complexity and requires more skill than the final assembly process itself. It’s considerably more difficult to make integrated circuits, for example, than to assemble those chips onto circuit boards and to assemble the boards into a plastic or metal case.
Monday, January 16, 2017
LEX ON LEADERSHIP
Neptunus Lex wrote about his “youngster” cruise as a Midshipman attending the Naval Academy. This is the first of two cruises that a Midshipman takes: during the second cruise, your activities are those of an officer…
But during youngster year, you sail as a Sailor. You wear dungarees, chip paint, sweep passageways and stand enlisted watches. You sleep in enlisted berthing, eat in the enlisted mess and attempt to get some sense of the men you are supposed to lead in three year’s time, and the lives they live. ..You are tempted to believe that this work is beneath you. You are a Naval Academy midshipman, the cream of the crop. You are special.
You spend some time in the engineering plant – in a gas turbine ship, an amazingly clean and quiet space. Totally incomprehensible. It resembles nothing at all like the wiring diagrams in your thermodynamics textbooks.
But there’s a 23 year old Sailor who didn’t go to college, never read Thoreau, and who nevertheless understands it all. He patiently tries to teach you how it works. He speaks to you like one would speak to an elderly person in a nursing home, slowly, simply. You feel patronized, and worse: You realize that you do not entirely understand.
You are beginning to learn – not about engineering. But about Sailors.
You’re heading home. Bridge watches now, under the tutelage of 20 year old quartermaster’s mates. Men from small towns that you’ve never hear of, in states you remember dimly from your grade school geography. From farming families, where no one went to college, and no one was expected to. Men who could fix your position to a hundred yards moving at 20 knots across the endless sea using only the stars, a stopwatch and a sextant. Men who could debate the finer points of Strauss and Engels. Men who play classical guitar to an appreciative audience in the 80 man berthing during their time off duty. Who have dreams of their own that they will tell you about, when no one else is listening. Men who would risk their lives to save yours in the midst of a flaming inferno, without hesitating for a moment to reckon the cost, to tally the odds. Men who would die for you, if they had to.
And you begin to realize that you’re not special because of who you are, the grades you got in high school or where you’re going to college. You’re special because of who you’ve been selected to lead, when your time comes.
And that, my friends, is the beginning of wisdom.
There was a general…can’t remember who it was…who remarked that you will can never be a good officer unless you like Soldiers. (And you can’t fake it for long, he added.) I think it is pretty clear that Lex liked Sailors.
One way of evaluating any leader…military, political, business executive..is his attitude toward those he leads or wants to lead.
cross-posted at Chicago Boyz, where comments are open
Friday, January 13, 2017
AN ODD COUPLE, OR A MATCH MADE IN HEAVEN?
It is interesting that there is such a high overlap of political opinion between College Professors and Entertainers…the latter category not being known for their intellectual or scholarly tastes, on the average.
Significance, if any?
Saturday, January 07, 2017
JARGON, PROVERBS, AND MEMES
Texan99, writing at Grim’s Hall, discusses the ‘thick fog of buzzwords’ that pervades the educational arena in this country. My comment is that buzzwords and jargon are worst in education, government, and the ‘nonprofit’ world, but increasingly are also pervading the world of business and having a malign effect therein. Many of the posts I see on LinkedIn, for example, represent attempts by people who have never had a creative idea or insight in their lives to posture a deep thinkers and business intellectuals by maximizing their use of the buzzwords du jour.
Sarah Hoyt draws a distinction between memes and proverbs:
Of all the ways people have come up with to avoid thinking, I like memes the most. They are so ridiculously easy to fall into. You see the words, you see the picture and you go “ah ah, that’s so true.” Even when on a minute’s reflection it makes no sense whatsoever…I think in a way it follows the same pattern that proverbs followed in more ancient cultures…While proverbs were ways not to have to think or short cuts around thinking, they weren’t, by themselves, pernicious…Proverbs are in a way, the encoding of societal wisdom into short cuts to lead people into ways that have worked before…Memes are similar, but you have to remove societal wisdom and put in “the commanding forces of culture and mass media”. RTWT
Andre Beaufre, who in 1940 was a young captain on the French General Staff (later a general, he commanded the French contingent in the Suez attack) commented on his impressions when he first breathed the refined air at the General Staff level:
I saw very quickly that our seniors were primarily concerned with forms of drafting. Every memorandum had to be perfect, written in a concise, impersonal style, and conforming to a logical and faultless plan–but so abstract that it had to be read several times before one could find out what it was about…”I have the honour to inform you that I have decided…I envisage…I attach some importance to the fact that…” Actually no one decided more than the barest minimum, and what indeed was decided was pretty trivial.
Entirely consistent with Beaufre’s observation was a interchange between the artists Picasso and Matisse which took place in the midst of the collapse of 1940:
Matisse: But what about our generals, what are they doing?
Picasso: Our generals? They’re the masters at the Ecole des Beaux Arts!
…ie, men possessed by the same rote formulae and absence of observation and obsessive traditionalism as the academic artists.
The decline in clarity of writing and speaking presages nothing good. Confucius pointed out that “If language be not in accordance with the truth of things, affairs cannot be carried on to success.”
NIGHT CARRIER OPERATIONS
Neptunus Lex puts you in the cockpit. It’s a long series…you can always pull the Eject lever–but I don’t think you’re going to want to.
Thanks to Bill Brandt for locating and posting this.
Tuesday, January 03, 2017
WHAT ARE THE LIMITS OF THE ALEXANDER ANALYSIS?
Edward Porter Alexander, who was Lee’s artillery commander at Gettysburg, became a railroad president after the war. His experiences in running a major transportation system probably had something to do with the evolution of his thoughts regarding state’s rights:
Well that (state’s rights) was the issue of the war; & as we were defeated that right was surrendered & a limit put on state sovereignty. And the South is now entirely satisfied with that result. And the reason of it is very simple. State sovereignty was doubtless a wise political instution for the condition of this vast country in the last century. But the railroad, and the steamboat & the telegraph began to transform things early in this century & have gradually made what may almost be called a new planet of it… Our political institutions have had to change… Briefly we had the right to fight, but our fight was against what might be called a Darwinian development – or an adaptation to changed & changing conditions – so we need not greatly regret defeat.
I think a lot of the belief in unlimited globalization is implicitly driven by an extension of Alexander’s argument, with the jet plane, the container ship, and the Internet taking the place of the railroad, steamboat, and telegraph.
How far does this extension make sense? If the ability of locomotives could pull trains across the United States in three days meant that full sovereignty for individual states was obsolete, does the ability of jet airplanes to carry passengers and freight anywhere in the world in less than one day similarly imply that full sovereignty for nations is obsolete?
I suspect that most people at this site will not agree with a transportation-based argument for the elimination of national sovereignty. So, what is valid and what is invalid about Alexander’s analysis, and what are the limits for the extension of its geographical scope? Discuss.