Monday, February 23, 2009

Total Systemic Failure

It was 1998 and I was working for Norwest. I was a foolish, idealistic young analyst who actually thought that profitability and efficiency were things that corporations would like to achieve. Led through my studies in college to think somehow managers and bosses would appreciate faster, cheaper and more efficient ways of doing things, I thought that if I could find a way to do something better they would appreciate it.

Now, already many of you are seeing the train crash coming, but in my defense they falsely led us ground troops to believe that Norwest did indeed care about efficiency. That maybe, somebody up top had realized that the brains of tens of thousands of individual employees might actually add up to a higher gross IQ than the handful of managers’ IQ’s. They did this with a “best practices program.”

You see, if you came up with a way to do something better, you could get a $25 savings bond!

Oh goodie!

And so in the monthly staff meeting we’d all be corralled into a big room, listening to management drone on about things irrelevant to our jobs and sure enough Suzi in processing came up with a way to save half a ream of paper per decade, and wow, what a great idea, Suzi, here’s your $25 savings bond for what is ultimately an insignificant contribution. I was of the opinion that getting rid of these meetings which tied up and lost hundreds of hours of labor would be a real efficiency achiever, but thought it better not to mention that

However, I did come up with an idea. A genuinely good and solid idea.

Part of my and the other analysts’ jobs was to take an hour out of our day and file all the paper work that had culminated throughout the course of our work. This was a tedious process as filing typically is. Common sense would dictate that instead of paying 8 analysts $18 an hour to file, we could hire a full time admin for about $10 to do the filing and save some money. However, my idea was even better.

“Why don’t we buy some scanners and scan this stuff in? We could then do away altogether with the filing, we’d free up some office space without the need for file storage, we could even cut down on rental expense as we wouldn’t need that much office space.”

Now this was 1998 and scanners did exist back then, and the idea of scanning was not a new and revolutionary idea. And so one would think that a large firm like Norwest would have the capital to buy a couple scanners and be eager to capitalize on this opportunity for increased efficiency.

One would think.

And that is the problem.

You see, in corporate America you are not paid to think. Oh sure, they have “best practices programs” and they feign like they want you to think. But if your thinking goes beyond saving paper, or saving toner, or perhaps being so revolutionary as to suggest cutting down on electricity by making it mandatory policy that you turn off the lights in the break room, and starts to enter the realm of management, then you start to scare people. Because the only true and real way corporations, the economy and society at large advance or progress is through innovation and change. Rethinking and redoing entire processes or the way business advances. But when one intelligent, idealistic individual, that hasn’t had the creativity kicked or brainwashed out of him comes up with that idea, that idea may be so changing it may obsolete some managers jobs that should have never been in the first place.

Naturally my idea was not implemented (well at least not as first, I found out 9 YEARS – and lord knows how much in wasted labor - LATER they finally did start scanning in documents), but it taught me an important lesson; logic does not always rule corporations.

Now, despite this wisdom I gained long ago, it is that damn natural, intuitive economist in me that automatically wishes to maximize production and maximize efficiency that still persists within. It’s not something you can turn off, it’s just this moral code programmed into your DNA, constantly nagging at you to progress and screaming aloud as you run into inane, obsolete and pointless instances of corporate idiocy. Regardless, I should not have been surprised when I ran into the most recent (and one of the more unbelievable) instances of corporate idiocy last week.

Like everybody else, one of my clients who shall go unnamed is having trouble boosting sales in this economy. It is a retailer that sells “stuff” and we’ll just leave it at that. Ergo, they wanted to find a way to get more people in the door.

Now, knowing this market and working with them before, after sitting down and doing some research I found a market that had yet been untapped or approached by any of this firm’s competitors. This market was wide open, not saturated, not even penetrated and I had it pegged.

I contact my contact at the corporation, send him some preliminary findings and say, “Hey, I found this market you could advertise to, what do you think?”

My contact said, “That would be great, but we’d have to go through marketing first to see how we would advertise to it.”

And now, yes, for those of you with experience in the corporate world, you see the train wreck coming. Working with marketing.

We waited a solid month before we thought maybe we should follow up with marketing to see if they got our idea. My contact contacted his contact in marketing who said, “Oh yeah, yeah, I got your e-mail, just haven’t had time to look at it. I’ll get back to you in a week.”

Sure enough, another month goes by and my contact contacts his marketing contact again.

“Oh, geez, sorry, yeah, sorry about that. We’ve just been swamped.”

Meanwhile sales are plummeting and people are starting to fear for their jobs.

Another month goes by and my contact at the firm finally has enough, decides to go over marketing’s head, and sends out an e-mail campaign to the predetermined target market.

All it took was one week and the sales department was flooded with calls from interested customers. They had people calling, not only interested in the product line, but willing to fork over good money.

Now one would think this was a good thing.


Sales INCREASED not only by a little, but by a lot, 20% for some lines, 40% for another.

Sales INCREASED based on a simple and costless e-mail campaign.

I had brought the firm business.

I had brought the firm MONEY.

It would be like going to a house with a $1,000 bill, knocking on the door and saying, “Hello, here, have some money.”

One would think the recipient of the money would be happy, if not ecstatic.

Ah, but there you go thinking again.

Sure enough, in true American corporation form my contact received a complaint from marketing. He hadn’t gone through the proper channels. The e-mail campaign was not authorized by the head of marketing, and even though it did receive authorization from executive management, marketing was not pleased.

Now I am of course critical of the Obama administration and their efforts to turn around this economy. I think their strategy is inherently flawed and will not work. But, in intellectual honesty it is not just the government that is to blame for the lack of recovery, but the American people, particularly corporate America.

I don’t know what to call it, but it’s like a disease. It’s like when the organs of a patient start to all shut down and fail at the same time. A “systematic failure” of sorts. That there is no one thing wrong with any one particular part of the body, but that there is something inherently wrong with the entire body and it is practically untreatable. And thus is the same with corporate America.

Almost on a cellular or individual level where people are so incompetent and so stupid they are incapable of the independent thought necessary to make logical decisions, their decisions or indecisions cost corporate America billions. Lost clients. Lost markets (anybody remember IBM scoffing at point and click interfaces or Ben Franklin retail stores turning down the Walton brothers?) Oh, and the fact this whole housing crisis could have easily been avoided. It is only by sheer economies to scale or massive government bailouts that some of these corporations ever manage to eek out a profit in the face of inept managers and incompetent executives.

However, in these dire economic times, we cannot afford to be so damn stupid if we sincerely expect to turn this economy around.

Norwest is going to wait 9 years to start scanning in documents for their back office operation? Are you nuts? Why?

You bitch and complain about increased sales, practically free money, because it didn’t go through the right god damned channels?

You cave in time and time again to the UAW, knowing full well you can’t afford to stay competitive, and then go for a taxpayer bailout?

Or you ignore the sheer convincing and damning statistics that there is no way in hell your client’s condo development is going to sell and finance it to the tune of $40 million anyway?

With such boneheaded moves, it is practically guaranteed that the corporate sector of the US will play no part in getting the country out of this recession.

People in corporate America are going to have to wake up and realize that there just isn’t any more room for such idiocy. The economy is going to get so dire and so tough that you will not be able to afford petty arguments about somebody in some other department going over your head and ignoring protocol. The economy is going to contract so much that hard and difficult decisions must be made and cannot just be passed on to future generations. The economy is going to crash so bad that corporations in general better get with the program of efficiency and extremely competitive capitalism real quick because in this environment only the strongest, fastest and most efficient survive (the rest just go for a bailout). And this whole thing about promoting people who don’t rock the boat, conform and are your little corporate-yes-men over those who are willing to make difficult decisions and blow the whistle if there is something wrong. Yeah, those days are over. It’s the assholes and jerks who make the tough decisions, blow the whistles and eat yes-men for breakfast who going to be your next boss…that is unless of course you would prefer the company to go bankrupt and have no job at all.

Sadly, I think the reason for such idiocy in corporations is the same reason we see idiocy in government. Both institutions pull their labor from a dumbed down and entitlement-driven population ala the movie “Idiocracy.” This also parallels my “total systematic failure” theory in that at the cellular level, the basic unit of labor is corrupted. When you only have idiots or spoiled children to choose from, is it any wonder none of the corporations seem to be able to make a profit, let alone had the incredibly simple foresight that was needed to see the housing crash coming? Worse still is that who precisely is going to turn around these corporations and institutions? Government is ruled by ignorant masses who believe they won’t have to worry about their mortgage or paying for gas as testified by Obama’s election. Corporations are headed up not by leaders, but by nepotists and cronies who have no managerial or leadership abilities but rather connections and rich parents. Schools, good lord, children teaching children. Alan Greenspan can’t teach economics. I can’t teach dance. But some 23 year old with no experience, living with mommy, BUT HAS A TEACHERS LICENSE can teach anything as long as you give them the textbook to teach out of. The t-cells or white blood cells needed to repair the US economy are either shunned from the organs and institutions that comprise it or are attacked and weeded out. And thus the organs will continue to deteriorate, continue to atrophy and ultimately fail.

Alas, the only thing the white blood cells can do is sit and watch.

(Future post along the same lines coming soon – How Blunt, Truthful, Meanie Manly Jerks Will Become Sought After in this Economy)


Glen said...

Reading this, it brings to mind two concepts: the Peter Principle and Pournelle's Iron Law of Bureaucracy. I've also had to deal with both in my working life. I used to do desktop support for about 125 people. At the time, we were using Pentium 75's (everyone else was using 200's). It was not uncommon for the computers to hang or just otherwise need to be rebooted. I estimated that people were spending about 15 minutes per day just rebooting their computer. That was the equivalent of just paying 3 people to do nothing but reboot computers all day. I'd been looking for a way to try to get the boss to find funding for new computers (we'd get most of our computers from other departments who were replacing their's on a 3 year cycle). I figured it was a no brainer to replace all the computers with new ones. Got shot down. From then on, until I left, we never got new computers based on my recommendations. The only time we got new computers was when some outside consultant or company sold us some kind of software that wouldn't run on our antiquated PC's, and then we only bought PC's for the folks who needed the software.

It got to where I was telling people "I don't get paid to think". It's a shame, because as you say, people want to be productive, and they get frustrated when there are artificial barriers placed in the way of their productivity. Eventually they either leave or just start logging hours, whether they be productive hours or not.

Anonymous said...

Capt'n, after 25+ years of repairing cars and trucks, primarily at Ford and Lincoln-Mercury dealerships, I've lived by a slogan for most of those years when it comes to idiocy in corporate America:

"I used to care, but they've beaten that out of me."

Which also reminds me of a sign I've seen:

"The beatings will continue, until morale improves."

Keep on keepin' on, my friend.

Hot Sam said...

Have you watched the movie 'Idiocracy'?

Well, what you describe is the road to something like it. We'll always have smart people, so we'll devolve into 'Incompetocracy' or 'Pompocracy'.

Anonymous said...

While I agree wholeheartedly with your observations about big organizations, this is not anything new.

In fact, I would challenge you to find any organization with more than, say, 10,000 people where this kind of counterproductive obstructionism doesn't take place.

This is just part of the nature of the beast, and an inherent advantage small companies have (helping to counter all the advantages big incumbents enjoy). There are a number of reasons, and you can take your pick:

1) Companies are made up of people, and the interests of individual people don't always correspond to the interests of the company.

2) Big organizations are process-oriented by necessity (there's no other way to efficiently manage that many people), and react badly to anything which undermines the process.

3) People are resistant to change, and will fight against any change imposed from outside no matter how beneficial.

Kevin Toboja said...

CC - What's your opinion on this article?

Anonymous said...

Mike Rowe of 'Dirty Jobs' spoke at the last TED conference and says this country has 'declared a war on work'.

It's an entertaining talk, mostly stories about what he's learned by doing the show, but he sums up in the last 5 minutes with some really insightful comments about what's lacking in our culture, and as a result, our economy. I think he's going to prove prophetic in the coming years.

Among the gems: "Maybe OSHA got it wrong, maybe it's not safety first, maybe it's safety third." and "Working people are either presented as simple heroes or as punchlines."


Anonymous said...

"In fact, I would challenge you to find any organization with more than, say, 10,000 people where this kind of counterproductive obstructionism doesn't take place."

If I may be so bold as to suggest Marriott International? Now, I don't know everything about the company, but I do interact with people at literally all levels of the organization, and I've been amazed at how slick their operation is in general. They made Fortune's top 100 companies to work for.

Then again, hotels have almost a feudal structure, so while the hotel company may have 150,000 people, as Marriott does, the average number of employees at a Marriott property is a bit under 50 under a General Manager who really calls the shots. It's a big company, but it operates like a bunch of small companies by similar business philosophies, brand standards and shared network resources.

Anonymous said...

I have to agree with the comment by 'anonymous' where he describes this as a function of a organization's size.
I liken it to the business version of the "circle of life". Organizations start small and vibrant, driven by a specific purpose/market. As they grow, the organization grows to be better able to support the purpose/market. Eventually the organization grows to such a point where the original purpose/market no longer acts as their reason for being. This usually coincides with the business becoming established in the market and being at low risk from competitors. Eventually the organization's purpose is to serve the its internal organizations (aka its bureaucracy). It slowly becomes dead wood. Sure it will survive for years to come, but it will slowly be worn away by the forces of market change and smaller more nimble competitors.

Anonymous said...

I have a faint hope that a good solid butt kicking recession/depression will have the unintended effect of spurring innovation and a competitive spirit. I also wonder if increased unemployment might yield better customer service from those who happily stay employed. (Not that I would have chosen this method of instituting reform...but that's what's happening so no point in wishing otherwise.) I have no evidence that indicates better decisionmaking / superior competitiveness / better service is at hand but theoretically it should be.

Anonymous said...

I read a maxim once from some famous physicist-or-other which said "First-rate people hire other first-rate people; second-rate people hire third-rate people; third-rate people hire seventh-rate people."

In my opinion, this and the Peter Principle explain most of the stupidity in corporate management.

Unknown said...

Loved the post. Its interesting how things are the same all over. Am living and working in South Africa. Have been in the corporate world for like 11 years and am abit of a rubble rouser. Obviously this means am not high up the corporate ladder. It sickens my stomach to know that in corporate companies the only way to get ahead is to thoroughly kiss your boss'es ass, laugh at his dumb ass joke, snitch on everyone and everything and agree to every dumb ass idea he comes up with. If you have an opinion...keep it to your damn didn't go to school so that you could have an opinion!! And if your mommy and daddy are rich therefore you grew up in the right circles than yippeee...everyone thinks your clever, witty, charming because your so and so's son and went to a ridiculously expensive school, ended up in an even more ridiculously expensive university which gave you this 'wisdom' other folks didn't good to know it happens all over the world!