Showing posts with label leadership & management. Show all posts
Showing posts with label leadership & management. Show all posts

Sunday, April 25, 2021

How to be creative like David Bowie, R.E.M. and Coldplay

Technical people are creative too

It's obvious that songwriters are creative, but technologists have to be creative problem solvers too. Many business technical problems are poorly defined at best and require a great deal of imagination just to get started.

(It's not just artists who have to be creative. Michelangelo, Public domain, via Wikimedia Commons.)

One of the big stumbling blocks for truly solving technology problems is local optimization. Imagine you're trying to reduce the processing time for a machine learning algorithm. You can focus on optimizing calculations, but would you be better off using a different algorithm altogether? Graphically, it looks something like this.

(Local and global optimization. Adapted from Wikimedia Commons. Author: Martynas Patasius. License: Creative Commons)

You end up focusing a great deal of effort for little gain when a more original approach might yield dividends.

This begs the question, how can you be more creative, how can you find more original approaches? How do songwriters and other creatives jump-start the creative process?

There's a technique I've found very useful: Oblique Strategies, but you have to be creative about how you use it.

Oblique Strategies

The painter Peter Schmidt and the musician Brian Eno first met in the late 1960s. They had a lot in common, including an interest in the creative process. Schmidt created a list of 55 quotes to overcome artistic blocks and Eno had been working on something similar, so in 1974 they combined their efforts to produce "Oblique Strategies".

Oblique Strategies was originally a set of phrases printed on cards. The idea was simple. If you're stuck in the creative process, view one of the random cards. Try to relate what's on the card to the problem at hand. Obviously, you'll have to jump through some creative hoops to do so, which is the whole point of the exercise.

Here are some example phrases from the cards:

  • Lowest common denominator
  • Turn it upside down
  • Always give yourself credit for having more than personality
(A card from the Oblique Strategies deck. Author: Bastiaan Terhorst, Source: Flickr, License: Attribution-NonCommercial-NoDerivs 2.0 Generic)

Who used it and what were the results?

In the 1970s, David Bowie moved to Berlin and, working with Brian Eno, recorded three albums, Low, “Heroes” and Lodger. You might be more familiar with some of the songs: Sound and Vision, Heroes, and Boys Keep Swinging. To keep the songwriting process going, the team used the Oblique Strategies deck to find new ways of thinking about music and lyrics.

(David Bowie, CBS Television, Public domain, via Wikimedia Commons)

R.E.M. even went so far as quoting some of the phrases on the cards in their music, in their song "What's the frequency, Kenneth?" they quote the card "withdrawal in disgust is not the same as apathy".

Moving to more recent times, Coldplay used the cards when recording their album Viva la Vida or Death and All His Friends, but that may be because Brian Eno was their producer. 

The best descriptions I've found for how musicians use the cards are blog bosts by Rosie Cass and Dave Dyment.

My use of oblique strategies

Oblique Strategies are not a daily tool for me. I only use the cards when I'm stuck and brainstorming with colleagues doesn't work. Because of commercial confidentiality, I'm not going to give you a detailed work problem example, instead, I'm going to give you a similar problem and how I might use the cards.

Imagine I'm trying to find missing data in a data set. I've used a statistical approach to detect missing data, but I'm stuck finding more, I know 30% of the data is missing, and I can characterize 45% of that 30%, but I don't know how to find the remaining 65%. What can I do? This is where I would turn to Oblique Strategies. The art is to use the words on the card as a starting point for your thinking.

My starting point is one of the online card generators, let start with this one. I pull a card online:

  • It is quite possible (after all)
This makes me think about what the desired end state might be. Can I identify 100% of the missing data? What 70% be enough? Maybe 45% is the best I can hope for? Do the success criteria change over time? Are there different categories of missing data? Maybe I can only get a few categories?

You can see how the train of thought continues. Let's pull another card.  
  • In total darkness, or in a very large room, very quietly
This is harder. Darkness makes me think of the lack of data here. Maybe there are hints about the missing data in the data I have? The large room makes me think of the data collection process. How efficient is it and how does it work?

This card probably isn't as helpful, so let's pull in another card.
  • State the problem in words as clearly as possible
Hmmm. This is more direct, but it's probably good advice to write down the problem clearly. So clearly that someone else could work on the problem. Maybe by clarifying the problem I could see a solution.

I could go on, but I think you can see the point. The cards don't provide a solution, but they're a kind of shock to the mind to think about the problem in different ways. It breaks me out of the rut of thinking-as-usual. 

I've used the cards to solve several business-technical problems over the last few years. They've enabled me to tame some very difficult problems. Once you get the idea of how to use them, the process is straightforward - it can even turn a frustrating problem into an enjoyable thinking session.

Where to get the cards

There are several online card generators, chose the one you like best:

If you prefer the tactile feel of real cards, you can buy cards from these vendors, but the prices are high:

Creativity is a must

If you're quite early in your career, then turning to your manager and saying "I'm stuck" is acceptable and even expected behavior. But as the senior person, there might be no one else to turn to, and even worse, you have to solve the "I'm stuck, help me" requests from others. Obviously, experience is a great tutor, but even experience lets us down from time to time. We all need an occasional creativity boost and Oblique Strategies is one of the methods I use.

Monday, December 28, 2020

I won an award! How to lose by winning

Company work anniversary awards

Sometimes, companies try and do a good thing but go about it so poorly, they end up doing something bad. 

A few years ago, I worked for a large company. I got to a work anniversary which triggered an award; a plastic slab I was supposed to display on my desk. How it was delivered was eye-opening.

(Winning a trophy like this would be meaningful. Image source: Wikimedia Commons. License: Public Domain.)

I was working at a different office from my manager, so the award was sent directly to me, including the written instructions to my manager on how to give me the award

How to do it wrong

The award was a tombstone-shaped piece of transparent plastic with some vaguely encouraging words embossed on it. Other than the company logo, there was no customization of any kind (not even the employee's name), it was completely generic. The instructions gave a formal pattern for how the plastic was to be awarded. They went something like this:
  • Allocate about 20 minutes for the award ceremony.
  • Gather the employee's colleagues together.
  • Thank the employee by name for their service to the company. Mention any noticeable successes. Be warm and encouraging. Use their name. Look them in the eye.
  • Hand over the award, being sure to note that it's a recognition of their service. Use their name.
  • State that you're looking forward to working with them in the future.
  • Start a round of applause.
I told my manager that this had happened and we both laughed. I told him I was going to have an award ceremony for myself and hand myself the award using the instructions in the box. He chuckled and told me to go for it. In other words, the whole thing meant nothing to either of us.

Obviously, the company's intention was to thank employees for not leaving. They'd thought it through sufficiently well enough to have a trophy that would be displayed on desks and that wouldn't cost very much. Of course, the goal of the ceremony was to celebrate the individual and make them feel special.

Unfortunately, the trophy wasn't meaningful to anyone - it didn't even look good. The instructions left a bad taste in my mouth. My guess is, the leadership was trying to reach managers who wouldn't normally celebrate individuals' contributions. By mandating the form of the ceremony, they were trying to introduce consistency and enforce meaning, but by describing the ceremony in detail, they undermined managers - this was a form of micro-managing and hinted at bigger issues with managers' people skills.

How to do it right

By contrast, I worked for another large organization that made a very big deal of work anniversaries. People who reached a significant anniversary were called into a big meeting and personally thanked by the CEO. There were meaningful gifts for reaching multiples of 5 years. Looking back on that experience, I believe the company, and the CEO were sincere - they put a lot of effort into thanking and recognizing people. The fact that the recognition was lead by the CEO made a huge difference.

Don't fake it

Employee recognition is a fraught topic and work anniversaries can be tricky. Do you celebrate or not and why? If you do celebrate, then it needs to be meaningful and focused on the person; you can't fake or mandate sincerity. If you're going to do it, do it well.

Monday, December 21, 2020

The $10 screwdriver: a cautionary management tale

Managers gone mild

I've told this story to friends several times. It's a simple story, but the lessons are complex and it touches on many different areas. See what you think.

I was a software developer for a large organization working on network-related software. For various reasons I won't go into, we had to frequently change network cards in our test computers and re-install drivers. My bosses' boss put a rule in place that we had to use IT Support to change cards and re-install drivers - we weren't to change the cards ourselves. No other team had a similar rule and there had been no incidents or injuries. Despite asking many times, he wouldn't explain why he put the rule in place.

At first, IT Support was OK with it. But as time wore on, we wanted to change cards twice a day or more. IT Support had a lot of demands on their time and got irritated with the constant requests. They wanted to know why we couldn't do it ourselves. One of the IT guys burned us a CD with the drivers on it and told us to get our own screwdrivers and change the cards ourselves. They started to de-prioritize our help requests because, quite rightly, they had other things to do and we could swap the cards ourselves. It got to the stage where we had to wait over two hours for someone to come, unscrew two screws, swap the card, and screw the two screws back in.

We were very sympathetic to IT Support, but the situation was becoming intolerable. My software development team complained to our management about the whole thing. My bosses' boss still wouldn't budge and insisted we call IT Support to change cards, he wouldn't explain why and he wouldn't escalate the de-prioritization of tickets. 

Excalibur the screwdriver

I got so fed up with the whole thing, I went out one lunchtime and bought a £7 ($10) screwdriver. It was a very nice screwdriver, it had multiple interchangeable heads, a ratchet action, and it was red. I gave it to the team. We used the screwdriver and stopped calling IT Support - much to their relief.

The blessed screwdriver

(This isn't the actual screwdriver I bought, but it looks a lot like it. Image source: Wikimedia Commons, Author: Klara Krieg, License: Creative Commons.)

The consequences

I then made a big mistake. I put in an expenses claim for the screwdriver.

It went to my boss, who didn't have the authority to sign it off. It then went to his boss, who wasn't sure if he could sign it off. It then went to his boss, who did have the authority but wanted to know more. He called a meeting (my boss, my bosses' boss, my bosses' bosses' boss) to discuss my expenses claim. I heard they talked about whether it was necessary or not and whether I had bought a screwdriver that was too expensive when a cheaper one would have done. They decided to allow my expenses claim this one time.

I was called into a meeting with my bosses' bosses' boss and told not to put in a claim like that again. I was called into a meeting with my bosses' boss who told me not to put in an expenses claim like that again and that I should have used IT Support every single time and if I were to do it again to buy a cheaper screwdriver. I was then called into a meeting with my boss who told me it was all ridiculous but next time I should just eat the cost. Despite asking, no-one ever explained why there had been a 'rule'. Once the screwdriver existed, we were expected to use it and not call IT Support.

Of course, the team all knew what was going on and there was incredulity about the company's behavior. The team lost a lot of respect for our leadership. The screwdriver was considered a holy relic to be treasured and kept safe.

What happened next

Subsequent to these events, I left and got another job. In my new job, I ended up buying thousands of pounds worth of equipment with no-one blinking an eye (my new boss told me not to bother him with pre-approval for anything under £1,000). All the other technical people in the group left not long after me. A competitor had been making headway in the market while I was there and really started to break through by the time I left. To respond to the competitive challenge, new management came in to make the company more dynamic and they replaced my entire management chain.

What I learned

Here's what I learned from all this. I should have eaten the cost of the screwdriver and avoided a conflict with my management chain, at the same time, I should have been looking for another job. The issue was a mismatch of goals: I wanted to build good things quickly, my management team didn't want to rock the boat. Ultimately, you can't bridge a gap this big. Buying the screwdriver was a subversion of the system and not a good thing to do unless there was a payoff, which there wasn't. 

I promised myself I would never behave like the management I experienced, and I never have. With my teams now, I'm careful to explain the why behind rules; it feels more respectful and brings people on side more. I listen to people and I've reversed course if they can make a good case. I've told people to be wise about expenses, to minimize what they spend, but when something needs to be bought, they need to buy it.

What do you think?

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Monday, August 31, 2020

Speaking in voices: pitch, volume, and speed

How you say it is important

As a speaker, you have two instruments to influence an audience: your voice and your body. In this blog post, I'm going to talk about how you can use your voice to become a more engaging and compelling speaker. 

To be successful on stage, you need to be more you, which means exaggerating who you are through your voice. It doesn't mean being manic, but it does mean being more expressive than you usually are. 

Everyone knows that speaking in a monotone can put audiences to sleep, which means it's important to have meaningful variation in your voice. You can use the need for variation to your advantage: you can use your voice to grab attention (in at least two different ways), to soothe an audience, or to rile them up.  

Let's look at three techniques you have at your disposal: volume, pitch, and speed.

(Margaret Thatcher was an expert in her use of voice pitch. Image source: Wikimedia Commons, Photographer: Rob Bogaerts / Anefo, License: Public domain)

Volume

This is the most obvious method; you can vary how loudly you speak. You should do it mindfully and be aware that you can use softness and loudness for the same goal.

Obviously, speaking loudly, or very loudly, grabs an audience's attention, but it quickly becomes tiring for both the audience and the speaker and the effect wears off quickly. You should use louder speech as you might use bold text in a document - to draw attention to a point. For example, a CEO might say something like:

"...our results for 2020 were at the lower end of expectations, in 2021, we changed our approach and saw a 10% improvement, in 2022, we must continue to focus on our core business."

The CEO would say the words in bold louder than the other words, and the underlined word louder still.

I was at a comedy club when the compere had to revive an audience after the previous comic had died on stage. He used various techniques to do it, but the most obvious one was loudness; he spoke closer to the microphone which had the effect of amplifying his voice. At times, it was so loud it was almost painful. However, it worked, he got the audience's attention and he continued with his set at a more reasonable volume. If you're the first speaker on stage after lunch, you can do the same to get your audience's attention, but don't do it for too long

You can also use a softer voice to get attention. One power move I've seen is for executives to speak softly to force people to listen more closely. Of course, this only works if the room is right and there are no background noises, but when it works, it works really well.

The ultimate in speaking softly is silence. I've used silence in my talks to powerful effect and I've seen other use it too. Mostly, it takes the form of a longer than usual pause in the lead-up to some crucial part of the talk. The silence works to build audience tension to a reveal and it serves to amplify the message. I've seen comedians use it to add power to a punchline - some comedians can get a huge laugh from weak material by effective use of silences to build anticipation. Of course, you have to use silences judiciously and not drag them out too long; extended silences can become excruciating for audiences. My suggestion is to use silences that last no longer than a count of 3 or 4.

Let's imagine you're VP of Engineering and you wanted to grab your audiences' attention during a talk on 2021 objectives. Here's how you might emphasize a point using a silence:

"In 2020, we had a problem that plagued several teams. It caused us to miss deadlines. It caused us additional expenses. It caused us all greater personal time and effort. The problems was..." <SILENCE FOR A COUPLE OF BEATS>"... staff retention."

Silence draws attention to your point.

Volume control is also partly dependent on your microphone technique. Very, very few speakers practice using a microphone and working with the sound team, and that's a shame. Although lapel mics are easy and very popular, a handheld mic enables you to play sound games, for example, to increase volume through moving the microphone closer to your mouth. This has the advantage of increasing volume and not distorting your voice in the way that shouting does. If you intend to use the microphone like this, for heaven's sake, practice and speak to the sound person if there is one. A sound person will immediately drop your volume if you use the microphone like this - you have to tell them what you're going to do so they don't work against you.

Pitch (frequency)

In normal speech, you vary the pitch of your speech for different reasons:
  • high pitch represents energy and excitement and high emotion
  • low pitch represents calm seriousness
You also vary pitch within sentences; you use increasing pitch to indicate a question at the end of sentences.

Even business speeches have emotional content if you play them right. One company I worked for had a meaningful commitment to Corporate Social Responsibility and people spoke about their experiences in disadvantaged communities around the world. The best speakers used high pitch to give a forceful power when talking about their experiences and coupled it with lower pitch to talk about the effect it had on them. More generally, executives can use higher pitch for energetic parts of a speech, for example, talking about beating the competition or exceeding quota, and then use lower pitch for serious parts, like discussing training and staff development.

Like all abilities, your vocal range is limited, which is why certain types of speech may suit your voice better than others, but there are things you can do to extend or even change your vocal range.

There's a famous story about Margaret Thatcher and her voice training. Before she became Prime Minister, one of the criticisms she faced was that she sounded like a shrill housewife. Obviously, this was a long time ago and it's a deeply sexist comment, but even today, it's a criticism of female politicians. Margaret Thatcher dealt with it by lowering the pitch of her voice. She had voice training and performed voice exercises to speak more deeply. It worked for her - if you get time, listen to some of her speeches - they're masterclasses in the use of voice for oratory. 

If you do have a higher-pitched voice, you need to be careful about your vocal range in speeches. Yes, it is deeply unfair that women are labeled shrill, but the labeling occurs. At the very least, you should be aware it will happen.

Speed

Speed is similar to pitch:
  • High speed represents energy, excitement, high emotion
  • Low speed represents seriousness
in fact, speed and pitch often work together to emphasize a point. 

If you need to represent urgency or energy, speak more quickly. The risk is that some of your audience might not catch every word, especially for non-native speakers, but there is a way round this that can work to your advantage. Many rhetorical devices use repetition in some form or other (e.g. anaphora, epimone, epistrophe etc.) - using one of these devices plus speed means some members of your audience can miss words but still take away the meaning. Very few audiences and speakers can maintain a high level of energy for extended periods, as a consequence, you need to use higher speed with consideration.

If you need to convey seriousness, speak more slowly. The classic case is a national leader speaking during a time of crisis; they all tend to speak more slowly and deliberately to convey gravity.

Of course, you can overdo speaking slowly. The risk is, you put your audience to sleep, so use it sparingly.

Putting it all together

You should use these techniques like spices in cooking; use them to bring out the features of your talk but not as the main element. You want people to remember your message, not your technique. Some techniques, like silence, are very powerful and should only be used sparingly. Others, like speed, you can use to add variety and interest and to emphasize your point. To keep your audience engaged, you need variety.

To see masters of voice control at work, I suggest you listen to the speeches of Martin Luther King or Margaret Thatcher - two people with very different styles and very different politics, but both very, very effective.

There are other voice techniques that I haven't gone into here. I haven't talked about communicating emotion or using rhythm in speeches. These are more advanced topics I might write about in the future. 

Like any physical skill, you need to practice to get good at using these techniques. The next time you're giving a talk, try to add volume, pitch, and speed to add variety and emphasize the important points.

Other blog posts in the series

Monday, August 24, 2020

Everything stops for tea

I was told this story years ago by those who were supposedly involved. I worked for the company concerned, but I'm not sure if it makes the story truer or not. In any case, it's a fun story with a subtle moral.

There was an IT department in a big company who were installing servers in an older building that didn't have dedicated server rooms or closets. Because there was nowhere else to put it, they installed a server in an office. The server was a typical innocuous beige box.

After a few weeks, there were reports of trouble in the building. Fairly regularly, e-mail and other services would go down for five minutes at about the same time of day. The IT department investigated. They checked the server configurations, but the configurations weren't to blame. They checked the cabling, but that was just fine. They checked network cards and routers, but everything seemed to be working as expected. During the whole investigation, the network kept on going down at around 10:30am for about 5 minutes, but there seemed to be no hardware or software cause.

In desperation, the IT department posted someone to sit by the server all day to watch what happened.

At about 10:30am, a secretary filled an electric kettle with water. She walked into the office, unplugged the server, and plugged in her kettle. She made herself and her boss a nice pot of tea. When the tea was brewing, she unplugged the kettle and plugged the server back in. She then went to enjoy her break and have her cup of tea.

(Image source: Wikimedia Commons Artist: Ian Smith License: Creative Commons)

So the mystery was solved. The IT department put a notice on the server plug not to unplug it and identified the server as a server. The secretary found another, less convenient place to plug in her kettle, and the world moved on.

I was told this story by the IT department. In their telling, the villain of the piece was the secretary, who they thought should have known better. At the time, I accepted this and laughed with them. Now, I disagree. In my view, the villain was the IT department and the innocent party was the secretary.

No-one told the secretary that the server was important; it wasn't marked in any way. She wasn't a technical person and she had no way of knowing what the box was or what it did. Because of the age of the building, the server was in an office instead of in a server closet, so there were lots of non-technical people in the area near the server. The IT department did know what the server was, they knew that there were non-technical people around, but they chose not to mark the server or communicate to anyone what it was or how important it was to keep it plugged in.

Bottom line: don't blame people for not being psychic - it's your responsibility to communicate.

Monday, July 20, 2020

Sad! How not to create a career structure: good intentions gone wrong

Sad!

I worked for a company that tried to do a good thing for people's careers and promotion prospects, but it back-fired horribly and ended up hurting more than it helped. I'm going to tell you the story and draw some lessons from it. Of course, I've changed and obscured some details to protect the guilty.
Placid developers turning into a mob
(Sometimes doing the right thing badly can turn even placid software developers into a mob. Image source: Wikimedia Commons, License: Public Domain.)

The company

The company was a large corporation with several hundred software developers working in different divisions on different projects. There was a formal grade level for developers: a developer fresh out of college might be level 20 and an experienced and senior developer might be level 30. Each level had a pay band with a rigid cap, once you reached the cap, you could only get more money by promotion. The pay bands overlapped and people knew them. Everyone was keenly aware of their level and there was open discussion of who was on what level. 

The problem was, the standards and levels were inconsistent across and within departments. Some departments and managers were known to be 'generous' and others were known to be 'mean'. Some developers moved departments as the only way to get promoted, but there were problems with this approach too. Some departments had one set of rules for pay and levels, others had different rules. In some cases, developers tried to move to other groups to get a promotion, but they were offered jobs at the bottom of the pay band at that level, which unfortunately was less money than they were currently on. Managerial inconsistencies had bad consequences for individuals too. In one case, a person got a big promotion and their manager left not long after. Their new manager felt they were underperforming and that they had been over-promoted. Some managers promoted based on performance alone, but others insisted on time served on a level.

The bottom line was, there were substantial inconsistencies and inequities and the software engineers were unhappy.

The learned organization

Fortunately, there was an active learned organization that helped software companies. One of the things this very learned organization did was produce career guidance, specifically, it produced a career hierarchy showing what software developers would be expected to do at different levels of seniority. As with all management solutions, it was a matrix. There were different skills in different areas and some areas were only applicable to more senior positions. To put it simply, they'd mapped out a grading structure and the skills and responsibilities of each grade.

On the face of it, this sounded like a perfect solution for my employer: why not roll-out this grading structure and use it to decide people's levels?

The roll-out

My employer took the skills/grades matrix from the learned society and mapped it to the internal levels 20-30. The idea was, you could see what was expected of you at your level and what skills you needed to develop and the responsibilities you needed to take on to get a promotion. Sounds great!

They published this guidance to all developers.

Light the blue touch paper...

The fall-out

Here's what happened.

The people on high grades (around 30) knew they weren't going to be demoted and their salary wasn't going to go down. Most of them noticed that they weren't doing many of the things the skills/grades matrix said they should be doing. They found the whole thing hilarious. They openly joked about the grade/skills matrix and freely talked about all the things they weren't doing that the matrix said they should be.

The majority of people were on middling grades (23-27) and this was incendiary to them. Many of the people were doing more than what was expected of them at their grade level. In many cases, they were meeting the requirements two levels above their current level. The net results were urgent discussions with their managers about immediate promotions.

The middling grades people were furious, while the high-grade people were laughing about it. It wasn't a happy mix and management had to step in to stifle debate to calm people down.

Senior management soon realized this was explosive, so they back-pedaled quickly. The roll-out program was canceled due to unexplained 'deficiencies in the process' and it 'not meeting business needs'. A review was promised, which as you might expect, never happened. The subject became taboo and senior management didn't attempt any further reform. 

Of course, this had its impact. The middling grades realized they had to leave to get career advancement and the senior people realized further advancement was unlikely. The people with get up and go got up and left.

What about the people on the lower grades? When the roll-out happened, they were very happy. For the first time, they had clear goals for promotion, and consistency meant they wouldn't have to leave their group to get promoted. They were upset when it was canceled because it was back to the old opaque system. When the review never happened, it dawned on many of them that the company wasn't serious about their futures.

Instead of being a positive change for the future, it set the company back several years.

Why did it go so badly wrong?

Solving the wrong problem

What problem was senior management trying to solve? There were two broad problems we faced as a company:
  • Current inequities and inconsistencies
  • Future inequities and inconsistencies
The skill/grade matrix was a solution to the second problem, but not the first. The first problem was the most serious and the skills/grade matrix just made it more visible. The senior management team had no plan to address the first problem.

The leadership applied the right solution to the wrong problem.

Overnight fix to a long-standing problem

Inconsistencies had built up over the course of about a decade, and there were reasons why things developed the way they did. Partly, it was company culture. 

As a general rule of thumb, entrenched problems take time to solve. Senior leadership plainly expected a magic wand, but that was never going to happen. They didn't put in enough effort post-launch to make the project successful.

Didn't listen/lack of inclusion

This was the main problem. Senior leadership should have talked to software developers to understand what their concerns really were. In short order, listening would have brought to the surface the issues with current inequities and it would have shown senior leadership that the plan wasn't going to work. The fact that developers weren't involved in discussions about their own future was telling.

Pretend it never happened

You can't put the genie back in the lamp. Senior management tried to brush the whole thing under the rug very quickly when it was apparent it was going wrong, which was the worst response they could have made. 

How should they have dealt with it?

Hindsight is a wonderful thing, but knowing what I know now, here's how I would have dealt with this situation differently.
  • Understand what the problem really is by talking to people. By people, I mean the people directly affected. I've learned never to rely on intermediaries who may be incentivized to mislead or tell you what you want to hear.
  • Deal with the worst cases up-front and as one-offs. A one-size fits all process can flounder when dealing with outliers, so it's better to deal with the most extreme cases individually. In this case, people who should be on much higher levels.
  • Trial the solution with a small group. Trying it on a group of about 20-30 software developers would have flushed out most of the problems.
  • Stick with it. Put the effort in to make it work, but have clear criteria for exiting if it doesn't work.
More specifically, I might have followed these policies.
  • Assuming no or very little money for promotions, I would have extended the pay bands at the bottom end. This would allow me to promote people without incurring extra costs. In the ideal world, you promote everyone who deserves it and give them the appropriate pay rise, but the ideal world doesn't exist.
  • I might reform the whole 20-30 levels, for example, I might call the levels something else, and then I would map people to new levels, including mapping some people to higher levels. An exercise like this allows you to correct all kinds of oddities, but of course, some people will be upset.
  • For people who were on higher levels than they should be, I would leave them there for a while. It's too damaging for an organization to make corrections on this scale - there were just too many people who were over-promoted. But I wouldn't promote these people further until their performance warranted it.

Saturday, July 11, 2020

The art of persuasion: pathos, logos, and ethos

The art of persuasion is ancient

In this blog post, I'm going to talk about three high-level approaches to persuasion that people have used for thousands of years: pathos, logos, and ethos. Aristotle codified them, hence their Greek names, but despite their ancient origins, they pop up in modern sales methods, in the speeches given by politicians, and in preachers' sermons. Understanding these basics will let you craft more effective speeches and emails.

(Martin Luther King was one of the best rhetoricians of the 20th century. King used pathos enormously effectively in his 'I have a dream speech'. Image source: Wikimedia Commons. Photographer: Rowland Scherman.)

Logos

Sadly, this is the weakest of the three, it's the appeal to logic; the use of fact and figures, and inference and deduction to make an argument. For example, if I were trying to make the case that the economy was great under my leadership, I might talk about high employment numbers, pay rise increases, and business growth. My chain of reasoning would be: the numbers are great due to my leadership, so you should vote for me. Let's look at a couple of real examples.

My first example is Winston Churchill's "Their finest hour speech" (you can read more analysis of this speech here):

"‘Hitler knows that he will have to break us in this Island or lose the war. If we can stand up to him, all Europe may be free and life of the world may move forward into broad, sunlit uplands.’"

Note there are no numbers here, it's a chain of logic linking one idea to another, in this case, an if-then piece of logic.

John F. Kennedy also used logos. Here's an excerpt from his famous "We choose to go the moon..." speech:

"Within these last 19 months at least 45 satellites have circled the earth. Some 40 of them were made in the United States of America and they were far more sophisticated and supplied far more knowledge to the people of the world than those of the Soviet Union."

Note the use of numbers to make the point that the United States was ahead of, and more advanced than the Soviet Union. Logos isn't just about making cold scientific claims, it can be about bashing your opponents with logic. 

Margaret Thatcher was a master speaker, and she used logos to batter her opponents:

"If the Labour Government is no longer able to act in the national interest, is there no alternative to the ruin of Britain? Yes, indeed there is - and that alternative is here at Brighton today."

(Leader's Speech, Brighton, 1976)

The point is, logos isn't about a mathematical deduction, it's about creating a chain of arguments to lead the audience to the conclusion that your point is true. 

In sales situations, logos is used in several ways, for example, a salesperson might say something like: "Our solution costs less on a yearly basis than competitor Y but has features A, B, and C that Y does not."

Ethos

This is an appeal from authority, the idea is that the speaker has some kind of position that gives them special knowledge. The most obvious example is the old quote: "Trust me, I'm a doctor". Speakers use this device a lot to establish credibility, for example, you might hear people talk about years of government service, or their qualifications, or their awards. 

One of the best examples of ethos I've come across is Steve Jobs Stanford Commencement address of 2005. Pretty much, the whole speech is ethos, establishing his credibility with the audience. Here's a small extract:

"I was lucky — I found what I loved to do early in life. Woz and I started Apple in my parents’ garage when I was 20. We worked hard, and in 10 years Apple had grown from just the two of us in a garage into a $2 billion company with over 4,000 employees. We had just released our finest creation — the Macintosh — a year earlier, and I had just turned 30."

There are several ways speakers establish ethos. Sometimes, they talk about their education, or they talk about their experiences, or they talk about their awards. But how do you establish ethos if you have none of those things? The answer is, you can co-opt it from other people and organizations.

A salesperson might co-opt ethos by talking about the awards and success of their company or product, for example, "Product X was the biggest selling product in category Y, it's the industry standard." They also use external references from trusted sources. Gartner's magic quadrant analysis is widely used for a reason, it lends external credibility and is a great source of ethos. Success stories serve similar purposes too; you can use a quote from an industry figure to boost your credibility.

Pathos

This is an emotional appeal to do something. It's is one of the most effective persuasive techniques, but it has to be used carefully; it's a blunt instrument that can undermine your argument. One of the clearest examples of pathos also illustrates the problem: "do as I ask or I kill this kitten".

I'm going to return to Winston Churchill and another of his famous speeches for my first example, here's a famous extract:

"I would say to the House, as I said to those who have joined this government: “I have nothing to offer but blood, toil, tears and sweat.”"

(Blood, toil, tears, and sweat)

Churchill's goal was to get the politicians and the people to join with him in an existential struggle against fascism. He used vivid imagery to illustrate the struggle ahead. If logos is the use of facts and figures, pathos is the use of adjectives and adverbs.

One of my other favorite speakers is Martin Luther King, here's an extract from his most famous speech:

"I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice."

King is using evocative language to appeal to his audience, to motivate them to appeal for change.

I've seen salespeople use pathos in a clever way when they ask a prospect what the success of product would mean for them. The crude example here is telling someone they would look good in a sports car. Less crudely, the success of a product could lead to promotions. This has to be artfully done, but I've seen it used very effectively.

Using them in a speech

Not every speech uses all the elements of persuasion, but many of them do. Let's imagine you're promoting your company's product at a convention and had a short slot to do it. Here's how you might use pathos, logos, and ethos.

Speech Commentary 
In 2020, Gartner placed us in the leader quadrant of their X magic quadrant for the fifth year running.
Ms A, Vice-President for Important Things at Big Company B said that Product Y was a game-changer for them.
 Ethos.
She said, it reduced design costs by 20% and reduced time-to-market by 15%. Her experience is common, which is why we have the largest market share and we're growing more rapidly than any other company in the sector. We're becoming the industry standard. Logos.
But it's not just about money. Because we reduce design flow issues, we reduce low-level re-work and rote work, so we free up engineers time to be more creative and use their skills in more engaging and interesting ways. Our software enabled Dr S to design H, which won the industry design award and got him on the cover of Trade Publication. Pathos

This is a little crude, but you get the general idea.

Churchill, Kennedy, and King did not just make up their speeches. They knew very well what they were doing. Churchill and King in particular were master rhetoricians, adept at using words to change the world. Knowing a little of rhetoric can pay dividends if you're trying to be more persuasive.

Reading more

A lot of books on rhetoric are unreadable, which is odd given that rhetoric is about communication. Here are some of the ones I like:

  • Thank You for Arguing, Fourth Edition: What Aristotle, Lincoln, and Homer Simpson Can Teach Us About the Art of Persuasion - Jay Heinrichs
  • Words Like Loaded Pistols: Rhetoric from Aristotle to Obama - Sam Leith

Rhetoric for managers series

This post is part of a series of posts on rhetoric for managers. Here are the other posts in the series:

Thursday, July 2, 2020

Managers must actively listen: foundational skills

Managers need to actively listen

Almost every MBA or business school degree has units on communications, including spoken communication. A great deal of attention is lavished on learning how to give speeches and how to communicate ideas, but no time is given to a more important management skill: how to actively listen. 

(If a dog can listen attentively, why can't you? Image credit: Wikimedia Commons. License: Public Domain.) 
If you're thinking of listening as a passive skill, you've got it wrong. If you think of it just as letting someone speak, you're mistaken. If you think of it as something you can just do, you've totally misunderstood it.

By actively listening, I mean understanding the true meaning of what someone says and not just the superficial content. I mean actively probing for the key underlying messages and feelings. I mean communicating back to the speaker that you've heard and understand what they have to say by your choice of gestures, noises, and responses.

By actively listening, you can understand what's really going on and earn trust as a manager. You can demonstrate empathy, respect, and the value you place on people. 

In the last few years, the 'fake it until you make it' business meme has done the rounds, meaning pretending to be something you're not so you can get promoted to be what you were pretending to be. Active listening is the antithesis of this approach; it's all about communicating genuine human warmth. You can't fake caring.

Listen without distraction

Our first listening lesson is the simplest: listen with undivided attention and communicate that your attention is undivided. This means no ringing phones and no beeping devices. Turn off or silence your phone or watch. Turn off or silence notifications on your computer - better still, close up your laptop or turn your screen away. If at all possible, you should sit close to someone without distractions or obstructions. If you have an office, get up from behind your desk so you can sit with the person without diversion. Sitting behind your desk communicates power, and it's even worse if your monitor even partially obscures your view. If you don't have an office, go to a meeting room where you won't be distracted. On Zoom or video conferencing, close down any distracting windows and look at the person only (not other computer windows or something else in your home office). These things sound simple, but it's surprising how many people don't understand the basics of turning off distractions. If you want people to talk, you need to give them the right environment - and that means you have to take action.

Let's imagine you wanted to talk to your manager about a difficult situation at work. Perhaps you suspect you're the victim of sexual or racial harassment, or you've seen something in another department you think you should report, or you're unhappy with a colleague. Each of these situations is difficult for you to talk about and requires you to trust your manager. Now imagine when you finally screw up the courage to see them, they sit behind their desk fiddling with their phone, their computer pings every minute, and they keep on turning away to check their monitor. Do you think you would tell a manager who behaves like this something that's risky and that requires trust? Do you want to be the kind of manager your team trusts, or do you just want to just fake it? Being authentic requires effort on your part.

Just making time for people isn't enough. You have to understand what's expected of you and what you mustn't do.

Listening isn't problem-solving

One of the big mistakes managers make is slipping into problem-solving mode as soon as someone starts discussing a problem or issue. For people from a technical background, this is a comforting response to a difficult situation, after all, solving problems is what technical people are trained to do. But this might be the exact opposite from what the person wants. They might just want to talk through a difficult or disturbing situation and be heard. The other risk is, by offering solutions too soon, you might block more serious content. Sometimes, someone might come to see you with a 'presenting problem' that's relatively innocuous; they're seeing if they can trust you before disclosing the bigger issue. Before suggesting any solution, you should make sure you've heard the totality of what someone has to say. Your first goal should be making sure the person feels heard.

The biggest risk of active listening for managers

I do have to address one of the big risks of listening: role confusion. You are a manager, not a counselor. The art of listening as a manager is to know your limits and not try and be a cheap therapist. Remember, as a manager, you may have to use the performance management process on someone which may be next to impossible if the person is relying on you as a counselor. If you've allowed an unhealthy pseudo-counseling relationship to develop, you've put yourself in a career-limiting situation. At all times, you must remember you are a manager.

Listening leads to acting - sometimes

There's another key difference between a therapist and a manager. As a manager, you need to act on what people tell you. You don't need to act all the time, sometimes people need to vent and your role is solely to listen and communicate you've heard what they have to say. But on other occasions, you have to act - in fact, acting is the ultimate in active listening: 'I've heard what you have to say and I'm going to do something about it'. If you do nothing in response to what you hear, ultimately people will do something themselves: they'll leave and go somewhere else.

What's next?

I'm going to blog a bit more about listening. I'm going to focus in on some micro-skills you can use to communicate you're listening, and provide examples and exercises you can follow. These blogs posts are not about faking listening, they're about being human and about your role for your team - demonstrating why you're a manager.

References

The best single-volume book I've come across that covers the skills of actively listening is "Swift to hear" by Michael Jacobs (ISBN: 978-0281052608). The book is aimed at people involved in pastoral care, but it focuses on technical skills, making it a great resource for anyone who needs to listen attentively.

Friday, June 26, 2020

Drunk and disorderly: not funny at company events

Loutishness isn't funny

Maybe I'm getting more puritanical as I get older, but I'm finding myself less and less tolerant of drunken loutishness at corporate events. I've seen too many instances where people have got away with poor behavior to the detriment of others, and to the detriment of the organization as a whole. Let me tell you my stories, some of the details have been disguised to protect the guilty.

(Great when enjoyed responsibly, not so great when it leads to bad behavior on company time. Image credit: Wikimedia Commons (klimkin). License: Creative Commons Zero)

Ruining the lawn

One fine summer evening, the company I worked for held a large-scale open-air event. The aim was to play summer outdoor games and enjoy a drink or two in the company of our colleagues. The venue was extremely proud of its grounds and had obviously spent a lot of money creating and maintaining immaculate grass playing surfaces. Some of my colleagues realized there was no limit at the bar and set out to get drunk on company money; a task they succeeded at admirably. One of them decided it would be really funny to plant his glass in the middle of the grass. He turned his glass upside down and stomped it into the lawn. His friends thought this was funny, so they did it too. The next day, the groundskeepers discovered the stomped glasses and had to fix the damage, which meant the venue was unavailable for others. Net result? The company paid a penalty to repair the lawn and was banned from the venue (the only venue like it for miles). Everyone knew who the stompers were, but they got away with it.

The Christmas party

Christmas time seems to bring out the worst in some people at corporate events. I was at a large-scale company Christmas lunch where a lot of alcohol had been consumed. One of the employees decided it would be fun to start throwing food at other tables. The food fight escalated until someone soaked a small tablecloth in water, screw it up into a ball, and threw it at another table. It hit the other table like a bomb, exploding a carafe of red wine, splattering everyone in red wine and glass fragments. This was plainly very upsetting to the people on the table and brought the event to an end. Obviously, the company was banned from the venue, but this time I believe someone did have a word with one of the perpetrators and there was managerial discussion of curtailing bad behavior.

The overseas trip

Corporate events held away from home can be a lot of fun, but there can be problems too. I was at a corporate event held in a resort venue and I witnessed some unfortunate things. There was a mix of company people, who were getting everything for free, and vacationers, who had paid to stay at the resort. It was not a happy combination. The company people were away from family, off the leash, and with unlimited free alcohol. On the whole, their behavior towards paying guests was disrespectful at best. At one of the resort bars, I got chatting to a vacationing couple who complained to me about poor treatment from my work colleagues. The vacationers were very unimpressed by the rude and drunken behavior they saw. This was not a good company image to project.

Company culture and drunkenness

I'm happy to say, I haven't seen drunken behavior at my current employer and I think I know why. The company has taken great pains with recruitment and boorish behavior just isn't part of company culture. As a manager, I would be on top of drunken misbehavior immediately, and I believe my fellow managers would do the same too.

Advice to managers: stop it dead

Along with most managers, I've read my fair share of legal documents, case studies, and guidance. Pulling all this together, here are my thoughts:
  • You are never off-the-clock if you're at a company event or with company people. Even if a few work colleagues go out for a drink, it's still a company event.
  • Loutish behavior is not tolerable and there have to be consequences. Just as the workplace must be safe, it must be safe to be with work colleagues. It must be safe for non-employees to be around employees too. Managers need to jump on instances of bad behavior immediately.
  • Everyone must know what the rules are and there must be reminders. Managers must make it clear to new employees what's acceptable and what isn't. It's only fair that everyone knows what's expected of them.
I'm not against people having a drink at company events, I'm not even against people getting drunk at events, but I am against harmful behavior towards others. I want everyone to feel safe and to be safe.

Saturday, June 6, 2020

(De)motivational speakers

I’ve heard motivational speakers give messages completely contrary to company values and I’ve heard a motivational speaker encourage people to resign. I’ve heard speakers that made me feel good to be a part of the company and I’ve heard speakers that made me think. 

It might seem like a good thing for a company to bring in a motivational speaker, but it needs thought as we’ll see. Let’s start with the bad because that’s always more fun.

(Motivational speaking, old school. Image credit: Wikimedia Commons)

At one company I worked at, we had a talk given by a mountaineer who had climbed Mount Everest. They vividly described the struggle of the team to get to the top; the cold, the physical demands, the oxygen deprivation. The expedition got close to the summit, but some of the team were struggling and it was difficult to move forward together. The leadership made the decision to leave some of the team behind and make for the summit with just a handful. The small group made it to the summit and took their pictures at the top of the world. They celebrated their glorious achievement and the speaker spoke movingly of the elation they felt. Then they started to make their way down, meeting up with their colleagues they’d left behind. The speaker told us how bitterly disappointed the people who were left behind were. The leadership had to carefully manage relationships with those they’d left behind to get everyone off the mountain and safely back to base camp. Once they were back at base camp, it didn’t matter anymore because everyone dispersed.

It was a great talk delivered well, but…

The company I worked for at the time had a big thing about teamwork and carrying everyone with you. It was all about the collective way forward. But the talk seemed to have a couple of underlying themes; you need a big team to get to the top and if people are holding you back, you cut them loose so the high performers can achieve their goals. It seemed to me that the talk was completely at odds with the company’s values. Was the company now advocating that we leave people behind? As I heard this story, I wondered about the people in the audience, did they all identify with the group that made it to the summit, or did they think they might be in the group left behind? What does it mean to work in a company where you might be left behind so others can get to the summit?

A different company I worked for was having some trouble retaining staff but wanted to grow. At a company meeting, we had a speaker who had sailed in a major race. The speaker was great, he spoke about his impoverished background, how he stumbled across sailing but loved it. He told us how he sacrificed a great deal to afford to sail and how after years of struggle, he qualified for a major sailing event. He told us how hard the race was and the deprivations he suffered during it. But he also told us how elated he was when he finished and achieved his life’s ambition. His closing message was, you should never be content with where you are and that you should stretch yourself to achieve new goals, do new things, and go to new places. But...

One of my colleagues turned to me and said “did he just tell us to leave the company and go somewhere else?” I said that he’d just told us we could do better elsewhere. Both of us left the company within six months to get better jobs.

Let’s turn to more positive speakers.

I had the great fortune to hear Mark Cuban and Adam Savage (from Mythbusters) speak at a company event for customers. They didn’t say anything that supported the company’s values but they didn’t say anything to contradict them either - they talked about their own subjects, Mark Cuban spoke about innovation and management and Adam Savage spoke about Mythbusters and what happened on set. It was great to hear them speak and great to get some insight into who they are. I left the event with a good feeling about the company - I was happy I’d had this experience and felt gratitude to my employer for providing it for me.

Recently, I heard a speaker talk about how their family had built a clothing company chain of stores around exemplary customer service. Their stores are extremely high-end, serving CEOs and others at the top of their professions. He told stories of associates driving to customer’s houses to deliver items, of clothing shipped out overnight across America so a CEO could give a TV interview looking his best, of tailoring services provided free to high-end customers to win their business. It was an awe-inspiring talk and fascinating to see how the family had consistently built their business. As you can tell, I loved the talk. I was fascinated by how well they’d aligned their tactical activities towards their strategic business goals; for me, it wasn’t about customer service, it was about aligning incentives and actions towards a clear end goal.

I’ve had the opportunity to think about the motivational speakers I’ve heard and the effect they’ve had on people. On the face of it, it seems like a great idea to bring in a compelling speaker, but as we’ve seen, it can go wrong. I recommend motivational speakers, but with qualifications.

  • Listen to them speak and hear the entirety of their talk. Does it support your company values? Is there anything in the talk that might encourage behavior you don’t want (leaving people behind, encouraging people to quit)?
  • Brief your speaker on your company values and ask them to avoid undermining them. Speakers can choose to focus on parts of their story, and they could choose the parts that support your values.
  • Understand why you’re bringing in a speaker and the effect you want to have on your audience. Bringing in celebrities is fun and makes people feel good. Bringing in business people can make people think. Bringing in people who have a powerful story to tell can be moving. But what’s your goal?
  • Reinforce the message by having an executive point out the pieces they want the audience to take away. Never leave it to the audience or the speaker to decide the takeaways.

Saturday, May 30, 2020

Inventory: your job may depend on how it's managed

Why should you care about inventory?

For your own job security, you need to understand the financial position of your employer. Their true financial position will govern your pay and promotion prospects. Long before they affect your job, you can spot looming signs of trouble in company financial statements. Learning a little of accounting will also help you understand news stories, as we'll see. In this blog post, I'm going to talk about one of the easiest signs of trouble to spot, inventory problems. Because it's always fun, I'm going to include some cases of fraud. Bear in mind, innocent people lose their jobs because of inventory issues; I hope you won't be one of them. 

Inventory
(Is inventory good or bad? It depends. Image credit: Wikimedia Commons. License: public domain.)

Inventory concepts

Inventories are items held for sale or items that will be used to manufacture products. Good examples are the items retailers hold for sale (e.g. clothes, food, books) and the parts manufacturers hold (e.g. parts for use on a car assembly line). On a balance sheet, inventory is listed as a current asset, which means it's something that can be turned into cash 'quickly'. There are different types of accounting inventory, but I won't go into what they are.

Inventory changes can be benign but can be a sign of trouble. Let's imaging a bookseller whose inventory is increasing. Is this good or bad?
  • If the bookseller is expanding (more sales, more shops), then increasing inventory is a sign of success.
  • If the bookseller is not expanding, then increasing inventory is deeply concerning. The bookseller is buying books it can't sell.
There are two ways of valuing inventory, which opens the door to shenanigans. Let's imaging you're a coal-burning power station and you have a stockpile of coal. The price of coal fluctuates. Do you value your stockpile of coal at current market prices or the price that you paid for it? There are two ways of evaluating inventory: FIFO and LIFO.
  • FIFO is first-in, first-out - the first items purchased are the first items sold. Inventory is valued at current market prices.
  • LIFO is last-in, first-out - the last items purchased are the first items sold. Inventory is valued at historic market prices.
If prices are going up, then LIFO increases the cost of goods sold and reduces profitability, conversely, FIFO reduces the cost of goods sold and increases profitability. There are also tax implications to the different inventory evaluation methods. 

Obviously, things are more complex than I've described here but we have enough of the basic ideas, so let's get to the fraud stories.

Inventory shenanigans

OM Group produced specialty chemicals from raw materials, including cobalt. In the early 2000s, cobalt was mostly sourced as a by-product from mines in the Democratic Republic of the Congo, a very unstable part of the world. The price of cobalt was going down and OM Group saw a way of making that work to their advantage. Their first step was to use the LIFO method of valuing their cobalt inventory. The next step was to buy up cheap cobalt and keep buying as the price dropped. Here's what that meant; because they used LIFO, for accounting purposes, the cobalt they used in production was valued at the new (low) market price, so the cost of goods sold went down, so profitability went up! The older (and more expensive) cobalt was kept in inventory. To keep the business profits increasing, they needed the price of cobalt to go down and they needed to buy more of it, regardless of their manufacturing needs. The minute prices went up, or they started eating into inventory, or they stopped buying more cobalt, profitability would fall. To put it simply, the boost to profits was an accounting shell game.
OM Group logo at the time. Image credit: Wikimedia Commons. License: Public Domain.)

As you might expect, the music eventually stopped. The SEC charged some of the executives with fraud and reached a settlement with the company, and there was a class-action lawsuit from some company investors. Unsurprisingly, the company later changed its name when the dust settled. If you want to understand how you could spot something like this, there's a very readable description of the accounting fraud by Gary Mishuris, an analyst who spotted it.  

Manufacturing plants run best when producing at a constant rate, but market demands fluctuate. If demand reduces, then inventory will increase, something that will be obvious in a company's financial statements. How can a company disguise a drop in demand? One illegal way is through something called 'channel stuffing', which is forcing your distributors and resellers to take your unsold inventory so you can record it as sales. 

Semiconductor companies are manufacturers and typically have large distribution networks through resellers covering different geographies or markets. For example, a semiconductor company may sell directly to large electronics companies but may serve smaller electronics companies through resellers, who may, in turn, resell to other distributors and so on.

Between 1995 and 2006, Vitesse Semiconductor used channel stuffing extensively to manage its earnings. It had an arrangement with its distributors that they could unconditionally sell back any chips they had bought and not sold. Here's how channel stuffing worked; if Vitesse needed to increase profits in a quarter, they would require their distributors to buy Vitesse' inventory. This would show up as an increase in Vitesse's sales for that quarter. At some point in the future, the resellers could sell the chips back to Vitesse. The chips themselves might never leave the warehouse, but might have been 'owned' by several different companies. In other words, short-term increases in profitability were driven by an accounting scam.
(Vitesse Semiconductor chip. Image credit: Raimond Spekking via Wikimedia Commons. License: Creative Commons)

Of course, this is all illegal and the SEC took action against the company; the executives were indicted for fraud. Vitesse had to restate their earnings substantially downwards, which in turn triggered a class action lawsuit. This fraud has even made it into fraud textbooks.

I want to stop for a minute and ask you to think. These are entertaining stories, but what if you were an (innocent) employee of OM Group or Vitesse Semiconductor? When the SEC arrest the leadership, what are the implications for employees? When the accounts are restated and profitability takes a nose dive, what do you think the pay and job prospects are like for the rank and file workers?

Inventory and politics - Brexit

A while back, I was chatting to a Brexit supporter, when a news report came on the TV; UK economic output had increased, but the increase had gone into inventory, not sales. Manufacturers and others were assuming Brexit would disrupt their supply chain, so they'd increased output to give them a buffer. I was horrified, but the Brexit supporter thought this was great news. After chatting some more, I realized they had no understanding of how inventory worked. Let's talk through some scenarios to understand why the news was bad.
  • Scenario 1: no Brexit supply chain disruption.  UK firms have an excess of inventory. They can either keep the inventory indefinitely (and pay higher costs than their overseas competitors) or they can run down inventory by producing less (and either pay workers to be idle or have shorter working). 
  • Scenario 2: Brexit supply chain disruption.  UK firms can't get parts, so they run down inventory until supply chain issues are fixed. Firms pay for production workers to be idle or have shorter working hours.
In both scenarios, UK firms have incurred production costs earlier than their overseas competitors, which reduces their cash flow.

(Image credit: Wikimedia Commons - Tim Reckmann. License: Creative Commons.)

This is obviously highly simplified, but you get the point. None of these scenarios are good for firms or for workers.

If increasing inventory without sales is so good, why don't firms do it all the time? In fact, why bother with the pesky business of selling at all when you can just produce for inventory? The question seems silly, but answering it leads you to consider what an optimum level of inventory is. The logic pushes you towards just-in-time, which leads to an understanding of why supply chain interruptions are bad.

Closing thoughts

Your job security depends on the financial stability of your employer. If you work for a company that produces public accounts, you have an opportunity to make your own risk assessment. Inventory is one factor among many you should watch. Here are some things you should look out for:
  • Changes to inventory evaluation methods (LIFO, FIFO).
  • Increases in inventory not matched to growth.
  • Increasing sales to distributors not matched to underlying market demand (especially when the inventory never leaves the company).
Yes, some companies do produce fraudulent accounts, and yes, some do hide poor performance, but you can still take steps to protect your career based on the cold hard reality of financial statements, not on hype.

Saturday, May 16, 2020

The Emperor's new objects: a two-year failed project

It’s a sad thing when people you admire turn out not to be what you thought they were, when you find out your heroes have feet of clay. I had an experience like that a few years ago and it taught me a lot.
(Image credit: Old Book Illustrations)

I worked for a company that decided to go for object-oriented technology in a big way. They hired a team of people to design and build components that the lesser people (e.g. me and my colleagues) would snap together to build systems more quickly. Let’s call this team Team X and the team leader Mr. Y. Team X was to be a team of superstars leading the company forward.

I admired Team X and Mr. Y greatly. They had all the skills I wanted and every time I walked past them, they were diligently designing systems; I was impressed by their energy. I used to chat to them once a week and they used to like it because I was so clearly in awe of what they were doing. Mr. Y was at great pains to show me their work, though it was plain I didn’t understand it.

Some time passed and I had the opportunity to learn object-oriented programming. I did a design course on UML, and I learned C++, and became familiar with all the key tools. I put a huge amount of effort in and went from knowing nothing to knowing a lot in a short space of time.

It had been a while since I dropped in on Team X and Mr. Y, so I said hello. As before, Mr. Y showed me their designs and work. This time, I knew about object-oriented design. Unfortunately, I immediately spotted several mistakes in their design and several places where their approach would have been very inefficient. I was foolish enough to point them out. At first, Mr. Y conceded I was right, but as I pointed out more problems, he got irritated. Eventually, I realized I wasn’t welcome anymore and left. I didn’t stop by and chat again.

After this, Team X locked down their designs and prevented anyone from viewing them, they even angled their screens away from people passing-by so no-one could see their work. They stopped communicating. In the meantime, after chatting to my boss, I realized Team X didn’t know what they were doing. My boss counseled me to keep quiet and say nothing, which I did after some moaning. He told me my chances of getting real change were zero and I would just damage my reputation by speaking out.

About six months later, Team X were all laid off. The company gossip was, they’d been employed for two years and produced absolutely nothing of value, not a single piece of executable code. The company got nothing for several people’s efforts over the entire time.

Ironically, the only group that actually produced an object-oriented system was the group I was in. We used C++ to create useful systems that actually did something, and we produced the systems in a few months with just a handful of people, none of whom claimed to be a superstar. We didn't do the huge analysis Team X did, we just built systems to meet our customers' needs.

What were my takeaways from all of this?
  • Results are what counts.
  • If you have a team working for you using a technology, make sure you understand it well enough to measure their progress.
  • Deliverables are important and you should manage projects to have some results at checkpoints throughout the project. This is the soundest way of measuring progress. Never, ever leave long gaps between deliverables.
  • A team that hides its work is a major red flag.
  • Choose your battles and only choose ones you can win or that are important. Companies do silly things all the time, but eventually they get corrected, whether you intervene or not.