6/20/2013

A New World Company

A New World Company, Part 1

All Rights Reserved © 1999 Thomas W. Day

I've beaten the bad and the typically ugly to death in the past two years of the Rat. It's probably overdue that I spend a moment on a vicious plot to fix some of this stuff. While I'm usually surrounded in gators and crap, I occasionally think about what life might be like out of the swamp. I suspect this is going to take a while, so if you hate "to be continued" stories, you may as well bail out right now. This is the first installment of what could be an endless series.

A few weeks ago, Terry Gross (NPR's extraordinary interviewer) interviewed a pair of ex-Vietnam POWs; former pilots Ed Mechenbier and Ron Bliss. These men were being interviewed about their experiences as prisoners of war and the "Return with Honor" documentary they had recently contributed to. Some of the things they said struck a chord with me. They also added to my belief that the things that are wrong with many companies could be fixed.

The quote that I found the most interesting was about the primary teamwork lesson they learned from their basic training: everyone and everything that goes in comes back out. If a man can't go on, two men carry him and another picks up his weapon. This translated into a sense of "camaraderie" (their word) that doesn't exist outside of the military. It's a big part of what carried them through the POW camp hell. When they felt they couldn't go on any longer, that they'd had all of the torture and deprivation that they could stand, one of their friends was there for them. At the same desperate point, they knew that someone else would need them, sometime soon, for the same support. Day after day, they survived until they were set loose into our considerably less meaningful and committed "land of the free." And, in some ways, both men felt the purpose in their lives declined from there.

OK, enough seriousness. I think it's important to remember that the military is about as pure an environment as the Ivy League. I've had a little personal experience with the kind of bottom feeders who join the forces because they can't get a real job. The Pentagon employs a Titanic boatload of useless, overpaid, pompous, self-serving, pampered executive dilettantes like the jackass Jack Nicholson portrayed in "A Few Good Men." There's no point in waving the flag at these characters in hopes that their example could turn a business into something special. Lots of us have experienced the inbreeding and favoritism that seems to often go with ex-military types who have slithered into management positions.

So, if military experience doesn't convey any consistently useful qualities, what made the difference in the lives of these two men? Unfortunately, it appears to me that hardship, extreme hardship, did the trick. Hardship is a tough thing to fake and is about impossible to get people to sign up for, so that isn't going to get us to a better place to work. I think it's possible that there might be another route to business teamwork that approaches camaraderie.

I think this kind of organization has to start with a belief in equality. Not necessarily the communist ideal where each is "given" what is "needed," but something between that impractical and failed socialist theories and the idiotic inequality that seems to be thriving in most American companies.

In any company there are people who are effective leaders, a few are original thinkers, some are skilled at implementing theory into practice, some excel at putting the stuff together so that it actually works when it gets used. I won't argue that those skills are available in equal quantities and, therefore, are worth the same kind of money. That's not true and sticking to that policy won't attract the kind of talent a living company needs to attract.

I will argue that, if you use minimum wage as a base salary for the easiest to obtain employee, it's unreasonable to pay anyone in the company five hundred (or more) times that amount. It's simply not true that an executive can make that kind of difference in a company's performance, relative to the effect that a group of unhappy functional level employees can make on the actual product seen by consumers.

The dissention, greed, and conflicts instilled in the group of employees caused by ridiculously high executive salaries don't create a long-term, healthy, productive company. In fact, I doubt that it's possible to even prove that multi-million dollar executive salaries have any connection to a company's success. There are at least as many companies sinking into the dust, while paying monster salaries and huge unproductively bonuses, as there are companies doing the opposite.

"Talent" is not something that just lives in the fancy offices. If you actually care to look for it, talent can be found most anywhere in almost any company. So here's where we start in our search for the basis to a great company, equality and fairness in compensation. There's more to come.

September 1999

A New World Company, Part 2

All Rights Reserved © 1999 Thomas W. Day

Company Ownership

Even great companies fail. Sometimes the market jumps left when you've just executed the coolest right-sided idea seen on this earth. Sometimes the whole economy crashes and even the best of organizations fall on hard times.

What usually happens then, is the layoffs hit the bottom of the corporate ladder first. Assemblers get dumped because production requirements are down. The technical support staff gets the axe, because customer support isn't a visible profit center. Sales people go because they aren't "making their numbers." The attrition works it's way, slowly, to the top of the ladder (where the original business decisions were made, more often than not, poorly) and the execs get to turn off the lights and lock the doors.

The day afterwards, all of the company's physical assets are stolen because the execs couldn't figure out the locks. Several months later, a monster utility bill wipes out the company retirement fund because the execs flipped the light switches the wrong direction.

Here's a better way to "downsize." In planning the year's budget, most competent managers put together a "good times," a "meets last year's performance," and a "disaster" budget. In the disaster budget, they eliminate equipment purchases, lower all expenses to survival levels, and decide which jobs will be eliminated in what order.

I heard Wilson Greatbach (of Wilson Greatbach Ltd.) speak a few months ago. He had recently bailed out of doing some work in AIDS research and he commented on how he couldn't "understand people who quit working when the money stopped." He had a right to make that comment, since he started his own business in his spare time, out of his home and still maintains a similar work ethic. However, a business with employees who survive on the monthly paycheck can't expect people to work for free. An alternative is to expect the people who have the most to gain to make the most sacrifices. This New World Company approach is about creating an atmosphere that promotes long-term company goals over personal agendas.

In keeping with the "everyone gets out alive" philosophy, our New World Company will do the disaster budget differently. First, when the crisis budget is enacted, all salaries are lowered to the company's "base salary." In a small company, this will probably be minimum wage. In a more established organization, it will probably be the starting salary for unskilled labor on the assembly line. When the disaster budget kicks in, from the supervisors to the middle managers to the CEO, everyone makes the same salary for the duration of the crisis.

Attrition will eliminate some people who either aren't dedicated to the purpose of the company or who can't manage their personal finances well enough to survive on the base salary. That may hurt in the short term, but, through shared hardship, it will congeal the rest of the employees together into a team. It will also motivate management and the other higher paid employees to fix what's wrong and set things right as fast as possible.

This aspect of budget planning also puts the onus of responsibility, and penalty, where it belongs for poorly considered management decisions. Today, most failing companies seem to glory in paying huge bonuses to their executives as a "reward" for failure. That is, in the best sense of the word, incomprehensible. Personally, I would ask those executives to buy huge lots of company stock, when the stock value is collapsing, as a commitment to fixing the problems or going down with the ship. If they don't put their money behind their decisions, it's pretty obvious what those decisions are worth.

The next step is to cut paid hours. For example, everyone goes on a 32 hour workweek. At the base salary, salaried workers will be hit the hardest since they'll still be expected to work whatever hours are necessary at that salary. They will, again, be motivated to find a cure for the company's problems since they will share in the hardship.

Next, I'll talk about the rewards of success and who gets what when there is real money to toss around.

September 1999

A New World Company, Part 3

(AKA "words a New World Company would never say to its customers")

All Rights Reserved © 2000 Thomas W. Day

Fifteen years ago, when I took over the management of a company's Technical Services department, I started with one rule. Under no circumstances would we ever say to a customer "We've never seen that happen before" or "you're the only person who's ever had that problem." Even if it was true, those words generate an incredible amount of disbelief and hostility from a customer who's fighting with a product he believes is defective. At best, someone being fed this argument hears those words as "you're an idiot who found a really creative way to break our gadget." At worst, the customer thinks he's being called a liar. So why say it at all?

Of course, "never" is a pretty spectacular statistic. If a fault has never before been reported, it might mean any number of things. None of those meanings are that the fault only exists in this one unit. It could mean that it's so hard to get to the company's customer service that a normal person would give up long before a semi-live human answers the phone. If the company has an automated "press one, if you are really frustrated" phone answering system, I'd bet my own money this is exactly what "never" means.

"Never" could also mean that the company sold so few of this crappy product that the requirement for "one-in-one-hundred irate customer who will bother to complain" hasn't yet been met. If the product is blatantly awful, was purchased at an "outlet store," or was made in Europe and cost six times as much as a more common brand, the odds were in the manufacturer's favor that "never" would never have arrived.

Another statement customers love to hear is "Out of the ten thousand widgets we've sold, only a half dozen customers have complained about that failure. So we don't think it's worth fixing at this point." Calling the customer an idiot isn't enough for this company representative. This guy has to make it "insignificant idiot" to be certain we understand how much contempt this company holds for its customers.

Statistically, this argument is the kind of thinking that a New World Company would avoid like a turd on a donut. Complaining customers are like canaries in coal mines. They are a precious resource that should be treated as such. The vast, overwhelming, monstrous majority of customers could care less if our company succeeds or dies a slow painful death and all of our employees spend the rest of their lives begging for spare change on street corners.

If I buy a Doomaflogie Mark II at a cost of what amounts to be an hour or two of my working day and the Mark II is a disappointment, I'm unlikely to fling away another hour of my life doing Doomaflogie's Quality Department's job. In fact, of all the people I've known in my life, I doubt that any of them would ever think twice about tossing a defective product into the garbage without even considering registering a complaint with the offending company. I know one or two folks who are so intimidated by the typical customer-hostile processes that they don't even complain when the product cost them thousands of dollars.

So, when that one-in-a-hundred (or thousand, or ten thousand, or whatever) customer takes the time to offer field reliability experience, we're talking about information that's so valuable that it's worth compensation. But most companies not only don't pay for this data, they ask the customer to pay to provide it. The majority of businesses don't have a toll-free number for complaints. Software companies even charge their customers by the hour for the privilege of providing product information. Once you've convinced the company that you have a defective product, you will have to pay the shipping to get the thing repaired. Sometimes, you have to prepay the return shipping.

Knowing the hoops customers will have to jump through, is what convinces Old World Company executives to babble about "lifetime" warranties. Who's going to waste the time to do all that crap to get a replacement product that's as likely to fail as the original was? This kind of practice also makes the entire concept of product warranties a null marketing tool. I don't even bother to read the warranty statements on 99% of the things I buy. It's information as valuable as the other marketing drivel. I might as well learn to read bar codes. Anyone can write marketing specifications and warranties. It takes someone very special to actually make products that meet those specifications and to honor warranties in the spirit that they were received.

Finally, we come to the ultimate customer-hostile corporate attitude: "It's not the product that's defective, it's the way you're using it that made it fail." Now I've graduated to "fumble-fingered insignificant idiot." Wow! Thanks guys. I used to have to visit my parents to get this sort of abuse. Now I can just buy one of your crappy products, watch it crumble in my hands, and call your Customer Service department to get my abuse quotient. You can bet I'll be a lifelong customer after suffering that sort of insult.

Most likely, the customer-induced failure is the result of poor product ergonomics, awful documentation, or the use of materials unsuited for the practical application of the product. Blaming the failure on the one guy who wanted the product to work so much that he tried to get it fixed is incredibly arrogant. Thanks to the example set by MBA programs, arrogance is a state-of-the-art management attitude. Statistically speaking, you are more ten thousand times more likely to hear "you broke it" from Customer Service than "we built it wrong and we're sorry." When you hear this drivel, you will toss the piece of busted junk and make a mental note to never spend another dime with this company.

In the New World Company, none of these statements will ever be made to a customer. In fact, we'll do everything we can to make the complaining customer part of our quality control system. We'll fix the problem, make the customer feel whole again, and do whatever it takes to make this guy our friend. If we do all of this stuff well, we will end up with someone who is very much involved in the success of our business. And we won't have to pay him a salary for having done the work we should have done in the first place.

July 2000

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