This from the HBR blogs, always a wealth of insight.
Quote of the day from this article:
"Success hides problems."
Of course. How obvious. Why don't more of us see those obvious things in front of us?
OS's first job out of college was with a successful small business, family owned, recently moved into a lovely building custom-built for them. Creative on top floor one side, admin top floor the other, production on the ground floor, and warehouse round back. It was cool to be there, and success was in the air.
Now the building stands empty. The company was bought for pennies just before bankruptcy.
A member of the family told OS the crucial anecdote:
On the day we dedicated that building, our CPA quietly told us that this building is not a monument to what we have achieved, but to what we would have to achieve going forward.
They were so happy about being successful, they never saw or dealt with the problems.
The next time OS had dealings with them, some ten years later, they were in total chaos, in the death spiral, never to recover.
Success hides problems.
Sunday, August 8, 2010
Lessons From The BP Oil Spill: The Rickover Lesson, And The Pitino Lesson
Some reasoned thoughts on the BP spill, and what can be learned from the experience.
James Hamilton, UC San Diego, shares the thoughts of Steven R. Kopits, an oil industry specialist. One of the points (all are cogent) is most interesting:
Do Send Field Managers to the 'Rickover School'. In an aggressive corporate culture seen in many oil majors, the ability of field managers to push back is critical. In such a situation, the most dangerous manager is one trying to dutifully comply with the mandates passed down from above. All field managers in the oil business (frankly, in the energy business) responsible for major at-risk activities, for example, the management of a refinery or an offshore drilling rig, need to know how to push back against management. The best I have ever met in this respect have been alumna of the nuclear fleet under Admiral Hyman Rickover. Rickover, considered the father of the US nuclear navy, left a legacy of technical achievements including the United States Navy's continuing record of zero reactor accidents. A key component of this legacy was the empowerment of subordinate officers and enlisted personnel to resist the unreasonable requests of senior officers. I don't know if this program is available commercially, but it wouldn't be too difficult to set up a school. Attendance should be mandatory.
Another lesson that can be taken away could be summarized by a quote recently attributed to Rick Pitino of the University of Louisville: 'If you tell the truth, your problems will become a part of the past. If you lie, they are a part of your future.' Rick should know, as he sowed the wind and reaped the whirlwind in these past few years. Look it up, if you wish. Warning given, however: It is a seriously, seriously ugly and disturbing cautionary tale.
Kids, choose your heroes wisely. Rick shouldn't be on the list, at least not for a long time to come.
As ugly as it was, BP did the right thing by letting the world view that oil gushing from its well for all those weeks. It was bad news, but it was the truth. When they finally did cap it, after showing their failures in live video, there was no doubt in anyone's mind that they had achieved the goal, ahead of the stated time-line. And now, the press is covering the clean-up, not the cover-up.
One of OS's acquaintances works in corporate PR. He's The Grim Reaper. If he shows up in your boardroom, your corporation is in very deep doo-doo. He gets called out 'when the knives are pulled', as he laconically says, with a quiet grin. OS calls upon his wisdom if he suspects things may go pear-shaped, before the knives come out.
Given what he's learned from The Grim Reaper over the years, BP made some very correct decisions in the midst of their deeply bone-headed ones.
James Hamilton, UC San Diego, shares the thoughts of Steven R. Kopits, an oil industry specialist. One of the points (all are cogent) is most interesting:
Do Send Field Managers to the 'Rickover School'. In an aggressive corporate culture seen in many oil majors, the ability of field managers to push back is critical. In such a situation, the most dangerous manager is one trying to dutifully comply with the mandates passed down from above. All field managers in the oil business (frankly, in the energy business) responsible for major at-risk activities, for example, the management of a refinery or an offshore drilling rig, need to know how to push back against management. The best I have ever met in this respect have been alumna of the nuclear fleet under Admiral Hyman Rickover. Rickover, considered the father of the US nuclear navy, left a legacy of technical achievements including the United States Navy's continuing record of zero reactor accidents. A key component of this legacy was the empowerment of subordinate officers and enlisted personnel to resist the unreasonable requests of senior officers. I don't know if this program is available commercially, but it wouldn't be too difficult to set up a school. Attendance should be mandatory.
Another lesson that can be taken away could be summarized by a quote recently attributed to Rick Pitino of the University of Louisville: 'If you tell the truth, your problems will become a part of the past. If you lie, they are a part of your future.' Rick should know, as he sowed the wind and reaped the whirlwind in these past few years. Look it up, if you wish. Warning given, however: It is a seriously, seriously ugly and disturbing cautionary tale.
Kids, choose your heroes wisely. Rick shouldn't be on the list, at least not for a long time to come.
As ugly as it was, BP did the right thing by letting the world view that oil gushing from its well for all those weeks. It was bad news, but it was the truth. When they finally did cap it, after showing their failures in live video, there was no doubt in anyone's mind that they had achieved the goal, ahead of the stated time-line. And now, the press is covering the clean-up, not the cover-up.
One of OS's acquaintances works in corporate PR. He's The Grim Reaper. If he shows up in your boardroom, your corporation is in very deep doo-doo. He gets called out 'when the knives are pulled', as he laconically says, with a quiet grin. OS calls upon his wisdom if he suspects things may go pear-shaped, before the knives come out.
Given what he's learned from The Grim Reaper over the years, BP made some very correct decisions in the midst of their deeply bone-headed ones.
Saturday, August 7, 2010
Note To The Local School Board
If some sweet-talking banker from J.P. Morgan, or one o' dem' udder NooohYork banks comes callin' with some sweet-sounding scheme to save us a bunch-a-money:
Tell him 'Hell-No!', and call the cops.
The Denver School board didn't, and they are in a mess.
From the New York Times Business section:
Since it struck the deal, the school system has paid $115 million in interest and other fees, at least $25 million more than it originally anticipated.
To avoid mounting expenses, the Denver schools are looking to renegotiate the deal. But to unwind it all, the schools would have to pay the banks $81 million in termination fees, or about 19 percent of its $420 million payroll.
Tell him 'Hell-No!', and call the cops.
The Denver School board didn't, and they are in a mess.
From the New York Times Business section:
Since it struck the deal, the school system has paid $115 million in interest and other fees, at least $25 million more than it originally anticipated.
To avoid mounting expenses, the Denver schools are looking to renegotiate the deal. But to unwind it all, the schools would have to pay the banks $81 million in termination fees, or about 19 percent of its $420 million payroll.
Saturday Morning, Small-Town South, August 7 2010
OS is weary, and so happy to be looking across his coffee cup at the sainted Mrs. OS, who has decided to tolerate him one more day, bless her.
OS knows a local newspaper writer, working for one of the county-seat papers. His county's experience paralleled ours. He reports that people are disgusted, and that they aimed their displeasure at the incumbents, many of whom have sat on their collective tooshies while their counties unwound around them. It may be a harbinger for November. In any case, OS breathes a bit easier in his county, with a new sheriff elected, replacing the one who more resembled the old Dixie model of a criminal with his own badge and police cruiser.
Over coffee, OS ran across this.
It's a thoughtful discussion of why the true unemployment rate may well be north of 20%, instead of south of 10%. Those figures actually correspond with OS's instincts and daily experience. The problem of the 'uncounted unemployed' has been with us a long-long time, and we may have reached an inflection point, where it is impossible to ignore.
OS, for his part, although far from rich, is so very grateful for the life he has been given. His spending habits, due to repair of flood damage from May, and necessary house and car repairs, have amounted to a one-man stimulus package for the local economy...
OS knows a local newspaper writer, working for one of the county-seat papers. His county's experience paralleled ours. He reports that people are disgusted, and that they aimed their displeasure at the incumbents, many of whom have sat on their collective tooshies while their counties unwound around them. It may be a harbinger for November. In any case, OS breathes a bit easier in his county, with a new sheriff elected, replacing the one who more resembled the old Dixie model of a criminal with his own badge and police cruiser.
Over coffee, OS ran across this.
It's a thoughtful discussion of why the true unemployment rate may well be north of 20%, instead of south of 10%. Those figures actually correspond with OS's instincts and daily experience. The problem of the 'uncounted unemployed' has been with us a long-long time, and we may have reached an inflection point, where it is impossible to ignore.
OS, for his part, although far from rich, is so very grateful for the life he has been given. His spending habits, due to repair of flood damage from May, and necessary house and car repairs, have amounted to a one-man stimulus package for the local economy...
The Oil Spill Cleanup: David Jones Of Daily Mail Visits The Gulf Coast
An extended article by David Jones of the Daily Mail, detailing his recent visit to the Gulf Coast to view the damage caused by the BP oil spill.
He makes two or three cogent points:
1. It could have been much much worse.
2. BP (and Heyward in particular) blundered at the beginning, and thus made themselves the target for Obama and company's cynical scapegoating.
3. Even at that, BP emerges with its reputation much more intact than Obama and company.
OS will keep repeating--BP has been around a lot longer than the clowns in the White House and Congress, and have been successful, if not saintly. They'll still be around long after this particular clown show leaves town.
And, for the record, OS is accumulating BP stock, while it is still cheap. Gonna make him some money, honey, on the back of The One's ignorant venality.
He makes two or three cogent points:
1. It could have been much much worse.
2. BP (and Heyward in particular) blundered at the beginning, and thus made themselves the target for Obama and company's cynical scapegoating.
3. Even at that, BP emerges with its reputation much more intact than Obama and company.
OS will keep repeating--BP has been around a lot longer than the clowns in the White House and Congress, and have been successful, if not saintly. They'll still be around long after this particular clown show leaves town.
And, for the record, OS is accumulating BP stock, while it is still cheap. Gonna make him some money, honey, on the back of The One's ignorant venality.
Isn't It Great To Take A Vacation! Just Ask Mrs. Obama
The UK Daily Mail gives us the breathless coverage.
Michelle Obama today faced a fresh wave of attacks over her lavish break in Spain with 40 friends, which could easily cost U.S. taxpayers a staggering £50,000 a day.
The First Lady has been lambasted for her extravagance at a time when the economy is still struggling. One blogger went so far as to brand her a modern-day Marie Antoinette.
And her critics will be further annoyed when they learn that the president's wife had a Spanish beach closed off today so that she, her daughter and their entourage could go for a swim.
Spanish police cleared off a stretch of beach at the Villa Padierna Hotel in Marbella after the Obamas had finished a busy day of sightseeing.
Hey, girlfriend! A girl's gotta have girlfriends! Ya'll just trippin', gettin' all upset 'bout this. It's cool, really ya'll. After all, it's hard work being the wife of The Winner of the 2010 Nobel Peace Prize. Just chill, and let her do the same, ya'll.
The private sector of the US economy created 71,000 jobs last month. 120,000 people enter the workforce every month, due to the demographic math of Birth-minus-Death-plus-Immigration.
No worries, ya'll.
Michelle Obama today faced a fresh wave of attacks over her lavish break in Spain with 40 friends, which could easily cost U.S. taxpayers a staggering £50,000 a day.
The First Lady has been lambasted for her extravagance at a time when the economy is still struggling. One blogger went so far as to brand her a modern-day Marie Antoinette.
And her critics will be further annoyed when they learn that the president's wife had a Spanish beach closed off today so that she, her daughter and their entourage could go for a swim.
Spanish police cleared off a stretch of beach at the Villa Padierna Hotel in Marbella after the Obamas had finished a busy day of sightseeing.
Hey, girlfriend! A girl's gotta have girlfriends! Ya'll just trippin', gettin' all upset 'bout this. It's cool, really ya'll. After all, it's hard work being the wife of The Winner of the 2010 Nobel Peace Prize. Just chill, and let her do the same, ya'll.
The private sector of the US economy created 71,000 jobs last month. 120,000 people enter the workforce every month, due to the demographic math of Birth-minus-Death-plus-Immigration.
No worries, ya'll.
Friday, August 6, 2010
Incumbency Was A Disadvantage In Tonight's Elections, Part Deux
OS woke up to the early news on the local stations, to check the weather for today's long drive north.
Eight county mayoral seats in the middle counties of Tennessee turned over. Incumbents were booted. In Tennessee, many of these folks serve for decades, transforming each county into a personal plantation.
In the governor's GOP primary race, Zach Wamp, Congressman from Chattanooga, enjoying the support of much of the Religious Right, lost by a wiiiiide margin after almost two years of campaigning. Voters remembered that he voted for TARP, after he was swamped by his constituents begging him to vote against it. That sort of stuff comes back to haunt. People have memories, after all, and waited for the opportunity to register their displeasure.
Lt. Gov. Ron Ramsey, a GOP institution in the legislature, came in a distant third. OS met Mr. Ramsey a few weeks ago as he came through town politikin'. He was, well, creepy, not anyone who should be allowed to actually run anything large.
Bill Haslam, mayor of Knoxville, who actually has successfully managed budgets, won the GOP primary. In his case, the public experience worked in his favor.
OS thinks the serfs may be irritated, that the natives may be getting restless.
Here's hoping.
Eight county mayoral seats in the middle counties of Tennessee turned over. Incumbents were booted. In Tennessee, many of these folks serve for decades, transforming each county into a personal plantation.
In the governor's GOP primary race, Zach Wamp, Congressman from Chattanooga, enjoying the support of much of the Religious Right, lost by a wiiiiide margin after almost two years of campaigning. Voters remembered that he voted for TARP, after he was swamped by his constituents begging him to vote against it. That sort of stuff comes back to haunt. People have memories, after all, and waited for the opportunity to register their displeasure.
Lt. Gov. Ron Ramsey, a GOP institution in the legislature, came in a distant third. OS met Mr. Ramsey a few weeks ago as he came through town politikin'. He was, well, creepy, not anyone who should be allowed to actually run anything large.
Bill Haslam, mayor of Knoxville, who actually has successfully managed budgets, won the GOP primary. In his case, the public experience worked in his favor.
OS thinks the serfs may be irritated, that the natives may be getting restless.
Here's hoping.
Incumbency Was A Disadvantage In Tonight's Elections
OS lives in a little county west of Nashville, which has stumbled along for years. It's a beautiful and utterly frustrating place to live.
The frustration boiled over today at the polls, as almost every incumbent had his or her head presented on a silver charger.
It wasn't even close, ya'll.
Meanwhile, Steve Fincher handily won the TN 8th District GOP Congressional primary.
Roy Herron won the Democrat nomination. Fincher's primary total far outstripped the entirety of the Democrat vote in their race. The three top GOP contenders together really swamped the Dem's numbers.
Here's hoping Mr. Fincher knows how to be a gentleman, and that if he's elected, he'll mature in office. In the end, OS just couldn't put the 'X' by the man's name, and no, t'ain't your business to know who he voted for.
The frustration boiled over today at the polls, as almost every incumbent had his or her head presented on a silver charger.
It wasn't even close, ya'll.
Meanwhile, Steve Fincher handily won the TN 8th District GOP Congressional primary.
Roy Herron won the Democrat nomination. Fincher's primary total far outstripped the entirety of the Democrat vote in their race. The three top GOP contenders together really swamped the Dem's numbers.
Here's hoping Mr. Fincher knows how to be a gentleman, and that if he's elected, he'll mature in office. In the end, OS just couldn't put the 'X' by the man's name, and no, t'ain't your business to know who he voted for.
Dean Dad: Enrollment At Community College
Dean Dad reports a new phenomenon in his institution, a community college he heads.
This Fall, with just a few weeks to go before the start of classes, we’re seeing a weird bifurcation. Applications for enrollment, and applications for financial aid, are both up significantly even when compared to last year. But students who have actually registered are significantly down. Put differently, the number of students who started trying to attend and then vanished is dramatically higher than it has been in past years.
The folks in Admissions have done follow-up calls to the folks who’ve applied and taken their placement tests but not registered, to see what happened. I was hoping to hear that the most common reason was something like “you were my safety school, but my first choice school came through with a great offer.” Instead, the most common answer was “my unemployment ran out.”
This is where the “education as private good” idea has real social costs. If you have a significant population that just can’t find work because the economy is in the tank, and that population would like to go to college but doesn’t have the income for living expenses -- financial aid is great for tuition and such, but doesn’t do much for living expenses -- then what would you have that population do?
There is discussion that ThePeopleInChargeOfSuchThings have decided to define a 10% unemployment rate as 'The New Normal'. With a 10% 'official' rate translating to an actual 15%-16% rate--well, ya'll, that's a prescription for cultural disaster.
We don't want to go there, and we sure as shootin' don't want to define what we now experience as 'normal'. Stroll through a rural WalMart on a Friday evening, and then tell yourself this is what you can accept as The New Normal.
This Fall, with just a few weeks to go before the start of classes, we’re seeing a weird bifurcation. Applications for enrollment, and applications for financial aid, are both up significantly even when compared to last year. But students who have actually registered are significantly down. Put differently, the number of students who started trying to attend and then vanished is dramatically higher than it has been in past years.
The folks in Admissions have done follow-up calls to the folks who’ve applied and taken their placement tests but not registered, to see what happened. I was hoping to hear that the most common reason was something like “you were my safety school, but my first choice school came through with a great offer.” Instead, the most common answer was “my unemployment ran out.”
This is where the “education as private good” idea has real social costs. If you have a significant population that just can’t find work because the economy is in the tank, and that population would like to go to college but doesn’t have the income for living expenses -- financial aid is great for tuition and such, but doesn’t do much for living expenses -- then what would you have that population do?
There is discussion that ThePeopleInChargeOfSuchThings have decided to define a 10% unemployment rate as 'The New Normal'. With a 10% 'official' rate translating to an actual 15%-16% rate--well, ya'll, that's a prescription for cultural disaster.
We don't want to go there, and we sure as shootin' don't want to define what we now experience as 'normal'. Stroll through a rural WalMart on a Friday evening, and then tell yourself this is what you can accept as The New Normal.
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