Nanobeepers

Another post on Ricardo Semler's Maverick…
Semco purchased several million dollars of computer equipment in the 80's to 'improve' their systems. However, this is what happened:

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Everything has become excessively complicated and confused, which is exactly the condition computers were supposed to remedy. I can shamelessly say that Semco was swept along on the electronic tide, going from the Stone Age to the Space Age in just a few years. But the more I learned about microchip management, the more I came to fear it.

I once visited a small unit of our three days before the end of the month.

"What do you think this month's billings will be?" I innocently asked the resident computer wonk.

"We already know. We have the number here in the terminal."

"How can you? There are still three days left in the month."

"Oh, no. We stop billing four working days before the end of the month."

I was shocked. It meant inventory was tied up longer than it had to be, increasing interest costs, and orders would sit for days before leaving the plant, increasing customer frustration. Just picture Federal Express stopping for a few days each month to feed paperwork to its computers.

"Well, we have to fill out the basic invoice, send it to the head office, wait for batch processing on the central computer…"

"Wait," I interrupted, "why can't you just issue the invoices on your own terminal?"

"Because then they wouldn't be automatically recorded in the accounts receivable program, which cross-references all the invoices."

"I see," I said, although I didn't. "Go on."

"The lot is batch processed after all invoices from all our units are gathered - we run them in numerical order, for tax purposes - and then our invoices are returned to us. And then we can ship the products."

"How did you do all this in the past?"

"Oh, that was very primitive. We would wait until the last minute, then type out the invoice. Sometimes we would be here in the middle of the night, getting invoicing out of the way, to make the month's sales larger."

"How many invoices did you issue then?"

"About 150."

"And now?"

"About 120."

Two days later the unit was off the computer and back on the primitive manual system. And soon invoicing rose 15 percent, as employees got back to making last-minute shipments in all-out efforts to move finished products out the door. And within a month all the other computer terminals at our business units had been returned to headquarters, and our mainframe there was disconnected.

This much seemed clear: either you can adopt sophisticated, complex systems to try to manage the complications, or you can simplify everything. [emphasis mine]

Finally, we chose the other path.

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This reminds me of when I was at the University of Maryland. Near the end of my time there, the higher-ups were convinced that they needed to use an 'enterprise' software system to run the university and made a multi-million dollar purchase of a huge do-everything software system from PeopleSoft. The thing was, the university systems, while old, still worked fine and were fairly simple and already adapted to all the nuances of the university. After years of circular discussions, failed attempts, and additional millions spent, the 'new improved' system was still just a dream.

If they had just chosen simplicity and incremental development to update the existing system - as needed - and - piece by piece - I'm sure the outcome would have been much more pleasant for all involved (except, perhaps PeopleSoft, he he).

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Another great section from the book Maverick by Ricardo Semler I've been reading:

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Without rules all answers are suggested by common sense. No, I can't define what common sense is, but I know it when I hear it. Some of our people stay in four-star hotels and others, sometimes with much higher salaries, choose lesser digs. Some people spend $200 a day on meals; others get by on half as much. The point is if we can't trust a manager to use good judgment about such things, we sure as hell shouldn't be sending him off to do business in our name.

A company makes, sells, bills, and, God willing, collects. It doesn't need to know if the taxi ride being claimed by a manager was for business. Or if another manager couldn't have stayed in a hotel with three rather than four stars. With few exceptions, rules and regulations only serve to:

1. Divert attention from a company's objectives.
2. Provide a false sense of security for executives.
3. Create work for bean counters.
4. Teach men to stone dinosaurs and start fires with sticks.

The desire for rules and the need for innovation are, I believe, incompatible. (Remember, Order or Progress.) Rules freeze companies inside a glacier; innovation lets them ride sleighs over it.
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While this may seem counter-intuitive to some, I've often seen this principle in action. For example, when I was working for a startup that was acquired by a multi-billion dollar software company everything seemed to slow down by a factor of about 10X after the acquisition. All of the sudden there were all these rules that needed to be followed - many of them rather pointless. At the startup, we always had free drinks available. The acquiring company decided that we now needed to pay for the drinks - a quarter each. So programmers that were making about $50 an hour were now asked to go find quarters throughout the day for drinks. That means, a programmer making almost $1 per minute was spending several minutes every day worrying about quarters for drinks. I would estimate about $10 lost per day per programmer just to make some bean counter at headquarters feel good about 'saving' money. That is just one of many examples where the company decided on Order over Progress.

Be careful whenever you have the idea of creating a 'money saving' rule, because if you don't think through the non-obvious costs, you could lose a lot more than what it seems you're saving! Semco and Google are great examples of focusing on the real business priorities.

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I've recently been reading Maverick by Ricardo Semler. It's an excellent read so far and chronicles the transition of Semco, a Brazilian manufacturing company, from a traditional corporate structure to one of the most unusual and innovative companies in the world. Part of that transition was due to Semler learning to overcome his own 'time-sickness' which was causing him very high-stress and induced physical symptoms such as a constant sore throat, migraines, gastritis, fainting spells, etc…. The following are the causes of this sickness he identifies:

Cause 1: The belief that effort and result are directly proportional.
Cause 2: The gospel that the quantity of work is more important than the quality of work.
Cause 3: "Things are a little uncertain at the office right now. I'll just have to work a little longer until they straighten out."
Cause 4: Fear of delegation, and its cousin, fear of replaceability.

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Well, it's been awhile since I posted. Since I'm starting a new adventure in my life, I figured I'd start blogging again. I moved to Provo, UT - the place of my birth and am quite enjoying it so far. For a long time I've had a drastic aversion to the thought of living in Utah - I'm not sure why - the thought just depressed me to no end! Maybe it just wasn't the right time for me to come here ;) Anyway, I seem to be totally over that and I'm really enjoying meeting new people and having all the new experiences that this move brings. I do miss the Bay Area and California, but feel that this is where I should be for the time being. I'll be writing more soon so stay tuned!

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Bill Gates - Harvard Commencement Speech

This was a fascinating read and made me think more about my motivations and my career. I find that I have hardly any motivation at all to work on a project that is solely a money-making adventure. For me to be passionate about what I'm doing there MUST be significant meaning in the pursuit. Usually it's enough that I'm solving a significant pain-point for a large group of users, but there must be more to drive my passion to its highest level. What really drives me is delivering the equity in opportunity (in concrete and definable terms) to those who really need it. That doesn't mean necessarily that my project has to *directly* and *immediately* contribute to generating profound humanitarian blessings. If what I'm doing can create the wealth to ultimately deliver those blessings, that will also drive my passion on a project. So what might look like a purely money-making venture, really is a means to an end.

The main problem with this is that I must work in a level of abstraction. I must be working with the goal to create wealth that will later be used for a greater good. That middle step of wealth creation can be a distraction from the end goal. I don't care in the least for wealth or power just for its own sake. It must be connected to a higher cause in order for me to care. My most demotivating experiences ever have been when I was working for someone who only cared about the personal wealth and gains from the venture. Seriously, how boring is that? However, the times that I've worked on a team where we were passionately solving a problem and helping others in a defined measurable way were the most glorious and high-inducing times of my career.–

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