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Edward E. Whitacre Jr. : “Give people more responsibility and authority deeper in the organization…”

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Edward E. Whitacre Jr. the new CEO and Chairman of GM says: "Give people more responsibility and authority deeper in the organization, and then hold them accountable."

General Motors needs a turnaround for many morale lifting reasons in America and the world. The GM brands mean a lot in China, India,Brazil and the world will cheer as GM revives.The management changes at GM have been rather drastic this time and there are high expectations for new Sales and Marketing Chief Susan Docherty who has long experience, starting as an intern in GM. Similarly, expectations are high for the relatively younger and second generation GM Executive Mark Reuss who has been named as head of operations for North America. These executives have long experience with GM and should be able to action the "deeper" organizational responsibility that Whitacre talks about.

I highlight "deeper" in Whitacre's comments because that is one of those age old concepts of management and public administration that ensures results,relevance and accountability. For example,the effectiveness of American public administration,compared to many other countries, is really because of the highly de-centralized town governance structure with the Mayor and town leadership responsible for matters like law and order, education and the more mundane garbage removal.The intense and frequently critical "neighborhood" watch on leadership and their actions or inactions serves as great accountability with pretty effective corrections during local elections.

The "deeper in the organization" strategy is to give the responsibility and authority to the front lines as near the action as possible. In manufacturing, the worker should be authorized to stop a machine that may be malfunctioning and a customer rep on the phone should be authorized to try and resolve an unexpected customer problem rather than simply going by the script. Empowered dealer managers will do a better job at GM as will the empowered local manufacturing managers in the many countries GM operates in. Simple,clear and compelling mission statements can help frontline managers decide on the spot, rather than waiting for Head Office, as Herb Kelleher did for Southwestern.

Dubai World debt crisis : Dubai is “too big to fail”

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60 Billion $ does not sound like much given that we have had so many Trillion $ debt problems. But the Dubai World move to seek a six month extension on the 60 B $ owed sent shock waves across the world from London to New York touching every major stock exchange on the way, including Hong Kong and Mumbai.

The signals on the Dubai slowdown has been evident for some time as this blog noted in January. Normally frenetic construction has been almost at a standstill for about a year in Dubai but the mere talk of debt re-scheduling, not an actual default seems to have put irrational fear into stock markets across much of the globe.

I guess that Dubai is one of those hopeful places in the world that encourages business optimism from Europe to Central Asia,the Middle East ,Africa and the Indian Subcontinent. In fact, Dubai beckons workers from Philippines and thereby impacts confidence in East Asia as well.

Dubai is looking to regional oil rich neighbors like Abu Dhabi for a bail out. Truly Dubai is "too big to fail" and I am sure something will work out very soon.

Implementing Insurance for the Uninsured- a view from Hartford Connecticut -The Insurance Capital of the World

We are near Hartford, Connecticut the Insurance capital so my views are biased in favor of the industry. More so when I learnt that Aetna Chairman and CEO Ronald Williams has regretfully announced 625 job cuts in the next four months.

As any business person would tell you, if the market expands by 10 % ( the 30 million uninsured) the health insurance companies should not be firing people, like Aetna, but hiring them.

Unlike say Australia, the Government is not taking over health care but sort of extending a Medicare type coverage to the uninsured.Just like so many reforms of the Obama Administration, the healthcare reform speed is great, intent is wonderful but implementation issues are not clear,upfront. Think the “Cash for Clunkers” program and the endless back and forth about how the auto dealers were not getting paid by the Government and so on. I suppose things worked out eventually, after a lot of heart burn across the clunkers value chain.

Back to the uninsured, talk to any doctor or dentists ‘ office or beleaguered patient and you’ll know how nightmarish the whole claim process can be. Some doctors’ offices are better at navigating the existing systems of Medicare and Private Health Insurance, others never figure out and unintentionally harass insured patients.

Understanding the claim process is a question of organizational learning (what code will be both appropriate and facilitate reimbursement for a procedure or treatment). Compounding learning problems in the doctor-insurance company-patient chain are differing technology and software that is highly fragmented.

The simplest implementation solution would be for the Government to negotiate with the handful of medical insurers to cover pre-existing conditions etc and even dictate a price or profit margin for the uninsured market segment. Although not ” free market ” this would be a far simpler alternative to implement. A new entity – even if a clone or extension of Medicare will take at least 5 years to get properly organized and communicate well with its stakeholders like uninsured patients,doctors office. I am not even thinking of how the 30 million bottom of the US pyramid will actually sign up or pay up the premium no matter how less the premium amount is unless they are on some type of social security payment from which deductions are made at source.

It is likely that the above idea is available in one of the many versions of the reform bill – but I bring it up because every worthwhile policy must ultimately be implementable- preferably quickly.

About StratoServe.

Where are the jobs? Some tips and cheer for tough times

The double digit 10.2% unemployment figure in the US is somber, more shattering is the broader measure of 17.5% that NY Times is reporting. Where are the jobs ? is the question across all age groups in the US.

Some years ago, we had a recruitment consultant speaker at one of the associations I am involved with. A participant asked the question: What should someone who is 60+ and looking for work- do? The speaker was a seasoned older professional from New York and not used to mincing his words …. ” This did not happen to you suddenly” was his answer, which I thought was rather cruel at the time.But today when I think about it, we tend to neglect our own professional development , even when everything is going rather well. Today,when entire industries like auto, banking and their value chains are tethering ,suddenly things look real bleak.Here are some tips for college students and beyond:

For College Students

If you are in college avoid “hobby” majors : Hobby majors are those that are fun to study but do not get you a job immediately on graduation. If you have the finances to study graduate school immediately then hobby majors are fine but then you don’t really need a job. Choose something that gets you into a growth field right after a college degree. Here are the top 50 from CNN.

For Mid Career and later

If you have a job try to add a skill or qualification – that has upcoming demand in your industry and beyond. Think global. Some markets are growing (China,India,Brazil) and add country skills.If you don’t have a job – its the hardest. Be prepared to move to wherever the jobs are – in the world. Not the time to only consider jobs within 10 miles!

Popular lore has it that with successive technology and globalization related changes you should be prepared to switch careers at least three times, in life. This could involve retraining, starting at the bottom again (my then boss in industry asked me this incredulously when I announced my move to academia several years ago).

For all

Read the book “What Color is Your Parachute ?” This is the all time classic on job hunting.
Get involved with your professional organizations – try to attend all meetings you can and volunteer if possible. My estimate is that less than 50% of any profession’s members actually become members of the professional association unless legally required to do so. Of members only 20% -30% attend meetings and less than 5% are willing to volunteer their time. Naturally, those who spend the time find opportunities that are still on the drawing board let alone on the job board.

Landmark research by Granovetter suggests that you should ask your friends’ friends for job leads. Your friends are good (like Seinfelds’) but they know the same familiar people as you do so no new network effects happen.

Above all, try to remain cheerful- think of your friends , their friends and who they might know and recall Seinfeld’s famous line “These are my friends…..??”

About StratoServe.

Input-Process-Output and Executive Bonus— Should we be outraged?

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The public is generally outraged at executives receiving bonus at the firms that had received bailout money. At first, this outrage seems "fair" but it is worthwhile to think about the nature of work in the knowledge economy in terms of input-process-output.

In the industrial old world manufacturing involved procurement-processing-marketing. If your firm made money you added more processing, you expanded markets and procured globally. Now when you contract global manufacturing the equation changes in manufacturing. The problem is more confounded in service industries like insurance and banking. One end of the firm seeks input customers who have a customer service process (including the recent issues like unqualified mortgages, credit card penalty charges, declining medical insurance for pre- existing conditions etc.). The output side of this industry includes investment (including the ill conceived debt swap instruments).

Because all these activities do involve creativity,higher levels of knowledge and knowledge integration they need to be rewarded appropriately. You cannot learn innovation and management in these fields in only a classroom.Managerial minds need to wrestle daily with the vexing problems of
globalization and the even more spectacular opportunities in the
input-process-output chains of organizations. Yes, there should be punitive control for mistakes like the misuse of debt swaps but lowering remuneration is likely to hurt the growth of knowledge and expertise that is required in the knowledge economy. Good pay and solid performance based bonus with accountability for mistakes may be the way to go.

Happy Diwali from Downing Street and the White House

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} catch(err) {}Today is Diwali and it was not surprising that President Obama lit the Diwali lamp for the first time in the White House. It was however a landmark occasion that British Prime Minister Gordon Brown celebrated Diwali for the very first time from 10 Downing Street. An interesting dimension of the new globalization. This blog wishes its readers Happy Diwali !

Buyer Supplier Relationships gets Nobel Prize in Oliver Williamson

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} catch(err) {}With 11 out of 13 Nobel Prizes coming to the US the Economics winners Elinor Ostrom and Oliver Williamson got sparse press. This despite Elinor Ostrom being the first woman Economist to get the prize. The name OE Williamson seemed familiar and then it struck me ! This was the legendary Williamson (1975) and (1985) who with his PhD adviser Ronald Coase (1937) practically invented large parts of the underlying theory of "buyer seller relationships" the central theme of this blog, called transaction cost economics within institutional economics.

In fact, it was during my PhD studies that I came upon the work of Williamson and refer to it frequently in several papers etc.. Essentially the transaction cost economics approach suggests that you stay with the same supplier, to reduce the costs of finding new suppliers and improve the supply chain performance. The subsequent theory development by a variety of scholars in marketing,supply chain,law, organization, strategy and off course economics continue to look at different questions at the "boundary of the firm" aka B2B and Supply Chain.

Here is a rather long press conference video from UC Berkley with Professor Williamson. About halfway down the video (20 minutes) a reporter asks whether the Nobel committee finally recognized him after the global financial crisis where buyer seller relationships had become too cosy and the mortgage mess escalated. This blog has been discussing these inter-organizational issues for the past year and celebrates the timely award to Professor Williamson.

Global B2B implications of Obama Nobel Prize, Free Global Telephony and Twitter

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No sooner I found out that President Obama had won the 2009 Nobel Peace Prize , I called my old friend from Vadodara,India – the longtime hometown and of another 2009 Nobel Prize winner-Chemistry- Venkatraman Ramkrishnan. My call was free because my VOIP carrier Vonage now allows free – yes "free" calls to 60 countries. My friend received the call free on his cell phone – no charges for incoming cell phone calls in India. We chatted for a few minutes and he had plenty of reaction from India -within hours of the prize announcement.

I will avoid commenting on the merits of the award , given that Twitter crashed this morning as the world went berserk as everyone had an opinion to share ! The key take away is that the world vastly more global today than just ten years ago. The Internet has applications like Twitter and VOIP phoning like Vonage- all of which is free.

Businesses small and large need to start grasping this immense change and the opportunity it affords:

A small business can think of both buying and selling from or to a small business in another country. This was unthinkable even ten years ago.Now communicating is free and reliable !

Bigger corporations need to appreciate this change and become nimbler, across the globe.

Gen McChrystal on Afghanistan Strategy -Less worried about security leaks than ignorance

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On Sunday we had the new US General McChrystal on 60 minutes in an impressive interview with David Martin.

I am familiar with the Mahabharata ( about 1000 BC) since childhood but only recently someone explained the Shakuni and Afghanistan angle. Shakuni the then King of Gandhara (modern Kandahar , Afghanistan) spent more time in Hastinapur (now Delhi) running intrigues at his sisters' husband's kingdom than managing Kandahar. At least 3000 years of poor governance had made me slightly pessimistic about Afghanistan. Making matters worse and more recently Afghanistan has given a tough time to British,Soviet and US Generals not to speak of the local Afghan Government leadership. At least 3 millenia of tough history is a lot of history for General McChrystal to handle but my sense of optimism about Afghanistan improved listening to the General's interview.

The one thing I liked was the rapid fire briefings he's trying to conduct with the Pentagon, ground troops and Afghan Army. Gen McChrystal says he is less worried about the Taliban getting a heads up through security leaks than having execution folks be ignorant about the strategic intent and tactical steps he is trying to implement.

If you think about it, only when you are clear in your strategy and believe in your own strategy, you can be confident about spreading the message without fear. You worry less that some "enemies" might learn details and try to sabotage some of your tactical moves. General McChrystal does sound clear and committed to his strategy. Watch the interview here.

Resurgence of innovation at Pittsburgh and the G-20 Summit

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Driving around the former steel towns can be daunting with rusty steel towers and Pittsburgh is one such former steel town. But when you hear Pittsburgh leaders talk, you realize that they have been trying to re-invent their communities and have done so successfully.

The G-20 countries meeting today at Pittsburgh covers 20 countries with 85 % of world economic output. Quite frankly, many of these countries and their people have become somewhat skeptical about the American innovative spirit. Hopefully Pittsburgh will give confidence to the leaders of the G-20 countries and their media who are reporting from Pittsburgh today. Here is a great video about the history of innovation by the people of Pittsburgh:

StratoServe

Edward E. Whitacre Jr. : “Give people more responsibility and authority deeper in the organization…”

Like this:

Dubai World debt crisis : Dubai is “too big to fail”

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Implementing Insurance for the Uninsured- a view from Hartford Connecticut -The Insurance Capital of the World

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Where are the jobs? Some tips and cheer for tough times

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Happy Diwali from Downing Street and the White House

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Global B2B implications of Obama Nobel Prize, Free Global Telephony and Twitter

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Gen McChrystal on Afghanistan Strategy -Less worried about security leaks than ignorance

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Resurgence of innovation at Pittsburgh and the G-20 Summit

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