The Co-Op Casino in Ann Arbor, MI (my home during graduate school) has been robbed, reports The Onion:

Thus far, no firings have been made or even suggested, but the casino’s members have agreed to beef up oversight measures by replacing the position of casino pit boss with a 15-person pit coordinating committee.

Categories: Community, Funny, Governance, Graduate School, Managing
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You began by saying that it is an exciting time to be an economist. I agree—not because economics is about to be replaced by psychology, but because of the big questions we are now struggling to answer. What are the fundamental causes of poverty? Are there solutions? How do ideas, habits and information spread across social networks? What makes innovation happen? Can governments help? Can anything improve the awful record of economic forecasting? How do economic clusters develop? What kills them off? How does competition work in the face of fallible consumers?

Behavioural economics is already making the running on the subject of consumer decision-making, but in other areas it has little to offer. That is no surprise, because there is so much more to economics than a theory of individual decisions.

Read the debate over behavioral economics that spawned this conclusion from Tim Harford.

It also contains an interesting sub-discussion on the literature around pay performance schemes which may be of interest to some of the management or info-econ wonks out there.

Categories: Behavioral Economics, Business and Economics, Information Economics, Managing
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Joel Spolsky just posted three parts (1,2,3) of a speech he gave at Yale in which he warns students to avoid corporate IT:

Now, at a product company, for example, if you’re a software developer working on a software product or even an online product like Google or Facebook, the better you make the product, the better it sells. The key point about in-house development is that once it’s “good enough,” you stop.

Spolsky is 100% right about corporate IT organizations - they are crappy places to work. You don’t get to work on fun projects, you’re disconnected from the business, you’re stuck making things quickly rather than high-quality, and everyone on the business-line hates you, to the point where they keep farming out your job to consultants like Accenture, Deloitte, and IBM.

But the reason IT is miserable is it’s own fault - in house IT is, for the most part, a monopoly, and it’s going to be just as miserable as working at any other monopoly. You don’t have to worry about what your internal customer needs, because they can’t go someplace else (you don’t run competing IT shops). You don’t have to run efficiently because there aren’t market pressures. For every complaint from someone in IT that their creative freedom is restricted, there’s a complaint on the business side for the problems that crop up when developers decide they want to play - for instance every business application needs to have it’s own authentication, with it’s own look and feel, and it’s own user database. Kerberos was invented how long ago? If you’re developing a product and you make your users sign-in a different way to use different areas of your product, creative destruction will take care of you pretty quickly, but when you’re in the monopoly that is corporate IT, the users don’t have anywhere else to go.

And what of the consultants that IT hates so much, who can charge $300 an hour to have a 22 year-old with an English degree and a crash course in .Net write applications for you? They do something corporate IT isn’t very good at - they spend most of their time figuring out what the biggest problem is, and then they develop an application that solves it. In the meantime, corporate IT has an amorphous idea of what the business is and starts developing applications that they think might be relevant. That’s how monopolies work - they push products onto the market as they develop them, without regards to customer needs. Customers, who don’t have a choice, take what they can get.

There are other structural forces that make corporate IT miserable. For instance, maintenance and new development usually come out of separate budgets, so developers have little incentive to make an efficient product that is cost effective to maintain - that’s somebody else’s problem. Because once a project ends they either have to find a new one or move into maintaining the code they wrote, they actually have a perverse incentive to write bad code that’s difficult to maintain, modify, and interact with. The best way to build job security is to invent a role nobody else can do. If you’re looking for anecdotal evidence, just look at the way the owners of legacy applications fight any attempt to modernize.

If you’re developing a product, any new feature you add provides value to the customer, that’s why it’s valued. Great companies value IT (and other support functions like HR) because they drive value to the bottom line. In fact, great companies are usually built on great people and great technology. When done right, IT contributes straight to the bottom line, and IT professionals are valuable parts of the business team.

In the end, the problems with corporate IT are based around the same issue - there is no accountability to the customer. That’s the root of line-managers’ complaints about IT and it drives into most of the problems programmers feel when working in corporate IT. Solve it, and all of a sudden IT becomes a great place to work, and a valued part of the team.

Categories: Business and Economics, Customer Engagement, Incentive Centered Design, Information Economics, Managing, Technology
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I’m a consultant, which means I consultant, then I count my benjamins, and then I network with the CEOs

From the first webisode of Dell’s web-series The IT Room.

Categories: Business and Economics, Managing, Technology
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I recently mapped out a complicated process that should really be simple. In place of the map, I’d rather send out this video:

Categories: Ephemera, Funny, Managing
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Arnold Kling, writing about Electronic Medical Records, says:

I spent much of my career in business, and much of my focus was on use of information technology (IT). Among the lessons I learned were.

1. Within a company, every business area gets the IT it deserves. Chaotic, haphazard business areas get lousy IT (and blame the IT department). Organized, well-run business areas get great IT.

2. Data cannot be maintained unless there is clarity of ownership. It must be clear who is responsible for creating, maintaining, updating, and deleting the data.

The best IT organizations are run like a great store (complete with consultative sales). In order for them to be affective, they need to be attached to a well managed company that knows what it wants. It’s not IT’s job to champion projects, to drive change, or to come up with ideas. It’s their job to understand what the business needs, come up with products that support it, and work with the business to implement them. If your technology department keeps turning out crap, you need to stop complaining and start thinking about what exactly you asked them for. Odds are, it was either nothing or crap, and either way, it’s not really their fault.

Note, however, that undisciplined software projects that are poorly executed are the fault of IT. That’s where they stop running a great store, and it makes the business side want to shop someplace else. Business leaders need to intervene there and take a look at how they can shake up the IT organization, most likely through some sort of change in leadership.

Categories: Business and Economics, Managing, Technology
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Isn’t that amazing? The institution of a way to monitor and quantify information ended up leading to the saving of millions (over the years) of lives. Develop a metric that truly measures what you need and then follow its advice.

Digging around in her archives, I found the Evil HR Lady discussing the Apgar score for infants, and why we don’t have something similar for students, despite the fact that most of them have quantifiable and comparable performance metrics.

Categories: Education, Managing, Metrics
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Looks like Warren Buffet is picking a successor. Too bad an expert in Incentive Design didn’t help him come up with his selection criteria:

When I heard about this, the romance died. For all of Mr. Buffett’s reputation as the ultimate nonmutual fund, he may have just fallen into one of the biggest mutual fund traps of all — forgetting how incentives affect fund managers’ behavior.

Winner take all stock market games don’t reward the best investors, they reward the luckiest. It’s a spin-of-the-wheel that determines just which high-risk high-return investment hits pay dirt. Long term success doesn’t matter. The article also discusses the inventives investment managers face to screw their clients.

Categories: Business and Economics, Careers, Incentive Centered Design, Information Economics, Managing
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Good writing is one of the most underestimated aspects of professional success. That’s why TheHeadHunter says that you can leverage that Liberal Arts degree into a great job: most people are horrible communicators, especially in writing. I see it every day in e-mails that I get, both personally and professionally. To help solve the problem, Penelope Trunk offers some great tips for professional writing. My favorite is #2:

2. Think on your own time.
Most of us think while we write. But people don’t want to read your thinking process; they want to see the final result. Find your main point in each paragraph and delete everything else. If someone is dying to know your logic, they’ll ask.

I remember reading an e-mail a few weeks ago from a C-level executive that sounded like he sat down at a computer and typed every thought that popped into his head. It was scattered, loopy, and disorganized. Not only did it make it difficult to follow, but it made his ideas seem less credible, no matter how persuasive he tried to be in the e-mail.

Because of that, I have to take issue with her title for number 4:

4. Write like you talk.
Each of us has the gift of rhythm when it comes to sentences, which includes a natural economy of language. But you must practice writing in order to transfer your verbal gifts to the page. Start by avoiding words you never say. For example, you would never say “in conclusion” when you are speaking to someone so don’t use it when you write.

Writing and speaking are different forms of communication, and some people aren’t great talkers in the first place. The key idea here isn’t making colloquial writing, it’s the “economy of language” - keeping things succinct and fluid.

She also advises to keep paragraphs short, maybe 4-5 lines, which I think is great advice for speaking as well. I coach people on what I call the “Three Sentence Rule.” Any time you’re speaking, make sure you solicit some sort of feedback from the audience, whether it’s laughter, nods, suggestions, or input, before continuing on. Preferably, you should let them talk for a bit at that point. People have short attention spans for things that aren’t about themselves, so keeping them focused beyond sentence three is tough, no matter how engaging you are. The three-sentence break gives them an opportunity to recenter the conversation around themselves.

Categories: Careers, Managing
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Gruntled Employees has a two word corporate blogging policy:

“Be professional.”

If your employee-bloggers are posting the secret-sauce recipe, bad-mouthing customers, or distributing NSFW (not safe for work) art, fire them. And if you’re concerned that your employees won’t understand what you mean by “be professional,” then you have a management problem or an employee problem. Or both

Categories: Business and Economics, Governance, Managing, Social Software
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New York Magazine has an excellent piece on organizational psychology, fitting the right personalities with the right roles, and what makes managers successful. One nugget:

In the same vein, another researcher reports that one law firm deconstructs its HR needs by personality traits. It insists on extremely bright employees who are also extremely insecure. “They want them to think that working really hard matters,” he explains.

Here’s the short version: managers shouldn’t be narcissistic assholes, except when they should.

As an aside, New York Magazine seems to have one or two awesome pieces a month, and then the rest is only OK. Once they get up to 3 or 4, I’m going to become a regular reader (and maybe a subscriber).

Categories: Business and Economics, Careers, Employee Engagement, Law, Managing, Matching Mechanisms
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An article on workforce.com says we need to ditch the HR Generalist:

They resist measurement. If you look within your firm, you’ll find that your generalists have no output or results metrics of any kind. They resist corporate-wide HR metrics and technology because once those are instituted, they’ll no longer be allowed to hide in their well-protected enclaves.

Most of the complaints seem to revolve around the same thing: Generalists protect information. Never mind the importance of transparency for governance in general, within a company, it is paramount. By hiding information, HR Generalists become the siloed barriers to change. At the same time, the more their role becomes “information conduit,” the easier it is to replace them with technology.

In all fairness to the HR generalist, people in all sorts of roles try to protect information and serve as barriers to change. I’ve seen companies where every single one of those complaints can describe anyone there, including senior management. It just so happens that HR generalists have these problems structurally built into their role.

Categories: Business and Economics, Careers, Information Asymmetries, Managing, Metrics
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After an experience at a restaurant, the Evil HR Lady says:

We don’t train our managers correctly. We don’t teach them what they, as the manager, should fix and what their employees should fix. Managers are scared to let employees have any power–for fear they’ll make the wrong decision. If your employees are poor decision makers, you should not have hired them in the first place. Hire good employees and let them do their work.

Customers want the person they’re dealing with to be able to fix their problems, not have to pawn it off on someone else. If your employees need to get management approval to improve customer experience, they’re wasting everyone’s time. Better to hire talented people, focus them on the customer, and trust them to make the right choices. Let managers manage, and trust the employees who handle your most precious asset, your customers, to make the right decisions, because if you don’t, your customers will leave for a company that does.

Categories: Business and Economics, Careers, Customer Engagement, Employee Engagement, Governance, Managing, Marketing
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