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    Entries in business (4)

    Tuesday
    Jul112017

    Learn a new word: The General Theory of Second Best

    There's nothing I care more about that NBA basketball, (I promise this isn't another basketball post, but I may have to dig out a basketball analogy to make the point), with the possible exception of learning new things.

    Which is why, I think, I run the 'Learn a new word' series on the blog. I am also falling into the trap of thinking 'if this is interesting to me, then it should be interesting to people who read this blog'. After 10 years of this, I am not really sure if that is even true. But I persist.

    So here's today's 'Learn a new word' entry - The General Theory of Second Best.

    What in the heck is that?

    A decent description can be found in the Economist: (emphasis mine)

    The theory of the second-best was first laid out in a 1956 paper titled, sensibly enough, "The General Theory of the Second Best", [paid access] by Richard Lipsey and Kelvin Lancaster. Roughly put, Lipsey and Lancaster pointed out that when it comes to the theoretical conditions for an optimal allocation of resources, the absence of any of the jointly necessary conditions does not imply that the next-best allocation is secured by the presence of all the other conditions. Rather, the second-best scenario may require that other of the necessary conditions for optimality also be absent—maybe even all of them. The second-best may look starkly different than the first best.

    Let's think on that for a moment and take it back (sorry) to the basketball analogy I hinted at in the open.

    The optimal allocation of resources for say a basketball team has traditionally consisted of five different kinds of players, with different body types, playing styles, and characteristics that when assembled, would provide the team with the right balance of scoring, passing, rebounding, and defensive play that would result in winning.

    But let's say that the team can't acquire or develop one of the positions, let's say the point guard - the player who usually is charged with handling the ball, setting up his/her teammates for easy scores, and functioning as the on-court leader of the team. If this example team can't find a good enough point guard, the Theory of Second Best suggests that 'answer' to the problem isn't making sure the other four positions/roles are filled as designed and slotting in any old player as the point guard.

    The theory suggests that the 'optimal' solution, when one resource (the point guard), is missing, may be to take a completely different approach to building the team. Maybe the team looks for more 'point guard' like skills in the other positions, or maybe the team implements a different style of offense entirely to mitigate the problem.

    The real point is that once conditions appear that make the 'first best' strategy impossible to execute, that you may need to think really, really differently about what will constitute the 'second best' strategy. 

    The second best may look starkly different than the first best.

    I really dig that and hope you think about it too, once your plans in business or in life run into some challenges.

    Tuesday
    Apr252017

    Notes From the Road #21 - Friendly Skies Edition

    I was waiting for an early morning flight today (on Delta, the best airline in the world), and heard a gate announcement from across the terminal for a United flight that was also soon to depart. The United gate agent was seeking volunteers to give up their seats on the 6AM flight to Chicago and take a later flight. With everything that has been in the news about the recent problems United has had with overbooking and removing passengers from flights, I couldn't help but wince a little as I heard the announcement. And I wasn't even on the flight. Nor that airline. Just the stench of what has been going on at United wafted across to my Delta gate. Aside - my Delta flight also was seeking folks to volunteer their seats as well. Must have been a big day to get out of Rochester today.

    But the announcements this morning, and the United follies of late made me think I hadn't done a 'Notes' post in a while, and since I KNOW you must have been waiting, on edge, for me to share my thoughts on the United stuff and air travel in general, here are my frequent flyer informed Top 10 observations/comments on the current state of the friendly skies...

    1. On the United stuff - pretty much everyone was at least partially in the wrong there. United operations should have a better plan to get its employees where they need to be. United gate staff and on-site managers should have had more leeway to increase the compensation on offer in order to coax the desired number of passengers from the flight. Airport/aviation security should have found some other way to accomplish the de-planing of the passenger that did not involve concussions and a busted up face. And finally, despite the unfairness of it all, the passenger in question, once three airport security staff boarded the plane and requested he de-plane, had to comply. He should have been mad. He probably should have dropped a F-bomb or two. But he should have left the plane and taken up his case back at the gate. On board an aircraft trapped with 100 other folks in close quarters who have nothing to do with this incident is no place to decide to hold your own sit-in protest. 

    2. I think an underrated element of the air travel experience is the newness of the aircraft itself. The plane I am on now is really, really new seeming. It almost has that new plane smell still. Creates such a positive feeling right from boarding when the plane is new(ish), and not one of those dreary, run-down, relics from 1987. 

    3. I know this is easy to forget, but another thing that would make the overall experience better is for everyone to realize that you are not the only person on this flight, and unless you are the pilot, you are also not the most important person on this flight. You know what? We all have connections to make! We all sat through the turbulence over Colorado. We all had to endure the four hours to LAX with the terrible wifi. Treat everyone nicely, we are all in this misery together.

    4. But given that we are all miserable, we can't take that out on the individual employees of the airline - gate agents, flight attendants, customer service folks - any of them. Ninety-five percent of the airline staff are giving their best effort to get us where we want to go - safely, on-time, and as comfortably as conditions, (which none of them created) allow. Sure, can an airline worker have a bad day? Be rude? Of course. But so can the guy at the gas station, the clerk at the DMV, and the passenger in Seat 17C who keeps hitting the call button to ask for another ginger ale. 

    5. Air travel is a volume business. Delta, American, Southwest, and United, (the Big 4), might carry 125 million passengers each year. If they are lucky, they will make $6 of profit on each passenger (it is often less). So even if you think your $1700 fare to SFO was really expensive, the airline barely makes enough to cover the costs of getting you there. So like your local grocery store, volume and thin margins is how airlines make money. I think some of the disconnect in the air travel experience is we see our fares as big-ticket purchases, but the airline sees us all as contributors of $6 to the bottom line.

    6. It is never a good idea to argue with the TSA. See point #4 - the person manning the scanner or waving the magic wand or doing the patdowns did not make the rules. The process is often ridiculous, but the time and place to make your stand is not at 5:30AM with 72 people in line behind you who just want to make their flights. Write your Congressperson if you don't like what goes on at airport security.

    7. No matter what scheme an airline uses to manage the boarding process, (line up with numbers, line up in groups, high status first/lower status next, etc.), boarding will be probably the worst aspect of the flying experience. This is mostly our, (the collective we) fault. We lug too many things on the plane, we can't count rows, we have to position phones, tablets, e-readers, magazines, boxes of Good n' Plenty just so at our seats before we sit down. Just please, for the love of all that is holy, stash your bag under the seat, don't try to stuff the roller bag where it clearly will not fit, and just sit down. There is nothing more likely to make you weep for humanity than to watch 120 of us attempt to board a plane.

    8. You do not, under any circumstances, need to make a phone call telling someone 'We just landed' the SECOND after the wheels touch down. I promise you that call can wait 7 minutes until we are at the gate and getting off the plane. Trust me.

    9. Your bags will almost certainly not get 'lost' or even delayed. In 2015 the USA rate of lost luggage was about 3 per 1,000 passengers, a 10% reduction from 2014. Delta (and American I think) now allows you to track the movement of your checked bags via it's smartphone app. I get a little notification when my bag gets placed on the plane, when it is switched to my connecting flight, and when it is unloaded at the claim area. Will you be one of the 3 out of 1,000 who has an issue with your bag? There's a 99.7% chance you will not. So get over that one time in Indianapolis nine years ago when your bag went missing and it had to be delivered to the Fairfield Inn a couple of hours later. You were fine.

    10. There are going to be times where you miss your flight, when weather or mechanical issues cancel the flight, when you are stuck in a middle seat between two guys who are the size of a WWE tag team, or when there's a crying baby, no wifi, or the plane has run out of red wine. That is just how it is. But remember none of those things are happening to you, they are happening to all of us too.

    And it could be worse. Remember that 27 hour drive to DisneyWorld when you were a kid? And Dad threatened to turn the car around about 19 times? And your brother got car sick on your Keds?

    Think about that compared to that crowded, stuffy, 2 hour 32 minute flight where you watched Moana and had some honey roasted peanuts and a Sprite.

    That's it, I am out. Safe travels out there.

    Monday
    Jun012015

    When liberal hipsters turn out to be ruthless capitalists too

    It seems to be a pretty widespread and more or less accepted assumption that the next generation of folks entering the workplace are more concerned with an organization's reputation for responsibility, for doing 'good', and for acting as a good community citizen than were prior generations. Where the boomers and Gen X were much more pragmatic (and possibly cynical), the Gen Y and Gen Z and the whatever comes next cohorts are going to evaluate organization's commitments and actions in the community and towards their customers and employees much more closely and critically when they make their decisions about where to work and (probably more importantly), where to spend. Like another nemesis of mine, 'Culture eats strategy for breakfast', (don't get me started...), this notion has been reported on and repeated so many times that I think it is worth considering if, you know, it actually isn't true, or at least isn't completely accurate.

    I started thinking about this when reading about of a new play titled World Factory being staged in London at the Young Vic theater. In the play, audience members participate in what is essentially a global business strategy game, placed into teams who have the job of navigating a fictional global clothing manufacturer through a complex set of scenarios and decisions. It is basically like the kind of gamified scenario exercise you'd see in any college business strategy class. But what has been happening at World Factory is kind of interesting.

    From a recent review of World Factory in the Guardian:

    The audience becomes the cast. Sixteen teams sit around factory desks playing out a carefully constructed game that requires you to run a clothing factory in China. How to deal with a troublemaker? How to dupe the buyers from ethical retail brands? What to do about the ever-present problem of clients that do not pay? Because the choices are binary they are rarely palatable.

    The classic problem presented by the game is one all managers face: short-term issues, usually involving cashflow, versus the long-term challenge of nurturing your workforce and your client base. Despite the fact that a public-address system was blaring out, in English and Chinese, that “your workforce is your vital asset” our assembled young professionals repeatedly had to be cajoled not to treat them like dirt.

    And because the theatre captures data on every choice by every team, for every performance, I know we were not alone. The aggregated flowchart reveals that every audience, on every night, veers towards money and away from ethics. But what shocked me – and has surprised the theatre – is the capacity of perfectly decent, liberal hipsters on London’s south bank to become ruthless capitalists when seated at the boardroom table.

    Fascinating, and possibly kind of revealing as well. It is certainly much, much easier to say that corporate ethics and community responsibility is important in making employment and consumer decisions. But, even in a fictional exercise like World Factory, it is often, (maybe always), much harder to live and take decisions that are 'responsible' when facing incredibly tough business, environmental, and social challenges. 

    Business if often messy. Capitalist systems often force tradeoffs to be made, ones that at least according to what we think we know about Gen Y and Gen Z are not in line with those generations world views. But once Gen Y and Gen Z are actually in charge? World Factory is just one small exercise, but what if it hints at what Boomers have known for a while - every generation follows pretty much the same trajectory as they mature, take on more responsibilities, and get more experience in how the world works.

    And then in about 10 or 15 years we will have moved on to a new set of young people who will be lamenting the materialistic robber barons formerly known as Gen Z.

    Have a great week!

    Wednesday
    Sep122012

    What do these 'Big Trends' mean for HR?

    I admit it, I am a total mark for Business Insider

    A superb mix of business, tech, culture, politics, economics, sports, celebrity gossip - all delivered with bludgeon-like ridiculous volume probably running upwards of 100 posts each day.

    Recently BI ran one of their guaranteed to generate a ton of page views slideshows that actually drove me to click through all (70!) distinct pages. Titled 'The US 20: Twenty Big Trends That Will Dominate America's Future', it was just the right blend of data, speculation, hype, and occasional insight that makes BI a go-to site. 

    The entire slideshow is worth a read click-through, but in case you are one of the 'I hate internet slideshow' types, I will spare you all the clicks and page loads and give you just 5 of the 20 Big Trends from the BI piece, the ones that might have the most direct impact to you as a HR, Talent, of HR Technology pro.

    Trend #2 - America is Aging - Key Statistic: The median working age in America is 42.1, up from 35.4 in 1986.

    This one is sort of a easy selection, I've blogged about it before here, but is bears repeating as the population ages the impacts on hiring, retention, work practices, learning, training, and just about everything else that happens at work will be impacted.

    Trend #5 - The Epic Rise of Student Loan Debt - Key Statistic: Student loan debt recently topped $1 Trillion, making it the largest category of consumer debt other than mortgages in the United States.

    Impact on the workplace? More younger workers stressed over their personal finances, more willingness to jump ship for a few more $$ somewhere else, and more likelihood of younger workers taking second jobs and taking work on the side.  

    Trend #13 - The U.S. Manufacturer Roars Back - Key Statistic, (really more of an observation), increased productivity combined with cheaper sources of domestic energy could continue to spur sustained growth in U.S. manufacturing.

    The State of manufacturing in America is constantly in flux, but we are starting to see more and more pieces about the return or renaissance of American manufacturing. A recent piece in Foreign Policy offers additional compelling reasons for the renewed strength in domestic manufacturing like robotics, artificial intelligence, and 3-D printing. No matter the root causes, if more organizations see benefits in re-shoring manufacturing, talent professionals will be under considerable pressure to find, attract, recruit, develop, and retain the kind of employees and leaders needed to make it happen.

    Trend #17 - American Cities as Economic Juggernauts - Key Statistic - Urban areas account for 84% of US GDP

    National growth will continue to be driven by cities, both large and medium-size. It makes sense that talent will chase after said growth and opportunity. If you are a talent pro in an organization not in or near one of these urban centers it could get even harder to lure the people you need from the areas or higher growth to your sleepy little town.

    Trend #18 - Immigrants Driving Product Innovation - Key Statistic - News Corp, (and others), investing heavily in new properties aimed at the growing Hispanic market

    If your organization is among the many that will seek growth and market share from an increasingly diverse set of customers then does your staffing, development, and leadership models adequately reflect the markets you are competing in? Do you have the right people that can understand and effectively service these markets?

    Ok, enough of these 'Big Trends', I think you get the idea. Organizations, and certainly the people inside organizations directly responsible for shaping their workforces, (that's you), have to be aware of the environment in which they operate. Economics, demographics, heck even politics - these things do matter, even if they seem kind of far off, or only the concerns of global mega-companies.

    What do you think, what are some of the big-picture trends impacting the work you do as an HR and Talent pro?