Tag Archives: management

Asleep at the Wheel

While most of the business press was focused on Ford Motor Company’s recent announcement that they had called in Alan Mulally to revive the ailing automobile giant (or at least to help it die a graceful death), I was busy looking at the way Volkswagen runs its US operations.

Don’t get me wrong: I’m intrigued by the creative destruction taking place at Ford, but I’m not a business journalist, so I’m not bound to comment on it. (As you may notice, I’m not even bound to update this blog on a regular basis, which is probably the only reason I’ll continue to update it.) Nor am I an automobile industry analyst who holds a brief for Ford or Volkswagen or any other automaker. As far as the auto industry is concerned, I’m much more important than any analyst or expert, or at least I ought to be: I’m a customer. And last week I wanted to find out what kind of trade in I could get on my Honda Civic toward the purchase of a VW Beetle.

Ordinarily I would have taken my Honda into the dealership, swallowed the bile I feel rising in my throat every time I have to talk to a car salesman, or a salesman of any sort, and started the conversation. But when I went to VW’s website to check the MSRP on the New Beetle, I was invited to take care of things right there, or right here, from my desktop. For those who share my aversion to salespeople, VW (like most manufacturers) has created a “build & get a quote” feature on its site. After you choose your model, and decide which features you’d like, the site then gives you a list of dealers in your area. Choose one or as many as you like, email them the list of specs you’ve created, and they will contact you by email or telephone with a quote.

Or at least that’s how it’s supposed to work. And, if you read the hype from IBM and SAP about the CRM installation they did for the German car manufacturer, that’s exactly how it will work, driving sales, improving the bottom line, making the whole operation smoother and more efficient. The only thing they won’t tell you is that they can’t really guarantee that your people are going to do what they’re supposed to do as customers fill the network with data, requests, preferences and choices. So after I designed the Beetle of my dreams, or at least the Beetle my budget would permit me to design, chose a nearby dealer, and sent a request to the dealer specifying that I would like to be contacted with a quote by email only (and not by phone, thank you very much), I was led to believe that I’d have a response within pretty short order.

But nothing happened. Nothing at all.

Maybe I’d somehow projected my dislike of car salesmen when I submitted my request. Or maybe I am a victim of a technology glitch. But isn’t it more likely that somebody at my local VW dealership just failed to do what he or she was supposed to do when the CRM system did exactly what it was supposed to do?

You can deliver the leads directly into the salesperson’s inbox, you can track the lead to determine whether the salesperson has read it or needs another notification to follow up on it, but none of those measures will matter — none of the technology will matter — if the salesperson simply doesn’t care enough to follow up, or can’t be bothered to look, or if the prospects coming into the showroom are hotter than anything coming from online. Maybe the showroom clerk can do better slapping on the same cheap cologne, sidling up to the same uncomfortable looking prospects, and talking in a cheeky way until they’re sitting down and signing their name to a lease. Maybe most car shoppers are still old-fashioned tire-kicking empiricists: they’ll brave the sales pitch to take it for a spin, look under the hood, smell the new interior.

IBM of course doesn’t deal with such issues in their case study of the VW CRM installation. Like most technology pitches, theirs assumes that people are already on board with new technology, that people are (wholly) rational actors, that “training” will do the trick, that people are not just lazy or that somehow they simply will do what they are supposed to do. But as many companies have learned to their chagrin, you have a much greater chance of success when you organize technology around people, and not the other way around.

It’s a nice idea: make the machines serve people, not people the machines. If you design a business process (like a new customer to dealer process), design it around people; don’t ask people to put themselves at the mercy of your processes. And don’t put your entire business at the mercy of people who find themselves at the mercy of a business process designed by consultants pushing technology solutions to human problems.

And this, in a nutshell, seems to be one of the big lessons business brahmins learned after the dotcom bust: people still matter. Some will say they’re the only thing that really matters. That’s why so many organizations today have a people strategy, or talk about people with the passion they used to reserve for technology, or when asked to define their greatest strategic resource answer with — you guessed it — people.

Roll your eyes all you like. There may be something to this people stuff, though. After all, business — getting the right people to work for you, getting people in the door, putting your stuff in people’s hands in exchange for their money, which they earn working for and with other people — business, commerce, the economy, is really all about people. What else could it be about?

Business consultants, especially the kind whose main job is to sell you a software package, will try to tell you that they have “solutions”; but people can and will resist solutions, find ways to survive them, outwit them, or just plain ignore them. Which brings me back to the slacker at my local VW dealer — with whom I now feel a kind of solidarity.

Humanity doesn’t have a place in solutions. It is the very thing solutions can’t account for.

On Being Not So Vertical

Vertical integration is a phrase business people like to toss around. Properly pitched, it makes others nod their heads in agreement, or feel a gentle mist settle over their brains. It portrays managers as empire builders or captains of their particular industry, or helps create the illusion that some high science informs the buying and selling and shuffling they do.

An industrialist like Andrew Carnegie, who controlled his steel operations from ore to coke to mill, was vertically integrating but probably didn’t call it that. The phrase comes into vogue in later decades: the first instance recorded by the Oxford English Dictionary is from a 1933 article in The Baltimore Sun, specifying “the logical labor organization” for an “industry organized vertically.” The crucial period for development of the idea is the post-war era, as MIT economist Paul Joskow notes. No surprise that this is also the heyday of management theory.

Joskow’s paper helps to frame vertical integration as an artifact of twentieth-century industrial culture, as much a linguistic and intellectual artifact as red scare or Ponzi scheme (or even management consulting). So it’s not really surprising to find the phrase in discussions ranging from American industrial monopolies to Poulantza’s economic remarks in his book, Fascism and Dictatorship. The phrase carries the story of the century that produced it.

Of course history has never really been a discipline of management theory; there’s no philology of commerce. With a few notable exceptions, Peter Drucker being the most eminent, those who theorize about organizations tend to suffer from historical myopia, or regard history as an insufferable drag on future opportunity. But history has a way of asserting itself: Frances Fukuyama thought he was announcing the end of history but he didn’t see the beginning of an international jihad. So (on a much more modest level) the language that management theorists wield against the unarmed reading public is often betrayed, or at least seriously compromised, by the very history they are doing their best to ignore.

In 1933, for example, it may have appeared “logical” to a writer in The Baltimore Sun and his reading public that the vertically integrated industry would exploit a vertical labor organization, a rank and file hierarchy in which labor is strictly subordinate to management, with a cigar-smoking industrialist at the top. Nowadays, we are more likely to see the potential weaknesses of such an arrangement: it’s far too rigid. It stifles creativity and encourages adversarial relations with the people who work for you. Too much verticality on the labor front and you can stop the flow of knowledge around your organization; too much on the operations front and you leave yourself shut off to the advantages of the global marketplace or innovative ways of thinking about your supply chain.

That’s why today many companies that talk about being vertically integrated are in reality more likely than not hybrid organizations, as Joskow points out; their survival depends on going a little horizontal, sometimes in spite of their business plan. They find themselves at a loss for words but do what they need to do. Some must wonder, in private, whether being integrated (vertically or horizontally or otherwise) is really all it’s cracked up to be.

Everywhere you look, the language of business and practical affairs comes up short of new realities or consists in stop gap measures. That we still fall into talk of vertical and horizontal organizations, that we still carelessly invoke the spectre of that cigar-chomping patriarch with his fantasy of industrial monopoly, suggests just how far indeed we are from developing a vocabulary, a language, a conversation that will help us understand the way people — and things — can and should and must really work together now.