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While the words "decide" and "choice" have slightly different connotations, it's quite frustrating to hear such a just-so explanation without making clean defin

by xapata 10y ago

While the words "decide" and "choice" have slightly different connotations, it's quite frustrating to hear such a just-so explanation without making clean definitions for the two terms. I guess in the end you back away from that particular distinction in favor of the incontrovertible "roles change". If you don't mind, could you rephrase your conjecture as a falsifiable hypothesis?

ChuckMcM 10y ago
How about this, tell me if it works for you or not; A path is sequence of correlated activities that lead to a particular goal or deliverable. A choice can increase or decrease the total number of goals or deliverables. A decision can increase or decrease the success chances of a pre-existing goal or deliverable. Generally a startup CEO has one deliverable, the product. And all of their actions are decisions on how to de-risk that deliverable at minimum cost. An enterprise CEO has multiple deliverables, evalutated as 'enterprise value'. Their actions are generally choices to add or remove deliverables to increase enterprise value.
- TheOtherHobbes 10y ago
  Your theory doesn't explain why so many CEOs are either neutral or spectacularly harmful to the long-term health of the companies they manage. I think the distinction between choices and decisions is arbitrary. The real difference is that startups have to keep customers and/or initial investors happy. They're also more likely - on a scale of "absolutely very much" to "I suppose I should care, I guess" - to take an interest in the employee culture. Enterprise CEOs have to keep their boards and institutional investors happy, and mostly don't give a crap about employee culture, except in so far as it contributes to the first goal. The problem for enterprise CEOs is that there are painful, obvious conflicts between Wall Street's persistent demand for high quarterly returns, the on-the-ground demands of keeping a business healthy and growing, and the value of their own personal stake in the company.
  - ChuckMcM 10y ago
    Can you characterize 'so many' a bit more objectively or quantitatively? I can certainly point to a few CEOs I felt are neutral or harmful to their companies but I don't have any data to suggest that this is any more than the typical left edge of the bell curve kind of thing. If you have any good studies on this I'd love to read them. I certainly agree that Enterprise CEOs do have to be doing a good job in the view of the board, exactly like any employee has to do a good job in view of their supervisor if they wish to retain their job. The board can fire them. But that also raises the question of how much is the continued presence of a 'bad CEO' the Board's fault. And I don't agree at all with this statement The problem for enterprise CEOs is that there are painful, obvious conflicts between Wall Street's persistent demand for high quarterly returns, the on-the-ground demands of keeping a business healthy and growing, and the value of their own personal stake in the company. If the stock price is a proxy for the health of the company and the CEO is in charge of keeping the company healthy, then the stock price and the CEO are aligned. I've only really been on 1:1 speaking terms with two enterprise CEOs, Scott McNealy (Sun) and Dan Warmenhoven (NetApp). And neither of them was 'conflicted' about what Wall Street 'demanding' high quarterly returns, nor did the noise of traders on Wall Street enter into their business decisions as far as I could ascertain. When decisions were made and communicated they are very solid reasoning behind them around how the choice would improve the company. I have also seen startup CEOs that made extraordinarily bad decisions that benefited themselves personally at the expense of the company, both Zynga and Groupon showed how painful that could be. But when you look across the millions of companies, just in the US, it is hard to find a persistent, or even prevalent, pattern of CEOs who put themselves or by proxy the stock price, ahead of the company issues. I am certainly open to evidence that this is the case, I just haven't seen it.
    - xapata 10y ago
      The quarterly reporting process does put perverse incentives on the CEO that cascade through the company. I've seen it first-hand. To meet the shareholders' shortsighted demands for steady growth and accurate short-term budget forecasts, the corporate budgeting process is a top-down bureaucratic affair that emphasizes predictability at the expense of long-term profits. If a small department has a great set of low-risk, high-reward projects, but runs out of budget, the company should run the project so long as the risk-adjusted reward is greater than the cost of capital. But instead, they must stick to the plan.
- xapata 10y ago
  That's much better. I don't mind arbitrary new definitions for words, so long as they're explicit and consistently used. However, you might find others like TheOtherHobbes more receptive if you use wholly new phrases to avoid namespace collisions. Being skeptical of arbitrary new definitions is a good defense against intentional conflation of two definitions. I find psychology papers are frequently guilty of using a very narrow, specific definition for a word in part of their research then switching to a very broad definition for their conclusions.

by xapata 10y ago

ChuckMcM 10y ago

How about this, tell me if it works for you or not; A path is sequence of correlated activities that lead to a particular goal or deliverable. A choice can increase or decrease the total number of goals or deliverables. A decision can increase or decrease the success chances of a pre-existing goal or deliverable. Generally a startup CEO has one deliverable, the product. And all of their actions are decisions on how to de-risk that deliverable at minimum cost. An enterprise CEO has multiple deliverables, evalutated as 'enterprise value'. Their actions are generally choices to add or remove deliverables to increase enterprise value.

TheOtherHobbes 10y ago
Your theory doesn't explain why so many CEOs are either neutral or spectacularly harmful to the long-term health of the companies they manage. I think the distinction between choices and decisions is arbitrary. The real difference is that startups have to keep customers and/or initial investors happy. They're also more likely - on a scale of "absolutely very much" to "I suppose I should care, I guess" - to take an interest in the employee culture. Enterprise CEOs have to keep their boards and institutional investors happy, and mostly don't give a crap about employee culture, except in so far as it contributes to the first goal. The problem for enterprise CEOs is that there are painful, obvious conflicts between Wall Street's persistent demand for high quarterly returns, the on-the-ground demands of keeping a business healthy and growing, and the value of their own personal stake in the company.
- ChuckMcM 10y ago
  Can you characterize 'so many' a bit more objectively or quantitatively? I can certainly point to a few CEOs I felt are neutral or harmful to their companies but I don't have any data to suggest that this is any more than the typical left edge of the bell curve kind of thing. If you have any good studies on this I'd love to read them. I certainly agree that Enterprise CEOs do have to be doing a good job in the view of the board, exactly like any employee has to do a good job in view of their supervisor if they wish to retain their job. The board can fire them. But that also raises the question of how much is the continued presence of a 'bad CEO' the Board's fault. And I don't agree at all with this statement The problem for enterprise CEOs is that there are painful, obvious conflicts between Wall Street's persistent demand for high quarterly returns, the on-the-ground demands of keeping a business healthy and growing, and the value of their own personal stake in the company. If the stock price is a proxy for the health of the company and the CEO is in charge of keeping the company healthy, then the stock price and the CEO are aligned. I've only really been on 1:1 speaking terms with two enterprise CEOs, Scott McNealy (Sun) and Dan Warmenhoven (NetApp). And neither of them was 'conflicted' about what Wall Street 'demanding' high quarterly returns, nor did the noise of traders on Wall Street enter into their business decisions as far as I could ascertain. When decisions were made and communicated they are very solid reasoning behind them around how the choice would improve the company. I have also seen startup CEOs that made extraordinarily bad decisions that benefited themselves personally at the expense of the company, both Zynga and Groupon showed how painful that could be. But when you look across the millions of companies, just in the US, it is hard to find a persistent, or even prevalent, pattern of CEOs who put themselves or by proxy the stock price, ahead of the company issues. I am certainly open to evidence that this is the case, I just haven't seen it.
  - xapata 10y ago
    The quarterly reporting process does put perverse incentives on the CEO that cascade through the company. I've seen it first-hand. To meet the shareholders' shortsighted demands for steady growth and accurate short-term budget forecasts, the corporate budgeting process is a top-down bureaucratic affair that emphasizes predictability at the expense of long-term profits. If a small department has a great set of low-risk, high-reward projects, but runs out of budget, the company should run the project so long as the risk-adjusted reward is greater than the cost of capital. But instead, they must stick to the plan.
xapata 10y ago
That's much better. I don't mind arbitrary new definitions for words, so long as they're explicit and consistently used. However, you might find others like TheOtherHobbes more receptive if you use wholly new phrases to avoid namespace collisions. Being skeptical of arbitrary new definitions is a good defense against intentional conflation of two definitions. I find psychology papers are frequently guilty of using a very narrow, specific definition for a word in part of their research then switching to a very broad definition for their conclusions.