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There are lots of issues that this article doesn't touch on. I believe that large companies have become exponentially more complex as IT has come to underpin bu

by sgt101 9y ago

There are lots of issues that this article doesn't touch on. I believe that large companies have become exponentially more complex as IT has come to underpin business processes. Competition has intensified both for markets, people and capital. The CEO's job has become, in my perception, undoable. Compensation has risen because the incumbents are trying to defenestrate themselves on a daily basis, and yes, yes there is a queue of eager applicants for the hot seat, but almost all of them are dribbling lunatics. The sensible, committed super sharp of suite c start shouting and screaming and fighting as soon as it's mentioned that they might be given the CEO role in the future - they know that it's a nightmare. The problem that boards have got is that the complexity has created an ecosystem of corporate types, it's become rich enough to support niching and evolution, and what we see is The Red Queen. Peacock tails of fashion, pose and fucking powerpoint decks dominate. Not only in the corporate itself but amongst the swirling flock of carrion feeders that surround it. I've been witness to/unable to hide from three "blue skys" exercises in corporate structure and strategy from "managing consultants" "auditors" and "boutique consultants". All of which were announced as opportunities, all of which were simply shakedowns and all of which are conducted in the medium of powerpoint slides. Until a powerpoint slide is not interpreted as a signifier of understanding corporates and corporate life will decline. My only hope at this point is the punchline of the red queen story. Peacocks are great, right up until they meet a fox.

hammock 9y ago
> All of which were announced as opportunities, all of which were simply shakedowns Shakedowns by the consulting firms? Can you expand bc isn't it the CEO or other exec who hire these guys in the first place
- michaelt 9y ago
  At least in the UK, publicly traded companies must have their accounts independently audited. But they're also allowed to hire those independent auditors to provide consulting services. This presents a pretty big conflict of interests - a company making £££ in consulting fees isn't going to want to sour the business relationship by being a hardass during the audit. Essentially every time there's a major fraud or accounting scandal, it'll turn out the auditors were also retained as consultants.
  - hammock 9y ago
    So the consulting firms are the ones being shaken down? Or what? I don't see how that's a "shakedown" for the company as if they are in compliance there's no need for them to pay for the "consulting shakedown" for better treatment. Unless you are talking at a systemic level where, in order to compete, companies HAVE to operate out-of-compliance and use these consulting arrangements in order to prevent being exposed.
    - elefanten 9y ago
      I think op just meant that they do bad work for exorbitant prices. And gp showed some of the pressures that can drive firms to buy optional services from consulting firms: desire to maintain a "good relationship" or possibly just discounting and bundling. Also, the big consulting firms are generally known for aggressive upselling. It's often a core part of their business model. Once you've got em on the hook... So, TLDR: Not shakedown as in extortion, shakedown as in bad service for a bad price.
      - sgt101 9y ago
        Yes - this.
    - jessaustin 9y ago
      Is being "in compliance" a guarantee of a clean audit? If so, is the suggestion that apparently corrupt audit firms are only corrupt in one direction? That seems unlikely.
  - chongli 9y ago
    So why is this allowed? Why hasn't there been a law passed barring this sort of incestuous relationship?
    - gautamdivgi 9y ago
      This used to happen in the US as well. Remember Arthur Andersen? They provided auditing as well as consultancy - and the scandals (not sure if it was Enron) broke them. Memory fails me at the moment to recollect if a law was passed to keep those functions separate.
- sgt101 9y ago
  Yup, these exercises come about because of pressure from internal politics (as a way to settle a battle between execs) or investor pressure. The consultants are selling machines, the long term outcome of their advice is not relevant. They seek to create evidence of interest and adoption of the latest trend. A great example would be organizational health vs rigorous performance management cultures. The outcomes of both are contestable and contested, they are polar opposites in terms of philosophy and culture, and yet both are touted and sold by the same people. For the consultant what matters is the booking now, the political reception preparing the way for next time in this company, and the reference and referral opportunities to generate more business. The value of what they sell and the impact of it on business success just doesn't matter - they're out here!
burntrelish1273 9y ago
TL;DR: CEOs need experience, wisdom, energy, political acumen and relentlessly resourceful critical-thinking skills. I think you're quite right. CEOs need to balance being institutional-continuity leaders and forward-leaning renegades. Status quo isn't good for one set of reasons, neither is arbitrary change. I don't think there's much room for Steve Jobs' types unless they're well-beyond perfect, even so, the culture may suffer enormously for most stakeholders. The worst kind of CEO these days is the generic "steady-rock" Mike Pence-type who's thoughtful and generally does all the right business-theater handshakes, but doesn't either doesn't understand the market, how to hold business units accountable or doesn't have any timely ideas that will grow/adapt the business to ensure its dominance. Fortune 1000 CEOs need to manage massive organizational complexity and anticipate the future like a startup founder/investor to be effective.
- ntsplnkv2 9y ago
  > like a startup founder/investor to be effective. Startups are not huge corporations with multiple silo'd organizations within. They're small and focused. Everyone is aware of the main goal. As opposed to a major fortune 500 with tons of silo'd organizations and internal politics. It's just too difficult to manage. There's too many products, too many competing services, too many people who want their slice of the pie.
rglover 9y ago
Totally unrelated, but do you have writing shared anywhere (e.g., essays, etc.)? Your cadence and tone is wonderful.
- sgt101 9y ago
  That is a sweet thing to say, thank you. But sorry - no cache.
Spooky23 9y ago
I think that says more about there being too many big companies than not enough talented leaders. IT was a revolution for reducing transaction costs, but broke a lot of companies by bringing decisionmaking too high up in the organization. Decisions made by clerks in 1980 are being made by people two hops down from the CXO today.
- JumpCrisscross 9y ago
  > IT was a revolution for reducing transaction costs Ronald Coase's Nobel-prize winning theory of the firm [1] posits that "people begin to organise their production in firms when the transaction cost of coordinating production through the market exchange, given imperfect information, is greater than within the firm." One could debate whether Wordpress, AWS and Google have made it easier to start a business than Gmail, Pipedrive and SAP have made it to run a big business. [1] https://en.m.wikipedia.org/wiki/Theory_of_the_firm https://en.m.wikipedia.org/wiki/Theory_of_the_firm
  - Spooky23 9y ago
    Great point!
rsync 9y ago
"My only hope at this point is the punchline of the red queen story. Peacocks are great, right up until they meet a fox." Your entire post reeks of the unintelligible consultants that you deride. I'm tempted to read into it some kind of triple-entendre at their expense ? Or something ?
erikpukinskis 9y ago
> eager applicants for the hot seat, [...] almost all of them are dribbling lunatics. [...] The sensible, committed super sharp of suite c start shouting and screaming and fighting as soon as it's mentioned that they might be given the CEO role in the future - they know that it's a nightmare. This parallels U.S. presidental campaigns. I posit all the time that large corporations are going away, in a long slide towards voluntary federations of sub-human corporations. (Fewer than one full time employee) Maybe the effect you describe is the writing on the wall. The biggest corporations are becoming unrunnable in any sustainable way. No forward motion, just death throws as previously booked resources are used up. Over time, this affliction will come to smaller and smaller corporations until just human persons and AIs remain. "Large corporations" will remain only to the extent CEOs can turn them into voluntary federations. Zuck buying companies and letting them run independently isn't really a corporation in the traditional sense. It has the whiff of a voluntary federation.

by sgt101 9y ago

hammock 9y ago

> All of which were announced as opportunities, all of which were simply shakedowns Shakedowns by the consulting firms? Can you expand bc isn't it the CEO or other exec who hire these guys in the first place

michaelt 9y ago
At least in the UK, publicly traded companies must have their accounts independently audited. But they're also allowed to hire those independent auditors to provide consulting services. This presents a pretty big conflict of interests - a company making £££ in consulting fees isn't going to want to sour the business relationship by being a hardass during the audit. Essentially every time there's a major fraud or accounting scandal, it'll turn out the auditors were also retained as consultants.
- hammock 9y ago
  So the consulting firms are the ones being shaken down? Or what? I don't see how that's a "shakedown" for the company as if they are in compliance there's no need for them to pay for the "consulting shakedown" for better treatment. Unless you are talking at a systemic level where, in order to compete, companies HAVE to operate out-of-compliance and use these consulting arrangements in order to prevent being exposed.
  - elefanten 9y ago
    I think op just meant that they do bad work for exorbitant prices. And gp showed some of the pressures that can drive firms to buy optional services from consulting firms: desire to maintain a "good relationship" or possibly just discounting and bundling. Also, the big consulting firms are generally known for aggressive upselling. It's often a core part of their business model. Once you've got em on the hook... So, TLDR: Not shakedown as in extortion, shakedown as in bad service for a bad price.
    - sgt101 9y ago
      Yes - this.
  - jessaustin 9y ago
    Is being "in compliance" a guarantee of a clean audit? If so, is the suggestion that apparently corrupt audit firms are only corrupt in one direction? That seems unlikely.
- chongli 9y ago
  So why is this allowed? Why hasn't there been a law passed barring this sort of incestuous relationship?
  - gautamdivgi 9y ago
    This used to happen in the US as well. Remember Arthur Andersen? They provided auditing as well as consultancy - and the scandals (not sure if it was Enron) broke them. Memory fails me at the moment to recollect if a law was passed to keep those functions separate.
sgt101 9y ago
Yup, these exercises come about because of pressure from internal politics (as a way to settle a battle between execs) or investor pressure. The consultants are selling machines, the long term outcome of their advice is not relevant. They seek to create evidence of interest and adoption of the latest trend. A great example would be organizational health vs rigorous performance management cultures. The outcomes of both are contestable and contested, they are polar opposites in terms of philosophy and culture, and yet both are touted and sold by the same people. For the consultant what matters is the booking now, the political reception preparing the way for next time in this company, and the reference and referral opportunities to generate more business. The value of what they sell and the impact of it on business success just doesn't matter - they're out here!

burntrelish1273 9y ago

TL;DR: CEOs need experience, wisdom, energy, political acumen and relentlessly resourceful critical-thinking skills. I think you're quite right. CEOs need to balance being institutional-continuity leaders and forward-leaning renegades. Status quo isn't good for one set of reasons, neither is arbitrary change. I don't think there's much room for Steve Jobs' types unless they're well-beyond perfect, even so, the culture may suffer enormously for most stakeholders. The worst kind of CEO these days is the generic "steady-rock" Mike Pence-type who's thoughtful and generally does all the right business-theater handshakes, but doesn't either doesn't understand the market, how to hold business units accountable or doesn't have any timely ideas that will grow/adapt the business to ensure its dominance. Fortune 1000 CEOs need to manage massive organizational complexity and anticipate the future like a startup founder/investor to be effective.

ntsplnkv2 9y ago
> like a startup founder/investor to be effective. Startups are not huge corporations with multiple silo'd organizations within. They're small and focused. Everyone is aware of the main goal. As opposed to a major fortune 500 with tons of silo'd organizations and internal politics. It's just too difficult to manage. There's too many products, too many competing services, too many people who want their slice of the pie.

rglover 9y ago

Totally unrelated, but do you have writing shared anywhere (e.g., essays, etc.)? Your cadence and tone is wonderful.

sgt101 9y ago
That is a sweet thing to say, thank you. But sorry - no cache.

Spooky23 9y ago

I think that says more about there being too many big companies than not enough talented leaders. IT was a revolution for reducing transaction costs, but broke a lot of companies by bringing decisionmaking too high up in the organization. Decisions made by clerks in 1980 are being made by people two hops down from the CXO today.

JumpCrisscross 9y ago
> IT was a revolution for reducing transaction costs Ronald Coase's Nobel-prize winning theory of the firm [1] posits that "people begin to organise their production in firms when the transaction cost of coordinating production through the market exchange, given imperfect information, is greater than within the firm." One could debate whether Wordpress, AWS and Google have made it easier to start a business than Gmail, Pipedrive and SAP have made it to run a big business. [1] https://en.m.wikipedia.org/wiki/Theory_of_the_firm https://en.m.wikipedia.org/wiki/Theory_of_the_firm
- Spooky23 9y ago
  Great point!

rsync 9y ago

"My only hope at this point is the punchline of the red queen story. Peacocks are great, right up until they meet a fox." Your entire post reeks of the unintelligible consultants that you deride. I'm tempted to read into it some kind of triple-entendre at their expense ? Or something ?

erikpukinskis 9y ago

> eager applicants for the hot seat, [...] almost all of them are dribbling lunatics. [...] The sensible, committed super sharp of suite c start shouting and screaming and fighting as soon as it's mentioned that they might be given the CEO role in the future - they know that it's a nightmare. This parallels U.S. presidental campaigns. I posit all the time that large corporations are going away, in a long slide towards voluntary federations of sub-human corporations. (Fewer than one full time employee) Maybe the effect you describe is the writing on the wall. The biggest corporations are becoming unrunnable in any sustainable way. No forward motion, just death throws as previously booked resources are used up. Over time, this affliction will come to smaller and smaller corporations until just human persons and AIs remain. "Large corporations" will remain only to the extent CEOs can turn them into voluntary federations. Zuck buying companies and letting them run independently isn't really a corporation in the traditional sense. It has the whiff of a voluntary federation.