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The problem boils down to that managers are rewarded by their upper-managers for doing things that make the upper-managers happy, and are rarely rewarded for do

The problem boils down to that managers are rewarded by their upper-managers for doing things that make the upper-managers happy, and are rarely rewarded for doing things that make their TEAM BETTER. So as a result, most managers practice schmoozing the management hierarchy, and not at all about making more effective teams. And then guess which one they get better at? (hint: the one they do more of) And then which one do they do MORE of? And the cascading spiral ruins modern corporations.

wpietri 13y ago
This is part and parcel of current corporate theory. The mantra of "increase shareholder value" really means "make the investors happy", which currently means "make the quarterly number look great". Combine that with a giant primate dominance hierarchy, where the only goal is to please the bigger monkeys, and idiocy like this is basically inevitable. This isn't the only way to run companies, but it's the only way most people have even heard of, so alternatives are literally inconceivable. From what I can tell, the infection vector for this meme is MBA programs. Happily, there are signs that this is starting to change. E.g.: http://www.forbes.com/sites/stevedenning/2013/07/09/ft-urges-business-schools-to-stop-teaching-the-worlds-dumbest-idea/ http://www.forbes.com/sites/stevedenning/2013/07/09/ft-urges... Or the rise of the various Lean-derived methods, which have a fundamentally different theory of business.
- WalterBright 13y ago
  > which currently means "make the quarterly number look great". Corporations with high P/E ratios are the counterexample to this, and Amazon in particular has a very high P/E.
  - robryan 13y ago
    At some point though the market expects this trend to reverse and the quarterly numbers to start looking very good. Which is what has been priced into the current share price.
  - wpietri 13y ago
    Can you name some more long-running exceptions? Amazon is an outlier in American corporate culture. Its founder and very active CEO is somebody who double-majored in CS and EE. My explanation of them is that Bezos never was indoctrinated with MBA dogma, and instead runs his company like an engineer. He's been lucky enough (and skillful enough) that Amazon has always done well enough that his investors have never pushed for a "real" CEO. So for me, Amazon is proof twice over for my theory that MBA dogma isn't even very good for business. Not only are they doing well in the long term by not giving a crap about quarterly numbers, but they don't have serious competitors because typical execs don't even get how they're being run over.
grey-area 13y ago
The problem boils down to that managers are rewarded by their upper-managers for doing things that make the upper-managers happy, and are rarely rewarded for doing things that make their TEAM BETTER. Any sufficiently large organisation becomes an ecosystem. To succeed inside that ecosystem might damage the ecosystem itself in the wider world, but that doesn't matter in the short term to those inside it. At a certain size the ecosystem seems invulnerable and everlasting, and eclipses the wider world for those inside it. This happens not just in corporations, but in any other social grouping I've seen, including governments, politics, and academia. It's very hard to avoid when any significant number of people are involved.

The problem boils down to that managers are rewarded by their upper-managers for doing things that make the upper-managers happy, and are rarely rewarded for doing things that make their TEAM BETTER. So as a result, most managers practice schmoozing the management hierarchy, and not at all about making more effective teams. And then guess which one they get better at? (hint: the one they do more of) And then which one do they do MORE of? And the cascading spiral ruins modern corporations.

wpietri 13y ago

This is part and parcel of current corporate theory. The mantra of "increase shareholder value" really means "make the investors happy", which currently means "make the quarterly number look great". Combine that with a giant primate dominance hierarchy, where the only goal is to please the bigger monkeys, and idiocy like this is basically inevitable. This isn't the only way to run companies, but it's the only way most people have even heard of, so alternatives are literally inconceivable. From what I can tell, the infection vector for this meme is MBA programs. Happily, there are signs that this is starting to change. E.g.: http://www.forbes.com/sites/stevedenning/2013/07/09/ft-urges-business-schools-to-stop-teaching-the-worlds-dumbest-idea/ http://www.forbes.com/sites/stevedenning/2013/07/09/ft-urges... Or the rise of the various Lean-derived methods, which have a fundamentally different theory of business.

WalterBright 13y ago
> which currently means "make the quarterly number look great". Corporations with high P/E ratios are the counterexample to this, and Amazon in particular has a very high P/E.
- robryan 13y ago
  At some point though the market expects this trend to reverse and the quarterly numbers to start looking very good. Which is what has been priced into the current share price.
- wpietri 13y ago
  Can you name some more long-running exceptions? Amazon is an outlier in American corporate culture. Its founder and very active CEO is somebody who double-majored in CS and EE. My explanation of them is that Bezos never was indoctrinated with MBA dogma, and instead runs his company like an engineer. He's been lucky enough (and skillful enough) that Amazon has always done well enough that his investors have never pushed for a "real" CEO. So for me, Amazon is proof twice over for my theory that MBA dogma isn't even very good for business. Not only are they doing well in the long term by not giving a crap about quarterly numbers, but they don't have serious competitors because typical execs don't even get how they're being run over.

grey-area 13y ago

The problem boils down to that managers are rewarded by their upper-managers for doing things that make the upper-managers happy, and are rarely rewarded for doing things that make their TEAM BETTER. Any sufficiently large organisation becomes an ecosystem. To succeed inside that ecosystem might damage the ecosystem itself in the wider world, but that doesn't matter in the short term to those inside it. At a certain size the ecosystem seems invulnerable and everlasting, and eclipses the wider world for those inside it. This happens not just in corporations, but in any other social grouping I've seen, including governments, politics, and academia. It's very hard to avoid when any significant number of people are involved.