• Tips gratefully accepted here. Thanks!:

  • Recent Comments

    Ivory Bill Woodpecke… on In News: GA SOS thrown under b…
    Ga6thDem on In News: GA SOS thrown under b…
    William on In News: GA SOS thrown under b…
    Ivory Bill Woodpecke… on 73,000,000 of them
    riverdaughter on 73,000,000 of them
    Lady V on 73,000,000 of them
    riverdaughter on Ahhh… breathe deeply
    jmac on Ahhh… breathe deeply
    riverdaughter on Ahhh… breathe deeply
    jmac on Ahhh… breathe deeply
    thewizardofroz on Ahhh… breathe deeply
    William on 73,000,000 of them
    William on Meet the New Team
    riverdaughter on 73,000,000 of them
    William on 73,000,000 of them
  • Categories

  • Tags

    abortion Add new tag Afghanistan Al Franken Anglachel Atrios bankers Barack Obama Bernie Sanders big pharma Bill Clinton cocktails Conflucians Say Dailykos Democratic Party Democrats Digby DNC Donald Trump Donna Brazile Economy Elizabeth Warren feminism Florida Fox News General Glenn Beck Glenn Greenwald Goldman Sachs health care Health Care Reform Hillary Clinton Howard Dean John Edwards John McCain Jon Corzine Karl Rove Matt Taibbi Media medicare Michelle Obama Michigan misogyny Mitt Romney Morning Edition Morning News Links Nancy Pelosi New Jersey news NO WE WON'T Obama Obamacare OccupyWallStreet occupy wall street Open thread Paul Krugman Politics Presidential Election 2008 PUMA racism Republicans research Sarah Palin sexism Single Payer snark Social Security Supreme Court Terry Gross Texas Tim Geithner unemployment Wall Street WikiLeaks women
  • Archives

  • History

    November 2010
    S M T W T F S
  • RSS Paul Krugman: Conscience of a Liberal

  • The Confluence

    The Confluence

  • RSS Suburban Guerrilla

  • RSS Ian Welsh

    • The Flynn Pardon Is The Right Thing To Do + Mishandling Russia
      So, Michael Flynn has been pardoned by Trump. His crime was lying to the FBI about talking to the Russians before Trump was inaugurated. Even a man like Trump can do the right thing occasionally, usually for the wrong reasons. It is entirely reasonable and routine for a President-elect’s advisors to talk to foreign governments. […]
  • Top Posts

American business is flying into a mountain

Do you remember the 70’s PBS series Connections?  Each week, James Burke showed how politics, obscure history, necessity, science and opportunity lead to the technological advances we now take for granted.  You never know where you’ll find connections.  So, I’m intrigued when I think I spot one.  See if you agree.

In one of his recent books, Outliers, the Story of Success, Malcolm Gladwell relates the story of the crash of Korean Air Lines Flight 801 into a mountain in Guam.  There were a number of factors that contributed to the crash, including that the glide path signal was taken out of service for a 2 month overhaul, the landing beacon that was supposed to be located a the end of the runway was relocated 5 kilometers from it and that the low altitude warning system was reconfigured to prevent the air traffic controllers from being annoyed by false positive alarms.

But the air crash investigators found another problem on the black boxes and cockpit voice recorders.  The pilot was exhausted and the co-pilot was reluctant to override him until the crash seemed imminent.  The problem seems to be a function of the culture where those people in charge are not questioned.  Malcolm cites research that shows that countries where questioning authority is forbidden or discouraged have bigger barriers to cross when introducing new ideas and preventing catastrophes.  The more hierarchical the structure of the society, the less likely innovation is to be nurtured.

Flash forward to 2010.  Derek Lowe at In The Pipeline posted this letter from a pharmabot in a corporate setting regarding the perils of outsourcing.  Here’s the money quotes:

in a recent edition (25th Oct 2010 “The Grand Experiment”) you state that Merck &Co targets 25% external R&D and that AstraZeneca is striving for 40%. I recently talked to all the project managers which oversee our current collaborations. The stories of naivety, incompetence and missed deadlines by the outsource companies were legion. The managers I talked to mostly used in-house resource and expertise to paper over the cracks. Why?When asked whether they had reported these problems up the chain of command, the answer was always no. The reasons?

1 “If we have four collaborations and mine is the only one reporting problems, which three project managers do you think will get a bonus?”

2 “They won’t believe me, they will just think I am trying to protect jobs here”.

3. “You can’t swim against the tide”.

4 “When it goes bad here, I might be able to get a job with the collaborator”.

5 “My next job will be outside chemistry as a project manager. The last thing I need is any negative vibes around this collaboration”.

6. “I want to be the out-sourcing manager when that is all that there is left here. Do you think I want any trouble to become visible”

So, as far as senior management know, it is all going very well.

Unfortunately I can’t attach my name and organization. I need a job too and telling the truth is not always that popular, as many out-sourcing managers will have experienced. . .

This isn’t really surprising and isn’t exclusive to R&D industries.  But the whole R&D apparatus in particular is scared sh&*less by layoffs and outsourcing.  No one wants to be the one to break the bad news to upper management that some outsourcing collaborations or periodic business management rearranging of the deck chairs restructuring is making our jobs harder and less productive.  As Derek sums up:
Just as with internal efforts, Something Upper Management Wants can too easily turn into Something Upper Management Is Going To Do No Matter What. And with outsourcing, the problems can be both harder to detect and potentially more severe. Because what you don’t want is Something Upper Management Will Be Told Is Going Great, if it’s really not.
But how do you break the news to the guys in charge without getting fired?
And then I read this article recommended in the comments section of today’s news post about the fading fortunes of America’s middle class.  In Class Dismissed: Why middle income jobs are not coming back, this paragraph caught my attention:
From 1979-2009, there was a nearly 12% drop in the four “middle-skill” occupations: sales, office/administrative workers, production workers, operators. Meanwhile, people in the top 20% of the economy earning $100,000 or more a year, says Peter Francese, demographer at Ogilvy & Mather, “have barely been touched by this recession.” They average an unemployment rate between 3% and 4%, the lowest in the nation. The US Bureau of Labor Statistics projects a 14% increase in low-education service jobs between 2008-2018. “The only major occupational category with greater projected growth,” Autor writes, “is professional occupations, which are predicted to add 5.2 million jobs, or 17%.” These sectors include medicine, law and middle- and upper-management.
Yes, that’s right.  Middle and upper management is now considered a “profession” right along side doctors and lawyers.  Hold that thought for a moment.
A couple of years ago, I ran into one of my daughter’s friend’s parents in a movie theater lobby.  Here’s how her side of the conversation went:
Oh, hi, what’s up?  Oh, I didn’t know you work for yadayadaco?   No, I work for blahco.  Yes, my job is very exciting.  I graduated from Wharton.  Which school did you go to?  Oh, really?  Well, my last project was very ambitious.  Yeah, we just corrected the labeling on the bottle of *insert famous over the counter medication here*.  And you do what?  What does that mean, I mean, I don’t know what that is.  Oh, it must be very interesting.  Well, gotta go.  Bye!
Readers, she’s bringing in the big money in her family.  Her husband’s career is more like a hobby.  They live very well, very well indeed.  Nice big house.  Expensive cars.  Lavish vacations.
And she changes the labels on over the counter drugs.  Now, I’m not saying this is not a very important thing to do but do you really need an MBA for that?  I mean, wouldn’t any one with sufficiently well developed communication and planning skills be able to read the documentation provided by the FDA and make the appropriate changes?  Sure, you have to coordinate with other departments but this is something the labrats do on a daily basis in addition to solving science problems.  Yeah, we have to read contracts, negotiate with vendors, make spreadsheets, call meetings, coordinate with other departments, prepare budgets and do every thing else that the Wharton MBA does.  But we do it for much, much less in salary and other benefits.  Moving from the lab to the corporate building always comes with a generous increase in salary regardless of company.
They think very well of themselves, those MBAs.  I doubt that any of them have a clue what we do and I don’t expect that any of them want to find out.  I’ve seen well respected PhDs in biology dressed down in a training session by some snooty woman from purchasing in her business suit because he had the temerity to ask about the application they were forcing on us.  It’s typical.  The condescension is palpable any time a labrat has to deal with the administrative side of the business.  You get the impression they think of us as dirty nuisances, an unpleasant and expensive necessity and we are stupid idiots for not immediately understanding their obscure bureaucratic procedures for getting even the simplest things accomplished in a time sensitive manner.  Yes, they waste our time and they aren’t nice about it.
But the fear we face is that the MBAs don’t want to hear this even if it is in the best interests of the shareholders.  We fear that they don’t want to hear that  they are sometimes wrong and that they will kill the messenger.  So, we just try to adapt and keep doing our best even when the alarms are all flashing danger.  No one wants to be the first one to raise their voices and get cut down by the higher ups.  We’ll keep our heads down and brace for the impact into that mountain.

32 Responses

    • Amen, it’s about time they start to wonder what exactly they are doing for millions and millions when people are getting laid off. The compensation scheme is more like robbing the stock holders and the workers, when neither group is benefiting except the executives.

      There should be a cap and the salary should be regard, that retracts if they are doing a terrible job.

  1. The only problem is that business is flying into a mountain because they don’t have enough fuel left to get back to the airport. A lot of companies reach a point of no return and decide instead of dropping the outsourcer (then being sued) and losing a bunch of money, they keep chasing their losses, hoping they will break even. More realistically, they pump money in until the stock price goes up, they sell, the company folds and we foot the bankruptcy costs.

    My company is doing the exact same thing. We are literally having problems with them that we solved a decade ago when we controlled the process. Our marketing people constantly fail at even the most simple planning, yet they have been put in charge of every level of development. Sales is costing us thousands of dollars at a time.

    Who gets the shit piled on them? Production. Even though we are supposedly inefficient and superfluous, we are reprimanded for not being psychic and anticipating that the outsourcer would start leaving parts out entirely. We exist now to check, correct and modify the garbage we get from them.

    We are doing this, of course, because we bought a CEO from who figured he could make a quick bonus by moving the operation overseas. The savings are supposedly 10% per unit, which is being completely eaten up by days-long inspection processes and late orders.

    The smart money says that in two years, the company goes under, our (surprisingly impressive) customer base will be sold a product from a company that buys our name and the executives will sell off the company stock just as it reaches its peak.

    • Executives are incentivized to make decisions that create short-term profits even if those decisions will cause long-term losses.

      When an executive makes a decision that brings short-term profits he/she gets a big bonus. But when those decisions turn out bad they not only don’t have to return the bonus, they get to keep their job!

  2. Hmmm, where did we hear this before?

    Obama’s Still Big, It’s The Presidency That Got Small

    Oh yeah:

    commenter on H is 44 nailed it:

    Fuck me, He’s Norma Desmond

    “I’m big, its the pictures that got smaller”

    Thats how he comes across.

  3. One big scam is a little thing called “executive compensation boards.”

    See, what you do is you hire a few executives from other companies to determine how much you should pay your executives. One criteria they use is “average compensation.”

    So if they raise the pay of YOUR executives that raises the average compensation so that when an ECB reviews THEIR pay they get a raise too.

  4. Comment #29 from your link…I believe the writer is refering to the company I work for and related to my China post yesterday.

  5. Early this week I was reading here an article where do drugs come from? It was interesting. Simply put, they comes from bottles, now I get to think about where those labels come from. Interesting.

    • I’m thinking that an MBA from Wharton is overqualified to change the wording on the label. And probably waaaay overpaid. The starting salaries for the biz major is obscene compared to the science peeps.

  6. Get yourselves to Foucault. It’s about the power/knowledge relation. And Diane Rubenstein’s Chicks With Dicks for that power trainer.

  7. As best I can tell, the business consulting creative class are speaking with the same voice when it comes to national politics. They are strong supporters of Obama, they are talking up the deficit commission proposal and the VAT, and the only thing they seem to fear is the tea party. Which is interesting because the tea party appears pro business on the face of things, but their positions on the dollar, trade, housing, bailouts and the fed are a moving target. The pressure on business should be coming from the left, but not much sign of that outside of TC, FDL and couple of other bloggers.

    • Businesses don’t want politicians who are pro-business. They want politicians (for or against business) who can be bought. They are afraid that not enough tea party members can be bought.

  8. American business and corporate management have pretty well sucked for the last 30-35 years. The search for short term gain is a major reason for the general lack of growth in the domestic economy.

    Even when the MBAs try to do long term planning, they can still fuck it up. Just look at Japan for proof of that.

    “Professional Management” will be the death knell of every economy they get their hooks into eventually. MBAs and economics in general are failed professions which should be rethought from the ground up.

  9. Where the ‘B’ Ark when you need it?

  10. IIRC, I got this picture from this website, but it’s worth reposting.

    Behold the face of the true spirit of capitalism.

  11. But how do you break the news to the guys in charge without getting fired?

    heck, just asking questions gets you fired. I’m with Ross Perot on this one… knock on hundreds of doors before you make your first sale, which is bigger than the Vice President’s entire book of business, and get fired.

    If your grandma worked hard and made VP in a bank, you can skate all the way to the Whitehouse and NEVER account for anything.

  12. The managers I talked to mostly used in-house resource and expertise to paper over the cracks. Why?

    Because the VP told them to. The VP doesn’t want to hear that the code sucks, that it’s bad and looks like a college sophomore wrote it. He want’s the local team to fix it and start behaving like a team. Dammit.

    • That must be the same everywhere. Exact situation exists in my employer. It’s hard to be the US side of that crap exchange, on the technical side at least.

  13. I was brought in with my boss to the VP’s office for a bad attitude when the outsourcing stuff was starting. He and I were referring to the Chinese crap as shit. They don’t even want to inadvertently hear the comments.

  14. There is also a great probability that their know how and trade secrets will be stolen. Not that management wants to hear that either. But they will be in jurisdictions where trade secrets are difficult to protect.


Comments are closed.

%d bloggers like this: