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SMART Letter #22 - June 1, 1999
Copyright 1999 by David S. Isenberg
At isen.com we accumulate intellectual capital
the old fashioned way -- we LEARN it.
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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CONTENTS
> Corporate Culture's Twisty Passages
> Quote of Note: Douglass Carmichael
> Smart Remarks from SMART People
> Peter Tingling, Bill Morrison, John Powell,
> Russell Nelson, Kingsley Hill, Anon Exec,
> Bob Frankston, David P. Reed.
> Policy on "Smart Remarks from SMART People"
> Quote of Note: Michael Dell
> Conferences on my Calendar, Copyright Notice, Administrivia
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CORPORATE CULTURE'S TWISTY PASSAGES:
A Social Anthropologist Studies How Managers Manage
by David S. Isenberg
In times of tension at AT&T, my colleagues and I would joke
that our jobs were 10% technical and 90% political. One day
it dawned on me that it wasn't a joke.
So I launched an effort to understand why I felt like such a
maladapted fish in the invisible but omnipresent viscosity of
corporate culture. Dilbert helped some, as did the stories of
Gulliver, Alice in Wonderland, and The Emperor's New Clothes.
But I suspected that there was a more systematic treatment.
After years reading fawning analyses and how-to management
success stories that rimmed but did not penetrate, I finally
found Moral Mazes.
Moral Mazes, a 1988 book by social anthropologist Robert
Jackall (Oxford, New York) is written as if the observer had
just parachuted into a Fijian out-island or the Stone-Age
Lacandon jungle. But the bizarre alien culture of this book
happens to be that of the big, modern, unreconstructed
American corporation.
An anthropologist needs informants -- high priests and
warriors that can explain a culture's internal ceremonies and
shibboleths. But corporate culture is opaque and unfriendly
to the outsider. Thirty-six corporations refused to grant
Jackall permission to study them. From these unsuccessful
negotiations, Jackall learned enough of an insider's ways to
gain admittance to three companies: a textile company, a
chemical company and a public relations firm. He called them
Weft, Alchemy, and Images Inc.
PATRIMONIAL BUREAUCRACY
Once inside, Jackall observed that formal corporate processes
are but a ritual veneer over intensely personal ones.
Reflecting this, managers typically identify their jobs by
their boss. They say, "I work for Bill Jones," or "I'm in
Jill Smith's organization." To Jackall's clinical eye, this
phenomenon, "exactly reflects the way authority is structured,
exercised, and experienced."
Jackall calls corporate culture a 'patrimonial bureaucracy.'
He points out that such personalization makes it more like a
royal court than a classical rule-and-process-driven
bureaucracy.
Jackall describes in detail how 'management by objective' ties
the patrimonial bureaucracy together. The anthropologist
observes that 'management by objective,' is, in fact, quite
subjective. The data indicate that the boss's primary job is
to make his or her organization look good to superiors.
Bosses use ambiguity to manipulate credit and blame,
allocating blame downwards and pulling credit up. "Pushing
details down protects the privilege of authority to declare
that a mistake has been made," Jackall says. A boss can't do
this if procedures are too explicit or well established. So
bosses often leave important details unspecified. This
creates more ambiguity, so personal relationships become even
more important.
Personalization of authority extends from lowliest manager to
CEO. At every level, Jackall observes, "the most common topic
of conversation is . . . speculation about the CEO's plans,
intentions, strategies, actions, style, public image and
ideological leanings of the moment," including who has the
CEO's ear and who's out of favor.
IGNORING BAD NEWS
When there is good news, credit flows up -- so the boss,
personifying the organization, looks good to superiors. Then
credit flows up again.
When there is bad news, it is the boss's prerogative to push
blame onto subordinates to keep it from escalating. Bad news
that can't be contained threatens a boss's position; if bad
news rises up, blame will come down. This is why they shoot
messengers.
So it's easier to ignore bad news. Thus, Jackall's chemical
company studiously ignored a $6 million maintenance item until
it exploded (literally) into a $150 Million problem. "To make
a decision ahead of [its] time risks political catastrophe,"
said one manager, justifying the deferred maintenance. Then,
once the mess had been made, "The decision [to clean up] made
itself," said another relieved manager.
I first read Moral Mazes in 1996, when I was part of AT&T's
Opportunity Discovery Department. At the time, we were
discovering that the ways that telcos create value were
becoming obsolete. This would be bad news for AT&T, indeed.
One night while reading, I had a vivid dream that my
Department colleagues and I were hanging on meat hooks in a
cooler, like butchered cattle.
Moral Mazes is a difficult book to read for other reasons,
too. It is written in a convoluted, academic style. But it
casts a steely, objective, unapologetic eye on how corporate
culture works, how decisions get made, how power flows, what
it takes to get ahead, and why Dilbert is so funny so often.
The book is a decade old, but it hasn't lost its edge. It is
a must-read for all of us whose work gets bogged down in the
labyrinthine politics of big, seemingly bureaucratic
companies.
[The article above appeared as the June 1, 1999 "Intelligence
at the Edge" column in America's Network. Copyright Advanstar
Communications, 1999.]
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QUOTE OF NOTE: Douglass Carmichael
"Our near total belief in things like money, gross national
product, the sanctity of jobs, the free market, the invisible
hand, can be seen, if we look at our society with the eye of
an anthropologist, to be basically, fundamentally, profoundly
religious. From this perspective we can say that we have been
living in one of the great ages of faith in history . . . To
question all this by suggesting y2k [might make] a mess of it
raises profound anxiety."
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SMART REMARKS FROM SMART PEOPLE:
Peter Tingling (peter_tingling@hotmail.com)writes:
"One of the most overused phrases has to be value-
added -- what is it? . . . There is a tremendous
amount of slack in most value chains. Value
subtraction is what many actually practice. . . .
The hardest part about all of this disruptive
technology is format renewal and virtually no one
can do it -- not without a real crisis . . . The
telcos, as Clayton [Christensen] outlines in his
book, have been weaned on too-fat margins . . .
Like caged tigers they no longer know how to hunt
in the wild."
Bill Morrison (bill.morrison@wcom.com) writes:
"In any large organization, there will be multiple
'competitive analysis' functions. . . . Adding
analysis is the difference between a reference
librarian and a communications analyst, per the
axiom mentioned to me by a manager at IBM when I
was a lowly intern: 'The more people who come to
you for information, the more value you have in
that organization.'"
I guess that gives me value-subtracted at AT&T -- David I
John Powell (john_powell@3com.com) writes:
"I found your comments on hotel Internet access (see
SMART Letter #20) interesting. I am a modem
engineer for 3Com/U.S. Robotics. I travel a lot,
and dial into my corporate net. I totally agree
with your disgust with a business hotel that
limits time on the phone. That is a pretty
ignorant business practice.
"Your idea on providing packet type access is
good, but you forget that many travelers need to
dial inside a firewall to gain access to email
and other resources. Our company is starting to
play with encrypted tunneling to allow access
inside our firewall, but that is kind of rare.
Also, most people don't carry an Ethernet card (I
do, but I am a geek), so providing some way to
connect the customer's laptop would be
troublesome.
"I wrote a short app note on the topic (aimed at
the hospitality industry); it is posted here:
http://totalservice.3com.com/pbx/index.html "
Russell Nelson <nelson@crynwr.com> comments on my statement in
SMART Letter #21 that AT&T people are "locked in by their
incumbency, their legacy, and their culture.":
"Nobody is 'locked in'. It's just that the way you
build value differs depending on whether you're
in a revolutionary or evolutionary period. During
evolutionary, you build value on top of value.
During revolutionary, you build value by
destroying other (more expensive) value.
Revolutionary periods are risky for incumbents
because it's their *own* value that gets
destroyed. If you use revolutionary tactics
during an evolutionary period, you destroy the
value you should have been building on."
And Russell Nelson rebuts my claim that we need equal access
for cable (also in SMART Letter #21) with a quotation from the
Fifth Amendment to the U.S. Constitution:
"Who's gonna pay for it? 'nor shall private
property be taken for public use, without just
compensation.' "
This is remarkably similar to a comment that Richard Green,
the president of Cable Labs, made to me on the same issue in
April at the Multimedia Roundtable in April. We could
discuss, perhaps, whether the taking of *public* property for
*CATV* use already paid for Equal Access . . . David I
Kingsley Hill (kingsley@siva.com) writes:
"I was in London giving a speech on competitive
strategies to new entrants to the telecom
industry. A representative from Lucent asked how
the 'Intelligent Network' (he meant IN (or AIN)
from a Lucent sense) fit into the future. I
noted that as the network moves to an IP
environment, 'intelligent devices' will be
everything from handsets to microprocessor based
servers on the network. He told me that given
Lucent's massive investment in IN and that of the
carriers it will not be allowed to die.
"I pointed out that if Lucent and the carriers
stand too much in the way of IN dying, they will
be caught in the cross-fire. He stood firm and
was still not happy. Finally, (should I have
done it? yes!) I pointed out that the number of
brains that can offer their abilities to
develop/deploy services and products increases
exponentially (as the innovation increased when
PC's democratized the development of computer
software). I asked him who whether he thought
the "Bill Gates" of telecom applications would
come from Lucent or perhaps from some thatched
hut in Bangalore."
"Anon Exec" <notmeg@hotmail.com>
To: isen@isen.com
Subject: Re: Smart Letter #21
Date: Fri, 14 May 1999 07:57:05 PDT
Anon Exec (notmeg@hotmail.com) writes:
"I had a comment about your thesis that under
AT&T ownership that "IP networks are just IP
networks." [see SMART Letter #21.] Nobody, to my
knowledge, has gone farther to break this model
than @Home. @Home has been creating the "@Home web
partners program"; the way it works, if you're inside
the fence (program member) your content runs fast,
gets cached on the servers, maxes out the customer's
cable modem. If you're outside the fence and you're
a target (high revenue/traffic), your service will
continue to operate, but there might just be a few
packets dropped on the floor -- unintentionally, of
course -- it's just Internet congestion . . . the fact
that your service runs at exactly 28.8 is just a
coincidence."
[OK. I am an @Home customer who never visits the @Home
"portal." I am a happy customer only to the extent that I get
great access to the web sites that I visit. The instant
@Home's ability to pull down these sites drops, I'm gone . . .
Meanwhile, I'm hoping some high-speed competition
materializes. -- David I]
Bob Frankston (bobf@frankston.com) writes:
"It's bad practice to tie two unrelated businesses
-- transport and content -- together. But this
doesn't mean [the telcos] won't cause damage by
trying. In particular, no matter what the
technology says, they can always create terms of
service that tell me what I'm allowed to think
while using the connection and can even try to
enforce it with invasive rules. . . . Sprint's
ION puts a card cage on your premises and then
slices up the bandwidth into services they
define. Mike Armstrong talks about charging for
IP telephony. Then there is the issue of TCI
using content to cover the costs of IP
connectivity. . . . [The telcos] are used to
detecting modem traffic and diverting it.
Wouldn't it seem natural to look for an H.323
connection and route over the PSTN in the name of
quality?
"The near term question is the extent to which the
FCC understands any of these issues and the
extent to which they can or should have a policy.
. . . At very least, perhaps, it could require
that IP packets are sacred."
David P. Reed (dpreed@reed.com) writes:
"AT&T will, nay must, move to satisfy the FCC and
the town/state grantors of wiring monopolies by
using Voice on Cable as a loss-leader . . . Voice
rates will plummet, driving the phone-only local
loops into a suicidal downward price spiral.
"The big win is that AT&T now will hold monopoly
position on all other non-voice service access,
and unlike stagnant voice, these businesses are
growing, and eventually will dominate.
"If I were AT&T, I would be violating my fiduciary
responsibility to my stockholders if I did not
try to capture this physical and regulatory
monopoly on the local loop. I applaud them in
advance, if they can make it fly. They have at
least a 50% chance of winning now, and I have
been accumulating a lot of AT&T stock for that
reason.
"But I am equally sure that it will kill value
creation to do so, and that it is technically
unnecessary. If I could vote my AT&T stock on
the principle of encouraging value creation,
rather than on the principle of protecting my
retirement, I would. But I think I'm going to
make a lot of money by betting that the
government will hand AT&T the protected role that
will enable it to win. (Though I'm a fan of free
markets, it's hard not to be a fan of free
government handouts when I can put them into my
retirement fund.)
". . . There's no reason AT&T has to actually
_deliver_ on the promise of competitive local
telephony over cable. All they need is state and
local governments' cozy ties to incumbents blocking
new access providers from deploying wire, fiber, and
spectrum, and for the FCC and DoJ to hold back on
antitrust action at the federal level."
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Policy on "SMART REMARKS FROM SMART PEOPLE"
The only way I will quote from email that you send me is if I
have your explicit permission to do so. Then, if you give
permission, and if I decide to use your comments, I'll edit
them for succinctness and readability while attempting to
preserve their meaning and spirit. If you *want* your remarks
included in a future SMART Letter, it'd save a step if you'd
say so up front. I'd like to publish comments with authors'
names and email addresses, but if you ask, I will withhold
either or both. David I
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QUOTE OF NOTE: Michael Dell
"I saw my name written in blood on every page of your book."
Michael Dell, in email to Clayton Christensen, as recounted by
Christensen on May 19, 1999.
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CONFERENCES ON MY CALENDAR
July 14-16, 1999, Memphis TN. "Disruptive Innovation" with
Clayton Christensen. I will be there to root out closet
sustainers with too many Internet stocks in their portfolio.
See http://www.gildergroup.com/conference/di/diindex.html
September 27-29, 1999, Lake Tahoe CA. George Gilder's
TELECOSM! Save these dates . . . I'm putting a high-level
panel together on The Stupid Network. For more information,
watch http://www.forbes.com/conf/Telecosm99/index.html
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COPYRIGHT NOTICE:
Redistribution of this document, or any part of it, is
permitted for non-commercial purposes, provided that
the two lines below are reproduced with it:
Copyright 1999 by David S. Isenberg
isen@isen.com -- http://www.isen.com/ -- 1-888-isen-com
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Date last modified: 5 June 99