• Skip to content
  • Skip to primary sidebar

Right Attitudes

Ideas for Impact

Business Stories

A Real Lesson from the Downfall of Theranos: Silo Mentality

February 4, 2021 By Nagesh Belludi Leave a Comment

The extraordinary rise and fall of Theranos, Silicon Valley’s biggest fraud, makes an excellent case study on what happens when teams don’t loop each other in.

Theranos’ blood-testing device never worked as glorified by its founder and CEO, Elizabeth Holmes. She created an illusion that became one of the greatest start-up stories. She kept her contraption’s malfunctions and her company’s problems shockingly well hidden—even from her distinguished board of directors.

At the core of Holmes’s sham was how she controlled the company’s flow of information

A Real Lesson from the Downfall of Theranos: Silo Mentality Holmes and her associate (and then-lover) Sunny Balwani operated a culture of fear and intimidation at Theranos. They went to such lengths as hiring superstar lawyers to intimidate and silence employees and anyone else who dared to challenge their methods or expose their devices’ deficiencies.

Holmes had the charade going for so long by keeping a tight rein on who talked to whom. She controlled the flow of information within the company. Not only that, she swiftly fired people who dared to question her approach. She also forcefully imposed non-disclosure agreements even for those exiting the company.

In other words, Holmes went to incredible lengths to create and maintain a silo mentality in her startup. Her intention was to wield much power, prevent employees from talking to each other, and perpetuate her deceit.

A recipe for disaster at Theranos: Silo mentality and intimidation approach

'Bad Blood' by John Carreyrou (ISBN 152473165X) Wall Street Journal investigative reporter John Carreyrou’s book Bad Blood: Secrets and Lies in a Silicon Valley Startup (2018; my summary) is full of stories of how Holmes went out of her way to restrain employees from conferring about what they were working on. Even if they worked on the same project, Holmes made siloed functional teams report to her directly. She would edit progress reports before redirecting problems to other team heads.

Consider designer Ed Ku’s mechatronics team responsible for designing all the intricate mechanisms that control the measured flow of biochemical fluids. Some of his team’s widgets were overheating, impinging on one another and cross-contaminating the clinical fluids. Holmes wouldn’t allow Ku and his team to talk to the teams that improved the biochemical processes.

Silo mentality can become very problematic when communication channels become too constricted and organizational processes too bureaucratic. Creativity gets stifled, collaboration limited, mistakes—misdeeds in the case of Theranos—suppressed, and collective objectives misaligned.

Idea for Impact: Functional silos make organizations slow, bureaucratic, and complicated

Innovation hinges increasingly on interdisciplinary cooperation. Examine if your leadership attitude or culture is unintentionally contributing to insufficient accountability, inadequate information-sharing, and limited collaboration between departments—especially on enterprise-wide initiatives.

Wondering what to read next?

  1. Let’s Hope She Gets Thrown in the Pokey
  2. The Dramatic Fall of Theranos & Elizabeth Holmes // Book Summary of John Carreyrou’s ‘Bad Blood’
  3. Your Product May Be Excellent, But Is There A Market For It?
  4. Creativity by Imitation: How to Steal Others’ Ideas and Innovate
  5. Beware of Key-Person Dependency Risk

Filed Under: Business Stories, Leadership, Mental Models Tagged With: Biases, Critical Thinking, Entrepreneurs, Ethics, Leadership Lessons, Psychology, Thought Process

Easy Money, Bad Deals, Poor Timing: The General Electric Debacle // Summary of ‘Lights Out’

December 14, 2020 By Nagesh Belludi Leave a Comment

The story arc of the unraveling of General Electric should be familiar to followers of business news over the last two decades. Wall Street Journal reporters Thomas Gryta and Ted Mann’s crisp Lights Out: Pride, Delusion, and the Fall of General Electric (2020) draws together the vital episodes in one impassive narrative. It’s brimming with lessons about the hazards of obsessively focusing on impressing Wall Street.

Decades of Bad Decisions and Careless Oversight Ruined GE

'Lights Out General Electric' by Thomas Gryta (ISBN 035856705X) The fall of General Electric is really the story of how long-time CEO Jeff Immelt got saddled with the doomed legacy of the previous CEO, Jack Welch.

In 2001, Immelt took over a ship that was in trouble but wasn’t sinking yet. Unbeknownst to many analysts and investors—and overlooked by Jack Welch-buffs,—General Electric had been spoiled by greed, lack of transparency, and “lax oversight and buried risks.”

As a rising star, Immelt was part of Welch’s apparatus, perhaps to a smaller extent, at the GE Medical Systems division that Immelt ran previously. Early in his tenure as CEO, Immelt realized the scope of a disaster in the making. However, he didn’t act quickly and decidedly enough to fix the ill-fated ship’s rotten bits.

To focus on the stock’s negative return during Immelt’s 16 years as CEO and pit it against the sixtyfold return over Welch’s 20-year term is myopic. This argument is definitely understandable, yet it is scarcely convincing.

Welch’s good times couldn’t last forever, and Immelt had a tough act to follow. Yes, Welch was a forceful numbers-obsessed management mastermind who transformed GE into the world’s largest, most profitable, and best-admired company during his tenure as CEO. However, many of the mistakes of his corporate strategy manifested years later.

Welch would argue that he pushed his underlings to produce results, not fraud. But even if the CEO didn’t bend the rules himself, Welch cultivated an environment of pressure that incentivized people to do just that.

Welch was fond of saying, “You reinforce the behaviors that you reward. If you reward candor, you’ll get it.” Welch’s playbook rewarded—and got—the worst traits of modern capitalism. In so doing, he sowed the seeds of the company’s tragic decline.

Jack Welch’s Playbook Was Long-term Destructive to GE

Welch had a take-no-prisoners attitude to running GE. He set overly aggressive targets for his managers. He engaged in accounting shenanigans and consistently “managed” the numbers to maintain the myth of consistency and limitless growth. Behind the scenes, Welch’s machination was made possible by crafty-but-legal accounting practices (with auditor KPMG’s blessings, nonetheless,) mazes of financial deals, and murky structures. Welch even underfunded reinsurance reserves by $9.4 billion, helping pump up profits from 1997 to 2001.

Managing financial results wasn’t unique to GE, but the degree of GE’s reliance on the practice was. Management, with its customary swagger, treated the frenzy of last-minute tweaks and transactions each quarter as entirely natural. GE executives have acknowledged that they worked to make sure earnings were always growing in a nice smooth trajectory.

Immelt knew—or came to comprehend—of all this tomfoolery but didn’t break GE’s bad habits swiftly. Specifically, Immelt didn’t dismantle the GE Capital unit, the company’s most significant liability, and it continued to haunt GE. Under pressure, the complex conglomerate structure that Welch had held together during the good times of the ’80s and the ’90s started falling apart towards the end of his tenure.

The winds were shifting on Welch. GE’s share price had soared for years, making it, for a time, the world’s most valuable company. [During Welch’s] final eighteen months, the share price fell 33 percent. … [Bond-market guru Bill Gross commented,] “Institutional investors have wondered why a company can continue to produce 15 percent earnings growth year after year, quarter after quarter.”

An Addiction That Was So Hard to Break

Decades of Bad Decisions and Careless Oversight Ruined General Electric At the heart of General Electric’s fall is how GE Capital came to gain an outsized influence over the parent company and ruined it. Under Jack Welch, GE Capital’s business model of high leverage and “financialization” was resoundingly successful. Financial engineering, e.g., recognizing revenue from long-term service contracts for power-plant repairs and jet-engine maintenance, is not only suspect, but it cannot manufacture results beyond the short term.

GE Capital was the nonbank bank that was embedded in the company’s fabric. Everything that GE produced was leased, rented, or loaned by GE Capital. In other words, the industrial side was sustained by the rise of GE Capital. It was too interlinked to everything else, and that impeded Immelt’s “definancialization” plans.

In the ’90s, Welch embraced the notion that it’s a lot easier to make money in financial services than in industrial manufacturing. The Capital unit provided huge dividends (with enormous risks) while the industrial side was less profitable but more stable.

No wonder, then, that Welch made GE Capital a gargantuan part of GE. GE Capital became the vehicle for his headlong obsession with enhancing pure shareholder value.

Sadly, Welch bet the farm on the continued success of GE Capital. It misused GE’s high-quality credit rating and became a colossal lender and a major shadow bank. Welch’s bet went sour in 2008—GE Capital was the largest commercial paper issuer going into the financial crisis. It needed a $139 billion government bailout, and it has continued to drain the company’s bottom line ever since.

Jeff Immelt focused on pivoting GE towards core industrial businesses. He doubled GE’s investment in R&D. He sold off slower-growth, low-tech, and nonindustrial businesses, but not soon enough. He managed to keep revenues growing and delivered high margins until the financial crisis hit.

Cleaning Up the Mess Left by Welch

Even as Immelt went about restructuring the company around industrial products, he continued to rely on GE Capital “for smoothing out rough quarters and delivering easy profits.” It was a hard addiction to break.

Lights Out acknowledges that Immelt was “playing with a tough hand,” and he knew that “his success would be attributed to his predecessor but his failure would be seen as all his own doing.”

The authors reveal plenty of leadership blind spots. Immelt was a genial and assertive salesperson, and he didn’t like hearing bad news. He didn’t like delivering bad news either.

CEOs are expected to be optimistic, but Immelt was unfailingly overoptimistic. Perhaps his overconfidence was a manifest outcome of the company’s cultural dynamics. Sadly, when a company is doing well, such CEO attributes as optimism, audacity, and foresight that Immelt’s leadership personified are heralded as brilliant, but when things go wrong, they’re the first to get the blame. Results are all that matters.

Some board members … had … a poor impression of Immelt’s deal-making skills. The knock on Immelt was that he chased trends, arrived too late, and paid handsomely. One rival CEO joked that he was “fad surfing.”

At General Electric, Jeff Immelt Made Bad Decisions and Was Slow to Make Changes

Immelt Made Bad Decisions and Was Slow to Make Changes

Immelt spent over $100 billion on ill-timed share buybacks to shore up earnings-per-share and so the stock price. He had a history of overpaying for acquisitions. He was reluctant to back away from deals that he was dead set on, even when the deal’s prospects became dubious during the parleying.

Immelt tended to start negotiations too high, sometimes to the surprise of others involved in the deal, leaving little room for negotiation. It wasn’t uncommon for the board to approve one of Immelt’s deals, only to have him ask for approval to pay more in order to make the deal work. In some ways, this tendency simply reflected Immelt’s experience as a salesman. He’d always needed to close deals, and for a company like GE, paying a little more didn’t seem to cause any concern.

No decision could be more illustrative of Immelt’s fateful deal-making than the one for Alstom, the French power generating equipment company. Immelt set his reputation on that deal because GE Power would be “the centerpiece of his new GE.” Immelt didn’t walk out on the deal even after regulators forced General Electric to divest Alstom’s lucrative service business and take on 30,000 high-cost employees in Europe.

Worst of all, the deal was spectacularly mistimed. With the Alstom purchase, Immelt doubled down on fossil-fuel-fired turbines just as renewables were becoming more cost-competitive. Demand for GE Power’s products collapsed in next to no time, and that unit’s profit plunged 45% in 2017. The whole Alstom transaction turned out to be an out-and-out disaster. In 2018, General Electric took a $22 billion goodwill impairment charge for the Alstom acquisition.

Hope and Optimism Could Take Immelt Only So Far

It’s both easy and unfair to comment on what GE should have done. Immelt’s prospects were seriously encumbered by the September 11 attacks, post-Enron accounting rules, the 2008 financial credit crisis, and a substantial recession that hit the energy industry.

The world in which Jeff Immelt had thought he would be leading GE had been turned upside down. The recession and the uncertainty that followed the terrorist attacks had dampened the global growth on which GE’s industrial businesses depended. And changes to accounting rules in the wake of the Enron scandal, by requiring that the company now account for the vast financial holdings on its balance sheet at GE Capital, had eliminated an easy and reliable source of paper profits to smooth over rough periods.

Lights Out explains how, during the last five years of his tenure, Immelt’s misfortunes piled on. GE Healthcare took a pause (it’s innovative, high-profit machines had become increasingly commoditized.) The GE Renewables business rarely turned a profit. The GE Transportation unit’s sales stagnated. GE Power built an extensive inventory hoping for a return in demand for its large, expensive machines. The merger of GE Oil and Gas with Baker Hughes turned out to be untimely too.

For many investors, GE had lost its mojo. Its lackluster performance, fuzzy financials, and unknown risk just didn’t fit with a lot of investment portfolios.

Leadership Mismanagement, Self-Dealing, Collusion

The deplorable collapse of General Electric, and GE Capital, in particular, was fostered by the board’s abysmal stewardship.

GE’s board was dysfunctional. It comprised too many directors who owed their cushy positions to Welch and Immelt and merely rubber-stamped their strategic actions. As chairman of the board, Immelt promptly cast out Welch-appointed directors who objected to his plans.

As they’d done under Welch, the board usually tended to approve Immelt’s recommendations and follow his lead. Some felt that Immelt manipulated the board, and it was whispered that members were chosen and educated to see the company through his visionary eyes. There was concern that the board didn’t entirely understand how GE worked, and that Immelt was just fine with that. Like many CEOs who are also their company’s chairman, he made sure that his board was aligned with him.

Just last week, GE agreed to a $200 million fine to settle a Securities and Exchange Commission probe into feel-good accounting at its Power and Insurance units.

General Electric Recent CEOs: Jack Welch, Jeff Immelt, John Flannery, Larry Culp

Too Steeped in the GE Culture to Effect a Major Transformation

Immelt was replaced by John Flannery, a finance specialist. Flannery had run the business development team when GE Power bought Alstom. He wasn’t likely to kick off any dramatic changes in GE’s business strategy. His proposals for GE’s transformation were consistent with Immelt’s strategy.

Flannery tried to stop GE’s hemorrhaging of money but wasn’t quick enough either. He showed reluctance—caution perhaps—to take risky and complicated actions that could have been costly or even impossible to reverse.

If Immelt was known for his vaulting optimism, Flannery soon became known for his indecision and endless analysis. Few decisions, even major ones, were final. A critical strategic move, like the separation of a major division, could be made, only to be reassessed at any time. Flannery’s style was quickly grating on top executives who worked with him.

The board got insecure quickly because of widespread public criticism that it had waited too long to remove Immelt. “After sixteen years of Immelt, Flannery thought that he had more time to turn the ship around, but when he looked for support from the board, there was none there.” Fourteen months into his term, Flannery was forced out.

For the first time in its 126-year history, GE, which prided itself as a talent factory, handed the leadership baton to an “outsider” to bring a fresh perspective.

New CEO Lawrence “Larry” Culp is generally admired for his stellar record of accomplishment at Danaher, a smaller industrial conglomerate. “Culp had more experience, and he also had no emotional attachment to GE.” Culp had joined GE’s board six months before and had started questioning the wisdom he’d received from Flannery and his team.

Having an outsider take charge of a storied company marks how much change the board desired. GE may not reclaim its once-celebrated footprint. But it’ll continue to be one of the great American business stories.

Jack Welch’s GE: Everything Worked Until It Didn’t

Recommendation: Must-Read Thomas Gryta and Ted Mann’s excellent Lights Out: Pride, Delusion, and the Fall of General Electric. It’s a great reminder that even America’s most iconic companies—and the world’s leading businesses—can go off the rails if things go wrong.

It wasn’t Immelt’s fault that the entire oil sector had turned south. But he was responsible for GE investors being so openly exposed to the collapse. … He had spent sixteen years at the top and, regardless of what Welch had left for him; he’d had plenty of time to fix it.

Lights Out is a revealing, reasonable, and accessible narrative of how a thriving company was humbled by sheer misfortune and poor leadership.

Jack Welch’s razzle-dazzle capitalism party could last only so long.

Wondering what to read next?

  1. General Electric Blame Must Be Shared: Summary of Ex-CEO Jeff Immelt’s ‘Hot Seat’
  2. The Checkered Legacy of Jack Welch, Captain of Wall Street-Oriented Capitalism
  3. General Electric’s Jack Welch on Acting Quickly
  4. Lessons from Peter Drucker: Quit What You Suck At
  5. Reinvent Everyday

Filed Under: Business Stories, Leadership, The Great Innovators Tagged With: General Electric, Jack Welch, Leadership Lessons, Leadership Reading

“Less is More” is True. 4-Day Workweek Is Better For Everyone.

December 7, 2020 By Nagesh Belludi Leave a Comment

Unilever New Zealand announced last week that it would begin a one-year experiment to allow its staff of 81 to work four days per week while earning their full salaries: “The whole premise is not to do 40 hours in four days … Our goal is to measure performance on output, not time. We believe the old ways of working are outdated and no longer fit for purpose.” If successful, Unilever will roll this initiative out to 155,000 workers around the world.

Microsoft Japan tried 4-day workweeks for a month two summers ago and reported a 40 percent jump in productivity as measured by sales per employee (I think that isn’t a suitable metric.)

4-Day Workweek Is Better For Everyone

People aren’t entirely productive all the time.

I’m a big fan of letting employees think about how they can work differently and encouraging them to develop their own productivity measures. As British historian C. Northcote Parkinson posited in 1955, “Work expands so as to fill the time available for its completion.”

Although, switching to four 10-hour days has its disadvantages. When Utah had its state employees work four 10-hour days from 2008 to 2011, many reported that they lost energy and focus in the last third of their workdays.

A reduced or even compressed week can give employees the benefits that matter the most—notably, the flexibility to organize their lives based on what matters most to them. Employers, in reality, borrow employees from everything else in their lives (hence the word ‘compensation.’)

Idea for Impact: Society needs to ratchet down the time people spend at work.

Once people come to terms with the fallacy of valuing work as an end in itself, the 4-day workweek’s appeal will spread, and it’ll springboard to bigger things. Karl Marx, Bertrand Russell, John Maynard Kaines, even recent U.S. presidential aspirant Andrew Yang have argued the merits of reducing the working week to help alleviate over-consumption, greenhouse gas emissions, overwork, unemployment, and other entrenched sociopolitical inequalities.

Some employers will undoubtedly use four-day workweeks as a pathway to get five days of work in four, push unpaid work, or reduce pay (58% of Americans are paid by the hour.)

Not all business models make the 4-day workweek possible, but businesses will become accustomed to the practicalities of ensuring customer needs are dealt with on all five days.

Wondering what to read next?

  1. The Truth About Work-Life Balance
  2. Do Your Team a Favor: Take a Vacation
  3. Working Exercise into a Busy Day
  4. The Dutch Practice of Doing Nothing: Niksen
  5. How to Combat Burnout at Work

Filed Under: Business Stories, Career Development, Health and Well-being Tagged With: Balance, Mindfulness, Wellbeing, Work-Life

What Elon Musk and Jeff Bezos Learn on the Floor

November 26, 2020 By Nagesh Belludi Leave a Comment

The Frontline Advantage

What Leaders can Learn

Leaders can learn a great deal on the frontlines, not only about the inner workings of the products they produce and the services they offer but also about their employees:

  • Tesla CEO Elon Musk sees being on the production line and understanding it an integral part of his job. Musk famously declared, “I have a sleeping bag in a conference room adjacent to the production line, which I use quite frequently.” He has helped his California factory hit its production goals—even “real-time triaging cars at the end of the line trying to get to the root cause of what the issues were.”
  • Amazon requires its deskbound managers to attend two days of call-center training. CEO Jeff Bezos said in 2007, “Every new employee, no matter how senior or junior, has to go spend time in our fulfillment centers within the first year of employment. Every two years they do two days of customer service. Everyone has to be able to work in a call center. … I just got recertified about six months ago. The fact that I did a lot of customer service in the first two years has not exempted me.”
  • Subway Restaurants’ chief development officer Don Fertman appeared incognito as a “sandwich artist” for a week on the popular CBS Undercover Boss reality TV show in 2010. Fertman remarked that this ground-level perspective offered managerial empathy and led to better decisions. Subway’s senior-level executives are now required to spend a week every year in the field, becoming aware of how their choices influence franchisees and customers.

Idea for Impact: The frontlines offer leaders unfiltered information

Leaders, don’t risk the ego trap of losing touch with the frontline experience.

Venture out of the office and work directly with frontline employees. Even do the work of those they lead for a while. You’ll break down the hierarchy and glean a valuable new perspective.

Don’t forgo the frontline advantage—that’s where problems are discovered, and solutions are born.

Wondering what to read next?

  1. Lessons from Toyota: Genchi Genbutsu
  2. How Smart Companies Get Smarter: Seek and Solve Systemic Deficiencies
  3. Learning from the World’s Best Learning Organization // Book Summary of ‘The Toyota Way’
  4. Making Tough Decisions with Scant Data
  5. Leadership is Being Visible at Times of Crises

Filed Under: Business Stories, Leadership, Managing People, MBA in a Nutshell Tagged With: Amazon, Critical Thinking, Leadership, Management, Problem Solving, Quality, Toyota

When Growth Stalls: A Case Study of the iPhone

November 13, 2020 By Nagesh Belludi Leave a Comment

If you got an iPhone in the last few years, you don’t really need to rush to replace it with the new iPhone 12.

In a sense, Apple is relying on other businesses to make this new lineup a success. Despite Apple’s assertions that the new iPhone 12 supports fast 5G cellular networks, the prevailing 5G networks in America just aren’t fast enough yet.

Feature Stagnation

When Growth Stalls: A Case Study of the iPhone Arguably, there’s not much further for the iPhone to go. It’s been improved through numerous versions since 2007, and there simply isn’t much left to do. The entire experience is probably as good as it ever needs to be.

Beyond better power, speed, design, battery, cameras, and display, Apple faces the horizon of what’s expectable from a smartphone. After a decade of relentless growth and absolute dominance, innovation has exhausted. Progress will become increasingly inconsequential. Through it all, Apple has successfully sustained premium-position captivity and thrived even as new, low-cost competitors are emerging worldwide.

When Growth Stalls

Apple’s growth trajectory is likely to look different in the future. The bulk of Apple’s future growth prospects will come from existing customers and not new smartphone adopters. Apple has been focusing on newer software and services to expand the user experience and retain customers.

Apple’s core product is ex-growth. In that sense, Apple is now like Microsoft and Alphabet. Faced with product stagnation, both Microsoft and Alphabet responded by pushing into entirely new areas to spawn growth, but with patchy successes. When it’s dominant Windows and Office franchises were stalling, Microsoft pivoted and had big hits with the Xbox and enterprise software but failed with MSN, Bing, and mobile. Google diversified with Android and Apps but repeatedly missed on social.

Idea for Impact: No one, no matter how historically innovative and powerful, is guaranteed immortality

Successful companies—and people—must evolve their competence or risk becoming marginalized. The roots of sustained success lie in being aware, innovative, and adaptable. Don’t become too focused on taking care of today and forget preparing for tomorrow. Your business model could be fragile.

Wondering what to read next?

  1. Microsoft’s Resurgence Story // Book Summary of CEO Satya Nadella’s ‘Hit Refresh’
  2. Fail Cheaply
  3. How to See Opportunities Your Competition Doesn’t
  4. Lessons from Peter Drucker: Quit What You Suck At
  5. Three Leadership Lessons from Ron Johnson’s Debacle at J.C. Penney

Filed Under: Business Stories, Leadership Tagged With: Apple, Change Management, Google, Microsoft, Strategy

Constraints Inspire Creativity: How IKEA Started the “Flatpack Revolution”

November 2, 2020 By Nagesh Belludi Leave a Comment

Designer Gillis Lundgren of IKEA In the mid-1950s, Gillis Lundgren (1929–2016) was a draftsman living in a remote Swedish village of Älmhult. He was the fourth employee of a fledging entrepreneur named Ingvar Kamprad.

Kamprad’s business was called IKEA, an acronym combining his initials and those of his family’s farm and a nearby village. He had founded IKEA in 1943 and got his start selling stationery and stockings at age 17. In the 1950s, Kamprad had launched a low-cost mail-order furniture retailer to cater to farmers.

Constraints have played a role in many of the most revolutionary products

IKEA Flatpack Revolution - Gillis Lundgren's Lovet Table In 1956, Lundgren designed a veneered, low coffee table. He built the table at home but realized that the table was too big to fit into the back of his Volvo 445 Duett station wagon. Lundgren cut off the legs, packed them in a flat box with the tabletop, and rushed to a photoshoot for the IKEA furniture catalog.

And in so doing, Lundgren unintentionally birthed the flatpack furniture industry. He modified his simple design and drew up plans for a disassembled version of the table. Lundgren’s Lövet table (now called Lövbacken) became IKEA’s first successful mass-produced product.

IKEA and Its Flatpacking Took Over the World

IKEA’s trademark, easy-to-follow assembly instructions are a central ingredient to the company’s success. Manufacturing and distributing prefabricated furniture via flatpacking has proved enormously successful. It has dramatically facilitated the shipment and storage of pieces that otherwise took up much more space.

'Leading By Design The Ikea Story' by Bertil Torekull (ISBN 0066620384) According to Bertil Torekull’s Leading by Design—The IKEA Story (1998,) the concept of ready-to-assemble furniture is much earlier than that. But IKEA was the first to systematically develop and sell the idea commercially.

Flatpacking contributed to many of IKEA’s products’ enduring popularity—they’re affordable, sleek, functional, and brilliantly efficient. In 1978, Lundgren designed the iconic Billy bookcase, the archetypical IKEA product that currently sells one in three seconds.

IKEA’s aesthetic of simplicity and efficiency reflects in its exclusive design and marketing approach. IKEA constantly questions its design, manufacturing, and distribution to create low-cost and acceptably good products.

The method has been adopted by numerous other business enterprises, transforming how products are made and sold globally.

Constraints Inspire Creativity - How IKEA Started the 'Flatpack Revolution'

Out of Limitations Comes Creativity

One problem with creativity is that sometimes people face an open field of creative possibilities and become paralyzed. Constraints can be the anchors of creativity [see more examples here, here, and here.]

Constraints fuel rather than limit creativity. Use constraints to break through habitual thinking and promote spontaneity. The mere experience of playing around with different constraints can stretch your imagination and open your mind’s eye for ingenuity.

Idea for Impact: Use constraints to help stimulate creativity. As the British writer and art critic G. K. Chesterton once declared, “Art consists of limitation. The most beautiful part of every picture is the frame.”

Wondering what to read next?

  1. Overcoming Personal Constraints is a Key to Success
  2. How You See is What You See
  3. Always Be Ready to Discover What You’re Not Looking For
  4. Turning a Minus Into a Plus … Constraints are Catalysts for Innovation
  5. The #1 Clue to Disruptive Business Opportunity

Filed Under: Business Stories, Mental Models, Sharpening Your Skills Tagged With: Adversity, Artists, Creativity, Critical Thinking, Entrepreneurs, Innovation, Parables, Problem Solving, Resilience, Thinking Tools

Never Cast a Blind Aye

October 17, 2020 By Nagesh Belludi Leave a Comment

Never Cast a Blind Aye Rep. Tom Moore Jr. (1918–2017) of the Texas House of Representatives was dismayed at how often his legislative colleagues in the Texas House of Representatives passed bills without reading and understanding them. For an April Fools’ Day prank in 1971, he sponsored this resolution honoring Albert de Salvo:

This compassionate gentleman’s dedication and devotion to his work has enabled the weak and the lonely throughout the nation to achieve and maintain a new degree of concern for their future. He has been officially recognized by the state of Massachusetts for his noted activities and unconventional techniques involving population control and applied psychology.

The resolution passed unanimously.

Albert de Salvo was actually the Massachusetts serial killer known as the “Boston Strangler.”

Having made his point, Rep. Moore withdrew the resolution.

Idea for Impact: Don’t endorse anything you haven’t read and understood thoroughly. Abstention, even denial, is much preferable to a blind aye!

Wondering what to read next?

  1. Accidents Can Happen When You Least Expect Them: The Overconfidence Effect
  2. Five Where Only One is Needed: How Airbus Avoids Single Points of Failure
  3. Constraints Inspire Creativity: How IKEA Started the “Flatpack Revolution”
  4. Turning a Minus Into a Plus … Constraints are Catalysts for Innovation
  5. Creativity by Imitation: How to Steal Others’ Ideas and Innovate

Filed Under: Business Stories, Sharpening Your Skills Tagged With: Critical Thinking, Decision-Making, Parables

I’m Not Impressed with Your Self-Elevating Job Title

October 12, 2020 By Nagesh Belludi Leave a Comment

I'm Not Impressed with Your Self-Elevating Job Title

Ben Horowitz of the venture capital firm Andreessen Horowitz discusses giving employees ego-boosting new job titles to appease them for not receiving a promotion or a pay increase:

Should your company make Vice President the top title or should you have Chief Marketing Officers, Chief Revenue Officers, Chief People Officer’s, and Chief Snack Officers? There are two schools of thought regarding this.

Marc Andreessen argues that people ask for many things from a company: salary, bonus, stock options, span of control, and titles. Of those, title is by far the cheapest, so it makes sense to give the highest titles possible… If it makes people feel better, let them feel better. Titles cost nothing. Better yet, when competing for new employees with other companies, using Andreessen’s method you can always outbid the competition in at least one dimension.

And, as a counterpoint, the pitfalls of job title inflation:

At Facebook, by contrast, Mark Zuckerberg… avoids accidentally giving new employees higher titles and positions than better performing existing employees. This boosts morale and increases fairness. Secondly, it forces all the managers of Facebook to deeply understand and internalize Facebook’s leveling system which serves the company extremely well in their own promotion and compensation processes. He also wants titles to be meaningful and reflect who has influence in the organization. As a company grows quickly, it’s important to provide organizational clarity wherever possible and that gets more difficult if there are 50 VPs and 10 Chiefs.

It’s become trendy to create and bandy about outlandish job titles and inflate career profiles.

I’m never impressed with self-elevating titles (e.g., Revenue Protection Officer for a Train Ticket Inspector, Director of First Impressions for a Receptionist) that make you sound like a pretentious, egotistical, and obnoxious person.

Your job title is supposed to help me understand what you do without having to open up the dictionary.

Yes, vague and puzzling job titles surface partly because the world is changing, and so are trades and occupations. Some new job titles are going to be needed.

But it’d be great if we could get by with a much smaller and simpler inventory of descriptive job titles.

Idea for Impact: Avoid bogus grandeur—challenge job title inflation. Don’t assign senior-sounding job titles to those with middle-ranking wages.

Wondering what to read next?

  1. Not Everyone is Chill About Tattoos and Body Art // Workplace Norms
  2. Wouldn’t You Take a Pay Cut to Get a Better Job Title?
  3. Job-Hunting While Still Employed
  4. Don’t Use Personality Assessments to Sort the Talented from the Less Talented
  5. Before Jumping Ship, Consider This

Filed Under: Business Stories, Career Development, Managing People Tagged With: Career Planning, Human Resources, Humility, Job Search, Winning on the Job

How to Create Emotional Connections with Your Customers

September 21, 2020 By Nagesh Belludi Leave a Comment

Consumers are shifting towards memorable experiences over material objects that bring happiness and well-being. Experiential consumption is increasing—the global spending on travel, leisure, and food service is estimated to grow from $5.8 trillion in 2016 to $8.0 trillion by 2030.

Businesses are responding by offering indulgences (think Apple products,) enhancing shopping experience (ordering and carrying-out Domino’s Pizza,) and creating more intimate experiences (Mastercard’s Priceless campaign) for consumers.

Persil Laundry Detergent - 'Dirt is Good' campaign One particularly edifying case study is Unilever’s Persil brand of laundry detergents (Unilever licenses this brand from Henkel in many countries.) As part of the “Dirt is good” campaign, Persil’s sentimental adverts that remind “learn to be a kid” (clip,) “climb a tree, break a leg … that’s part of life” (clip,) and “dirt makes us equal” (clip) have attempted to connect with consumers emotionally.

Persil bucked the longstanding ritual of creating dull adverts for its dull products (cheery moms grabbing washing baskets and fragrant flowers and butterflies rising from the clean laundry.) Persil doesn’t focus on the detergent’s stain-busting attributes. Instead, Persil’s campaign signals that children must feel free to experience the world around them regardless of the impact on their clothes. One prominent advert (clip) presented a cheerless robot who slowly transforms into a child while playing in the open air and splashing around in a muddy pool during a rainstorm: “Every child has the right to be a child. Dirt is good.”

Persil 'Dirt is Good' campaign - children spend less time outdoors than prison inmates

Even the UNICEF commended Unilever for “creating awareness of children’s right to play, the right to express themselves—in short, the right to be a child! It encourages parents to see the value of exploration, play, activity and exercise as critical to children’s development and important for full and healthy lives, even if it means that children get dirty in the process.”

Idea for Impact: Enhance how your customers see and feel the benefits of your products and services. Promote an emotional connection between products and customers.

Wondering what to read next?

  1. Make ‘Em Thirsty; or, Master of the Art of the Pitch
  2. Creativity & Innovation: The Opportunities in Customer Pain Points
  3. Leo Burnett on Meaning and Purpose
  4. A Sense of Urgency
  5. Everything in Life is Perception

Filed Under: Business Stories, Effective Communication Tagged With: Creativity, Emotions, Likeability, Marketing, Parables, Persuasion, Skills for Success, Winning on the Job

The Grim Post-Industrial Decline of Detroit // Book Summary of ‘The Last Days of Detroit’

August 20, 2020 By Nagesh Belludi Leave a Comment

Mark Binelli’s The Last Days of Detroit: The Life and Death of an American Giant (2013) is an astonishing chronicle of Detroit from the initial days of the French settlers, to the arrival of Henry Ford in 1913, the racial unrest in 1967, and the present-day hipster arrivistes who’re trying to resurrect the city.

Binelli characterizes the eeriness of the city’s many impoverished neighborhoods, the administrative corruption, and the underperforming public schools—all climaxing in the city’s bankruptcy in 2013. “Ruin porn” from Detroit evocatively exposes once-majestic, now-decaying buildings and factories overgrown with prairie grasses and wildflowers and on the brink of collapse.

'The Last Days of Detroit' by Mark Binelli (ISBN 0099553880) Binelli outlines how Detroit became the hub of industrialized America. Detroit’s decay really began well before 1967, when the racial riots made it worse. In the 1950s, carmakers and their suppliers moved production out of the city to places with cheaper labor and land. Industrial automation superseded low-skilled jobs. The flight of middle-class residents out of Detroit—to its suburbs and beyond—distressed the city’s tax base and left the poorest, more vulnerable residents to fend for themselves.

Binelli includes stirring and occasionally heart-warming interviews with many residents—teachers, volunteer firefighters, students, clerks, union leaders—and a few Detroit figures who’ve become part of the local folklore.

What is particularly bleak about The Last Days of Detroit is how Detroit has become a symbol of the decline of America. In Binelli’s analysis, there’s barely anything particularly grave about Detroit—ongoing socioeconomic changes could reproduce Detroit’s decay anywhere else in the post-industrial West.

Recommendation: Read Mark Binelli’s The Last Days of Detroit (2013). It’s a fabulous piece of Americana.

Wondering what to read next?

  1. Book Summary of Nicholas Carlson’s ‘Marissa Mayer and the Fight to Save Yahoo!’
  2. The Biggest Disaster and Its Aftermath // Book Summary of Serhii Plokhy’s ‘Chernobyl: History of a Tragedy’
  3. Two Leadership Lessons from Oscar Munoz, United Airlines CEO
  4. Tylenol Made a Hero of Johnson & Johnson: A Timeless Crisis Management Case Study
  5. Transformational Leadership Lessons from Lee Kuan Yew, Singapore’s Founding Father

Filed Under: Business Stories, The Great Innovators Tagged With: Books, Governance, Leadership Lessons

« Previous Page
Next Page »

Primary Sidebar

About: Nagesh Belludi [hire] is a St. Petersburg, Florida-based freethinker, investor, and leadership coach. He specializes in helping executives and companies ensure that the overall quality of their decision-making benefits isn’t compromised by a lack of a big-picture understanding.

Get Updates

Signup for emails

Subscribe via RSS

Contact Nagesh Belludi

Explore

Anxiety Attitudes Balance Biases Books Coaching Conflict Conversations Creativity Critical Thinking Decision-Making Discipline Emotions Entrepreneurs Etiquette Feedback Getting Along Getting Things Done Goals Great Manager Leadership Leadership Lessons Likeability Mental Models Mentoring Mindfulness Motivation Networking Parables Performance Management Persuasion Philosophy Problem Solving Procrastination Relationships Simple Living Skills for Success Social Skills Stress Thinking Tools Thought Process Time Management Winning on the Job Wisdom Worry

RECOMMENDED BOOK:
On Writing Well

On Writing Well: William Zinsser

Journalist William Zinsser's bestselling manual has inspired generations of writers to perfect their skills in introducing clarity and brevity, and presenting their unique voice into prose.

Categories

  • Announcements
  • Belief and Spirituality
  • Business Stories
  • Career Development
  • Effective Communication
  • Great Personalities
  • Health and Well-being
  • Ideas and Insights
  • Inspirational Quotations
  • Leadership
  • Leadership Reading
  • Leading Teams
  • Living the Good Life
  • Managing Business Functions
  • Managing People
  • MBA in a Nutshell
  • Mental Models
  • News Analysis
  • Personal Finance
  • Podcasts
  • Project Management
  • Proverbs & Maxims
  • Sharpening Your Skills
  • The Great Innovators
  • Uncategorized

Recently,

  • Direction + Autonomy = Engagement
  • Beware of Too Much Information
  • Bollywood: An Escapism to a Happier Place
  • What to Do When Your Friend Becomes Your Boss
  • Inspirational Quotations #946
  • Look Back at This Time Last Year
  • Having What You Want

Unless otherwise stated in the individual document, the works above are © Nagesh Belludi under a Creative Commons BY-NC-ND license. You may quote, copy and share them freely, as long as you link back to RightAttitudes.com, don't make money with them, and don't modify the content. Enjoy!