ATLANTA, Georgia — May 27, 2018 — (NYSE:DUA) — DeltaUnited-American (DU-A), the country’s premier global airline, announced today that it is ending coach class service and retiring routes and aircraft that serve the coach market. In conjunction with the move, the airline rolled out a new ultra-premium “Imperial Class,” designed for customers who own smaller jets, are awaiting delivery of their own intercontinental jets, or who appreciate the elevated level of door-to-door service, amenities, and attention to detail that a big airline can provide.
The airline noted that although all-business airlines like Eos and Silverjet have been tried before, but none successfully, the economic climate today is different. DU-A has no problem, for example, selling business-class seats for five times the price of coach, even though the seats only occupy four times the floor space. Competitors like Lufthansa and British Airways profitably operate limited numbers of all-business class flights, and this move is seen as the next logical step. Continue reading →
Turns out, it’s still highly innovative, just in other areas:
But Irish tax law only considers companies residents of the small European country if they are managed and controlled there. The U.S. Internal Revenue Service, meantime, only counts corporations as American if they are incorporated here.
The result: Apple pays little or no taxes to either country on much of its international revenue, according to the report.
As the article explains, Apple incorporates many of its international operations in Ireland, but “manages and controls” them from Cupertino. One subsidiary didn’t file a tax return, anywhere, even though it took in nearly $30 BN between 2009 and 2012.
The question of offense vs. defense is as old as strategy and was discussed most famously by the Prussian general and author, Carl von Clausewitz. Although he maintained the superiority of the defensive (“properly understood”), he was not one to champion a passive approach to war:
Every defensive, according to its strength, will seek to change to the attack as soon as it has exhausted the advantages of the defensive, so therefore, however great or small the defense may be, we still also include in it contingently the overthrow of the enemy as the object which this attack may have and which is to be considered as the proper objective of the defensive. (end of Chapter IV, Book V) Continue reading →
You may recall the controversy that greeted new Yahoo CEO Marissa Mayer’s decision to ban employees from working at home. I suggested that while such a decision might be useful in the turnaround phase, it does send a message of “We don’t trust you” and so could undermine Einheit if kept in place for too long.
He cites research (an innovative approach!) that shows advantages to both working at home and at the office, depending on the types of work to be done.
“Thinking work” is invisible and hard to observe accurately. Waber studied one company where a handful of superstar programmers complained that they could only be productive at home. So leave them home, right? Except Waber found that when these stars worked in the office, the firm’s productivity as a whole soared, because they’d answer other coders’ questions. Let them work from home and everyone suffered.
He recommends doing both:
Managers and employees need to assess what type of mental work they’re doing on any given day and gravitate to where it’s best suited. Doing Mad Men–style “aha” groupthink? Stay in the office. Need to crush that 90-page memo on paper-clip appropriations? Seems like the kind of thing best handled at home, possibly in your underwear. One-size-fits-all policies—like the one at Yahoo—are too crude for today’s white-collar toil.
Seems reasonable, but the big question still remains unanswered. Do you trust your employees to make this decision for themselves, or, like one of the companies he cites, do you lay down a fiat that thou shall work at the office on MWF and from wherever you want on TTh? That might solve the work-at-home-or-at-the-office issue, but what do you do when a highly productive employee finishes a critical project by working from home on Friday?
As Thompson suggests at the end, the most successful companies may be those that break the trade-off between control and trust and manage to have both. Boyd’s framework is designed to break exactly this trade-off. As I describe in Certain to Win, it rests on Einheit/mutual trust, shaped by such concepts as Schwerpunkt (focus and direction) and Auftragstaktik (roughly, mission “orders”).
Once you have done the hard work to build Einheit (also “unity” and even “team feeling”; c.f., Patterns 74-79, 118), and once people appreciate the need for both creative individual work and for team interaction (this need being part of your Schwerpunkt), then a little leadership should resolve any problems that come up in day-to-day operations.
Of course not, although the record profits [CR Note: actually, the best in 5 years; its record was in the FY ending March 2008] it just posted might make you think so. In an article in today’s New York Times, company President Akio Toyoda takes the “only the paranoid survive” approach:
“Have we really turned into a company that will be profitable and continue to grow no matter what happens to its business environment?” Mr. Toyoda asked.
“I am not sure yet, is my honest answer. An unprecedented crisis even beyond the scale of the Lehman Shock may happen again,” he said, using a common Japanese reference to the global economic crisis. “We’ll only know the answer when such events actually happen.”
Good attitude. A couple of clouds on the horizon, though. For one thing, Toyota now faces brutal competition not only from Nissan and Honda but from Hyundai / Kia and, for the first time in years, from GM and Ford (Chrysler is still lagging). And the article in the Times talks about “a company-wide cost reduction drive.” It’s worth remembering that such short-term thinking is really what got them in trouble in the first place.
Although Toyota’s problems were exacerbated by the recent recession, recalls, and the earthquake, they actually began in the early parts of the century when, in an attempt to accelerate its expansion drive and boost profits, it cut back on training and took shortcuts with its vaunted Toyota Production System. In other words, it started to look like any other car company, with the problems that any other car company faced:
Since 2004 the automaker has had to recall 9.3 million vehicles in the U.S. and Japan—its two biggest markets—up from 2.5 million in the previous three years. The problems got so bad that, in July [2006], Toyota CEO Katsuaki Watanabe felt obliged to bow deeply in apology.
You may remember that in January 2010, Consumer Reports cut Toyota from the companies that it automatically recommends.
As the owner of two Toyotas, I certainly wish them well. But I’d like to see some evidence that they’re refocusing on the values that led them to prominence and not just chasing next quarter’s numbers.
My order from Apple has two parts. Yesterday, I posted FEDEX tracking information for the first.
Here’s the second, coming by UPS:
Notice that it left China on Friday and is now out for delivery to our house near Hilton Head. By the way, the FEDEX package from yesterday’s post just arrived.
If you’re a local retailer, how do you compete with this? And don’t go whining about sales taxes because Apple collects it. I can think of four approaches:
Have it in stock for customers to feel and play with. This includes accessories.
Instill the EFAS climate among your sales staff. This means Fingerspitzengefühl for both the product and for sales technique (do they know the product inside and out and are they aces at selling?)
Provide a lagniappe. Even if you have to order it for them, give them something extra, something they can take home, in their hands, today.
Sell the whole experience: Provide free coffee (most places won’t let you give out free wine), keep the shop clean, ensure that everybody’s enthusiastic and having fun, and if you do screw up on something, fess up and make it right (screw-ups are your best opportunities to build customer relationships). If you’re the owner, get out on the floor, introduce yourself and mix it up with the customers. If lines get long at checkout (you should wish) lend a hand.
Originally, the term refers to the implicit guidance and control link from orientation to observation, which then loops back into orientation. That loop can become locked, so that we only see what we want to see, thereby reinforcing our original orientation.
More generally, it refers to Boyd’s comment at the bottom of Chart 3 of The Essence of Winning and Losing (the infamous OODA “loop” sketch):
Note how orientation shapes observation, shapes decision, shapes action, and in turn is shaped by the feedback and other phenomena coming into our sensing or observing window.
Problems can arise when we limit the range of phenomena so that we don’t detect mismatches in time to do anything about them. Here’s an interesting example, from “What Martial Arts Have to Do With Atheism: An interview with Sam Harris about self-defense and the seduction of faith,” by Graeme Wood at Atlantic.com.
First, an aikido master demonstrating the technique of the “touchless takedown/no-touch knockout” with a group of his students:
And then what happens when he confronts a master who is not one of his students:
[I can't vouch for the authenticity of either of these. Read the article and decide for yourself.]
Along those same lines, here’s a recent piece in the New York Times that refers to David Freedman’s summary of John Ioannidis’s paper on why so much published, peer-reviewed scientific research is wrong, in that it cannot be reproduced or is contradicted by more precise studies later on. As Freedman’s original article notes:
Simply put, if you’re attracted to ideas that have a good chance of being wrong, and if you’re motivated to prove them right, and if you have a little wiggle room in how you assemble the evidence, you’ll probably succeed in proving wrong theories right.
This is an extremely difficult habit for leaders to break because it requires you fire sycophants (who may be long-time friends or even family members), promote unorthodox or unpleasant employees who habitually tell you the truth, and establish robust ties to the eternal world, even when others inside the organization complain that you’re stepping on their toes.
I met Jonathan Brown at the last Boyd Conference in Quantico, back in October, and we spent quite a lot of time discussing the role of stress in Boyd’s framework.
Boyd thought of stress as an offensive weapon. On chart 132 of Patterns of Conflict, for example, he lists one of the intentions of operating inside opponents’ OODA loops as:
Generate uncertainty, confusion, disorder, panic, chaos … to shatter cohesion, produce paralysis and bring about collapse.
Which seems like a reasonably good definition of “stress” to me. He also used to say that it was OK to be confused, so long as your opponent is more confused. Probably the same thing is true of stress.
In this new book, now available on Amazon, Brown takes Boyd’s famous definition of the goal of human activity — to survive on our own terms — and melds it with the latest research on the causes of stress.
I think you’ll find it most interesting, not to mention practical, and it might even provide new insights into Boyd’s work.
By the way, the publisher is listed as “A.L.P. Limited (Publishing), The Old Bakery, Tunbridge Wells, Kent.” The Brits still have a way about these things, don’t they?
Somewhere in the middle of new employee orientation, more years ago than I shall admit, I suddenly jerked awake when the briefer very slowly enunciated that “It is a fireable offense for employees to discuss their salaries.”
Tom Peters once insisted that in a capitalistic society, where we reward according to performance, why not post the scores? The answer, quite obviously, is that we often don’t reward according to performance, despite what we say. What companies get from such a policy is mistrust, with rumor replacing fact. As the WSJ reported in an article today (paywall), even ostensibly well-run companies like Apple would sometimes rather play games than build a more powerful organization.
The article makes an important point: Don’t kid yourself — people will find out the truth. And some of the better performers will feel betrayed.
Like many readers of this blog, I come from a military background, where you can look at people’s uniforms and know to within a few dollars a year how much they make. And not coincidentally, the best military organizations make a fetish out of building Einheit.
In Boyd’s framework, Einheit is what defines the organization: We strive to improve it within our organization, and one of your primary goals is to destroy Einheit in your opponents. If you build an environment where internal politics flourishes, you’re doing your opponents’ jobs for them.
As the Journal article observes: “So one way for employers to head off internal politics: Be even more transparent.” It would seem logical. Showing that you have nothing to hide is a step towards building trust.
