Author: Chet

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Congratulations, Ford!!

As you all know by now, Ford has posted its best 3rd quarter net income in 20 years and gained 1.3 percentage points of North American market share, putting it ahead of Toyota for the year.

A couple of observations:

  • The investment rating services — those folks you told you that mortgage-backed securities were AAA, recall? — still penalize Ford for not declaring bankruptcy and stiffing its creditors, shareholders and employees
  • “Restructuring” still gets the credit.  Look at this from CNN: That success is due in large part to Mulally’s restructuring of the company that resulted in strong sales and reduced costs in North America.

“Restructuring” does not “result in strong sales.”  It may lower costs, but it does not produce products that customers want to buy.  If all you want to do is lower costs, eliminate R&D while you file for Chapter 11.

It may be a while before we understand the bases for Ford’s success, assuming that it is real success, that Ford continues to make money and gain market share.  But my preliminary assessment is that Alan Mullaly and the folks at Ford understand the Toyota Way better than the current crowd at Toyota.

For example, consider this from the Wall St. J.:

Ford’s mid-size, front-wheel-drive Fusion sedan is now the top-ranked model in Consumer Reports’ “family cars” segment—better than the Toyota Camry, the Honda Accord, the Nissan Altima and the Hyundai Sonata. Overall, Ford is now No. 1 among the Detroit brands.

Improving quality; containing costs — starting to sound like the Toyota Way to me.

Which raises an interesting question:  Look at the 14 elements of the Toyota Way, as revealed by Jeffrey Liker and think about Toyota’s current dilemma — has Mulally found something missing?

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Air Bus?

Suppose that instead of leaving home a couple of hours before takeoff to account for driving to the airport, finding a place to park, making your way to the terminal, checking baggage, allowing for potential delays in security, and arriving at the gate 30 minutes before flight time, suppose that instead of all this, you could hop on a bus with the equivalent of at least business class (reserved) seats and  free wifi, and reach your destination just as quickly.  Suppose furthermore that you could do this from, say, DC to downtown Manhattan for $15.00

Think that would be a threat to the airlines?

Check out the new Greyhound site.

Yeah, I know that busses have bad reputations for cleanliness and stations are often located in parts of town you’d rather not find yourself in, but given only slight fare increases — still well below airlines’ — those problems can be fixed.  And long-distance service, such as the newly announced route between Chicago and New Orleans, will probably only appeal to those who cannot afford to fly.

Europe has invested heavily in high-speed trains, but given the cost of building new rail lines, this option remains impractical for the United States.  Busses, however, just show up and go.

I couldn’t tell from the site whether $15 will get you one of the new busses, but even at, say, three time that price, is it still a threat to airlines, most of which will charge you that just to check bags?

Point is that dysfunctionality in our air transportation system has led not to new airlines but to alternative ways of getting from point A to point B. There will be more to come.

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Problems at Facebook?

I tried a post and got the following message:

“This message contains blocked content that has previously been flagged as abusive or spammy. Let us know if you think this is an error.”

Here’s the abusive content I was trying to post:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

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RIP Mary Boyd

John Boyd’s widow, Mary Ethelann Boyd, passed away on October 5 at the age of 81.

Her obituary is available here.

John’s daughter and executor of his estate, Mary Ellen Boyd has asked that in lieu of flowers, donations be sent to the American Heart Association at the following link:

https://donate.americanheart.org/ecommerce/donation/acknowledgement_info.jsp?campaignId=175&site=Heart&itemId=prod20007

Please use the following address for acknowledgements (the donation form will require it):

Mary Ellen Boyd
41784 Inspiration Terrace
Aldie, VA 20105

Goodbye, Mary.

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Count me in Tim Heffernan’s camp

With many thanks for the kind mention in his Politics Blog at Esquire.com, dated September 2, 2010:

Drones Do Not Win Wars

… Drones are just one of our tools. You can argue their practical merits and the morality of their use. But it is naked idiocy to trust them alone to “turn the tide” or “put the enemy on the run” or “bring our boys home” or justify any other jolly stock phrase. Count me in Chet Richards’s camp, instead: the power of drones is as likely to induce hubris in ourselves as acquiescence in terrorists. Regarding which, I’m reminded of an unjolly stock phrase that actually rings true: pride goeth before a fall.

Unfortunately, the link to my piece got gomered up in Tim’s original blog; the link above should work.

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Airlines: Do They Think We’re Stupid?

The answer is too obvious to dignify with a response.

AirTran, with the second largest number of departures out of ATL, announced today that it’s raising its fee for the first checked bag from $15 to $20.  Fair enough — if you don’t like it, don’t check a bag, or you could fly Southwest (not out of ATL,  of course … )

What I liked was the rationale they provided:

AirTran spokesman Tad Hutcheson said the airline is raising the fee because its fuel costs have been increasing.

BS.  They’re raising the fee because they can.  That’s the only reason any business ever raises prices.  Delta has opened up some headroom, and AirTrans absorbed some of it.  Delta is still $3 to $10 more expensive.

American, incidentally, also announced extra fees, in this case, if you want a seat in one of the first rows of coach plus the right to board right after elite level frequent fliers.  At least they didn’t insult us by making up some phony excuse — just a simple business proposition:  If you want it, you can have it, here’s the price.

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FBEMBA Internet Radio Interview

The Family Business Radio network is featuring an interview tomorrow, August 19th, on our Executive MBA for Families in Business. To listen in at 1pm EST go to http://www.familybusinessradio.com/?p=639 then simply click on the “Listen Live” icon in the upper right corner. The pre-show promotion is now posted on that link as well.

As far as I know, this is still the only graduate-level program based around Boyd’s strategic framework.  For more information, please visit the Cox Family Enterprise Center’s site.

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Developing the touch

Ibis raised an interesting question in one of his comments:  If Fingerspitzengefühl can be taught, why do so few people have it?

Two points:  First, Fingerspitzengefühl is a skill, so although most people can get better at it, some are going to get a lot better.

Second, it’s a strange kind of skill, not for performing complicated or even dangerous tasks mystically well, but for sensing what is going on among groups of people in conflict and then influencing what happens.

If you learn juggling, for example, and get so good that people go “Wow!  How did she do that?” the clubs still obey simple laws of motion, pretty much f=m•a. You may do amazing things, but it’s all predictable, at least in theory, and you can learn them yourself under good coaching and maybe a practice partner to help.

The first problem in learning Fingerspitzengefühl is that you can’t learn it by yourself.  You have to have at least two groups of people to practice with — your team and some opponents.  And to develop this skill, you have to practice a lot, because people, unlike clubs, don’t obey laws as simple as f=m•a.  And you have to practice influencing your own team — call that “leadership” — while also influencing the opposition — call that “strategy.”  And you have to learn it in increasingly unstructured and even threatening situations, under varying time constraints. This is the concept behind Vandergriff’s adaptive leader methodology, which I’ve referred to before.

If your conflict is business, not war, then it’s even more complex because you have to influence both customers and competitors (and the relationship between the two), not to mention your own team.

So you can see that Fingerspitzengefühl is hard to practice.  Many military organizations just don’t provide the opportunity to hone it as a skill (my military training in the 1960s and ’70s offered virtually none) or enough for people to get good at it.  On the other hand, some companies do this quite well, particularly in those sales training organizations that stress role playing.

Here’s Boyd quoting Blumentritt (Patterns, 74):

… an officers training institution which allows the subordinate a very great measure of freedom of action and freedom in the manner of executing orders and which primarily calls for independent daring, initiative and sense of responsibility.

or as he put it in Organic Design (23):

Arrange setting and circumstances so that leaders and subordinates alike are given the opportunity to continuously interact with external world, and with each other, in order to more quickly make many-sided implicit cross-referencing projections, empathies, correlations, and rejections as well as create the similar images or impressions, hence a similar implicit orientation, needed to form an organic whole.

It’s important to note that while you’re building Fingerspitzengefühl, you’re also building Einheit, that is, mutual trust and a common outlook.  That statement has a lot of implications …

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Destruction and Creation

The previous post featured Boyd’s last work on strategy; this one provides his first.  The entire Boyd opus can be found at http://dnipogo.org/john-r-boyd/

I had met Boyd while he was still in the Air Force and I was a civilian in the Program Analysis and Evaluation division of the Office of the Secretary of Defense.  We’re talking 1972 or so.  But I didn’t start working with him until he retired and started this paper.  He needed someone to review the mathematics and who would work for free.  I fit the bill.

Destruction and Creation lays out the primary arguments that will guide Boyd’s strategic thought at least through Strategic Game in 1986.  It makes the statement that one cannot tell the character or nature of a system from within that system.  Fair enough — nothing radical there.  But then he makes a claim that as far as I know establishes his unique place in strategic thought:  Attempts to do so will “expose uncertainty and generate disorder.”

In other words, a good strategic principle is to force  opponents to turn inward and keep them focused internally until they destroy themselves or so weaken their abilities to resist that you can do it for them.

All the rest of Boyd’s primary strategic work illustrates this concept and suggests many mechanisms at the physical, mental, and moral levels for applying it.

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The Essence of Winning and Losing

Boyd’s last briefing, also called “the big crunch,” available through our “Articles” page link above.

In the 10 years after the last dated version of his major briefings, including Patterns of Conflict (available at http://dnipogo.org/john-r-boyd/), Boyd thought long and hard about the essential elements of his work.  About a year before he died, this is what he came up with.

It ties together all the major elements of his work, including orientation, implicit guidance and control, Fingerspitzengefühl, the OODA loop, and the notion of “operating inside the OODA loop.”  All in 3 pages.

It’s not an easy read, but it will repay many hours of deep pondering.