http://www.amazon.com/exec/obidos/ISBN%3D0684846365/forkrecommendedrA
"The following is an excerpt from "The New Pioneers: The Men and
Women Who Are Transforming the Workplace and Marketplace," a book by
Wall Street Journal columnist Thomas Petzinger Jr."
http://interactive.wsj.com/public/current/articles/SB919830807592010500.htm
A short time later I launched a new weekly column called "The Front
Lines." Instead of rounding up the usual sources and subjects -- the
officers and analysts who mostly did a lot of officiating and
analyzing -- I resolved to write about the anonymous people who
actually invented the products, sold them to customers, and came
face-to-face with competitors. And with each successful person I came
across it grew obvious that a revolution was under way in business,
for the most part invisible in the headlines and the boardrooms, but
dizzying in its effects on the front lines.
Factories, I once thought, were supposed to run with clocklike
precision. Then I met Charlene Pedrolie, who managed a cinder-block
furniture plant in rural Virginia. Pedrolie had ripped out the
assembly line, setting gluers, staplers, and seamstresses madly
scurrying to assemble sofas as they saw fit. Amid the pandemonium of
the shop floor, productivity and quality were going through the roof.
Products, I always believed, were priced according to cost, with a
margin for profit. Then I met Paul Graziani in King of Prussia,
Pennsylvania. He was selling a disk of software called the Satellite
Tool Kit, a product he developed while working as a General Electric
engineer. GE sold the Satellite Tool Kit for $3 million a copy. When
I first met him in 1995, Graziani was happily selling the same thing
for $9,999. When I visited him again in 1997, the price had dropped
to zero -- yet by redefining his market his company was making more
money than ever.
I used to think that only managers could make the hard decisions.
Then I went to Mercedes-Benz Credit Corporation in Norwalk,
Connecticut. There, employees were busily investigating ways to
eliminate their own jobs. Why? Because those who succeeded were
rewarded with new jobs helping the company to grow.
At one time I believed that going into business required a ransom of
risk capital. Then I met a debt-ridden artist in Minneapolis who went
from homelessness to a Horatio Alger story by selling lettertype
designs over the World Wide Web.
....
In exploring the frontier of the new pioneers, I have set myself a
number of tasks. Chapter 1, "Being in Business," explores the
evolution of trade and technology and their origins in the nature of
economic man. Chapter 2, "Everyone a Middleman," shows how every
entrepreneur finds his role in the new economy and how the changing
rules of the game once again favor the small. Chapter 3, " 'Have It
Your Way,' " illustrates the extraordinary lengths to which
pioneering companies go in the service of their customers, while
Chapter 4, "What Am I Bid?," explores how the new compact with
customers is revolutionizing the most fundamental concepts of pricing.
The book then moves inside the organization. In Chapter 5, "From
Planning to Playing," I will show how pioneering companies
continually reinvent themselves instead of attempting to control an
uncontrollable future. Chapter 6, "Nobody's as Smart as Everybody,"
explores the nature of collective learning, its link to
self-organization, and the creative dynamics of a place called "the
edge of chaos." Chapter 7, "All Together Now," shows how today's
diverse and often conflict-prone organizations succeed through shared
vision, whose creation has become the new mission of leadership.
Chapter 8, "Money and Motivation," suggests that while people may
take a job because of what it pays, they remain loyal to it, and give
their best to it, for reasons other than what it puts in their
pockets.
Lastly the book turns to the wider place of business in society.
Chapter 9, "At Home in the Economy," shows how economic pressures are
dissolving the artificial cleavage between work life and family life.
Chapter 10, " 'All My Sons,' " explores how today's economic
pressures have transformed social missions from acts of charity into
commercial imperatives.
http://interactive.wsj.com/public/current/articles/SB919831031465431500.htm
[Pedrolie was a chemical engineer, explaining her faith in process a bit...]
But the most telling measure of Pedrolie's self-confidence was her
awareness coming into the job -- not just her awareness, in fact, but
her conviction -- that the answer to Rowe's problems would never come
solely from her. Nor could it come from any leader alone. As she saw
it, the answer resided mainly in the collective minds of the people
actually doing the work. Nobody knew this kind of sewing, after all,
better than the seamstresses themselves. Anyone who made his living
gluing armrests on love seats knew more about that kind of gluing
than just about anybody on the planet. Pedrolie also realized that
each of these workers also knew more about the adjacent specialties
than anyone except the people in those jobs. And although years on an
assembly line had blinded them individually to the entire operation,
the odds were pretty good that with the right information in their
hands the people who had been doing it for so long were the best ones
to figure out how to put the pieces together for greater speed and
efficiency.
So Pedrolie began dismantling. Most supervisory positions were
eliminated. In fact, entire departments were eliminated. Everyone in
the plant received a crash course in the skills he had previously
seen at a distance: Gluers were taught to staple and staplers to
glue; framers to upholster and upholsterers to frame. As a way of
reinforcing the ideas that things were changing, Pedrolie ordered the
paint scraped from the windows.
Before long the five hundred workers were assembling themselves into
clusters -- "cells," Pedrolie called them. Each group selected its
own members, like kids drawing sandlot teammates. Each group received
responsibility for a particular line of product and began creating
its own processes, schedules, and routines, all varying according to
the mix of workers and products in each group. With the assembly line
about to become a thing of the past, the teams figured out the most
sensible arrangements for clustering their power tools, which were
hung from the ceiling on electrical cords, color-coded by cell.
"Every cell started with a blank sheet of paper," Pedrolie would
recall. "They figured out the process from beginning to end." If
anyone on the production floor wanted to explore making special
arrangements with an outside vendor, that worker simply picked up the
phone and made the call.
...
Had it been anyone else in charge of Rowe's effort, it, too, might
have slipped into ignominy. But Pedrolie held firm. The assembly line
was gone for good, she said; it could not be reinstalled. By refusing
to let anyone out -- by forcing workers and managers to stay in the
game and by cheering them on at every opportunity, which came
naturally to her -- she forced everyone to realize that
self-organization was the only path to a sane workday and a secure
future. Instead of letting the plant fail, everyone began pitching in.
Even more important, Pedrolie had installed a "safety net," as she
called it, and the safety net was information. Every member of every
team at every moment had instant access to up-to-date information --
about order flows, order output, productivity, and quality. Data once
closely guarded by top management became the common property of the
shop floor. People had the instantaneous opportunity to see which of
their actions worked and which didn't -- and they reacted! And
adjusted! This wasn't as easy as I probably make it sound. Rowe still
had computers locked in the hands of a few professionals who dallied
over her requests to generate new reports and information. Using her
sharpest political skills, she engineered the ouster of the firm's
computer chief and brought in one of her pals from GE
...
After several weeks of plant-wide pandemonium, the pieces at last
fell into place, causing productivity and quality to shoot through
the roof. Before long the factory was delivering custom-made goods to
the consumer within thirty days; several months later the lead time
had reached merely ten days, a stunning accomplishment in an industry
accustomed to working on lead times of as long as six months. A
culture of speed permeated the plant. When a technology specialist
named Ken Potter wanted to install a state-of-the-art frame-cutting
tool, he was stunned to win management's instant approval. "It's
exciting to feel like you're on the cutting edge," he said as the new
computer-controlled machine buzzed behind him. "In the past we were
told to wait until someone else in the industry got one."
...
"The market is not an invention of capitalism," Mikhail Gorbachev
once told the Wall Street Journal. "It is an invention of
civilization." He could have gone further: Civilization is an
invention of business, and business is an invention of life. Business
consists of technology and trade, both of which predate our species.
Homo erectus mined quarries for stone tools as many as 1.4 million
years ago. Language itself may be a by-product of technology: Some
researchers believe toolmaking helped to create the neural
connections necessary for speech. Trade in ax parts dates at least to
200,000 b.c., long before humans left Africa for Europe and Asia.
Our economic identity is stamped all over our language and culture.
The earliest known examples of cuneiform writing involved business
transactions almost exclusively -- ledgers and inventories accounting
for everything from livestock to olive oil. In many ancient languages
the word equivalent of "business" shares the same roots as "life"; in
old Sanskrit, "man" was derived from a word meaning to weigh, value,
count out, or share. The words "commerce" and "market," (as well as
the French merci, for gratitude) share their origins in Mercury, the
god of trade and information.
....
there's no getting away from that feedback cycle of action, reaction,
and synthesis, not on any scale of life. Human creativity, says the
Nobel chemistry laureate Ilya Prigogine, is "part of a fundamental
trend present at all levels of nature." Or, as Stuart Kauffman quips,
"We may find that E. coli and IBM do indeed know their worlds in much
the same way."
I know a business consultant named Fritz Dressler, who during the
Cold War conducted psychological profiles of foreign leaders for the
State Department. He also immersed himself in the 1950s fighter-pilot
studies that identified the fabled OODA cycle -- observe, orient, do,
act. In later years Dressler conducted a full-time investigation of
every well-established theory of human knowledge -- such familiar and
unfamiliar theories as the "cognitive cycle," the Delphi Process, and
on and on. Every one of them, Dressler realized, was stricken through
with the identical arrow: the cycle of action, feedback, and
synthesis. "The process we call creativity is in fact nature's
evolutionary process running in real time," Dressler says. It is
"evolution on the fly."
The second deep law about economizing is that it occurs best in
groups. A solitary inventor laboring in his lab is every bit as
important to human development as the solitary mutation is to the
evolution of a bacterium, but in either case it takes a village (so
to speak) to propagate the outcome. When nutrients run low, certain
bacteria self-organize into slime molds that consume less than the
bugs would otherwise. African termites, who are nearly blind and
quite stupid individually, create ventilated structures fifteen feet
high, full of chambers, overpasses, ventilation tunnels, and fungus
gardens -- ten-ton masterpieces that may stand for more than three
hundred years -- without ever consulting a set of plans.
....
http://interactive.wsj.com/public/current/articles/SB919892313276946000.htm
It ranks among the most famous soundbites in all of economic history:
"It is not from the benevolence of the butcher, the brewer, or the
baker that we expect our dinner, but from regard to their own
self-interest." Like many soundbites, however, this one loses most of
its meaning outside of context.
Contrary to widespread impressions, Adam Smith, the inventor of
economics, celebrated the individual not solely as an end in himself
but as the member of a community, one whose purpose was a better
society. He hailed the power of "connexions and dependencies" in
promoting the greater good. He spoke of the entrepreneur as "a single
cell in a larger organism." He said technological progress came from
"combining together the powers of the most distant and dissimilar
objects." In the very paragraph of The Wealth of Nations containing
his oft-quoted axiom of self-interest, Smith also makes the following
claim: "In civilized society, [man] stands at all times in need of
the cooperation and assistance of great multitudes." One telling
fact: When Smith died his estate was negligible. He had given it all
away.
...
On his own and incurably entrepreneurial, Morabito in 1991 purchased
a small corporate relocation agency owned by the timber giant
Weyerhaeuser and reopened as a new company called Paragon Decision
Resources, based in Irvine, California. Paragon lacked the capital to
take unsold houses into inventory as Merrill Lynch once had. It also
lacked the kind of national realty network that Prudential was
putting together. But Morabito didn't view his new company merely as
a way to churn fees and commissions on real estate.
Instead, Morabito resolved to reorient the relocation process,
treating home selling as just one of many critical links in a complex
and delicate chain. He figured that by shrewdly sequencing the events
-- house hunting, mortgage application, cash advances, packing
schedules, flight arrangements, realty closing, and the myriad steps
in between -- he could generate tremendous savings for the corporate
client, far beyond what he had ever accomplished at Merrill Lynch.
And by giving transferred employees a single point of contact, he
could spare them the trauma of bouncing from department to department
within a firm. The big relocation outfits worked on economies of
scale; Morabito would work on economies of scope.
There were no blueprints for such a business. Making travel
arrangements quicker and at lower cost required leasing his own
airline computer-reservation terminals. To speed the transfer of cash
advances and realty payments he hard-wired his computer systems to
those of his clients, enabling Paragon to issue checks on its
clients' accounts. Where he lacked capabilities he forged alliances
-- a partnership with Deloitte and Touche to help cope with
international tax codes, another with Citibank to handle
international money flows. He lined up other firms to provide
language training, spouse job-hunting assistance, psychological
counseling, and elder care -- anything in the interests of a seamless
solution. When Morabito's sales people called on potential customers,
they also made a point of pitching the services of Paragon's vendors,
just as those companies began pitching the services of Paragon in
their sales calls.
...
These worldviews are based on erroneous science. "Competition has no
special status in biological dynamics," says the British biologist
Brian Goodwin. "What is important is the pattern of relationships and
interactions that exist and how they contribute to the system as an
integrated whole." In a book memorably titled Why Big Fierce Animals
Are Rare, the biologist Paul Colinvaux remarks, "Natural selection
designs different kinds of animals so they avoid competition. A fit
animal is not one that fights well, but one that avoids fighting
altogether." This is true of no species more than man. Having traded
brute strength and fanged jaws for large, delicate brains, "humans
are innately disposed to avoid violent physical contact," says the
Harvard biologist Edward O. Wilson. That we still sometimes do proves
only that our evolution has far from run its course.
....
Technology also provides a marketing platform on which scale
economics have no meaning. I spent some time in Minneapolis with a
twenty-eight-year-old named Charles Anderson, who goes by the Web
handle of Chank Diesel. Only a year earlier Chank had been
"practically homeless," as he put it, living in the dreary basement
headquarters of a Minneapolis punk-rock magazine called Cake. But he
had a talent for drawing the alphabet, inspired partly by his love of
Art Deco-style motel lettering that he saw plowed under by major
hotel chains in his native Florida. By 1997 he was on the World Wide
Web, offering free downloadable digital fonts but also special fonts
in exchange for a $10 payment by credit card. ("Fonts are like
water," his Web site noted. "You can get it for free, but the kind
you pay for tastes much better.") Even at $10 a transaction, he was
yielding more money from his Web site than General Motors or Exxon
had ever harvested from theirs.
....
Nobody I know exemplifies the bright future of the middleman better
than Jerry Whitlock, the "Seal Man" of Stockton, Georgia.
Whitlock sells seals and gaskets, an independent distributor working
for himself -- precisely the kind of intermediary the experts seem
determined to disintermediate. The son of a truck driver, he grew up
in rural Georgia and went to work out of high school chasing
smokestacks from town to town, conducting cold calls at every factory
he could find. It was the early 1970s -- recession years -- and he
considered no order too small: a few metric O-rings here, a handful
of V-rings there, grease seals, pump packing, you name it. "I did it
the hard way," he told me when I visited his home near Atlanta. "No
mentor, no financial support, no nothing."
In the course of tracking down so many seriously obscure parts,
Whitlock amassed a mountain of catalogues and bulletins, organizing
and cross-referencing them in a set of huge, black binders. Likewise
his Rolodex grew and grew, listing vital contacts who could either
supply any part or tell him who could. Briefly Whitlock took a tour
through corporate America, but he was appalled to find himself
surrounded by sleazy financial dealings and the pressure to cut
corners. And he quickly burnt out on managing inventories,
supervising employees, and flying as often as fifty times a year. So
in 1995 he once again struck out on his own -- not in his car this
time, but in a spare room in the home on his wooded suburban lot.
Never was a gasket salesman so wired. He bought two cell phones,
lashed a beeper to his belt, and purchased an automatic fax machine
to broadcast one hundred single-page advertisements overnight to
carefully targeted prospects. Whitlock's faxes boasted of his
experience with "rush jobs," his access to "oddball, hard-to-find
parts," and his purported standing as a "worldwide supplier to
industry." He dubbed himself "the Seal Man," adding a likeness of
himself to his stationery to give customers a feeling for the fellow
on the other end of the fax. He also hired his sister to work
part-time from her home phoning prospects who had responded to one of
his faxes. Then Whitlock added e-mail, eventually installing a
program that forwarded any messages containing a few promising key
words (such as "quote" or "order") to his pager for instant
call-back. He scanned his entire twenty-four-page catalogue into a
site on the World Wide Web and notified the major searching services
to include his Web address under "seals" and "gaskets."
The truth is that no amount of technology assures a profitable
connection, but it surely helps to create a potential selling
opportunity. As inquiries arrived by phone, fax, and e-mail, Whitlock
dug into those old notebooks years in the making. Motion Industries
needs a part for a Bulgarian-made press. A giant motor at Carolina
Power & Light keeps catching fire because no one can replace a
persistently leaky oil seal. A call from GM, another from TVA,
another from Smucker's. At such moments Whitlock flipped through his
golden Rolodex or reached back into his years of experience hanging
out on shop floors. When he tracked down a part he arranged for its
shipment by overnight express to his two-car garage. There, his wife,
Rita, connected to him by two-way radio, switched the incoming
product into a new box with an invoice, dropped in a "Seal Man"
refrigerator magnet, and immediately sent the package out. By 1997 he
was doing $1 million worth of business a year, and with costs so low
his gross margins averaged about 60 percent -- a sum representing the
value of the know-how he brought to every order.
And his growth had only begun. Whitlock's niche expanded with the
spreading World Wide Web, bringing in customers from around the
globe. "Last week I had inquiries or orders from Indonesia, Dubai,
Singapore, Sweden, Trinidad, Chile, Mexico, and several others," he
told me at one point. Technology also expanded his reach for supply
beyond his old set of black binders. By 1998 he was buying from
vendors in Germany, Venezuela, Ireland, Australia, and Austria. He
forged a close relationship with an Indian entrepreneur with whom he
established a small, captive manufacturing operation -- all via
e-mail. "A guy right around the corner from me never heard of me till
he saw me on the Internet," Whitlock said, sitting at his built-in
plywood desk, his wife packing boxes a few yards away, the UPS truck
in his driveway, his cell phone warbling.
Whitlock's success enabled him and Rita to spend a lot of time in a
Florida vacation home without leaving the business behind. He scanned
his Rolodex and his industrial directories into his laptop. He
mounted a post over the transmission hump in his truck to keep the
laptop within reach as he drove. He forwarded all his calls. And when
an order could not wait for repackaging in his garage, he simply
arranged a drop shipment straight from his supplier to his customer.
He was the ultimate middleman. He added value by knowing where to
find the gasket equivalent of a needle in the marketplace equivalent
of a haystack, creating a profitable storefront in the new village
square that is the world.
* * *
The Seal Man succeeded because he had a niche -- but "niche" is a
poorly understood word in business, corrupted by generations of
people thinking of it as a hiding place from competition, or as a
haven for collecting revenue to which no one else has yet laid claim.
"Hit 'em where they ain't," says a highly successful "niche
consultant" and best-selling author. These purported experts counsel
clients to "differentiate" themselves from the competition by adding
a unique feature to an established product. This is empty advice in
the new economy. Differentiation may provide marginal benefits for a
high-volume commodity distributor -- making cheeseburgers square
instead of round, say, or adding engine cleaners to high-octane fuel
-- but merely being different no longer opens niches. When people try
to define their businesses (or for that matter their careers)
according to what the competition isn't, they're not filling a niche.
They're simply occupying a habitat.
...
Latham's lesson is universal, though too seldom seen: Economic
niches, like ecological ones, take form around innovations -- and
innovation most often occurs through combination. Though long
forgotten in an era of extreme specialization, the power of
combination is evident on every level of scale. In its brimming
supply of "distant and dissimilar objects," to repeat Adam Smith's
lovely phrase, the world contains infinite undiscovered combinations
-- atoms become molecules, words become poetry, a handful of notes
becomes an endless book of song. Add gospel to blues and you get
rhythm and blues; throw in a white boy from Memphis and you get rock
'n' roll. "Every act of imagination is the discovery of likenesses
between two things which were thought unlike," says the mathematician
Jacob Bronowski in The Origins of Knowledge and Imagination. In a
similar vein the humanist psychologist Abraham Maslow in 1964 defined
invention as "a sudden integration of previously known bits of
knowledge not yet suitably patterned."
....
The proliferation of economic players and the increasing
connectedness among them is creating a kind of cocktail party
economy. The next time you're invited to a party, make a point of
arriving unfashionably early. You'll notice that when the guests are
still few, they cluster into a single clump. Then, as a few more
people arrive, you notice two groups coalescing, then three after a
few more guests arrive. Though the total crowd grows larger, the
individual crowds grow smaller. Often, by the end of the evening,
people have simply paired off. (The identical dynamic is seen in
Internet discussion groups: the larger the group, the smaller the
size of the subgroups.)
The reason is that diversity begets diversity. Variety creates
feedback that creates more variety. The more possible combinations
that can exist, the more that usually will exist. In the case of the
cocktail party, you'll see people's eyes beginning to dart around the
room. Bores get less slack. All this describes the new world economy,
in which the doorbell just keeps ringing.
....