Bad management and restructuring

I want to do a quick blurb about bad management and corporate restructuring.

Bad managers cut costs by laying off people, closing remote operations, etc, without examining the real basis for the underlying profitability issues.

Typically there are three or four costs, employee specific costs, remote operation costs, corporate overhead costs and materials costs.  The key is to look at these costs individually and accumulated.  A lot of lazy accountants are too stupid to understand statistics so they work off of median and mean, which are easily generated  numbers.  The good bean counters work off of modalities, which tell us a lot more about what is going on.

For example, what is the individual performance modality?  This is where we take all the workers and create a histogram of their gross income generation.  In production, this is pretty much equal.  But, in other businesses, this can be radically different.  This modality curve defines my minimum expectation for worker income generation.  The curve should be skewed to the high side, meaning that the modality will be below the average gross income generation.  This is because high performers skew the curve.

What is the cost per income generating employee of the remote office?  Again, I would do a histogram of all the remote offices and look at the modality, not the mean or the median.

Corporate cost per employee should be the lowest of these three numbers, if it isn't, corporate costs need to be reduced.

This is actually basic processing statistics, the modality becomes critical and the mean/median are only important in their relationship to the modality of the process.

Looking at the modality curve, the analyst has to compare the width of the modality curve to 2 sigma.  Using the lower of 2 sigma or the width of the curve, it is fairly easy to set up lower and upper boundaries for process control, everyone producing below the lower boundary is let go, every remote office which costs more than the upper boundary of their modality curve is restructured to reduce costs. 

The total of the employee, remote operation and corporate overhead costs must be lower than the low boundary of the individual employee income generating modality.  This way, income generation is protected, costs are cut and profits increased.

Once individual performance standards are determined using modalities, everything else becomes obvious.  Then management can look at high performers and figure out what they are doing, then train others so that the modality begins shifting closer to the mean.  Done right, continuous improvement strategies result in process optimization.

This is all basic, Business 101, Processing 101, stuff.  The problem is, people are usually too arrogant to pay attention to the basics and figure they can do things better than the last thousand people who did it.

So, when you hear about a corporation that is restructuring, are they protecting gross income generation?  Are they protecting the corporate overhead (their salaries and perks, executive dinning room)?

Look at the financial services corporations that the United States bailed out and then handed over the future of health care to with "Obamacare".  Most of these guys didn't change their overhead, they depended on charity to protect their overhead.

Income in the States is multi-modal, there is a "line" with multiple "bumps" in it.  Each "bump" is a curve modality.

So what did those political decisions do?  Well, they reduced the amount of the three lower income modalities in the United States, which decreases the amount of money consumers have to spend in a consumer drive economy.

In other words, by implementing Obamacare and other corporate protections, the Obama Admin is protecting the high income modalities and damaging the lower income modalities.

Constitutional Equality

Rand Paul and Ted Cruz and the rest of these morons are really missing the point of our constitution and the intention of the founding of the United States.

Our Declaration of Independence stated it very well when Thomas Jefferson, and others, wrote: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

Like most people who have ideals, this nation has constantly failed to live up to these ideals.  The nation was born into genocide and slavery, fought an unconstitutional war to eliminate slavery, has dealt with segregation, discrimination, prejudice, intolerance, hatred, all institutions based on the ideals of superiority instead of our original stated intent of equality.

Over the centuries this nation has constantly moved towards the ideal of equality our Founding Fathers envisioned.  That is how it should be.

Yes, the circular logic applying the Separation of Church and State is flawed.  There is no foundation for a majority intent for such a Wall when States had State sponsored religions.  We accept this Unconstitutional Wall because the majority believe in equality.

Yes, Abraham Lincoln was a tyrant who suspended the Constitutional and fought an Unconstitutional War to end legalized slavery in the United States.  We support and supported that decision because the majority believe in equality.

In 1964 over half the Democrats and 3 Republicans voted against the Civil Rights Act, but, that act passed and Lyndon Johnson signed it (under duress) because the majority believe in equality.

Yes, we have also elected horrible presidents, like Andrew Jackson, who acted out their genocidal fantasies causing the deaths of thousands, if not millions.  Yes, we have enacted horrible discriminatory laws which destroyed thousands, if not millions.  Yes, the United States is directly responsible for at least two genocides that have killed millions of ethnic peoples.

Time and time again, the majority has eventually rejected these behaviors and the majority has supported actions which have supported the legal equality of all peoples.

It is true we do not always live up to our ideals and this is evident in the political popularity of closed minded bigots and the glorification of genocidal president Andrew Jackson on the $20.

I have faith in the people of the United States because, while we have a history of genocide and discrimination, we have a long history of the majority supporting the belief that all people are created equal.

I believe God wants equality.  I believe God wants us to treat others as we treat ourselves, to love others as we love ourselves and as long as the majority of the people of this nation continue to move to support the ideal of equality, I believe God will protect us.

Gay Marriage and Religious Freedoms

The ruling on Gay marriage is going to get interesting, especially in light of the opinion presented by the Texas State Attorney General regarding the right of government employees to refuse marriage licenses on religious grounds.

This opens a can of worms, for example, prostitution was used as a form of religious worship for many thousands of years, and there are religions in the United States which engage in Temple Prostitution, can Police Officers, and other officials, refuse to enforce laws against prostitution?

In addition, as I have mentioned before, the legal incorporation of the "freedom of religion" clause in the First Amendment to the states is actually unconstitutional, based on circular logic and is justified by the personal writings of someone who was not involved in the writing of the Federal Constitution, but, who was involved in the Virginia State Constitution and whose personal correspondence reflected that.  All the rulings incorporating the very specific , "Congress shall make no law regarding the establishment of religion..." to the various states will eventually be over turned.

In case anyone didn't actually ever learn to think for themselves, the Reynolds ruling applying the prohibition of establishing religion to the various is states is circular logic.  SCOTUS used a law that prevented them from making a law (Congress shall make no law...) to make a law (ie, you can't make a law) that they were specifically forbidden from making.  Pretty stupid actually.

So, states can have state sponsored religions, just as they had at the time the Constitution was ratified.  Jefferson's wall has no real foundation and will crumble eventually.  That could mean a state in the U.S. with Sharia Law....

However, Jefferson also points out something else interesting in the Danbury Baptist letter, the difference between social responsibility and religious responsibility.  " I shall see with sincere satisfaction the progress of those sentiments which tend to restore to man all his natural rights, convinced he has no natural right in opposition to his social duties."

For example, can civil servants refuse to work on Sunday?  Can someone have a natural, religious, right that opposes their social duties?  Can a fireman, police officer, correction officer, etc, refuse to work on Sunday?

The answer is, people are hired with the understanding that they can perform the job for which they are employed.  If someone's natural, religious duties prevent them from performing the position in which they are employed then they should seek employment in a position which is compatible with their religious beliefs.

If someone cannot work on Sunday, they shouldn't take a job where they have to work on Sunday.  Replace Sunday with Sabbath if you like.

I believe SCOTUS will have to, eventually, rule that people who accept civil service positions where they are required to perform duties which may conflict with some religious beliefs are free to either accept the position or reject the position, however, they cannot accept a position knowing that they will be required to violate some of their religious beliefs and then refuse to perform duties, which are required by their position, based on their religious beliefs.

It will be interesting, and fun, to see how all this plays out in the courts.

Revolution!

Yesterday I was riding my motorcycle and I pulled up behind a van with a sticker on the back.  Guy Fawkes face with the words "revolution" under it.  I started laughing so hard I almost fell of my motorcycle.

Guy Fawkes was the principle in an event in England called the "Gunpowder Revolution", or the "Gunpowder Plot", a failed attempt to kill off the entire government of england with a shit load of gunpowder.

Wait, this gets better.  The government Guy was trying to kill was King James, you know, King James of the famous King James Bible, the first widely produced Bible in any language except Latin.  The "Protestant" king.  The English King and the House of Lords which had presumed to revolt against the excesses of the Catholic Church.

Guy Fawkes was a catholic religious fanatic, a counter revolutionary trying to put the world back the way it was before the Protestants revolted against the Catholic Church.

There was this movie, "V", and the protagonist, a nut case who tortured a young woman because he wanted to force her into seeing things the same way he did (which makes so much sense!), wore a Guy Fawkes mask.  While I think the move was ridiculously stupid, the subtle irony of a terrorist wearing a Guy Fawkes mask working against a conservative Christian government did not escape me.

It has, however, apparently escaped the vast majority of people including Anonymous, who hide behind the mask of this counter revolutionary, and others who see "V" as a revolutionary film.

The movie "V" really isn't a movie about revolution, it is actually a pretty sick commentary on the ignorance of people and their willingness to destroy each other based on ignorant ideologies.

One of the major ironies of the film is that both V and the Conservative Christian Government believed torture was an appropriate means to an end, so regardless of which fascist was in charge, people were tortured.

The writers and directors put so much subtlety in this film, most people apparently missed it.

But, this momentum of ignorance generated by the film is amazing.  Will anything good come of it?

No.  In fact, seeing Guy Fawkes face above the words "Revolution" reminds me of nothing so much as "Idiocracy".

I like movies, and I know they are fantasy.  The influence that movies, television, music, and video games have on the thought processes of people can not be overstated.  I'm no psychologist, and even if some did have a reasonable theory about this issue I probably wouldn't buy it.

People adopt ridiculous and hypocritical ideologies presented in film because they are ignorant and have no capacity to think and reason.  This is nothing new, people have had a lack of an ability to think for thousands of years.  Some of us think slightly more than others, but, all of us show an amazing capacity for ignorance.

If we are going to have a revolution, it should be a revolution of knowledge and the ability to think critically.

Fat chance of that happening while we still have counter revolutionary Guy Fawkes around trying to blast us back into the "Dark Ages".  He just might get us there yet.

Amazing ignorance in the news today

I'm a kind of a news junkie, I like reading the news.  I generally find it pretty funny, the things people do that make almost no sense to me.

The uncle of the wacko accused of shooting up the church wants to be the one to execute his nephew.  With such a "loving" family I have no doubt why the nut case hated the world.  I suppose I could be wrong, there is evidence that fetal biology causes predispositions for violent and erratic behavior, those are predispositions though.....

In an incredible example of the application of one of the most sacred legal principles in the United States, presumption of innocence, the Governor of South Carolina is insisting on the death penalty for the wacko accused of shooting up the church.  Isn't it wonderful to live in a nation where we say one thing and do another?  Hypocrisy in action!  So glad to live in a nation where the concept of being innocent before being proved guilty in a court of law is such a highly esteemed legal principle that it is effectively and publicly ignored!  Let's have a quick trial followed by a swift execution!

You know, the United States could drop the hypocritical pretense and just admit we live in a totalitarian police state, even if we have nominally democratic elections.  The rest of the world knows it already, why we live in pretense I will never know.

In an effort to decrease the supply and increase the demand for, and profitability of, illegal ivory, U.S. Customs is crushing illegal ivory in the belief that they will, somehow, decrease the demand for illegal ivory.  Personally, I don't see that working any more than burning up; drugs has worked.  The economic law of supply and demand tells us that as supply decreases, demand  increases and the price increases.

And people wonder why I am amazed at ignorance.

Stupid management mistakes

I was just chatting with a friend who is a little concerned about her job, and she should be.

One of the biggest mistakes management makes is allowing overhead to spiral out of control.  It is really crazy, but, once overhead starts spiraling out of control, bad management will usually cut expenses primarily in profit generating areas and maintain unprofitable support structures.

Look at Sears, Chrysler and American Motors.  All were doing fine, until they bought huge mega-headquarters and screwed themselves by increasing overhead to the point where they couldn't generate enough profits to cover the overhead.

At a company I used to work with, we had three divisions, mine, Ricks and Dena's.  Ricks wasn't making a profit, but, management believed they would eventually (bird in the bush) so even though Dena's and my divisions were creating cash flow, they cut resources for us and gave them to the people who were not generating cash flow in excess of their costs.

This sounds stupid, but, bad management will often try to restructure profitable areas while maintaining unprofitable areas of the company.

Always cut the non-cash flow generating portions of a company to the bone.  Don't mess with the parts of the company that are generating cash flow.

This is a big deal.  Anything that is not generating cash flow becomes a burden.  Book keepers, accountants, janitors, secretaries, empty office space, executives.

The next one is harder, what contributes to cash flow?  The controller of the company I used to work for had us going to the office manager to get pens and legal pads towards the end.  My cost to the company was like $2 a minute, it literally doubled the cost of a pen and paper for me to go through the office manager.  Did that process of doubling the cost of pen and paper save money?  No idea really, but, I doubt it, unless there are thieves stealing them and taking it home for their kids.  As much as I used my computer, cell phone, white board, etc, I still use paper and pen occasionally because it helps me think to draw out a flow diagram.  I'm kinesthetic so holding stuff helps.

Look around the company, and they messing with cash flow generating employees?  Sales, production, shipping, programmers, etc and leaving the office alone for the most part, the accounts, secretaries, executives, office space, etc?  Are there divisions that are not generating enough cash flow to pay for themselves?

This is tricky, can a division pay for itself, but, not the corporate overhead?  For example, suppose there is a plant that is generating enough to cover it's own costs, but, only covers 25% of its share of the corporate overhead.  Bad management will shut it down or restructure it to try and pay for the bloated overhead.

If they shut it down, percentage of overhead that the rest of the company pays for increases.

Say there are four plants, one corporate head quarters.  Each plant generates 2 million in revenue.  Corporate costs 2 million to run.  3 plants cost 1.5 million to run.  1 plant costs 1.75 million to run.  The corporation is losing 250K per year.

Close the plant that costs 1.75 million, their costs are too high, Chinese competition is killing us!  Now the corporation is losing 500K per year.

Ok, so lets restructure the plant to reduce costs.  Now the plant only costs 1.5 million to run and it only generates 1.8 million in revenue.  Now the corporation is losing 200K per year.

I have a better idea, cut that $250K from head quarters first.  Then restructure the plant.

Here is the key, and it is pretty easy.  Look for the variability.  If the cash flow is variable, that is the problem.  If the time it takes to generate cash flow is variable, that is a problem.

The problem is always overhead and failure to manage that overhead.

The lack of logic and critical thinking skills

The older I get, the more amazed I am at what seems to be a centuries old lack of critical thinking and logic skills.  I am, as always, most amazed when I don't think things through.  The second most amazing thing is when groups of people, communities, nations, etc, engage in acts which denote a complete lack of critical thinking.

Take Anonymous and their adoption of the Guy Fawkes mask.  The most cursory research would have informed them that they were adopting the image of a fascist religious fanatic who wanted to destroy the fledgling and progressive Protestant Church, encouraging a return to the oppressions, the inquisitions, of the Catholic Church.  Yet, this group, supposedly working against oppression who, in fact, simply engaged in the fascist oppression of those whose opinions disagreed with their own, just as the Catholic Church which Guy Fawkes loved had done for millennium.

How about the "intellectual" disdain for religion?  The most cursory examination of the last thousands of years  during which billions have experienced spiritual incidents involving a higher power would indicate that, while wildly different, the common threads of spiritual existence and a higher spiritual power would cause even the lest intelligent to at least consider the possibility of spiritual existence.  Instead, "intellectuals" often totally reject the possibility of a spiritual existence, choosing to believe in their own understanding and the delusional nature of the majority.

Or believers in the "Wall of Separation".  Here we have a wonderful piece of circular logic in which the Supreme Court used a law, "Congress shall make no law regarding the establishment of religion", which forbids the creation of a law, to make a law, "you can't establish a religion" which they are forbidden to make.  As if that isn't bad enough, the jurists who developed this wonderful piece of ignorance used the personal writings of a man who was not involved in the writing of the Federal Constitution to determine the "intentions" of Founding Fathers who typically resided in States which had state sponsored religions before, during and after Constitutional ratification and whose intentions could not possibly have been to prevent the various states from legalizing state sponsored religions.

Then we have the dogma associated with Einstein's theories of relativity which tell us that velocity is relative to the perspective of the observer and proves, mathematically, that mass cannot achieve the speed of light, even though from the perspective of a photon, traveling at the speed of light from the Sun to the Earth, the photon is standing still and both the Earth and Sun are moving at the speed of light.

How do large groups of supposedly intelligent and educated people engage in such follies of ignorance?

I get that we all make mistakes.  I know that I screw up all the time.  Sometimes people gain enjoyment from humiliating me when I make a mistake, sometimes people correct me politely and many times I correct myself.

But, how do thousands, millions, even billions, of people totally ignore logic and critical thinking to adopt positions based on circular logic, or a lack of research, or arrogance, and adopt ridiculous ideologies?

I get the individual mistake, but, examining the "Wall of Separation", how do millions of educated and intelligent people over hundreds of years dogmatically accept this historically unsupportable circular logic?

And, why, when confronted with the truth, do people usually reject the truth in favor of ridiculously illogical dogma?

I can only believe that people do not know how to think and that it is the rare individual alone who is actually capable of thinking.

Instead, like Aristotle's geocentric theory, people depend on the charisma of an individual to "teach" them the truth.  When Aristarchus challenges that truth, presents the facts of heliocentricism and is shouted down as an idiot, the charismatic dogma continues on for thousands of years.  Not based on logic or intelligence or critical thinking, but, based purely on charisma and people seeking to be like the one who is charismatic enough that their opinion trumps fact.

Aristotle was not a great thinker.  Aristotle, like Hitler, was a great and charismatic orator.  Even today people "worship" the opinion of the charismatic speaker while they ignore the facts presented by the thinker.

People choose not to think.  People choose ignorance.  People choose to follow or lead, oppressed or be oppressed, rather than work together as equals.

And that is sad.

How life changes us.....

It is kind of funny how life changes us without our ever knowing.  This term in a class, they made a big deal about Paleo-Americans finding their away around places they had never been.  I didn't think of it as an issue at all, and it reminded me......

My last few months in the Army I was stuck in a Cavalry Platoon with this Second Lieutenant named Givens.  At the time, I didn't think much of him.

One night we were out on a training patrol in some chunk of desert I had never been in and I was, as usual at the time, drunk off my ass.  Lt. Givens and the sergeants were leading us in the wrong direction, so I figured I would split.  Someone noticed and the stupid platoon sergeant was actually calling my name.  We were in opposing force territory and the last thing I wanted was to spend the night being interrogated as a POW, so I popped up behind the guy and he proceeded to chew my butt for "getting lost".

I, very carefully and with the greatest respect (not), explained that they were lost and I wasn't going to wander around some frickin desert all night.  This prompted the platoon sergeant to gently explain that he didn't believe I had a clue where I was so I pointed out three incredibly obvious landmarks that had escaped their highly trained notice.  (the light glow over installations).

Now, for some reason They let me lead the platoon to our objective.  Maybe because they figured that they could stop me if I led them in the wrong direction, maybe they figured I would prove I had no clue where I was at and I would make a fool out of myself, for whatever reason they got out of my way and let me loose.  Good decision.

Lt Givens received a letter of commendation for allowing a drunk 19 year old without a map or compass lead his platoon through an unknown hunk of desert patrolled by an opposing force to an objective in record time.

Instead of thinking of Givens as a dumbass who couldn't read a map or compass, I now think of him as a rather astute manager who was smart enough to delegate, even though what passes for common sense would never have conceived of allowing me, drunk, without a map or compass, to lead a platoon to its objective in the middle of the night.

Maybe I'm wrong, maybe he just expected me to crash and burn after making him and the sergeants look like fools for pointing out how I knew exactly where I was, but, one of the choices I have made over the years is to try and assume the best about people.

So, while the circumstances haven't changed from that night back early 1980, my understanding of what kind of managerial ability it takes to place confidence in a drunk, 19 year old discipline problem with a chip on his shoulder the size of Everest has changed dramatically.  Lt. Givens now impresses me in a way few people have.

Ain't that a kick?