We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day

…as I have complained about in the past, there has been a major shift in modern companies from delivering something useful – such as a bridge which doesn’t collapse – to managing processes. A lot of companies have subcontracted out the actual work – designing, building, manufacturing, operating, maintaining – and instead busy themselves with “managing” the whole process. This involves lots of well-educated people in nice clothes sitting in glass-fronted office buildings sharing spreadsheets, reports, and PowerPoint presentations by email and holding lengthy meetings during which they convince one another of how essential they are.

Tim Newman speculating on the causes of the Florida footbridge collapse.

25 comments to Samizdata quote of the day

  • Shirley Knott

    This is not, I think, an artifact or product of current companies per se.
    It seems rather to be one of the natural results of cronyism.
    The businesses that operate as you describe are driven, or enticed, into these practices to meet the governance requirements of the state.
    Management by checklist, credentialism, concern for process over product, are all gross inefficiencies that markets do not encourage, indeed, work to weed out.
    In my 55 years in the working world, I have only encountered this sort of process-centric, checklist managed insanity as a result of one of two drivers:
    attempts to manage encroaching dis-economies of scale
    and
    attempts to meet external, inevitably traceable to governmental or government-mandated requirements.
    Checklists are easy.
    Process management and tweaking is eternal and boundless — and trivially easy.
    Productivity is hard.
    Guess which of these cronies try their damnedest to avoid.

  • The businesses that operate as you describe are driven, or enticed, into these practices to meet the governance requirements of the state.

    It’s tempting to think that, but in my experience it isn’t true. I’ve found it wherever individual managers believe they are going to get paid regardless of what happens in the future, and this can apply to the private sector just as much as a company wedded to the state. Personally, I think it mostly comes down to human nature and the skill of the management is to ensure those who make up the organisation don’t revert to this natural behaviour. This is a skill which has largely been lost, I fear.

  • Stonyground

    Whatever happened to the British motorcycle industry? is a book written by insider Bert Hopwood. In it he described how hundreds of managers were brought in to sort out BSA-Triumph in the late sixties. They all had a fantastic time making charts and graphs and doing fun manager stuff but did nothing to sort the problems out. So this kind of thing Isn’t new.

  • bobby b

    “A lot of companies have subcontracted out the actual work – designing, building, manufacturing, operating, maintaining – and instead busy themselves with “managing” the whole process.”

    Much of this kind of structural change has been driven by the risk management process. Assemble a project with discrete and delineated parts and then write a well-designed coverage program, and you go far in limiting how badly a “worst day” scenario (such as a bridge collapse) can affect the individual parts.

  • staghounds

    You forgot lobbying, empowering, celebrating diversity, giving back to the commrunity, and providing political patronage up and down the chain.

  • bob sykes

    Some time ago, I was talking with a senior manager in a major civil engineering company about how the internet affect his business. He noted that nowadays (back then) they had offices and subcontractors all around the world, and that let them develop projects very rapidly and cheaply. The reason being that as an office/subcontractor in German was closing down for the day, they would email all the working files to someone in the US, who in turn would pass it off to someone in Japan or India, and thence back to Germany.

    In that context, Newman’s point about senior manager’s knowledge of what was happening and his ability to supervise the work is telling. My interlocutor was obtuse about the problem, as was I.

  • Daniel Boone

    Deleted: we don’t do egregiously off-topic here, Daniel

  • I’ve found it wherever individual managers believe they are going to get paid regardless of what happens in the future (Tim Newman March 17, 2018 at 11:08 am)

    I’d agree with Tim that the presence or absence of the state is not central to this. The state is a frequent cause of situations where managers are protected from concern about the outcome. However caused, the manager’s lack of skin in the game then has a strong statistical tendency to degrade the feedback loop.

    BTW, in the paragraph above the one quoted, Tim offers another speculation on why the bridge collapsed. I can see why it was not quoted – likely readers of this site can guess it without help. The words ‘doing work for the public sector’ and ‘hiring’ and ‘diversity’ occur in it.

  • madrocketsci

    “A lot of companies have subcontracted out the actual work – designing, building, manufacturing, operating, maintaining – and instead busy themselves with “managing” the whole process.”

    In my (relatively short so far) career as a working engineer, I’ve seen a lot of this. I don’t have a clear picture of the mechanics of this process, but I haven’t found a large organization yet that actually functions. The vast majority of our established scientific and engineering organizations are stuffed full of a certain kind of person: Weird priorities, obsession with appearances and showing off for tours, obsession with extremely detailed reports and metrics, speaking a language that I can barely translate about how our commitments match the corporate vision statement and if certain actions fall under certain buzzwords from higher echelons of management (and there are always so many layers overhead that I can’t hold the org-chart in my head). And a whole effing lot of subcontracting.

    At (one of my old jobs), everything was subcontracted. *Everything*. Even things that had no business being subcontracted. We were asked to certify things that we never personally checked or oversaw ourselves (I refused. I didn’t conduct the test, I didn’t see the test conducted, and you aren’t giving me time to check it, my name is NOT going on this document.) One major disaster struck, and all the management could do was flap their arms about how this added schedule-risk to their program, how they *couldn’t possibly* do testing and redesign work – they couldn’t afford it (they didn’t know how), and how they were going to cover it up. (I left shortly thereafter).

    I’m working on an interesting project now in a different organization. It’s far more interesting work. It is an island of efficacy though in the midst of an organization being eaten alive by the same cancer. I don’t know quite where I am supposed to learn real (nonacademic) engineering though, because I haven’t yet found *where it even happens*! Maybe I need to eventually join a subcontracting firm.

  • Alisa

    My guess is that most of these companies (that are not directly under some kind of government control) are publicly traded – am I way off the mark?

  • Jon

    Isn’t it simply a function of mechanisation, various winner takes all industries and Parkinson’s Law?

    Before manufacturing and agriculture became largely automated they employed most people but competition kept margins low so significant management overhead was avoided (leading, for example, to Alec Issigonis making a loss on every Mini he sold because they didn’t have cost accountants).

    Now that those jobs don’t exist, work has expanded to fit the available labour force and some companies are so embarrassed by their riches that they manage down profits with salary bills to avoid scrutiny and/or the visibility of super normal profits encouraging new entry competition. That they can handily suppress profits with expensive lobbying to restrict new entrants is just the cherry on top.

  • terence patrick hewett

    Put simply: if the construction industry were subject to the standards and validation procedures that the medical device or aeronautics industries are subject then this stuff would not happen much at all. In medical there has to be a recorded trail of design and manufacturing decisions so that if an error creeps in then it can be swiftly identified and fixed.

  • Snorri Godhi

    Based on my own experience as a subcontractor to a medium-sized company which had a contract with the European Space Agency (which has nothing to do with the EU btw), Tim Newman’s assessment is a bit of a hyperbole, but basically accurate.

    One thing that is missing is the perspective of the subcontractor: i was left in the dark about how much money the main contractor was getting, and was told by associate contractors that even they, though nominally contracting directly with the ESA, did not know how much money the principal contractor was getting.

    Basically, we were providing pretty much all the technical/scientific expertise, while the main contractor was doing the management and paperwork, plus one of their programmers implemented an algorithm provided by an academic partner. I realize that management+paperwork needs to be done and paid for, but i’d have liked to know how much it was paid: if nothing else, i’d have been in a better bargaining position.

  • Mr Ed

    The bridge is almost 5 tons per foot of span, over 15 tonnes per metre, for pedestrians, not trains or lorries, it could have been made much lighter and I’m no engineer. At 862 tons, it’s around 2/3rds the weight of a run-of-the-mill corvette. You wouldn’t stick a corvette over a road even if it could act as a bridge without some serious calculations and justifications, unless you were flaming crazy, and pretty much the same goes for huge lump of concrete.

    I understand from reports that it was being ‘stress-tested’ when it fell down. It had developed a crack, which appears to have been regarded as nothing serious, but the BBC reports:

    it emerged that lead bridge engineer Denney Pate had warned of a crack in the structure in a voicemail left with the state’s department of transport two days before the disaster.
    But the employee was away on assignment, and did not hear the message until after the bridge had fallen.
    In his voicemail, Mr Pate had said there was no concern “from a safety perspective”.
    But “obviously some repairs or whatever will have to be done”, he said.

    Voicemail left = problem solved? Douglas Adams’ SEP?

  • The Wobbly Guy

    Snorri, what are the chances that the principal contractor got the job through connections and networking, and not by any merit?

    I think the biggest reason why markets cannot weed out these inefficient companies is due to patronage and cronyism, as eluded to by others. And these, in turn, are usually linked to the state.

  • I think the biggest reason why markets cannot weed out these inefficient companies is due to patronage and cronyism, as eluded to by others.

    “Nobody ever got fired for going with IBM” plays an enormous role here.

  • Paul Marks

    A very good post – thank you for sharing this Patrick.

    Yes – this is how modern companies tend to operate. Lots of managers sitting in offices (or walking around without really seeing what is around them) – totally divorced from reality. Instead they are obsessed with “diversity” – how many office workers are women, or are from various ethnic groups, or are homosexuals, or whatever.

    “Can anyone here build a bridge?” – “No – who cares about that nasty bit of physical work, we are working towards SOCIAL JUSTICE”.

    A company should be managed by people who can actually do, and have done, the physical work the company is engaged in. And one person should be ultimate charge of every undertaken.

    If a company can not answer correctly the following questions it is no good.

    “What individual is in charge of this task?”

    And.

    “Does he have any experience of doing this work himself?”

    If it is unclear what INDIVIDUAL is in charge of a project, or if he has no experience of the physical work himself (if they are a “college boy”, or “college girl” type) then the company is no good.

  • Snorri Godhi

    In reply to The Wobbly Guy: I know how the principal contractor got the contract: the ESA had invited companies to submit bids for a contract on remote sensing, and the p.c. put together a small local consortium of companies and academics.

    The p.c. was, and is, an aerospace company, so they presumably had had contracts with the ESA before, and that must give them an advantage in the eyes of the ESA (in addition to experience in filling out the forms). They had no experience in remote sensing, though; nor did the rest of us have experience in winning contracts from the ESA.

    I accept that winning contracts through connections and networking, whether that is fair or not, is hard work which nobody would do without getting paid for it; all what i wanted was to know how much it was being paid!

  • Paul Marks

    Even advertising is now controlled by the “Social Justice” vermin.

    For example, advertising for the British armed forces has been “out sourced” to company renowned for its corruption and incompetence – it is one of the two main companies the government “out sources” things to (the other company is already bankrupt).

    The adverts for military recruitment are all about promoting various racial groups (with blasting American ghetto music – a PATRONISING belief that a black person can like no other form of music), women, the mentally ill, and even Islamists.

    What has all this got to do with the British Army or the Royal Navy? HATRED has what it has got to do with it. The people who made the adverts clearly HATE the British armed forces and British culture and traditions. The people who made the adverts are clearly university types – taught to HATE Britain, its history, traditions and culture.

    “Big business meets the Frankfurt School of Marxism?” – yes exactly, but remember the TAXPAYERS pick up the bill. So there is no real market. Organisations such as “Capita Ras” would not exist long in a free market.

  • Fraser Orr

    To the OP’s specific point, notwithstanding your disregard for management as a useful skill, I’m not sure that this is a bad thing, in fact it is really an artifact of capitalism and efficient markets. The concept of the “firm” as a large hierarchical organization comes about primarily as a mechanism to manage transaction costs. A “firm” is just a large collection of people organized hierarchically. Why do they fall under a legal structure like the “firm”, primarily because it reduces the transaction costs between these people (for example, the design department doesn’t have the cost of billing the product development team, and the product development team doesn’t have the cost of finding programmers to code their new web site, etc.)

    But the promise of the modern age of networks, web, and other such mechanisms is the great reduction of these transaction costs. So it is possible to split these departments up into smaller units, and these smaller units can be more efficient (they can get other work when things are slow, they can spend their own capital to increase efficiency, they can be more nimble to respond to changing circumstances, for example.)

    So the modern “firm” is a balance between the point at which these transaction costs overwhelm the efficiencies of small units, and so as modern technology reduces them then you’d expect to see the split off of lots of small firms working together in a network. And, as it happens that is what you see in the American economy — management delivery firms are one example of this.

    Of course you also get massive boondoggle companies that mostly survive on either corporatism, cronyism or the fact that government or para-government mechanisms make it really hard. A perfect example of that being the stock market which makes it extremely hard to raise capital in a distributed firm structure as above, or laws like SOX that make compliance costs a dominating transaction cost. And there are some firms whose capital structure does demand size.

    So what the OP describes is potentially a good thing. Management is no less feckless in big corps than it is in small management corps.

  • BTW, in the paragraph above the one quoted, Tim offers another speculation on why the bridge collapsed. I can see why it was not quoted – likely readers of this site can guess it without help. The words ‘doing work for the public sector’ and ‘hiring’ and ‘diversity’ occur in it (Niall Kilmartin, March 17, 2018 at 5:24 pm)

    Further to the unquoted paragraph (via small dead animals):

    This company prides itself on how many women they hire, saying that it’s a big step towards gender equality.

    earlier this month, MCM was slapped with a lawsuit for hiring “incompetent, inexperienced, unskilled or careless employees.

    One of my oldest female friends is a very talented engineer – who has worked for decades at a firm that hired her for her talents, not the statistical effect.

    Hiring for statistical diversity effect – never a good idea.

  • Tedd

    To paraphrase McLuhan, “The process is the product.” Over time, that attitude tends to creep into any organization, especially as it gets bigger. People are focused more and more on the minutia of their part of the process and need to be constantly reminded that the real goal is a useful product.

    I’m not sure how that fits in with Fraser Orr’s point about reduced transaction costs leading to a larger number of smaller units. I guess what’s important is that each entity in the chain sees its product as the overall project product, not just the “deliverables.” In other words, if your company’s role is project management you still need to see the end product (the bridge, or whatever) as your ultimate goal, not just a project that is “well run” as defined by metrics internal to the project.

  • Laird

    Snorri, I’m sure you would like to know how much the PC was being paid, to be (as you say) “in a better bargaining position.” Which is precisely the reason I would never give you that information if I were the PC. You have no legitimate reason to know it; all you have to know is your own costs and your required profit margin, so you can tender a bid. As the PC, my profit on the contract is my business and no one else’s. I’m certainly not sharing it with you!

  • Snorri Godhi

    Laird: your reply is certainly thought-provoking, but i think that i can provide cogent counter-arguments.

    1st, i did not say that i have legitimate reasons to know how much money the principal contractor was getting;
    2nd, the boss at the PC made it clear at our 1st meeting that he was interested in building a long-term partnership, but, by keeping us all in the dark, made sure that it did not happen;
    3rd, money from the ESA is ultimately taxpayer money, so i feel entitled to know the amount — coming to think of it, maybe i could have, by looking at the ESA website; but neither i nor the other “minor contractors” thought of it at the time.

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