Reality Check (July 25, 2005)
[This article no longer applies. The company has revised its web site. But a year ago, what I describe here did exist.]
I am about to show you a classic foul-up. It's on the web, for all to see. It will be interesting to see how long it stays on-line. The longer it stays on-line, the stronger my argument. In every organization, this question is appropriate: "Is anyone in charge here?" In case after case, the correct answer is: "Officially, yes. Operationally, no."
Back-up is vital to success. So is a functioning chain of command. Both are lacking in most organizations.
It takes a commitment to detail and constant review to keep things from falling apart. Things do not move toward order on their own. They move to disorder. Entropy is universal.
If you want an example on entropy in action, consider the number of broken links on web sites. They do not fix themselves. Recently, I came across two websites in a row that had a notice on the front page asking readers to send an e-mail if they spot a broken link. There were pop-up, pre-addressed e-mail links to click. There are very few sites with anything like this. There are far more sites where the webmaster refuses to post his e-mail address on- line. He does not want to be bothered. He hides from site visitors, and his boss lets him get away with this. Show me a website where the webmaster is hiding, and I'll show you a site with broken links and an organization to match.
Show me a site with a long page of customer support FAQs and no "Contact Us" page, and I'll show you an organization whose operational logo is a particularly rude gesture. An organization that has a website without a clearly visible "Contact Us" option is an organization run by truly short-sighted managers. They are trying to save money on customer support on the naive assumption that customers won't notice the absence of "Contact Us."
Here is a real-world example of highly skilled incompetence in action. It won't be on-line for long, so enjoy it while you can.
ORTEK . . . OR WHAT?
On June 23, one of my subscribers sent me a link to a web page. It is a specialty firm. The company sells computer keyboards.
On the home page, I saw one of the choicest examples I have ever seen of incompetence. But it was a special kind of incompetence. It was artistically grand. It took lots of money and a skilled artist to create this on-line testimony to incompetence. Here is the page:
When you arrive on the home page, you see a keyboard at the top of the page. Next to the photo is a message:
That is correct: ORtek. Not Ortek.
There are a lot of words under this welcome message. But before you have time to read these words, the image and the text fade, to be replaced by a new image of another keyboard and a new headline:
Take a close look at that image. The old phrase applies: "What's wrong with this picture?"
That keyboard immediately caught my attention. I live with keyboards -- old keyboards: 1984 IBM PC/AT clickety- clack keyboards. I have over half a dozen of them. So, this Ortek keyboard image grabbed my attention. There was something strange about it. Then I figured it out. . . .
The ENTER key was upside down and backward. Also, all of the right-hand function keys were on the left-hand side of the keyboard. Now, that's a unique design!
What was going on? Simple. The person who designed the home page had taken a photograph of a keyboard, and had posted it backwards by mistake. Despite living with keyboards, as web page designers do, he/she posted a reversed photo.
We are told, "The devil is in the details." Warning: the devil is malicious.
Before I could read the five lines of small-print text under "Professional Manufacturer," both the image and the text faded to a new image: what appears to be a calculator. Next to it, we read:
What does a calculator have to do with keyboards? I have no idea. I could not read the seven lines of text to find out, either, because the image faded, and I got this:
Soon, it was back to the original message:
I watched again, several times. It turns out that the calculator really isn't a calculator. It's part of a keyboard. But I have never seen anything on a keyboard like it. So, the photo did not sell me. It confused me.
The backward image of the keyboard so utterly amazed me that I sat down and wrote a letter. I sent it to every e-mail address on the Ortek site. There were three. Here is what I wrote:
Dear Sir: On this page, http://www.ortek.com, you have 4 photos of your products. One of the photos is reversed, the one with the headline Professional Manufacturer. The right-hand keys are on the left, including the ENTER key. It looks silly. It looks as if the web page designer was not paying attention, along with every other senior official in your company. It looks as though your website is an afterthought. It looks as though you and your staff did not bother to check the work of your web page designer. I suggest that you do the following:
1. Find out what person designed the page. 2. Find out why nobody on staff spotted this incredible error. 3. Find out why no visitor to the site has paid enough attention to the page to spot the error and tell you.The rotating fade-in images are a marketing disaster. There is too much text. Nobody can read it before the next fade-in takes place. Your page's designer is not a marketer. He/she is an artsy type. Artsy types do not know how to sell products. Never hire anyone to design a website who is not highly skilled in direct-response marketing. A good web page designer should have experience in designing catalogues. Someone in your company violated this rule. The result is a home page that posts a backward photo, yet has so little traffic that no visitor spotted this until now. You have marketing problems.
I then e-mailed this to the three addresses on the site.
Within a matter of seconds, I had two replies. Well, you might not call these replies. But they were responses.
Your message has encountered delivery problems to the following recipient(s):onleader@public.sm.fj.cn (Was addressed to onleader@public.sm.fj.cn) Delivery failed
Can't interpret host name, or non-existent host (WS-Error: 11001)
The other was even more cryptic: a series of two lines of boxes.
[ ] [ ] [ ] [ ][ ] [ ] [ ] [ ]
kbsales@kbtek.com
So, only one letter will get through. Maybe.
Here is a company that advertises itself as being high tech. It describes itself in these glowing terms:
Yet its posted e-mail addresses are dead, and it has a reverse-image keyboard on its home page to verify its claim of Professional Manufacturer.
This much is clear: there is nobody in operationally charge at Ortek. There are lots of munchkins doing their munchkin tasks, but nobody is in charge. Everyone says, "That's not my department." Then they don't pay enough attention their own department.
Is Ortek an exception? Or is it typical? I think it's typical, although it is truly exceptional in the public nature of its incompetence. That a glitch this obvious got on-line and stayed on-line is amusing. Some poor web designer will get a call from a frantic Ortek official, who has seen this report and is not happy.
Will this lead to a re-structuring or Ortek's management? Will they impose a new system of back-up? Probably not. This glitch will be shrugged off as an exception. "Mistakes happen." Yes, they do. The question is: How does a mistake like this stay in full public view.
The reversed image is a symptom of the underlying problem. What is the problem? Senior managers who don't know the first thing about either marketing or web design.
Rule: "Technicians should not be allowed anywhere near a website or a marketing budget. Neither should artists."
If this problem were not universal, why can't you understand the owner's manual for that gadget you bought six months ago and have yet to get operational?
The VCR was replaced by the DVD player before 80% of the public ever figured out how to time the recording of a TV show in advance. For two decades, the engineers were incapable of solving this problem. Yet the machines still included this feature as though most people could make it work. It was easier to invent an entirely new technology than to re-design the VCR. The new technology does not have a record feature.
THE PREVAILING LEVEL OF COMPETENCE
The level of competence at any time is minimal. This is why, if you really care about what you're doing, and you pay attention to what you're doing, you will be successful. There is virtually no competition. I don't care what you do. Your competition is asleep at the wheel.
A company must compensate for a lack of competence by supplying back-up. Very few companies do. It is amazing how glitches not only take place, they remain in full public view. Nobody cares.
Let me begin with the most obvious case in history: the collapse of Communism, 1988-91. That was a failure! This failure went on for seven decades, yet in the West, there was hardly any academic criticism of the Communist economy.
Paul Samuelson was the second person to win the Nobel Prize in economics. He is the author of the best-selling college textbook in economics of all time. In 1989, just as the Soviet Union's economy was crashing, when Gorbachev was begging the West for further aid, only a few months before the entire system went belly-up, Samuelson and his co-author Nordhaus wrote this in the 13th edition of their textbook: "the Soviet economy is proof that, contrary to what many skeptics had earlier believed, a socialist command economy can function and even thrive" (p. 837).
Yet in 1989, a handful of free market economists had been saying for half a century that the Communist economy was bankrupt, that the official statistics were fake, and that the CIA's estimates of Soviet economic growth were based on nothing substantial. The academic economists who controlled the universities and the CIA paid no attention. "Crackpots," they sniffed. "Extremists." Nobody ever got fired for assigning Samuelson's economics.
The Commissar had no clothes, but the fashion experts with Ph.D's in the West kept telling us he was dressed to the T.
The Communist economies all went down to visible economic failure in the late 1980s -- I mean those that had enough prevailing productivity to actually fall. East Germany is the best example. Communism's epitaph was written by an unnamed writer in "The Economist," where all the authors are anonymous, and so is the editor. The author said (I am paraphrasing -- my files are in the garage in boxes): "Communism was a system so flawed that even the Germans could not make it work."
The Communists' economic failure was not based merely on incompetence. Incompetence is universal, but rarely does it produce anything as comprehensive as the Communist collapse. That failure was based on a production system that could not get reduce the inherent, universal incompetence of the vast majority of human beings outside of each person's incredibly narrow area of borderline competence.
Communist managers were not less intelligent than capitalist managers. They just didn't have the wealth formula. What is the wealth formula? Private ownership.
The free market, as an economic agency of consumers, is ruthless in its penalizing of incompetence. Most buyers don't have long-term loyalties to companies that persevere in the face of shoddy products. This is why most businesses fail. This is why the list of Fortune 500 companies keeps changing.
THE FREE MARKET IS RELENTLESS
The genius of the free market is two-fold: positive and negative. It rewards those individuals and firms that meet buyers' expectations, and it bankrupts those who don't. The creative souls who meet consumers' demands are rewarded with more success, more money, more tools of production.
Most companies that do somehow survive just bump along in an undistinguished fashion. This is the vast majority of companies. I would estimate about 80% of them. About 20% are on the brink of bankruptcy at any time.
This is not a matter of IQ. The original distribution of brains in any population is genetic, not ideological or organizational. What is not random is the concentration of brains in a handful of firms that have met the test of public competition. These firms can afford to hire bright people. They are successful. There are not many of them.
There is enormous incompetence at any time. Most people barely know what they are doing most of the time. Most companies are just barely getting by. We call them marginal. In them, we find lots of incompetence, a lack of attention to detail, and general confusion.
If they are pressured by competition to innovate, they foul up. They find it difficult to do anything new, let alone do it correctly.
Consumers are weeding out these firms and employees, but weeds are always in every lawn. The free market keeps the weeds at bay, but it does not destroy them. It merely isolates them and then forces them into someone else's lawn. The employees find work elsewhere when their companies go bust or else fire them to keep from going bust. The weeding process is continual. If it weren't, we would be living in the equivalent of Cuba.
Some organizational structures attract incompetents. The incompetents spot what appears to be a port in the competitive storm of capitalism. These structures strive because the state protects them. The state is run by self- protected people who seek to turn all of us into their image.
Consider Congress. Its inability to solve problems is legendary, the stuff of jokes for over a century. Yet Congress keeps getting worse -- less responsive to the voters, less capable of solving problems.
It is not that Congressmen are stupid. It is that they have the power to tell the rest of us what to do. Also, they have persuaded state legislatures to gerrymander their districts so that voters cannot impose negative sanctions on individual Congressmen.
They seek to re-make society in their own image. As Ludwig von Mises wrote in his book, "Socialism" (1922), the world of civil government is the world of the postal service. Government officials want to make every institution into a version of the postal service. (In 1922, most Western nations' postal services actually delivered most of the mail on time.)
THE CEO'S ARE FAKING IT
On the same day that one subscriber sent me a link to Ortek's site, another subscriber send me a link to a fascinating article, "CEOs are faking it, Stanford professor says." It was written by Robert McMillan. It was dated July 22, 2005. It reported on a forthcoming book by Stanford University Professor, Robert Sutton.
Sutton, the author of a 2001 study of corporate innovation, "Weird Ideas that Work," says that a close look at the evidence shows that chief executive officers (CEOs) probably deserve less credit for their company's fortunes than they receive, and that the best of them manage a tough balancing act: secretly aware of their own fallibility, while also realizing that any sign of indecisiveness could be fatal to their careers."In just about every study I've ever seen ... the amount of control a leader has over the company is exaggerated," Sutton said, speaking during a keynote address at the AO05 Innovation Summit at Stanford Thursday. Although top executives of the largest companies are often considered uniquely powerful, their effectiveness actually dwindles as companies get larger, he said. "If you look at these Fortune 500 companies where they get paid a fortune, they have the least impact."
One implication of this is that the enormous salaries and stock option packages that are paid to senior American executives are money down the drain, except for one thing: illusion. Senior managers are paying themselves enormous salaries to foster an illusion. It may be that this illusion of competent senior managers is as important in business as it is on the battlefield. The troops must believe that the senior executives know what they are doing. If they lose confidence, the organization will be crippled.
The notion of the CEO as a captain, steering the corporate ship, isn't so much a fallacy as it is a "half truth," according to Sutton, who has devoted a chapter to the topic in his upcoming book, titled, "Hard Facts, Dangerous Half Truths, and Total Nonsense."In fact, leaders -- even great ones -- often have no clear idea where they are going, he said. And they make mistakes.
Then the article reports on an amazing interview, an interview with one of the richest ex-CEOs of one of the most innovative, productive, and profitable companies in the world.
The best executives, like Intel's former CEO Andy Grove will admit that they face a dilemma in needing to appear decisive, while at the same time being conscious of their limitations. "You have to pretend" Sutton said. "It's sort of a dilemma, but if you want to accept a leadership job, you've got to accept the hypocrisy of it."In a 2003 interview with the Harvard Business School, Grove admitted that no business leader has "a real understanding of where we are heading."
In the interview, Grove added that it was important not to be weighed down by the burden of making important decisions without a clear picture of things. "Try not to get too depressed in the journey, because there's a professional responsibility. If you are depressed, you can't motivate your staff," he said.
Got that? It's motivation that counts.
The big problem is, without rewards and punishments, motivation does not count for much.
If a web designer suffers no consequences for posting a backward image and then filling space with lines of hype that cannot be read before the next image appears, then why should anything change? Only because a report like this causes some CEO some embarrassment.
It is the avoidance of public embarrassment, not the quest for profit, that really counts for most CEOs. I think this is the big motivator for most people most of the time.
FIVE CRUCIAL QUESTIONS
Here are five questions that should be asked by every prospective employee:
1. Who's in charge here?
2. To whom do I report?
3. What are the rules?
4. What do I get if I obey? Disobey?
5. Does this outfit have a future?
Is anyone in charge? Not really.
Nobody at Ortek was monitoring the web page designer. "That's not my responsibility."
The web page is so useless as a marketing tool that not enough site visitors spotted the reversed keyboard, or cared enough to contact anyone at the company.
Meanwhile, nobody at the company is aware that two of the three email addresses are dead.
Nobody is in charge of the web site, except for a webmaster, who is asleep at the wheel.
Then why have a web site? "Because every company has one."
Yes, but not a ridiculous one.
By the time you read this, maybe an embarrassed executive will have pointed out the error to the web designer, if there is a full-time web designer on staff, who will have made the change. Maybe. But organizations move slowly. I will check back daily to see how long it takes for the repair to be made.
I did print out the page with the reversed image. I will keep it in my files. It deserves to be preserved.
CONCLUSION
If you pay attention to what you're doing, you will succeed. If you care about what you are doing, you will succeed. If you can tel;l the difference between a photo of a keyboard and a reverse image, there may be a job for you at Ortek.
But don't forget question 5: "Does this outfit have a future?"
This is why I am a big proponent of starting your own business on the side. This way, your future is not dependent on a team of incompetents, only on you and the consumers.
But hire some back-up.
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