CONTACTS 
0201 - Chips & Tech.                                                                                                                                                      O-00000039 0101
020101 - Mr. Morris E. Jones
020102 - Sr. Vice President

SUBJECTS
PMI Event Program, Planning
Chips, Morris Jones, V.P., Founder
Drucker, Peter, Executive Mind Set
Leadership & Change, 930119
Executive Training, 930726
Roles, Tasks, Purpose of Management
Overhead, Management is Unproductive
Leadership Broader Vision, Technology
Lean Management
Scenario Complex Communications

1512 -
1512 -    ..
1513 - Summary/Objective
1514 -
151401 - Follow up ref SDS 56 0000, ref SDS 46 0000.
151402 -
151403 - Morris described a "common sense" perspective about management and the
151404 - accounting practice of capturing "overhead" expenses.  We considered
151405 - these views in relation to Peter Drucker's writings, and experiences
151406 - that represent the source of views about the role of "management" that
151407 - lead to "Communication Metrics" ideas.
151408 -
151409 -
151410 -
151412 -  ..
1515 -
1516 -
1517 - Discussion
1518 -
151801 - Leadership with a Broader Vision Makes Management Productive
151802 - Managers Unproductive Overhead Requires Leadership with Broader Vision
151803 -
151804 - Morris explained his sense that managers are unproductive "overhead."
151805 -
151806 - He feels they do not produce things that generate revenues through
151807 - sales; whereas, team leaders which we discussed in July, ref SDS 18
151808 - 2165, are similar to carpenter foremen who produce along side the men
151809 - they are leading in performing the work.
151810 -
151811 -      [On 970607, a year later Morris promoted someone to be a "Project
151812 -      Manager," ref SDS 67 4403.]
151814 -  ..
151816 -  ..
151817 - Question arises as to what executives and managers "produce?"
151818 -
151819 -      [See analysis of this issue on sprinkler repair job ref SDS 66
151820 -      5005.]
151821 -
151822 -      [See where executives request "paperwork" for communication
151823 -      metrics, yet decry being burdened with too much paperwork, ref
151824 -      SDS 62 5930.]
151826 -  ..
151827 - This is an aspect of Communication Metrics on the value of investing
151828 - intellectual capital, discussed in the New World Order paper ref OF 1
151829 - line 959 (see also Peter Drucker below).
151830 -
151831 -     [Later its reported that executives do not like SDS because it
151832 -     produces writing that requires reading, ref SDS 60 4882.]
151834 -      ..
151835 -     [See Fortune article on downsizing, ref SDS 61 6922.]
151836 -
151838 -  ..
151839 - Calculating Management Overhead
151840 -
151841 - I mentioned the tension that has long existed in construction on how
151842 - much "unproductive" labor a job can afford, and the problems that
151843 - arise because the project budget fails to allocate adequate resources
151844 - to manage the work, ref SDS 5 line 162 and ref SDS 7 line 41.  An
151845 - example was the Broadwater Power Project where the contractor resisted
151846 - complying with submittal and schedule requirements because they seemed
151847 - to be extra "paperwork" that cost money, ref SDS 2 line 154.  The
151848 - State resisted paying for these management metrics because contractors
151849 - often fail to follow the schedule, preferring instead to "expedite"
151850 - the work, ref SDS 1 line 343.
151851 -
151852 -     [See effort to calculate overhead staffing, ref SDS 69 2113.]
151854 -  ..
151855 - Middle-management Downsized to Remain Competitive
151856 - Reengineering:  Budgeting to Fail, Burdened by Paperwork
151857 -
151858 - Morris explained concern that too many middle "managers" make a firm,
151859 - like Chips, uncompetitive because other companies in his business are
151860 - reducing staff, i.e., reengineering to streamline, to become "leaner"
151861 - by cutting away managers who are just filling out paperwork and not
151862 - really putting work in place.  He seemed to lament that this
151863 - "paperwork" has become in some sense a significant dimension of his
151864 - daily activity.
151866 -  ..
151867 - Drucker discusses "middle management" in chapter 35 on page 443 of his
151868 - book "Management Tasks, Responsibilities and Practices. ref OF 5 3500
151869 -
151870 -      [On 950223 Morris proposes communication metrics that produce
151871 -      more "paperwork." ref SDS 12 5868, again on 950228, ref SDS 13
151872 -      2482, again on 970524. ref SDS 64 0335]
151874 -  ..
151875 - Executives are coming to believe they can just do away with middle
151876 - managers and save a lot of money, per our discussion in December,
151877 - ref SDS 29 7309, and July, ref SDS 18 7409, see also discussion with
151878 - Corps of Engineers on competitive fears that cause organizations to
151879 - try to get by with inadequate management, ref SDS 37 1008.
151880 -
151881 -      [See letter to PMI Comm. on Asilomar re strategy to improve
151882 -      practice of management rather than downsizing to get leaner and
151883 -      meaner, ref SDS 62 7477.]
151885 -  ..
151886 - Obviously there is no issue about doing away with too many managers,
151887 - who are unproductive, any more than there is to eliminate too many
151888 - programmers, secretaries, accountants, carpenters, riggers, gardeners,
151889 - doctors, and so on.  The challenge is determining how much of any
151890 - resource is needed, ref SDS 5 8400, ref SDS 5 0488.
151892 -  ..
151893 - Hoping that inexperienced craftsmen or engineers can be effective
151894 - managers of more than 4 or 5 people, and also perform design,
151895 - accounting, or carpentry, is not effective leadership in today's
151896 - environment where the phone is ringing, fax are flying, meetings and
151897 - email are relentless.  As Peter Drucker notes (below) management is a
151898 - crucial, specialized practice that requires dedicated effort.  In this
151899 - setting, those who feel the pressure, seek refuge in their craft.
151900 - Instead of doing the difficult work of managing, people who have
151901 - special skills invest their time using their speical skills, rather
151902 - than "managing" the work, because they feel they are making progress,
151903 - when in reality the team is suffering due to lack of management.
151904 - Mistakes and losses lead to more downsizing.
151905 -
151907 -  ..
151908 - Complex Management Scenario
151909 -
151910 - I recalled Pat Welch's similar perspective that led him to put on the
151911 - coveralls and perform carpentry on the Redwood City Maintenance
151912 - headquarters facility in 1968.  It was a $5M job (today, $10M - $15M)
151913 - that was using a new design for pre-cast elements.  The arrangement of
151914 - the buildings and sequence of the work was complex. Misc. Metals and
151915 - Rigging subs had to be coordinated with the design of the precast.
151916 - This required significant management resources, but competitive
151917 - bidding puts pressure, as Morris points out, to minimize "overhead."
151918 - ref SDS 5 5115.  It was minimized; it failed and the job was a
151919 - disaster, almost broke Welch Construction, but for the T&M work at
151920 - Lockheed and NASA.  Pat became frustrated by poor performance
151921 - reflected in monthly losses on cost reports; edge forms, for example,
151922 - bid at $1.23/LF, were costing $4.72 -- that gets managements attention
151923 - when there are 200,000 LF to build.  The problem seemed like
151924 - carpenters were not performing adequately.  So Pat spent several weeks
151925 - on site as a carpenter.  He reverted to craft and become a team leader
151926 - instead of taking responsibility to manage his business.
151927 - ..
151928 - This was shocking to City officials, the architect and of course
151929 - to his own people, subs and so on.  In a way it was a noble form of
151930 - leadership, certainly for the workmen.  Of course it undercut the
151931 - on-site management team.  Pat did discover though that it was lack of
151932 - planning that caused the unit prices to escalate.  The lumber used
151933 - initially for the edge forms was delivered late, so they had to
151934 - scramble to get an interim supply from a local vendor and then had to
151935 - increase the crew size to meet the schedule.  This acceleration made
151936 - the work less efficient.  Another problem was that some embeded steel
151937 - was not ready on time, so they had to box out for it and then later
151938 - weld the elements in place and do some extra grouting, which the
151939 - structural engineer required in order to let them proceed.  When the
151940 - edge form lumber was finally delivered, it was rough sawn, full
151941 - dimensioned.  That made it heavier so the work went a little slower,
151942 - and the inspector made them finish the side that would contain the
151943 - concrete.  This extra step cost a lot of money relative to the budget
151944 - for this part of the work, and it delayed things quite a bit.  Later
151945 - they had to finish the other side in order to flip the lumber over to
151946 - offset warpage that occurs when one side is subjected to moisture in
151947 - concrete.  All of these extra costs went into the edge form account,
151948 - because there was no other place for them in the budget.  Pat asked
151949 - why the lumber wasn't delivered on time, why didn't they wait for it
151950 - instead of accelerate the work, why did they get rough sawn lumber,
151951 - why didn't the misc. metal sub have the embeds on the job when they
151952 - were needed?  It turned out, however, that these "paperwork" matters
151953 - were performed by management.  Pat had estimated the job, developed
151954 - the budget, prepared the schedule, ordered the lumber and written the
151955 - subcontracts.
151956 -
151957 -      [See another scenario example for illustrating the complexity of
151958 -      communications, ref SDS 68 4402.]
151959 - ..
151960 - Pat really enjoyed himself though for that short period, until
151961 - reality struck that his job was to "manage managers" and it cannot be
151962 - performed while setting forms, pouring concrete and so on.  I can
151963 - remember Pat's wife, Peg, bringing us lunch one Saturday when Pat and
151964 - I were up to our knees in mud, digging out a rebar cage for an
151965 - elevator shaft that had been buried from recent heavy rains.  It would
151966 - have been just about this time of year, because it was right after I
151967 - was released from the Army and had returned from Vietnam.
151969 -  ..
151970 - During breaks in calamities in Vietnam I had read Peter Drucker's book
151971 - "The Practice of Management," highlighted passages and prepared a
151972 - binder of ideas to try at Welch Co. after my tour in Vietnam.  When I
151973 - was released from the service, Pat read this material and we talked
151974 - about Drucker's ideas at some length.  I don't seem to have the
151975 - binder, but Drucker's book is still in my library.  I noticed this
151976 - evening Pat's notes in the margin on page 47.  Over a 20 year period
151977 - these ideas were a continuing source of tension between us.  He never
151978 - transcended his roots as a craftsman, but continued to view managers,
151979 - like Morris described this evening, as "unproductive overhead," as
151980 - "paperwork" people (see analysis on 931130, ref SDS 9 2552), even
151981 - though Pat actually liked doing some of that work when he turned his
151982 - attention to it, i.e., developing organizational structure,
151983 - information flows, business systems.  He was ultimately forced to
151984 - close his business on advise of counsel, his accountant and bonding
151985 - reps, in order to preserve capital to finance his retirement.  The
151986 - string simply ran out because he was never willing to apply the level
151987 - of management needed to meet the complexity (risk) of public works
151988 - projects.
151989 -
151991 -  ..
151992 - Craftsmanship v. Leadership and Managing
151993 -
151994 - He felt, as many competitors did (e.g., Williams and Burrows), and
151995 - still do, ref SDS 36 line 120, that his foreman or superintendent
151996 - should be able "think through" the morass of specification
151997 - requirements and conflicting interests of direct labor, subs, vendors,
151998 - owners, architects, government officials, neighbors, in the same way
151999 - Pat had used early in his career as a craftsman to hang a door or
152000 - erect falsework for a concrete poor.  He never grasped the essential
152001 - difference between craft work which is directed at a stable objective
152002 - and resources, and managing which is directed at people whose
152003 - interests and perceptions are in constant flux.  At heart he
152004 - distrusted the "management" process. Everyone he hired for management
152005 - in the main office either quit or he fired them.  This should have
152006 - indicated how difficult the job of "managing managers" is.
152007 -
152008 -
1521 -

SUBJECTS
Drucker Respected Voice for Effective Good Management
Management Unproductive Overhead, Drucker Disagrees
Jones, Morris Review Peter Drucker's Ideas on Management

2305 -
230601 -  ..
230602 - The Role of Managers - Drucker
230603 -
230604 - This evening Morris and I reviewed Peter Drucker's writings on the
230605 - role of management, since he mentioned a few months ago on 950816 that
230606 - he holds Drucker's work on management in very high regard. ref SDS 20
230607 - 3976
230609 -  ..
230610 - At that time Morris was planning to attend an event honoring Drucker,
230611 - which was subsequently reported in the March 1996 issue of Wired
230612 - magazine for an article on George Gilder, p. 124.
230614 -  ..
230615 - Morris confirmed this evening his earlier high regard for Peter
230616 - Drucker's writings on management.
230618 -  ..
230619 - We therefore reviewed Drucker's work in relation to the worry, above,
230620 - about management being unproductive overhead. ref SDS 0 4692
230622 -  ..
230623 - We found Drucker writes that "management" is the most productive
230624 - resource in an organization. see review on 931130, ref SDS 9 2552, and
230625 - on "innovation" at ref SDS 9 8955.
230626 -
230627 -      [On 980101 Drucker spoke on leadership. ref SDS 71 2154]
230629 -  ..
230630 - Drucker says:
230631 -
230632 -     The manager is the dynamic, life-giving element in every business.
230633 -     Without his leadership the "resources of production" remain
230634 -     resources and never become productive.  In a competitive economy,
230635 -     above all, the quality and performance of the managers determine
230636 -     the success of the business. {The Practice of Management, p. 3,
230637 -     Harper & Row, Asia Edition, 1969}
230639 -      ..
230640 -     Management, which is the organ of society specifically charged
230641 -     with making resources productive, that is with the responsibility
230642 -     for organized economic advance, therefore reflects the basic
230643 -     spirit of the modern age.  It is in fact indispensable..." {ibid
230644 -     p. 4}
230645 -     ..
230646 -     Only superior management competence and continuously
230647 -     improved management performance can keep us progressing, can
230648 -     prevent our becoming smug, self-satisfied and lazy. {ibid p. 5}
230649 -     ..
230650 -     Businesses have pretty much the same resources to work with.
230651 -     Except for the rare monopoly situation, the only thing that
230652 -     differentiates one business from another in any given field is the
230653 -     quality of its management on all levels. {ibid p. 71}
230654 -
230655 -        [On 960304 application to chip industry, ref SDS 59 BH3S
230657 -      ..
230658 -     Management's ... function is therefore to make a productive
230659 -     enterprise out of human and material resources.  Concretely this
230660 -     is the function of managing managers. [Management makes an
230661 -     enterprise greater than the sum of its parts, i.e., produces
230662 -     profits.] {ibid p. 12}
230663 -
230664 -
230665 -
230666 -
2307 -

SUBJECTS
Reengineer Project Management
Managing Managers
Reengineering Management
Competitive Advantage Quality of Management
Managing Managers
Sunshine Profits Invest to Prepare for Change

2908 -
290901 -  ..
290902 - Continuing to quote from Drucker's book...
290903 -
290904 -     And management is so complex and multi-faceted a thing, even in a
290905 -     very small business, that managing managers is inevitably not only
290906 -     a vital but a complex job. {ibid p. 14}
290908 -  ..
290909 - This is also entered in the review of Drucker's later book reviewed on
290910 - 931130. ref SDS 10 9772
290911 -
290912 -        Morris and I discussed this at ref SDS 56 line 1058; [later
290913 -        example of frustrations at ref SDS 63 line 197.]
290914 -
290915 -        An example of "managing managers" is at ref SDS 4 line 294, and
290916 -        a scenario is at ref SDS 14 line 399.
290918 -         ..
290919 -        Another example is the question of how soon can someone prepare
290920 -        an SDS record showing the "management process," is at ref SDS
290921 -        23 line 445.
290922 -
290924 -  ..
290925 - Managing Managers: the Reengineering Delima
290926 -
290927 - Modern businesses seem to be saying through reengineering schemes that
290928 - "... I cannot develop and manage quality managers, so I will do away
290929 - with the role."  There are varying degrees of lip service to changing
290930 - "processes" to eliminate duplication, but the bottom line is fewer
290931 - people are chasing more information.  Drucker says managers are
290932 - indispesnable engines of productivity that need to be managed
290933 - effectively.  This is hard to do but the alternative is to slide back,
290934 - to implode.
290935 -
290936 -     [Used this later in letter to PMI Comm, ref SDS 62 7765.]
290937 - ..
290938 - An example of this may be David Vannier at Intel.  He is the
290939 - Director of Mobile Architecture, but does not seem to have time to do
290940 - any "directing."  He is off to Japan, Austin, Portland and does not
290941 - have time to think, to deliberate, to plan, to direct, to manage, per
290942 - telecon on 960223, ref SDS 50 4992 and ref SDS 58 9999  Who is
290943 - "managing" David in this manner that denies him time to plan, review,
290944 - analyse, deliberate and direct the work?
290945 -
290946 -     [On 970910 report executives do not have time to think. ref SDS 70
290947 -     3479]
290949 -      ..
290950 -     [On 980307 reviewed Andy Grove's book "Only the Paranoid Survive"
290951 -     that describes need for strong management. ref SDS 73 1722]
290953 -  ..
290954 - He is like one of Pat's foreman who always had 4 calls to make, 10
290955 - documents to read, 2 men waiting for instructions, and a discussion
290956 - underway with the inspector while he was laying out a wall for the
290957 - plumbers that required input from the unread documents and the waiting
290958 - calls.  Four months later when the plumbing didn't fit, the wall had
290959 - to be rebuilt, the painter walks off the job because the sheetrock and
290960 - plumbing are not ready, it did not seem like the job could afford more
290961 - supervision after paying for all the mistakes.  These problems were
290962 - attributed to a superintendant who was not paying attention to
290963 - details, and a General Manager who wasn't checking the job.  New
290964 - people were hired.
290965 - ..
290966 - Another example was Perini's PM who had 15 concrete trucks lined
290967 - up at 0700 to begin pouring the sump slab at the Oro Loma Treatment
290968 - plant in San Lorenzo, and not enough men nor lifting capacity, yet he
290969 - was riding around on a D8 to build a staging area for loading the
290970 - concrete buckets.
290972 -  ..
290973 - Of course it wasn't his fault Perini elected to understaff the job and
290974 - Barney Hedberg's plan to use conveyors failed, so at the last minute
290975 - they went to cranes and this required twice the capacity of what was
290976 - available.  The budget clearly showed what was needed but was ignored
290977 - because it could not be determined by the executive practice of
290978 - managing by conversation.  It wasn't as much fun and didn't feel as
290979 - good as it does to tell people what to do.  Even in 1978 it seemed
290980 - like there wasn't enough time to link conversation back to original
290981 - sources, in this case the estimate. ref SDS 19 7878.
290983 -  ..
290984 - Another example is the "O" ring disaster on the 1986 Space Shuttle,
290985 - described at the Cal Tech event, ref SDS 6 line 713.
290987 -  ..
290988 - Other examples are in the Communication Metrics definition, ref SDS 16
290989 - line 176.
290991 -  ..
290992 - We cannot improve management by eliminating managers; we have to help
290993 - them, give them the tools, skills, support and direction to succeed.
290994 - We have lead by showing the way.
290995 -
290997 -  ..
290998 - Growing New Knowledge
290999 -
291000 - Morris and I considered at some length Drucker's observations about
291001 - the value of knowledge work, reviewed on 931130. ref SDS 9 7720, at
291002 - ref SDS 9 2134
291003 -
291004 - Morris cited the transitory advantage of growing new knowledge,
291005 - replacing physical labor with knowledge.  He was concerned that
291006 - investing time and expense to create new designs for better products
291007 - is swiftly lost when competitors copy and then improve upon a new
291008 - method.
291010 -  ..
291011 - We considered the advantages of pneumatic nailing guns in replacing
291012 - traditional hammers, and backhoes replacing pick and shovel.  These
291013 - add value to the workmen, but the competitive advantage to the
291014 - business disapates within a few cycles.
291015 -
291017 -  ..
291018 - Sunshine Profits Invest to Remain Competitive
291019 - Quality of Management is Biggest Competitive Advantage
291020 -
291021 - Morris' lament reflects Drucker's observation that the biggest
291022 - competitive advantage of a business is the quality of its management.
291023 -
291024 -    See "The Practice of Management," Drucker Asia Press 1968, p. 71;
291025 -    also "Management: Tasks, Responsibilities, Practices, Harper
291026 -    Business 1993, p. 111.
291028 -     ..
291029 -    See also review on 931130. ref SDS 9 1504
291031 -  ..
291032 - Drucker notes the folly of resting on past achievements rather than
291033 - investing fruits of successful innovations to spawn new and better
291034 - technology, in observing "...whoever contents himself to rise with the
291035 - tide will fall with it."  ibid p. 57.
291037 -  ..
291038 - Drucker says managers are the people who convert "productive
291039 - resources" into production.  How successful and efficient they are in
291040 - converting information into the knowledge needed to carry out the
291041 - mission of the organization, determines relative performance in the
291042 - market.
291044 -  ..
291045 - That is why the POIMS paper describes managers as the ultimate
291046 - "knowledge" worker, cited by Drucker in the review on 931130.
291047 - ref SDS 9 7720
291048 -
291049 -
291050 -
291051 -
291052 -
291053 -
2911 -