Quotulatiousness

April 4, 2024

Boeing and the ongoing competency crisis

Filed under: Business, Technology, USA — Tags: , , , , , — Nicholas @ 03:00

Niccolo Soldo on the pitiful state of Boeing within the larger social issues of collapsing social trust and blatantly declining competence in almost everything:

By now, most of you have heard of the increasingly popular concept known as “the competency crisis”. For those of you who haven’t, the competency crisis argues that the USA is headed towards a crisis in which critical infrastructure and important manufacturing will suffer a catastrophic decline in competency due to the fact that the people (almost all males) who know how to build/run these things are retiring, and there is no one available to fill these roles once they’re gone. The competency crisis is one of the major points brought up by people when they point out that America is in a state of decline.

As all of you are already aware, there is also a general collapse in trust in governing institutions in the USA (and all across the West). Cynicism is the order of the day, with people naturally assuming that they are being lied to constantly by the ruling elites, whether in media, government, the corporate world, and so on. A competency crisis paired with a collapse in trust in key institutions is a vicious one-two punch for any country to absorb. Nowhere is this one-two combo more evident than in one of America’s crown jewels: Boeing.

I’m certain that all of you are familiar with the “suicide” of John Barnett that happened almost a month ago. John Barnett was a Quality Control Manager working for Boeing in the Charleston, South Carolina operation. He was a “lifer”, in that he spent his entire career at Boeing. He was also a whistleblower. His “suicide” via a gunshot wound to the right temple happened on what was scheduled to be the third and last day of his deposition in his case against his former employer.

In more innocent and less cynical times, the suggestion that he was murdered would have had currency only in conspiratorial circles, serving as fodder for programs like the Art Bell Show. But we are in a different world now, and to suggest that Barnett might have been killed for turning whistleblower earns one replies like “could be”, “I’m pretty sure that’s the case”, and the most common one of all: “I wouldn’t doubt it”. No one believes that Jeffrey Epstein killed himself. Many people believe the same about John Barnett. The collapse in trust in ruling institutions has resulted in an environment where conspiratorial thinking naturally flourishes. Maureen Tkacik reports on Boeing’s downward turn, using Barnett’s case as a centre piece:

    “John is very knowledgeable almost to a fault, as it gets in the way at times when issues arise,” the boss wrote in one of his withering performance reviews, downgrading Barnett’s rating from a 40 all the way to a 15 in an assessment that cast the 26-year quality manager, who was known as “Swampy” for his easy Louisiana drawl, as an anal-retentive prick whose pedantry was antagonizing his colleagues. The truth, by contrast, was self-evident to anyone who spent five minutes in his presence: John Barnett, who raced cars in his spare time and seemed “high on life” according to one former colleague, was a “great, fun boss that loved Boeing and was willing to share his knowledge with everyone,” as one of his former quality technicians would later recall.

Please keep in mind that this report offers up only one side of the story.

A decaying institution:

    But Swampy was mired in an institution that was in a perpetual state of unlearning all the lessons it had absorbed over a 90-year ascent to the pinnacle of global manufacturing. Like most neoliberal institutions, Boeing had come under the spell of a seductive new theory of “knowledge” that essentially reduced the whole concept to a combination of intellectual property, trade secrets, and data, discarding “thought” and “understanding” and “complex reasoning” possessed by a skilled and experienced workforce as essentially not worth the increased health care costs. CEO Jim McNerney, who joined Boeing in 2005, had last helmed 3M, where management as he saw it had “overvalued experience and undervalued leadership” before he purged the veterans into early retirement.

    “Prince Jim” — as some long-timers used to call him — repeatedly invoked a slur for longtime engineers and skilled machinists in the obligatory vanity “leadership” book he co-wrote. Those who cared too much about the integrity of the planes and not enough about the stock price were “phenomenally talented assholes”, and he encouraged his deputies to ostracize them into leaving the company. He initially refused to let nearly any of these talented assholes work on the 787 Dreamliner, instead outsourcing the vast majority of the development and engineering design of the brand-new, revolutionary wide-body jet to suppliers, many of which lacked engineering departments. The plan would save money while busting unions, a win-win, he promised investors. Instead, McNerney’s plan burned some $50 billion in excess of its budget and went three and a half years behind schedule.

There is a new trend that blames many fumbles on DEI. Boeing is not one of those. Instead, the short-term profit maximization mindset that drives stock prices upward is the main reason for the decline in this corporate behemoth.

March 15, 2024

Peter Turchin’s notion of the “overproduction of elites”

Filed under: Books, Bureaucracy, Economics, Education, USA — Tags: , , , , , , — Nicholas @ 03:00

Severian is on a mini-vacation at the moment, but still managed to find time to share some thoughts about Turchin’s “overproduction of elites”:

University graduation – a large crowd of students at a graduation ceremony in Ottawa, Ontario. This was the thumbnail image used on the “Elite overproduction” Wikimedia page, which seemed quite appropriate.
Photo by Faustin Tuyambaze via Wikimedia Commons.

Let us consider “the overproduction of elites”. Those who love Peter Turchin’s work love this phrase, as it finally gives a name to a phenomenon we’ve all noticed: The creation, promotion, and indeed valorization of what would more properly be called social barnacles — they don’t move, can’t change, and eventually bring whatever they infest to a complete halt. Those who dislike his work often haven’t read it, so they object to the use of the word “elite” — again, these are social barnacles; what’s elite about them?

Which is precisely Turchin’s point — “elite” is a descriptor of their lifestyle, and most importantly their self-image; it is almost perfectly opposed to their actual utility. The modern Ed Biz is set up to do little else but produce these (pseudo) elites, and therefore a kind of Say’s Law takes hold. Say’s Law, you’ll recall, is vulgarly summarized as “Supply creates its own demand,” and that’s what we see with the (pseudo) elites churned out by every college in the land — they expect, indeed they demand, “jobs” commensurate with their “education”, and thus make-work “jobs” in the Apparat are brought into being.

They take out massive student loans to get the “jobs”; they “work” the “jobs” to service the debt, and so on.

But that’s true of most “white-collar” “jobs” these days. What separates the “elites”, in Turchin’s usage, from the rest of them is not their utility, or lack thereof — the economy, such as it is, would function just as well (or not) with far fewer lawyers, accountants, insurance adjusters, and so on. The difference, comrades, is what we must call Revolutionary Class Consciousness, stealing nationalizing socializing liberating a phrase from Lenin.

An accountant, I’d wager, views his work as a technical specialty. They’re “rude mechanicals” (that’s Shakespeare, darlin’; evidently Mr. Ringo is an educated man). Maybe not so “rude” — accountants make good scratch; they’re middle to upper-middle class, economically — but basically technicians. Accounting is a highly-trained, well-compensated job, but that’s all it is: A job. Accounting is what an accountant does; it’s not what an accountant IS. Contrast that to the overproduced “elites”, in Turchin’s sense, and you see what Turchin’s sense really means: An “elite” really IS his job title.

Note the shift: His job title. As we all know, so many of the overproduced “elite” do no meaningful work. How could they? We could easily do this for most any “job” in the Apparat, but one example will suffice. Consider “Journalist”. Formerly called “Reporter”, and back then it required some actual productive output. Some “shoe leather”, as the phrase was. To find out what they were up to at City Hall, you actually had to physically go down to City Hall and follow the Mayor around. These days — the days when Reporters are now Journalists — it’s just stenography. And not even real stenography, Claudine Gay-style stenography — the Mayor’s press secretary (who probably went to college with you) emails you a press release; you change a word or two and then reprint it, basically verbatim, under your byline.

A monkey could be trained to do it. Hell, a chatbot could be trained to do it, and that’s probably a good quick-and-dirty definition of a Turchin-style overproduced “elite”: If whatever “work” he does could easily be replaced by a chatbot, with no appreciable drop-off in either productivity or quality. Because that’s the key to understanding these people: They know damn good and well, at some almost-but-not-quite conscious level, that they’re social barnacles. That is the “base” upon which the “superstructure” — again stealing terms from Onkel Karl — of their Revolutionary Class Consciousness is built.

February 18, 2024

Indigo’s very bad third quarter may not be all bad news

Filed under: Books, Business, Cancon — Tags: — Nicholas @ 05:00

In the latest SHuSH newsletter, Ken Whyte discusses Indigo’s latest earnings report and points out a few things that may indicate better things to come if the firm continues its “refocus” on bookselling as its primary line of business:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

Indigo Books & Music last week reported its third quarter financial results, covering the months of October to December 2023. Because retailers make most of their money in advance of the holiday season, Indigo’s third quarter is its most important quarter — the one that makes or breaks the year. It wasn’t good.

Revenue for the three-month period was $371 million compared to $423 million in the same period last year. Net income for the quarter was $10 million compared to $34.3 million in the prior year. Given that the company had already lost more than $40 million in the first two quarters of the year and that its fourth quarter is traditionally soft, Indigo is looking at another annus horribilis come its March 31 year end.

After every quarter, Indigo’s CEO and CFO discuss the company’s results and take questions from shareholders on a conference call. I tuned in to this quarter’s call to hear company founder Heather Reisman, recently returned as CEO, admit that it was a “challenging” time for the business. She attributed the poor performance to the ongoing repercussions of last winter’s ransomware attack, overbuys of the wrong kind of general merchandise (non-book items such as dildos, blankets, and cheeseboards), and “the premature launch of our new e-commerce platform”.

Amid all the ugly results, I heard a few things that might strike anyone interested in the Canadian book publishing industry as positive.

You’ll remember that Heather spent a few months in the doghouse last summer after announcing a terrible fiscal 2023. She retired and then un-retired in September and, on her return, pledged to take SHuSH‘s advice, clear her shelves of the dildos and cheeseboards that represent half of Indigo’s business, and recommit to selling books. I wasn’t sure if she meant it or just wanted the business community to know she was up on SHuSH. Apparently she meant it.

On the call, she spoke at length of her “transformation plan” to “connect meaningfully with book lovers”. She apparently spent the autumn shrinking her general merchandise inventory — much of the poor financial performance was due to unloading it at steep discounts. In fact, if you back out the aggressive discounting of unwanted crap, Indigo’s recent holiday season hit a slightly higher level of profitability than the prior year. Heather meanwhile reinvested in book inventory, “consistent with our long-term brand mission to inspire reading”.

I was heartened by this, more so when it emerged on the call that there are sound business reasons for recommitting to books. The printed word turned out to be Indigo’s most resilient retail channel last year. It was down only 8 percent. General merchandise was down 18.5 percent. Heather thinks general merchandise was hit especially hard because the guy she’d hired to run the place in her absence didn’t have the right assortment in stores at Christmas. That may be true, but 18.5 percent is still a big drop.

The 8 percent decline in books looks okay in relation to the rest of Canada’s retail economy. Canadian Tire just announced its results from the last quarter of 2023 and revenue was down 17 percent across the board. That suggests books more than held their own in a weak environment.

It seems reasonable to expect that if Indigo follows through on Heather’s promise and refocuses its brand and its marketing efforts and its in-store experience on books and reading, the business has a future. It will take time, as she repeatedly reminded listeners on the call. There’s still a canopy bed in the middle of the company’s flagship bookstore in Ottawa.

February 9, 2024

You can’t pro-actively synergize action-oriented metrics in the heat of battle

Filed under: Bureaucracy, Business, Military, USA, Weapons — Tags: , , , — Nicholas @ 05:00

No, I’m not sure if that headline makes any sense, as I was never particularly receptive to the latest buzzwords of any given management fad that went through from the 70s onwards. They all seemed to share a few characteristics along with a bespoke sheaf of buzzwords, PowerPoint slides galore, and lots of spendy courses you had to send all your employees to endure. Is there anything more dispiriting to staff morale than a VP or director who’s just returned from a week-long training seminar in an exotic location on this year’s latest “revolutionary” “transformational” management fad?

It’s bad when companies that make widgets or smartphone apps or personal hygiene products fall for these scams, but it’s terrifying to discover that your military isn’t immune … and in fact revel in it:

Image from “Fads and Fashions in Management”, The European Business Review, 2015-07-20.
https://www.europeanbusinessreview.com/fads-and-fashions-in-management/

We spent these last few decades since the fall of the Soviet Union weaving a comfortable web of CONOPS and implemented “efficiencies” constructed of consultant-speak, weekend-MBA jargon, and green eyeshade easy-buttons bluffed from the podium by The Smartest People in the Room™ to an audience on balance populated by people who already had the short list of jobs they wanted once they shrugged off their uniform in a PCS cycle or two.

Agree, endorse, parrot, prepare …. profit!

War is New™!, Revolutionary™!, Transformational™!. Hard power is Offset™! If we change a bunch of simple words in to multi-syllabic cute acronyms … then the future will be ours, our budgets will be manageable, and our board seats will be secured! Efficiency to eleventy!

Facing the People’s Republic of China on the other side of the International Date Line … how efficient do you feel? How effective?

Something very predictable happened in our quarter century roadtrip on the way to Tomorrowland; we realized instead we wound up on Mr. Toad’s Wild Ride instead.

I would like the record to show here in 2QFY24 that this exact problem was discussed in detail back when I was a JO in the mid-1990. This is not shocking to anyone who is wearing the uniform of a GOFO. They lived the same history I did.

We knew we were living a lie that we could sustain a big fight at sea. An entire generation of Flag Officers led this lie in the open and ordered everyone else to smile through it. Ignore your professional instincts, and trust The Smartest People in the Room™.

Once again, Megan Eckstein brings it home;

    If U.S. military planners’ worst-case scenario arose in the Pacific — having to defend Taiwan from a Chinese invasion — American military forces would target Chinese amphibious ships.

    Without them, according to Mark Cancian, who ran a 2022 wargame for the Center for Strategic and International Studies that examined this exact scenario, China couldn’t invade the neighboring island.

    …

    U.S. submarines would “rapidly fire everything they have” at the multitude of targets, Cancian said, “using up torpedoes at a much, much higher rate than the U.S. has expected to do in the past.”

    Navy jets, too, would join in — but they’d run out of Long Range Anti-Ship Missiles within days, …

    It’s this nightmare scenario that’s driving the Navy to increase its stockpile of key munitions: the LRASM, the MK 48 heavyweight torpedo, the Standard Missile weapons and the Maritime Strike Tomahawk, among others.

Over a decade after the Pacific Pivot, a couple of years after the US Navy became the world’s second largest navy after being the worlds largest for living memory of 99% of Americans, and two years after the Russo-Ukrainian War reminded everyone that, yeah … 3-days wars usually aren’t.

And the defence industries of the 1980s and 90s have all swallowed up smaller competitors — again following “normal” business practices of the time, seeking economies of scale and manufacturing efficiencies and closing down less-profitable assembly lines or entire lines of business.

Let’s go back to SECDEF Perry’s 1990s “Last Supper”, you know, the one that was all about the efficiencies of consolidation of the defense industry.

Three decades later, what is the solution to the strategic risk we find ourselves in due to our inability to arm ourselves?

    … “the bottleneck is rocket motors” because so few companies are qualified to build them for the United States, Okano explained. To help, the Navy issued a handful of other transaction agreement contracts to small companies who will learn to build the Mk 72 booster and the Mk 104 dual-thrust rocket motor so prime contractors have more qualified vendors to work with, she added.

LOLOLOL … what “small companies?” That ecosystem is “old think”. If we need to go back to that structure, that will take decades not just to build, but decades of a viable demand signal.

Looks like we have started that as “small companies” perhaps repurpose part of their company to a military division. If we can just stop them from being gobbled up by the primes, it might be nice to return to a more robust, competitive ecosystem. Soviet-like consolidation and McNamaraesque efficiencies got us here, perhaps time to try something old as new again.

Nothing is less efficient to go to war with than a military designed for an efficient peace.

October 21, 2023

“… we’re not a business publication. One of them can point out that corporate governance is a joke in Canada”

Filed under: Books, Business, Cancon, Media — Tags: , — Nicholas @ 04:00

In the latest SHuSH newsletter, Ken Whyte reviews a recent BNN Bloomberg interview with Heather Reisman former-and-now-current-again CEO of Canada’s only big box book retailer, Indigo:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

Heather Reisman gave an interview to Amanda Lang of BNN Bloomberg last week, her first effort to explain a summer of screwball management at Canada’s only bricks-and-mortar book chain.

[…]

How did Heather explain the zany sequence of events that started with her reporting Indigo’s fourth massive annual loss in five years in May; saw her booted in June from her role as executive chairman of Indigo, the company she founded, by her husband and controlling shareholder, Gerry Schwartz, along with every member of the board of directors who wasn’t personally beholden to Gerry; saw her spin her exit as a personal life-stages choice (“deciding when it is time to move on is one of the toughest decisions a founder must make”); saw her hand-picked successor and CEO, long-time British clothing retailer Peter Ruis, grab a seven-figure payout and make his own exit in September; saw the company announce that it would “act swiftly to find the right leader to move the company forward following Peter’s resignation”; saw Heather reinstated at the head of the chain two weeks later?

She didn’t. How could anyone explain that?

Heather bullshitted her way through the interview. It was all Ruis’s fault, she told Amanda. Indigo “took a journey off brand” under Ruis. She’d put him in charge of a book chain and “suddenly I was hearing that we were getting famous for selling $550 barbecues,” she said. “Somehow vibrators turned up in our stores and I remember saying ‘no, that’s not who we are.'” Ruis had “lost sight of … what our commitment is to customers.” He was “taking the business in the wrong direction” and it was showing up in the financials.

Heather claimed she’d been powerless to stop Ruis: “I was gone formally for over a year and informally for two and a half years in the sense that I was pulling back and not able to influence things.”

I scarcely know where to start. We could talk about the breathtaking ease with which Heather presented herself as a victim of Ruis while running him over with a forklift. How she hired a career fashion retailer to run what most Canadians still understand as a book chain and complained that he took the business off brand. How his barbecues and dildo merchandising was a logical extension of the cheeseboards and blankets merchandising she’d been doing for a decade.

If we were a serious business publication, we’d have to talk about her supposed powerlessness to do anything about the dildo-happy Ruis. The people who run public companies have duties to their shareholders, one of which is to keep them informed—promptly, honestly, transparently—about the management of the business. If Heather was gone “formally for over a year” and “informally for two and a half years,” investors should have known, right?

Let’s start with “formally for over a year.” Heather is referring to the most recent period of September 2022 to August 2023 during which Barbecue Boy was CEO of the company. Was Heather gone?

She was no longer CEO, a title she’d held for a quarter century, but according to corporate records she remained executive chairman of Indigo during that time, drawing an annual salary of almost a million. Titles matter in public companies. The difference between an executive chairman and a run-of-the-mill chairman is that the former is recognized as having an active role in the operations of the business, hence the executive-level salary. Executive chairman is higher on the org chart than CEO. If the company was moving off brand, betraying its customers, she was the one person with the formal role and the moral authority, as founder, to send the “four hours of fun” Firefighter Vibrator from Smile Makers ($75.00) back to the warehouse. Either Heather misspoke to Amanda last week about being “gone” or she spent her last year at Indigo misrepresenting herself to her shareholders and drawing a salary under false pretenses.

September 24, 2023

A sliver of hope for Indigo?

Filed under: Books, Business, Cancon — Tags: , , , — Nicholas @ 03:00

In the latest SHuSH newsletter, Ken Whyte relays some new-ish rumours in the book business that may provide a bit of help for the struggling Indigo chain:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

So what do we make of Heather Reisman’s return as CEO of the Indigo bookselling chain after her unceremonious removal from that role just two months ago?

The short answer is I have no idea, but SHuSH has never shied away from delivering irresponsible speculation on happenings at Indigo. I heard this week from a reasonably reliable source that Indigo is in discussions with Elliott Management Corp., owners of Barnes & Noble and the world’s only buyer of distressed bookselling chains.

This conflicts with some chatter I reported last spring suggesting that Elliott Management was uninterested in Indigo. If what I’m now hearing is true, it’s great news.

I have to emphasize, I have no idea. But if a deal were imminent, it would make sense to bring Heather back to see it through. Indigo wouldn’t want the bother of recruiting a new leader simply to effect the handover, and who would want the job on those terms?

And another thing …

In last week’s piece about Indigo, I noted that the company’s staff, “with exceptions, were young, inexpert, and disinterested”. Amal, clearly one of the exceptions, left an interesting comment:

    No. We became disinterested simply because a) we were all book lovers and had zero interest in selling crap and b) just like the author of this piece, head office and management were beyond dismissive of our knowledge, our book expertise, our genuine love of the written word. I worked at Chapters/Indigo starting in 2006 all the way until 2019, a couple of days a week, simply for my love of books. I am incredibly proud of my time there — especially when I was able to introduce new authors or genres to readers. My staff picks would sell out because I would hand sell them to people with my joy. It certainly wasn’t for the stellar pay or the people who treat retail employees like we are “inexpert”. Fun fact: you were asked in the job interview what your favourite books/genres were.

September 17, 2023

Why Indigo’s struggles are far from over

Filed under: Books, Business, Cancon — Tags: , , , , — Nicholas @ 03:00

Following up from last week, in this week’s SHuSH newsletter Ken Whyte explains why Indigo went in the direction it chose and why it seemed like the thing to do at that time:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

Bookselling is a difficult business and it’s been especially difficult over the last twenty years. The Internet captured a lot of the used book business and shifted it online. Amazon captured a lot of the new book business and shifted it online (and bought Abebooks.com, one of the largest used book sites).

Former Indigo CEO Heather Reisman tried and failed to convince the federal government to keep Amazon south of the border back around 2002. She went so far as to sue the feds on the grounds that Amazon, as a cultural entity, was not majority-owned by Canadians and therefore operating in contravention of the Investment Canada Act. The suit went nowhere because Amazon then had no physical presence in Canada; it operated primarily through Canada Post. By the time Amazon did announce its intention to build a warehouse north of the border, early in 2010, the government had given up enforcing the Investment Canada Act. It was happy to have Amazon create new jobs.

It was when Amazon opened its Canadian warehouse that Heather began backing Indigo out of the book business. She cursed Amazon for its anticompetitive practices, not least its habit of selling books below cost to destroy competitors, and adopted the term “cultural department store” as a pivot from bookstores.

I’ve made it clear in newsletter after newsletter that I don’t like the direction Heather took Indigo but it’s only fair to look back at prevailing circumstances in 2010 and wonder if she really had a choice.

I’m sure she had stacks of research and hordes of people telling her that abandoning books was the only move. Attempting to compete with Amazon’s enormous scale and superior logistics would have struck many as a fool’s errand. Amazon would always have the largest selection, the best price, and the fastest delivery.

There was also a widespread belief that print was dead. E-books, e-readers, and tablets were the future, along with the “one very, very, very large single text“. Global e-reader sales were growing like this:

They were expected to keep growing. So were sales of e-books. In 2012, the Financial Post quoted data from Indigo predicting that e-books would capture 50 percent of the market in five years.

So, having played the Canadian Nationalist card and discovering that the government was willing to bluster but not to meaningfully act, Heather Reisman took the advice of her consultants and diversified away from books and into all the utter crap that currently befoul at least half of the retail space in every Indigo store. After all, the big box bookstores in the United States were clearly failing in the face of Amazon, with Borders filing for bankruptcy and Barnes & Noble staggering in the same direction. From 1999 to 2019, fully half of all the bookstores in the country disappeared.

The story isn’t as bleak as it looked in 2019, as Barnes & Noble is staging quite a comeback by concentrating on the book business. It’s a radical move, but Indigo could do far worse than cooking up a maple-flavoured version of the Barnes & Noble strategy. It might fail, but they’ll definitely fail if they keep on pretending to be a department gift store that also has a few books.

September 10, 2023

Indigo today … Indigone tomorrow?

Filed under: Books, Business, Cancon — Tags: , , , — Nicholas @ 03:00

In the latest SHuSH newsletter, Ken Whyte discusses the financial woes of Canada’s quasi-monopoly book chain, Indigo after a series of misfortunes:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

As we reported in SHuSH 197 and SHuSH 203, Indigo posted a ruinous 2023 (its fiscal year ends March 30), losing $50 million. That came on the heels of more than $270 million in losses the previous four years. The company’s share price, as high as $20 in 2018, has been floating around $1.30 this summer.

That dismal performance spelled the end of founding CEO Heather Reisman’s leadership at the chain. In June, her husband, Onex billionaire Gerry Schwartz, who has been Indigo’s controlling shareholder and chief financial backstop since the company’s launch in 1997, took the reins and elbowed Heather into the ditch along with almost every member of the board of directors who wasn’t beholden to Gerry personally.

The only non-Gerry director to survive was CEO Peter Ruis.

As I said at the time, Peter Ruis, “a career fashion retailer who landed in this jackpot from England two years ago”, is either “polishing his resume as we speak or negotiating a massive retention bonus to stick around and wield an axe on Gerry’s behalf. My money is on polishing.”

[…]

Meanwhile, I’m hearing that everyone in the publishing industry is being slammed with returns. Publishers usually get a lot of books back from retailers in the first quarter of the year as stores send back unsold inventory from the holiday season. This year, the returns were slower to start, probably because of Indigo’s cyberattack last fall, but they have kept coming right through the second and third quarters. This is coupled with lighter than usual buying for the fall.

The firm’s releases continue to claim that Indigo will keep books at its core, even as it loads its shelves with brass cutlery, dildos, and pizza ovens. According to Google, the core of an apple represents 25 percent of its weight. Books are now less than 50% of Indigone, suggesting more returns and light orders to come.

One final note. I corresponded this morning with a giant of Canadian businessman who has no special insight into the Indigo situation although he’s kept up with the news and, like everyone in Toronto commercial circles, he’s familiar with the Schwartz-Reismans.

He wonders just how involved Gerry is with Indigo these days. Apparently his health is not good. And while he’s still the lead shareholder at Onex, he’s no longer CEO and may not have access to the hordes of ultra-bright hirelings and menials that have long surrounded him.

My friend writes: “My guess is that suppliers are going to start to halt shipping and that a financial crisis is imminent, despite [Gerry’s] line of credit. But I don’t know anything.”

August 26, 2023

“Email jobs”, as defined by Freddie deBoer

Filed under: Bureaucracy, Business, Government, USA — Tags: , , , — Nicholas @ 04:00

Freddie deBoer offers some notes on what he calls “a book I’ll probably never write”:

When I talk to people about college-educated workers, even informed people, there’s a constant tendency to immediately think of doctors, lawyers, engineers, data scientists … Reflexively, people seem to think of educated labor in terms of college graduates who a) tend to go on to some sort of graduate study, b) work in fields that directly utilize domain-specific knowledge from their majors or graduate education, and c) are generally high-income relative to the economy writ large. These professions, combined, are a healthy slice of our labor force, and there’s nothing wrong with paying an appropriate amount of attention to them. But I think the amount of attention they’re given in the educational and economic discourse is in fact disproportionate. And I also think that there’s a kind of profession that is intuitively very understandable but which (despite considerable effort on my part) remains very difficult to classify and thus to quantify. Though it has many names, I think my preferred term is “email job”.

[…]

To me, prototypical email jobs

  • Depend, naturally, on email and other digital communicative tools like video conferencing, online calendars, and networked workspaces for the large majority of their actual productive capability
  • Are staffed almost entirely by people with college degrees, but while they do take advantage of time management and organizational skills that can be developed in college, almost never call on domain-specific knowledge related to a particular major
  • Dedicate a considerable amount of time not to the named productive goals of the job themselves but to meta-tasks that are meant to facilitate those goals (scheduling, coordinating, assigning responsibility, “touching base”, enhancing productivity, ensuring compliance with various HR-mediated job requirements and odd whims of the boss)
  • Have no immediate observable impact on the material world; an email job might involve coordinating or supporting or assessing a project that will eventually move some atoms around, but the email job itself results only in the manipulation of bits
  • Cannot be considered creative in any meaningful sense — they do not entail the production of new stories, scripts, code, images, video, blueprints, patents, research papers, etc — but may involve the creation of materials that are subsidiary to larger administrative goals, such as PowerPoint presentations, reports, postmortems, or white papers
  • May or may not be partially or fully remote but could likely be performed fully remotely/on a “work from home” basis without issue
  • Can involve supervising lower-level workers, even teams, but these positions are not themselves fundamentally supervisory and the holder of an email job is rarely the only “report” for anyone; these positions, in other words, are not executive or executive-track, though some may escape the email job track and gain entry to the executive track
  • Tend to top out at middle management, and often have a salary range (with a great deal of wiggle) between $50,000 and $200,000/year.

Doctors do not have email jobs because the human bodies they treat exist in the world of atoms, not the world of bits, and their work involves domain-specific knowledge. There are some lawyers who are effectively in email jobs, as their law credentials are used for hiring purposes but their actual task is handling particular kinds of paperwork that a non-lawyer could complete, but most lawyers are not in email jobs as their work involves various functions at courthouses and otherwise away from the computer, and anyway their work too involves domain-specific knowledge. Most accountants and actuaries are not in email jobs as their jobs require domain-specific knowledge that they acquired in formal education. Architects create new things that will someday exist in the world of atoms and utilize domain-specific knowledge they learned in college. Programmers take advantage of skills gained in college to create new things that exist for their own purpose, rather than to satisfy other administrative functions. Professors don’t have email jobs, even those who work at online colleges, as working with students takes place in the world of atoms and they are constantly accessing domain-specific knowledge they learned in formal education. Screenwriters create something new; engineers move atoms and usually get graduate degrees; CEOs don’t have email jobs because they’re on the executive track and enjoy the ability to delegate most of the email work to subordinates. I could go on.

So who does have an email job? Take someone who works in accreditation at a college in a large public university system. He or she didn’t get a major in accreditation (there is no such major) and is unlikely to have majored in education, and even if they did they would have learned about pedagogy and “theory” and assessment rather than anything having to do with their daily work lives. Essentially everything they do for work takes place within the confines of their laptop screen, and the exception is various in-person meetings that accomplish nothing beyond delegating various tasks, defining roles, critiquing past performance, and otherwise reflecting on how to do a better job of supporting the tasks that other people do. A person in this job might have a secretary or lower-level administrative functionary that reports to them, but they are not on a track that makes advancement likely — becoming a VP somewhere will likely require many years of service and going on the job market to get a job at another school. A person in this position will never interact with students in any real capacity, demonstrating the psychic distance between email jobs and the actual function of their institutions. Though they have a clear and defined set of responsibilities written into their job description, their overall impact on the day-to-day functioning of their college is nebulous, and far more time is spent on administrivia than their “real” duties. They live between the 50th and 75th percentile for individual income in their state.

August 12, 2023

QotD: Scientific management and the work-to-rule reaction

Filed under: Bureaucracy, Business, Government, History, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

Scientific management, a.k.a. “Taylorism”, was all the rage around the turn of the 20th century. At its crudest (and I’m only exaggerating a little), you’ve got some dork with a stopwatch and a camera standing behind you while you do your job, and after some observations and a little math, the dork tells you you’re pulling the lever wrong. There’s a scientifically optimized way to pull that lever, one that shaves 0.6 seconds off each of your work “processes”, and henceforth you shall be required to do this exact sequence of steps, every time … and if you disagree, too bad, why do you hate science? Similar regulations follow, until the whole plant is “scientifically” optimized.

And since this is the great age of “Progress”, you’ve got umpteen government regulations to deal with now, too. And then as now, the august personages in Congress wouldn’t dream of soiling even their shoes, let alone their hands, by going anywhere near anyplace labor is actually performed, so all these regulations have been promulgated ex cathedra. Suddenly the straightforward, mindless job of lever-pulling — the one that was already so insulting to the human spirit, so “alienating”, as Marx put it, something to be endured because one has no choice — is bound up with reams of regulations, too. If you don’t like it, build your own factory.

But in this, the workers saw opportunity. You’re going to tell me how to do my job? Fine, but you’d better tell me how to do all of it. Is there anything the Policies and Procedures manual leaves unexplained? Where to place my feet as I stand in front of the lever, for example? I’d better not do anything until the manager tells me exactly what to do, in writing, in a fully-vetted update to the P&P, and have you run that by Compliance, sir? Perhaps the lawyers in the Environmental Division should take a gander, too, since who knows what might contribute to Global Warm … errrrr, whatever, you get the point. It turns out that even back then, when there was no such thing as OSHA or the EPA or the rest of the Federal alphabet soup, the “scientific managers”, let alone Congress, simply weren’t able to envision the nuances of everyone’s day-to-day job. Or, for that matter, the very basics of everyone’s job. Work ground to a halt because everyone was following the rules.

Severian, “A History Lesson”, Rotten Chestnuts, 2021-01-14.

July 28, 2023

QotD: “Stakeholder” Capitalism

Filed under: Business, Economics, Politics, Quotations, USA — Tags: , , , , , , — Nicholas @ 01:00

Like many things faddish and ephemeral — disco, Pet Rocks, feathered hair, taking Michel Foucault seriously as an intellectual — the 1970s gave birth to the concept of stakeholder capitalism, one of the most unfortunate yet enduring of the bad ideas that polyester decade bequeathed us. At its essence, stakeholder capitalism is Marxian capitalism run through a lens of business ethics. It is the attempt to maintain authoritarian control over capitalism by displacing the Invisible Hand with a Velvet Glove, then using that glove, which hides an iron fist, to pound the world into adopting values that both assert and maintain its worldview. It is Theory applied to markets, marketing, wealth creation and management, and an overall globalized ethos of required and policed “virtue”, with the end goal being — as it always is under the discourses of Cultural Marxist thought — power: who has it, who controls it, and who uses it for their own ends most effectively and ruthlessly.

Of course, nobody participating in the push to replace shareholder capitalism with stakeholder capitalism would describe it this way. But then, euphemism and branding are each crucial tools in the Marxist’s verbal toolbox. So when you ask a stakeholder capitalist to describe stakeholder capitalism, what you ordinarily hear is that, as a business ethic, it combines the “sustainability” shareholder capitalism supposedly lacks with the “inclusivity” we’re not supposed to recognize is merely stultifying, policed conformity, the yield being a Woke capitalism that replaces production and consumption with “sharing and caring,” taking it out of the realm of the invisible and mechanical, as Adam Smith would have it, and placing it into the realm of values, where it can be used to shape the Greater Good the Marxist pretends he cares about. It’s fascism with a smiley face.

In the stakeholder capitalist system, investors aren’t — or at least, they shouldn’t be — solely interested in profits driven by production and consumption. And this is because to the stakeholder capitalist, itself a euphemism for collectivist corporatist, “it is well proven that our current form of Capitalism is inherently unsustainable because it requires endless growth on a planet with finite resources.”

Of course, none of this is “well proven” — the history of shareholder capitalism suggests the opposite, in fact, as innovation has led to the production of more and more out of less and less — but whether this is or isn’t the material case is incidental to those who are working on this inorganic worldwide paradigm shift commonly known as The Great Reset.

Because the move toward a “caring and sharing” worldwide economy, especially one that we’re told will be both sustainable and inclusive, requires those who care, those who share, and — most importantly, and at the very heart of the turn — those who get to determine what is cared about, who must do the sharing, and how most effectively to police the excesses that the ruling elite determine aren’t sustainable, while slowly dissolving the idea of the individual and his will to make way for an inclusive collective required to run the machinery of the self-installed Elect. It’s a global system of neo-Feudalism dressed in the finery of familiar values that have been deconstructed and re-signified, often without their consumers even aware that the values they reference — which were once commonly understood and largely shared by the civil society — are now their precise inverse: “tolerance”, thus, becomes the violent rejection of intolerance, as they define it; free speech is separated from “hate speech”, as they adjudicate it; individualism is but a controlling fiction maintained by the white male power structure that must be replaced by an ordered and value-determined collection of identity markers that construct you, while simultaneously acknowledging that there is no “you” beyond this assembly of discourses that assign your being its social situatedness, then places you within a collective of those with similar — though never identical — constructions. Once here, you are graded on the intersectional scale. Your relative worth and power come down to not to the content of your character, but rather to the collection and arrangement of your victimization tokens.

Jeff Goldstein, “Maybe I’ll be there to shake your hand, maybe I’ll be there to stakeholder capitalist the land”, protein wisdom reborn!, 2023-04-26.

July 22, 2023

QotD: “Managing” your way to victory

Filed under: Bureaucracy, History, Military, Quotations, USA — Tags: , , , — Nicholas @ 01:00

Some of the greatest victories of all time were managed by ad hoc organization that, like Topsy, just “growed“ from 1939 to 1945, as Churchill and Roosevelt searched for ways to operate a grand, strategic alliance fighting against formidable enemies, while the postwar fascination with process, led in large part by US Defence Secretary (1961-68) Robert S. McNamara, contributed, I believe, in a major way to the strategic and military debacle that was the Vietnam War (1955-75) when data began to replace tactics, and management theory, coupled with complex organization charts, replaced military acumen and strategic vision.

There is nothing wrong with good, sound management and management theory and management science (and, yes, I believe there actually is a such a thing) have much to teach us all, including governments and the military, about how to get the most from one’s always limited resources, especially time. But, too often, in my opinion, management becomes an end in itself and process replaces critical thinking and analysis. When this happens in both the political/bureaucratic and in the military realms, as I believe it has in Canada (which has tended, since about 1970, to follow the USA almost slavishly) then I believe that our national defence is in peril.

It is common, amongst military people, to accept that there is a “master principle of war”: Selection and Maintenance of the Aim. That means that one MUST understand what one is trying to do and then focus all one’s efforts on getting that done. The corollary is that if you don’t know what you need to be doing then getting the results you want (need) is unlikely. I believe that the Canadian Armed Forces lack good strategic direction because the Government of Canada, the Trudeau government, is unconcerned with anything past the next election. I also believe that the military leadership, lacking strategic direction, simply follows whatever new process seems to be popular in the Pentagon. Canadians, therefore, are not getting value for money from either the government they elected nor from the military forces for which they pay.

Ted Campbell, “Following the blind leader (3)”, Ted Campbell’s Point of View, 2019-05-21.

July 2, 2023

QotD: Processes for fighting the last war

Filed under: Bureaucracy, History, Military, Quotations, USA — Tags: , , — Nicholas @ 01:00

I don’t have a full-blown prescription for reform, but what I am sure is needed is a greater focus on basics, on principles, and less focus on the “flavour of the month”. Counter-insurgency — the topic that preoccupied Richard Holbrooke for much of his career — is a good example. It used to be understood that every insurgency was different; what may have worked in Malaya would not work in Indo-China because the insurgents were fighting for different reasons and in different ways and the lessons learned in Indo-China and Vietnam, and many were, would not be readily applied in Nicaragua or Yemen because, once again, the problem was different and none of the “solutions” from Malaya through to the First Gulf War would work in Afghanistan … but generals kept offering “the answer”, even when experience said that every single answer was wrong. There are a few well-tested principles for peacekeeping and low-intensity operations and peace-making and counterinsurgency but there is no “right way”, no process that works and can be taught on a six-week course. Canadian generals need to move all the “process” books to the bottom shelf of the bookcase and put the handful of “principles” books back on top. Ditto for all aspects of training; the tactics that worked in the Gulf War or Grenada are not going to work against China or Russia, and what we expected would “work” against a large, modern, well-equipped enemy in 1969 is unlikely to work against a large, well-equipped enemy now, a half-century later … even if some of the equipment looks almost the same.

The same applies to “cyber” or “information warfare”; there is no doubt that technology has changed the so-called “battlespace”, making it bigger and more complex by, in effect, adding an invisible dimension. We have been conducting “information operations” for decades, even millennia — I would argue that at the end of the Third Servile War (73-72 BCE) when Marcus Licinius Crassus crucified 6,000 of Spartacus’ followers on the Appian Way (it is not clear if Spartacus, himself was among them) that it was psychological warfare which is either a subset of or a near relation to information warfare. But the tools have changed and with them, tactics need to change, too, but some principles will remain as they were 2,000 years ago, or 100 years ago (the Zimmerman Telegram) or 75 years ago (Turing, the Enigma machine and Bletchley Manor).

Ted Campbell, “Following the blind leader (3)”, Ted Campbell’s Point of View, 2019-05-21.

June 12, 2023

“The more recent four or five years at Indigo have been a disastrophe”

Filed under: Books, Business, Cancon — Tags: , , , , — Nicholas @ 03:00

In the latest SHuSH newsletter, Ken Whyte outlines the rise and fall of Canada’s biggest bookstore chain that stopped trying to be a bookstore chain and now appears to be looking for a new identity to assume in the wake of several board resignations and the announced resignation of Heather Reisman, the founder and public face of the chain:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

Indigo opened its first bookstore in Burlington in 1997 and quickly expanded across the country in competition with the Chapters chain, which it bought in 2001. Heather’s husband, Gerry Schwartz, provided much of the financing in these years. Gerry is the controlling shareholder of Onex, a private equity firm that now has about $50 billion in assets under management.

Influential in Ottawa, the Schwartz-Reismans managed to convince the federal government to approve Indigo’s purchase of Chapters and also keep the US book chain Borders from moving north into Canada — a double play that cleared the field of meaningful competition and wouldn’t have happened in a country with serious antitrust enforcement.

Heather, as Indigo CEO, cast herself as the queen of Canadian literature, making personal selections of books to her customers, hosting book launches, interviewing celebrity authors, etc.

From a financial perspective, Indigo took about five years to get rolling after the Chapters acquisition. It looked steady through the late aughts and into the teens when Amazon showed up in force. Indigo’s share price caved. Unable to convince Ottawa to push Amazon back across the border, Heather adopted a new strategy, backing out of books and recasting Indigo as a general merchandiser selling cheeseboards, candles, blankets, and a lot of other crap to thirtyish women. “We built a wonderful connection with our customers in the book business,” she famously said. “Then, organically, certain products became less relevant and others were opportunities.” This charmed investors, if not the book community, and Indigo’s share price hit a high of $20 a share in 2018. By then, books, as a share of revenue, had fallen from 80 percent of revenue to below 60 percent (they are now 46 percent).

The more recent four or five years at Indigo have been a disastrophe. With its eighty-eight superstores and eighty-five small-format stores, the company lost $37 million in 2019, $185 million in 2020, and $57 million in 2021. Things looked somewhat better in 2022 with a $3 million profit, but its first three quarters of 2023 (Indigo has a March 28 year-end) resulted in an $8 million loss and its fourth quarter featured one of the most spectacular cyberhacks in Canadian commercial history. The company’s website was breached and its employment records held for ransom, resulting in a ten-day blackout for all of the company’s payment systems and a month-long outage in online sales. The share price is now $2.00 or one tenth the 2018 high.

ANALYSIS AND IRRESPONSIBLE SPECULATION

Given everything Indigo has been through over the last several years, and especially the last several months, it’s not surprising that Heather wants to pack it in. She’s seventy-four and super wealthy. There’s nothing but a desperately hard slog ahead for her money-losing company. Why stay?

Still, this has the feel of something that blew up at a board meeting, or in advance of a board meeting. It’s highly irregular for a company to lose almost half its directors in a single day. If these changes had been approached in conventional fashion, there would have been more in the way of messaging and positioning, especially regarding Heather. For all intents and purposes, she is Indigo. It wouldn’t exist without her. They ought to be throwing her a retirement parade and presenting her with a golden cheeseboard. Instead, all she’s getting, for now, are a few cliches in a terse press release.

It’s also weird that this all happened days before we get the company’s year-end results (they were out by this time last year). My guess is that the board got a preview, that the picture is ugly, that there are big changes afoot, and that the directors were nudged out as the start of a major retrenchment or given the option of sticking around for a bloodbath and chose instead to exit.

June 9, 2023

Putting an end to “stakeholder” capitalism

Filed under: Business, Economics, Media, Politics, USA — Tags: , , , , , , , — Nicholas @ 03:00

The Streetwise Professor explains what “stakeholder capitalism” is and why it needs to be staked through the heart to save western economies:

A graphic from Wikipedia showing typical internal and external stakeholders.

At its root, stakeholder capitalism represents a rejection – and usually an explicit one – of shareholder wealth maximization as the sole objective and duty of a corporation’s management. Instead, managers are empowered and encouraged to pursue a variety of agendas that do not promote and are usually inimical to maximizing value to shareholders. These agendas are usually broadly social in nature intended to benefit various non-shareholder groups, some of which may be very narrow (transsexuals) or others which may be all encompassing (all inhabitants of planet earth, human and non-human).

This system, such as it is, founders on two very fundamental problems: the Knowledge Problem and Agency problems.

The Knowledge Problem is that no single agent possesses the information required to achieve any goal – even if universally accepted. For example, even if reducing the risk of global temperature increases was broadly agreed upon as a goal, the information required to determine how to do so efficiently is vast as to be unknowable. What are the benefits of a reduction in global temperature by X degrees? The whole panic about global warming stems from its alleged impact on every aspect of life on earth – who can possibly understand anything so complex? And there are trade-offs: reducing temperature involves cost. The cost varies by the mix of measures adopted – the number of components of the mix is also vast, and evaluating costs is again beyond the capabilities of any human, no matter how smart, how informed, and how lavishly equipped with computational power. (Daron Acemoğlu, take heed).

[…]

Agency problems exist when due to information asymmetries or other considerations, agents may act in their own interests and to the detriment of the interests of their principals. In a simple example, the owner of a QuickieMart may not be able to monitor whether his late-shift employee is sufficiently diligent in preventing shoplifting, or exerts appropriate effort in cleaning the restrooms and so on. In the corporate world, the agency problem is one of incentives. The executives of a corporation with myriad shareholders may have considerable freedom to pursue their own interests using the shareholders’ money because any individual shareholder has little incentive to monitor and police the manager: other shareholders benefit from, and thus can free ride on, any individual’s efforts. So managers can, and often do, get away with extravagant waste of the resources owned by others placed in their control.

This agency problem is one of the costs of public corporations with diffuse ownership: this form of organization survives because the benefits of diversification (i.e., better allocation of risk) outweigh these costs. But agency costs exist, and increasing the scope of managerial discretion to, say, saving the world or achieving social justice inevitably increases these costs: with such increased scope, executives have more ways to waste shareholder wealth – and may even get rewarded for it through, say, glowing publicity and other non-pecuniary rewards (like ego gratification – “Look! I’m saving the world! Aren’t I wonderful?”)

H/T to Tim Worstall for the link.

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