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    I am now using this blog to re-post some comments I make other blogs. For my full management blog see the Curious Cat Management Blog

    Sunday, November 02, 2014

    Managing the Organization as a System with Many Stakeholders

    Comments on "Deming’s thinking is alive and well…in China! That's why those looking for evidence of Profound Knowledge in the US may be looking in the wrong place." (my response is to a discussion on The W. Edwards Deming Institute LinkedIn group - I can't link to the original comment because it is a private forum)

    
(Jack Ma) If you want to invest in us, we believe customer number one, employee number two, shareholder number three. If they don't want to buy that, that's fine. If they regret, they can sell us. 


    (Lara Logan) In the U.S., the shareholder is usually first.


    (Jack Ma:) Yeah. And I think they were wrong. The shareholder, good. I respect them. But they're the third. Because you've take care of the customer, take care of the employees, shareholder will be taken care of.“

    Deming couldn't have said it better. And it illustrates why he often insisted that the CEO, who invited and introduced him to his staff, actually stay and listen.
    The problems are real. But there is a significant minority of companies that don't accept the Wall Street conventions. There are very few companies that don't allow CEOs to steal from the corporate treasuries - through completely unjustifiable "pay" packages (but there are some - Berkshire Hathaway, Costco and I believe Bezos, Larry Page and Sergy Brin also don't behave like kleptocrats).

    But I can't include Google and a company that doesn't let those with power take the companies gold, senior executives have taken ludicrous pay including past CEO Eric Schmidt. I must say I think Schmidt has done an excellent job at Google (the lame decisions by Larry Page only make it more obvious) but even so his pay was insane.

    If you look at Google and Amazon they both also refuse to bow to the idea that their job is to please wall street analysts. A fair amount of the interest business companies in the last 15 years don't place much faith in wall street "wisdom."

    Google from their start with their IPO didn't accept wall street dictates. They are actually moving to become much more conventional, ever since Larry Page became CEO. The new non-voting class stock they created GOOG (GOOGL is the stock that has actual ownership voting rights) could be seen as fighting wall street convention or could just be seen as founders greedily setting up the rules so they control no matter what.

    Jeff Bezos is a former Wall Street analyst and knows the games and what matters. If your business NEEDS to get cash from Wall Street - raising equity or bonds you might have to listen some. Otherwise the talking heads regurgitating wall street dictates are entirely pointless. While Amazon has very little profit, the cash flow situation is much better (Bezos doesn't need to raise capital and therefore what wall street says just doesn't matter and he is smart enough to know that unlike the majority of CEOs that do as Wall Street wishes).

    But even the companies that are doing some things very well (Google, Amazon, Apple...) have a very long way to go in learning about managing organizations. But those companies have some aspects of they are doing very well.

    "At Berkshire, managers can focus on running their businesses: They are not subjected to meetings at headquarters nor financing worries nor Wall Street harassment."
    - Warren Buffett

    Related: Google is Diluting Shareholder Equity with Massive Issuing of New Shares - Amazon Innovation

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