Building Better Automation Companies

by Gary Mintchell | Dec 21, 2010 | Automation

I spent several years early in my career in product development. It was good training for many things. First, I learned much about engineering documentation procedures. And about working with marketing and customers to develop products that people might actually use. It’s also where I first learned to sell–by selling the sales department on why our products were better than others.

Recently I’ve had the opportunity to interview some men who have changed the automation industry by building some first-rate organizations (although the jury is still out on one of them). The consistent thing I learned, something that reinforced everything I had been taught and practiced for years, was the importance of building teams. Intelligent team building around acquisitions or product development is one of the key elements of success.

Google, Yahoo and Facebook have all been in the news recently for a variety of reasons. I’d like to tie a number of threads around success or failure to properly combine teams from old and new–or within various departments or disciplines.

Yahoo stumbles!

Yahoo has had a significant vision problem. It can’t seem to figure out what it wants to be. Current CEO Carol Bartz has taken lumps for failing to have an “elevator pitch” about what the company is. While laying off several hundred people last week, some slides were leaked showing that the company planned to shutter at least one popular service (social Web page bookmarking site Delicious) along with many others. An uproar ensued.

How does Yahoo stand up to the team-building test? Here are some quotes lifted from TechCrunch.

Neil Kandalgaonkar, a former engineer at Upcoming writes: If they were supposed to revitalize Yahoo, they weren’t treated that way. They weren’t all combined into any one thing, even though they all relied on social networking and shared the same kind of userbase. Instead they were parcelled out to different parts of Yahoo where they were subordinate to the existing hierarchy and agenda. (Flickr was the exception though, in that they carved out a separate role for themselves, and absorbed Yahoo Photos rather than the other way around.) Arguably the Upcoming acquisition is the only one that “revitalized” anything as Leonard Lin made it his mission to work on Yahoo’s culture.

But others counter that Flickr isn’t as independent as one would think and faced administrative obstacles from Yahoo. Longtime Flickr engineer, Kellan Elliott-McCrea (who now works at Etsy), wrote that from his conversations 15% of the large projects they the Flickr team “tackled over the last few years (internationalization, video, various growth strategies, etc) went into building the feature, whereas 85% of the time was spent negotiating and dealing with Yahoo.

Elliott-McCrea writes: I recently pulled up a worklog I was keeping in 2008-2009, and I found 18 meetings scheduled over a 9 month period discussing why Flickr’s API was poorly designed and when we’d be shutting it down and migrating it to the YOS Web Services Standard.

As for bookmarking service Delicious, Dave Dash, former Yahoo engineer for the product writes, Yahoo! lacks vision. It had Delicious for years, but didn’t properly place it in its eco-system. It ignored the founder for the most part, and switched the management team above it repeatedly.

Facebook and Google the new evil?

Meanwhile, Google is famous for allowing its engineers to devote 20% of their time on projects with no apparent utility. This is a great engineering culture and can lead to many cool things. On the other hand, Google seems to throw many of these experiments out into the world without the discipline of product management. So products (always in beta) seem to come and go. A few have stayed (gmail, docs) but many have languished or disappeared.

Many of us wonder if Facebook is the new evil. It seems to keep changing things that are less favorable to users, but more favorable to gleaning information to sell to advertisers and spammers, er, email marketers. It has had several missteps where it had to retract changes that just sort of appeared.

An explanation of this behavior comes by way of serial entrepreneur and angel investor Jason Calacanis. The conversation he reports with a Facebook engineer reveals the same developer-oriented culture that lacks discipline. This can work when you’re small. But when hundreds of millions of users are accustomed to your product, things can and do go awry. Here’s an excerpt from Calacanis’ email to subscribers:

“Can I ask you a question then?” I said.

“Sure,” said Bob.

“All these privacy issues I’ve brought up in my newsletter, you know, all these examples of users getting screwed for lack of a better word, were these designed with bad intent?” I asked.

“Actually, no… we just didn’t have any oversight or process in the early days, and we were encouraged by Zuckerberg to just push changes to the site,” Bob said.

“Can I get an example of that?” I asked.

“Sure. Photos was built by two people in a couple of days, and they just pushed their changes to the site without showing it to anyone. Zuck encouraged us to just push changes and not worry about it,” Bob explained.

“Wait a second… you’re saying there was no product review, no product manager… no thought to just pushing changes to the server of one of the most popular sites in the world?” I asked, perplexed.

“Yes,” Bob said.

Innovation

I’m writing my article for the January Automation World on innovation–where technologists in supplier companies see new technologies for automation coming from. Most of these companies take a disciplined product management approach to bringing innovation to market. That’s a good thing for manufacturing professionals. We can’t afford (either from a money or from a productivity/safety point of view) to try just anything that a couple of developers through together in a couple of days.

That’s a good thing.

Manufacturing jobs, blog update, GE

by Gary Mintchell | Dec 15, 2010 | Automation

I’ve seen GE in the news recently. The main point seems to be that CEO Jeff Immelt is guiding the company away from the elixir of finance and back to its roots in manufacturing.

Steve Lohr writing in The New York Times on Dec. 4 says, “Perhaps no company outside of the banking sector was hit as hard by the financial crisis as G.E., certainly none that seemed healthy before the economic tailspin. Its big finance arm, GE Capital, long a cash machine that bolstered the mother ship’s bottom line, became an albatross, threatening to pull down the entire enterprise. G.E. cut its dividend for the first time since the Great Depression, lost its triple-A credit rating and hastily arranged a $3 billion investment from the billionaire Warren E. Buffett.”

Immelt admitted that GE was “seduced” by GE Capital’s financial promise. In a disturbing part of Lohr’s report, he notes, “In the buoyant years before the credit crisis, the company’s finance arm contributed nearly half of GE’s overall profits. When Mr. Immelt had qualms about the unit’s risks, he sought outside opinions, including ordering up a study by the consulting firm McKinsey & Company in 2007. Sixty days later, the consulting team, he says, told GE that money from nations with a trade surplus, like China, and sovereign wealth funds, among other investors, would provide enough liquidity in the financial system to fuel lending and leverage for the foreseeable future. (McKinsey declined to comment on the study.)”

I call this disturbing because McKinsey supposedly hires very bright people. But they ignore what makes an economy healthy and buy into the day’s prevailing wisdom.

Where the blog is going
Seven years ago this month, I started playing around with blogging software and began this blog. I had been reading blogs for several months, but 2003 was a hectic time as we got Automation World started and I learned to be an Editor in Chief. December was the first break I had where I could put together several contiguous days to concentrate on it.

It began as a person blog where I wrote as much about soccer as business and automation. For several reasons, the blog got co-opted by Automation World. First the sales department discovered it could sell advertising for an email newsletter with the blog as contents. Then I discovered we just couldn’t post news often enough on our Website, so I started doing more newsy posts on happenings in the automation market.

Very soon, you will see a new and revolutionary Automation World Web site. Scary, I’m not on the team, but they are doing almost what I would do if I were designing it. It’ll be great. It’s built on a new platform that is easier to use than our current platform. So for current news, the site to visit or subscribe is here.

I will be doing less news and more thoughtful pieces on manufacturing, leadership, automation technology–and, yes, soccer.

Manufacturing jobs

I finally caved in and decided to send Rupert some money for an electronic Wall Street Journal subscription. Hope I’m not disappointed. But I say a couple of recent articles that had interesting manufacturing angles.

“Insourcing: The Secret To Job Growth, Want to put Americans back to work? Help multinationals grow their U.S. operations,” by Robert M. Kimmitt and Matthew J. Slaughter, looks at the inverse of “outsourcing”–or sending jobs away from America.

They write, “Last month a Survey of Current Business report by the U.S. Bureau of Economic Analysis suggested ‘perhaps accidentally‚’ a promising new approach. The report documented a dynamic group of companies that create high-paying American jobs based on significant capital investment and export prowess‚–precisely the kinds of jobs America desperately needs to build a sustainable recovery.

“In 2008, these companies employed 5.6 million Americans, 4.7% of total private-sector employment. In the U.S. private sector that year, these companies accounted for 11.3% of capital investment ($187.5 billion), 14.3% of research and development ($40.5 billion), and 18.1% of goods exports ($232.4 billion). All these activities contribute to good-paying jobs. In 2008, total U.S. compensation at these companies was $408.5 billion‚ per-worker average of $73,023. That’s about one-third more than the average for all other U.S. workers.

So which companies are these? Ones that “insource”‚ that is, the U.S. operations of multinational firms based abroad. Insourcing companies now employ more than twice the number of Americans they employed in 1987. According to a recent survey by the Organization for International Investment, the chief financial officers of insourcing companies continue to see growth opportunities in America. Almost 50% plan to increase U.S. employment over the next 12 to 18 months, and just 22% plan to reduce it.”

The global economy is so complex that any simple explanation will be much like the fable of the blind men and the elephant–you see only that part to which you’re disposed to see, overlooking the whole picture. Remember to step back and look for balance when you see just one report.

Economic growth

I just received two reports on economic growth in the United States.

U.S. purchasing and supply management executives say economic growth in the United States will continue in 2011 in their December 2010 Semiannual Economic Forecast. Expectations are for a continuation of the economic recovery that began in mid-2009. The manufacturing sector continues to outpace the non-manufacturing sector and has greater expectations for growth in terms of revenue, say the nation’s purchasing and supply management executives in their December 2010 Semiannual Economic Forecast. The overall forecast projects optimism about the U.S. economy for 2011. The manufacturing sector, overall, is positive about prospects in 2011 with revenues expected to increase in 16 of 18 industries, while the non-manufacturing sector appears slightly less positive about the year ahead, with 12 of 18 industries expecting higher revenues. Business investment, a major driver in the U.S. economy, will increase substantially in the manufacturing sector, while investment in the non-manufacturing sector will increase at a lower level. These projections are part of the forecast issued by the Business Survey Committee of the Institute for Supply Management (ISM).

Senior management at U.S. manufacturing companies is once again optimistic, according to a Grant Thornton LLP November survey. Nearly half (49%) believe the U.S. economy will improve in the next six months, and the same amount (49%) say they plan to increase staff during the same period. Manufacturing leaders are also optimistic about their own businesses, with 81% feeling optimistic about their companies’ growth over the next six months.

There is much reason to be optimistic looking forward into 2011. But it will take all of our leadership skills to keep this growth on the right track.