Tag Archives: corporation

Idea Soup

Now We Can All Be Michael Scott And Number 6

Or, if you are from the UK — you can be David Brent. That is, we can all aspire to be a terrible boss. And, it’s all courtesy of the techno-enabled Uberified gig-economy.

Those of us who have a boss will identify with the mostly excruciating ritual that is the annual performance review; your work, your attitude, your personality is dissected, sliced and diced, scored, rated and ranked. However, as traumatic as this may be for you, remember that at least your boss actually interacts (usually) with you, and may actually have come to know you (somewhat), over a period of some years.

[tube]nW-bFGzNMXw[/tube]

But, how would it feel to be evaluated in this way — scored and rated — by complete strangers during a fleeting interaction that may only have lasted minutes? Online social media tools make this scoring wonderfully easy and convenient — just check a box or select 1-5 stars or a thumbs up/down. Add to this the sharing / gig economy, and we now have millions of people ready (and eager) to score millions of others for waiting tables, chauffeuring a car, delivering pizza, writing an app, cleaning a house, walking your dog, mowing your lawn. And, the list grows each day. Thus, you may be an employee to any numbers of managers throughout each day — it’s just that each manager is actually one of your customers, and each customer is armed with your score.

Where will this lead us? Should we rank our partners and spouses each day, indeed, several times each day? Will we score our kids for table etiquette, manners, talk-back? Should we score the check-out employee, the bank clerk, the bus driver, barista, nurse practitioner, car mechanic, surgeon? Ugh.

But you can certainly see why corporate executives are falling over themselves to have customers anonymously score their customer-facing employees. For the process devolves power to the customer, and removes management from having to make the once tough personnel decisions. So, why not have hordes of anonymous reviews and aggregated scores from customers determine the fate of low-level service employees? This would seem to be the ultimate customer service.

Yet, by replacing the human connection between employer/customer and employee/service worker with scores and algorithms we are further commoditizing ourselves. We erode our humanity by allowing ourselves to be quantified and enumerated, and for doing the same to others, known and unknown. Having the power to score and rate another person at the press of a finger — anonymously — may make for savvy 21st century management but it makes for a colder, crueler world, which increasingly reads like a dystopian novel.

From the Verge:

Soon, you’ll be able to go to the Olive Garden and order your fettuccine alfredo from a tablet mounted to the table. After paying, you’ll rate the server.

Then you can use that tablet to hail an Uber driver, whom you’ll also rate, from one to five stars. You can take it to your Airbnb, which you’ll award one to five stars across several categories, and get a TaskRabbit or Postmates worker to pick up groceries — rate them too. Maybe you’ll check on the web developer you’ve hired through Upwork, perusing the screenshots taken automatically from her computer, and think about how you’ll rate her when the job is done. You could hire someone from Handy to clean the place before you leave. More stars.

The on-demand economy has scrambled the roles of employer and employee in ways that courts and regulators are just beginning to parse. So far, the debate has focused on whether workers should be contractors or employees, a question sometimes distilled into an argument about who’s the boss: are workers their own bosses, as the companies often claim, or is the platform their boss, policing their work through algorithms and rules?

But there’s a third party that’s often glossed over: the customer. The rating systems used by these companies have turned customers into unwitting and sometimes unwittingly ruthless middle managers, more efficient than any boss a company could hope to hire. They’re always there, working for free, hypersensitive to the smallest error. All the algorithm has to do is tally up their judgments and deactivate accordingly.

Ratings help these companies to achieve enormous scale, managing large pools of untrained contract workers without having to hire supervisors. It’s a nice arrangement for customers too, who get cheap service with a smile — even if it’s an anxious one. But for the workers, already in the precarious position of contract labor, making every customer a boss is a terrifying prospect. After all, they — we — can be entitled jerks.

“You get pretty good at kissing ass just because you have to,” an Uber driver told me. “Uber and Lyft have created this monstrous brand of customer where they expect Ritz Carlton service at McDonald’s prices.”

In March, when Judge Edward Chen denied Uber’s motion for summary judgement on the California drivers’ class action suit, he seized on the idea that ratings aren’t just a customer feedback tool — they represent a new level of monitoring, far more pervasive than any watchful boss. Customer ratings, Chen wrote, give Uber an “arguably tremendous amount of control over the ‘manner and means’ of its drivers’ performance.” Quoting from Michel Foucault’s Discipline and Punish, he wrote that a “state of conscious and permanent visibility assures the automatic functioning of power.”

Starting with Ebay, rating systems have typically been described as way of establishing trust between strangers. Some commentators go so far as to say ratings are more effective than government regulation. “Uber and Airbnb are in fact some of the most regulated ecosystems in the world,” said Joshua Gans, an economist at the University of Toronto, at an FTC workshop earlier this year. Rather than a single certification before you can begin work, everyone is regulated constantly through a system of mutually assured judgment.

Certainly customers sometimes have awful experiences — reckless driving, creepy comments — and the rating system can help report them. But when it comes to policing dangerous behavior, most of these platforms have come to rely not on ratings but on traditional safety measures — identity verification, background checks, and the knowledge that any illegal actions can be investigated and enforced through the tracking devices every worker carries. We can’t rate for criminal histories, poor training, or negligent car maintenance.

So what do we rate for? We rate for the routes drivers take, for price fluctuations beyond their control, for slow traffic, for refusing to speed, for talking too much or too little, for failing to perform large tasks unrealistically quickly, for the food being cold when they delivered it, for telling us that, No, we can’t bring beer in the car and put our friend in the trunk — really, for any reason at all, including subconscious biases about race or gender, a proven problem on many crowdsourced platforms. This would be a nuisance if feedback were just feedback, but ratings have become the primary metric in automated systems determining employment. If you imagine the things customers rate down for as firing decisions in a traditional workplace, they look capricious and harsh. It’s a strange amount of power for customers to hold, all the more so considering that many don’t know they wield it.

Sometimes, as in Uber’s system, workers have the opportunity to rate customers back. An Uber spokesperson told me that, “Uber’s priority is to connect you with a safe, reliable ride — no matter who you are, where you’re coming from, or where you’re going. Achieving that goal for our community means maintaining an environment of mutual accountability and respect. We want everyone to have a great ride, every time, and two-way feedback is one of the many ways we work to make that possible. “

Read more here.

Video: The Prisoner – I’m not a number, I’m a free man! 1967. Courtesy: Patrick  McGoohan / ITC Entertainment.

 

Idea Soup

Corporate Grief

amazon-france-bannerFollowing the recent horrendous mass murders in Mali, Paris, and Lebanon (and elsewhere) there is a visible outpouring of grief, and on a worldwide scale. Many of us, while removed from direct involvement and having no direct connection to the victims and their families, still feel sadness, pain and loss.

The empathy expressed by strangers or distant acquaintances for those even remotely connected with the violence is tangible and genuine. For instance, we foreigners may seek out a long-lost French colleague to express our concern and condolences for Mali / France and all Bamakoans / Parisians. There is genuine concern and sense of connection, at a personal level, however frail that connection may be.

But what is going on when Amazon, Apple, eBay, Uber and other corporations wave their digital banners of solidarity — expressing grief — on the home pages of their websites?

Jessica Reed over at the Guardian makes some interesting observations. She is absolutely right to admonish those businesses that would seek to profit from such barbaric acts. In fact, we should boycott any found to be doing so. Some are taking real and positive action, such as enabling free communication or providing free transportation and products. However, she is also correct to warn us of the growing, insidious tendency to anthropomorphize and project sentience onto corporations.

Brands and companies increasingly love us, they sympathize, and now they grieve with us. But there is a vast difference from being hugged in sympathy by the boss of your local deli and the faceless, impersonal digital flag-waving courtesy of a dotcom home page.

Who knows where this will lead us decades from now: perhaps if there is money to be made, big corporations will terrorize us as well.

From Jessica Reed:

The pain is shared by all of us, but a golden rule should apply: don’t capitalise on grief, don’t profit from it. Perhaps this is why big companies imposing their sympathy on the rest of us leaves a bitter taste in my month: it is hard for me to see these gestures as anything but profiteering.

Companies are now posing as entities capable of compassion, never mind that they cannot possibly speak for all of its employees. This also brings us a step closer to endowing them with a human trait: the capacity to express emotions. They think they’re sentient.

If this sounds crazy, it’s because it is.

In the US, the debate about corporate personhood is ongoing. The supreme court already ruled that corporations are indeed people in some contexts: they have been granted the right to spend money on political issues, for example, as well as the right to refuse to cover birth control in their employee health plans on religious grounds.

Armed with these rulings, brands continue to colonise our lives, accompanying us from the cradle to the grave. They see you grow up, they see you die. They’re benevolent. They’re family.

Looking for someone to prove me wrong, I asked Ed Zitron, a PR chief executive, about these kinds of tactics. Zitron points out that tech companies are, in some cases, performing a useful service – as in Facebook’s “safety check”, T-Mobile and Verizon’s free communication with France, and Airbnb’s decision to compensate hosts for letting people stay longer for free. Those are tangible gestures – the equivalent of bringing grief-stricken neighbours meals to sustain them, rather than sending a hastily-written card.

Anything else, he says, is essentially good-old free publicity: “an empty gesture, a non-movement, a sanguine pretend-help that does nothing other than promote themselves”.

It’s hard to disagree with him and illustrates how far brands have further infiltrated our lives since the publication of Naomi Klein’s No Logo, which documented advertising as an industry not only interested in selling products, but also a dream and a message. We can now add “grief surfing” to the list.

A fear years back, Jon Stewart mocked this sorry state of affairs:

If only there were a way to prove that corporations are not people, show their inability to love, to show that they lack awareness of their own mortality, to see what they do when you walk in on them masturbating …

Turns out we can’t – companies will love you, in sickness and in health, for better and for worse, whether you want it or not.

 Read the entire article here.

Image: Screen grab from Amazon.fr, November 17, 2015.

Idea Soup

You Could Be Galactic Viceroy

Many corporations, by necessity, are not the most innovative of human aggregations. Most are conservative by nature — making money today, based on what worked yesterday. So, to maintain some degree of creative spirit and keep workers loyal they allow (some) employees to adopt rather — by corporate standards — wacky, left-field titles.

My favorite of this bunch: Digital Prophet, which I much prefer over iCup Technician, Wizard of Lightbulb Moments, and Wet Leisure Attendant.

Read more oddball titles here.

Idea Soup, tD

Baroness Thatcher and the Media Baron

The cozy yet fraught relationship between politicians and powerful figures in the media has been with us since the first days of newsprint. It’s a delicate symbiosis of sorts — the politician needs the media magnate to help acquire and retain power; the media baron needs the politician to shape and centralize it. The underlying motivations seem similar for both parties, hence the symbiosis — self-absorbtion, power, vanity.

So, it comes as no surprise to read intimate details of the symbiotic Rupert Murdoch / Margaret Thatcher years. Prime minister Thatcher would sometimes actively, but often surreptitiously, support Murdoch’s megalomaniacal desire to corner the UK (and global) media, while Murdoch would ensure his media channeled appropriately Thatcher-friendly news, spin and op-ed. But the Thatcher-Murdoch story is just one of the latest in a long line of business deals between puppet and puppet-master [you may decide which is which, dear reader]. Over the last hundred years we’ve had William Randolph Hearst and Roosevelt, Lloyd George and Northcliffe, Harold Wilson and Robert Maxwell, Baldwin and Beaverbrook.

Thomas Jefferson deplored newspapers — seeing them as vulgar and cancerous. His prescient analysis of the troubling and complex relationship between the news and politics is just as valid today, “an evil for which there is no remedy; our liberty depends on the freedom of the press, and this cannot be limited without being lost”.

Yet for all the grievous faults and dubious shenanigans of the brutish media barons and their fickle political spouses, the Thatcher-Murdoch story is perhaps not as sinister as one might first think. We now live in an age where faceless corporations and billionaires broker political power and shape policy behind mountains of money, obfuscated institutions and closed doors. This is far more troubling for our democracies. I would rather fight an evil that has a face.

From the Guardian:

The coup that transformed the relationship between British politics and journalism began at a quiet Sunday lunch at Chequers, the official country retreat of the prime minister, Margaret Thatcher. She was trailing in the polls, caught in a recession she had inherited, eager for an assured cheerleader at a difficult time. Her guest had an agenda too. He was Rupert Murdoch, eager to secure her help in acquiring control of nearly 40% of the British press.

Both parties got what they wanted.

The fact that they met at all, on 4 January 1981, was vehemently denied for 30 years. Since their lie was revealed, it has been possible to uncover how the greatest extension of monopoly power in modern press history was planned and executed with such furtive brilliance.

All the wretches in the subsequent hacking sagas – the predators in the red-tops, the scavengers and sleaze merchants, the blackmailers and bribers, the liars, the bullies, the cowed politicians and the bent coppers – were but the detritus of a collapse of integrity in British journalism and political life. At the root of the cruelties and extortions exposed in the recent criminal trials at the Old Bailey, was Margaret Thatcher’s reckless engorgement of the media power of her guest that January Sunday. The simple genesis of the hacking outrages is that Murdoch’s News International came to think it was above the law, because it was.

Thatcher achieved much as a radical prime minister confronted by political turmoil and economic torpor. So did Murdoch, in his liberation of British newspapers from war with the pressroom unions, and by wresting away the print unions’ monopoly of access to computer technology. I applauded his achievements, and still do, as I applauded many of Thatcher’s initiatives when I chaired the editorial boards of the Sunday Times (1967-81) and then the Times (1981-2). It is sad that her successes are stained by recent evidence of her readiness to ensure sunshine headlines for herself in the Murdoch press (especially when it was raining), at a heavy cost to the country. She enabled her guest to avoid a reference to the Monopolies and Mergers Commission, even though he already owned the biggest-selling daily newspaper, the Sun, and the biggest selling Sunday newspaper, the News of the World, and was intent on acquiring the biggest-selling quality weekly, the Sunday Times, and its stablemate, the Times. 

 Times Newspapers had long cherished their independence. In 1966, when the Times was in financial difficulty, the new owner who came to the rescue, Lord Roy Thomson of Fleet, promised to sustain it as an independent non-partisan newspaper – precisely how he had conducted the profitable Sunday Times. Murdoch was able to acquire both publications in 1981 only because he began making solemn pledges that he would maintain the tradition of independence. He broke every one of those promises in the first years. His breach of the undertakings freely made for Times Newspapers was a marked contrast with the independent journalism we at the Sunday Times (and William Rees-Mogg at the Times) had enjoyed under the principled ownership of the Thomson family. Thatcher was a vital force in reviving British competitiveness, but she abetted a concentration of press power that became increasingly arrogant and careless of human dignity in ways that would have appalled her, had she remained in good health long enough to understand what her actions had wrought.

Documents released by the Thatcher Archive Trust, now housed at Churchill College, Cambridge, give the lie to a litany of Murdoch-Thatcher denials about collusion during the bidding for Times Newspapers. They also expose a crucial falsehood in the seventh volume of The History of the Times: The Murdoch Years – the official story of the newspaper from 1981-2002, published in 2005 by the Murdoch-owned HarperCollins. In it Graham Stewart wrote, in all innocence, that Murdoch and Thatcher “had no communication whatsoever during the period in which the Times bid and presumed referral to the Monopolies and Mergers Commission was up for discussion”.

Read the entire story here.

 

Idea Soup

RIP: Chief Innovation Officer

“Innovate or die” goes the business mantra. Embrace creativity or you and your company will fall by the wayside and wither into insignificance.

A leisurely skim through a couple of dozen TV commercials, print ads and online banners will reinforce the notion — we are surrounded by innovators.

Absolutely everyone is innovating: Subway innovates with a new type of sandwich; Campbell Soup innovates by bringing a new blend to market more quickly; Skyy vodka innovates by adding a splash of lemon flavoring; Mercedes innovates by adding blind spot technology in its car door mirrors; Delta Airlines innovates by adding an inch more legroom for weary fliers; Bank of America innovates by communicating with customers via Twitter; L’Oreal innovates by boosting lashes. Innovation is everywhere and all the time.

Or is it?

There was a time when innovation meant radical, disruptive change: think movable type, printing, telegraphy, light bulb, mass production, photographic film, transistor, frozen food processing, television.

Now, the word innovation is liberally applied to just about anything. Marketers and advertisers have co-opted the word in service of coolness and an entrepreneurial halo. But, overuse of the label and its attachment to most new products and services in general has ensured that its value has become greatly diminished. Rather than connoting disruptive change, innovation in business is no more than a corporate cliché designed to market the coolness or an incremental improvement. So, who needs a Chief Innovation Officer anymore? After all, we are now all innovators.

[div class=attrib]From the Wall Street Journal:[end-div]

Got innovation? Just about every company says it does.

Businesses throw around the term to show they’re on the cutting edge of everything from technology and medicine to snacks and cosmetics. Companies are touting chief innovation officers, innovation teams, innovation strategies and even innovation days.

But that doesn’t mean the companies are actually doing any innovating. Instead they are using the word to convey monumental change when the progress they’re describing is quite ordinary.

Like the once ubiquitous buzzwords “synergy” and “optimization,” innovation is in danger of becoming a cliché—if it isn’t one already.

“Most companies say they’re innovative in the hope they can somehow con investors into thinking there is growth when there isn’t,” says Clayton Christensen, a professor at Harvard Business School and the author of the 1997 book, “The Innovator’s Dilemma.”

A search of annual and quarterly reports filed with the Securities and Exchange Commission shows companies mentioned some form of the word “innovation” 33,528 times last year, which was a 64% increase from five years before that.

More than 250 books with “innovation” in the title have been published in the last three months, most of them dealing with business, according to a search of Amazon.com.

The definition of the term varies widely depending on whom you ask. To Bill Hickey, chief executive of Bubble Wrap’s maker, Sealed Air Corp., it means inventing a product that has never existed, such as packing material that inflates on delivery.

To Ocean Spray Cranberries Inc. CEO Randy Papadellis, it is turning an overlooked commodity, such as leftover cranberry skins, into a consumer snack like Craisins.

To Pfizer Inc.’s PFE +0.85% research and development head, Mikael Dolsten, it is extending a product’s scope and application, such as expanding the use of a vaccine for infants that is also effective in older adults.

Scott Berkun, the author of the 2007 book “The Myths of Innovation,” which warns about the dilution of the word, says that what most people call an innovation is usually just a “very good product.”

He prefers to reserve the word for civilization-changing inventions like electricity, the printing press and the telephone—and, more recently, perhaps the iPhone.

Mr. Berkun, now an innovation consultant, advises clients to ban the word at their companies.

“It is a chameleon-like word to hide the lack of substance,” he says.

Mr. Berkun tracks innovation’s popularity as a buzzword back to the 1990s, amid the dot-com bubble and the release of James M. Utterback’s “Mastering the Dynamics of Innovation” and Mr. Christensen’s “Dilemma.”

The word appeals to large companies because it has connotations of being agile and “cool,” like start-ups and entrepreneurs, he says.

[div class=attrib]Read the entire article after the jump.[end-div]

[div class=attrib]Image: Draisine, also called Laufmaschine (“running machine”), from around 1820. The Laufmaschine was invented by the German Baron Karl von Drais in Mannheim in 1817. Being the first means of transport to make use of the two-wheeler principle, the Laufmaschine is regarded as the archetype of the bicycle. Courtesy of Wikipedia.[end-div]

Idea Soup, tD

Do Corporations Go to Heaven When They Die?

Perhaps heaven is littered with the disembodied, collective consciousness of Woolworth, Circuit City, Borders and Blockbuster. Similarly, it may be possible that Enron and Lehman Brothers, a little less fortunate due to the indiscretions of their leaders, have found their corporate souls to be forever tormented in business hell. And, what of the high tech start-ups that come and go in the beat of a hummingbird’s wing? Where are Webvan, Flooz, Gowalla, Beenz, Loopt, Kosmo, eToys and Pets.com? Are they spinning endlessly somewhere between the gluttons (third circle) and the heretics (sixth circle) in Dante’s concentric hell. And where are the venture capitalists and where will Burger King and Apple find themselves when they eventually pass to the other side?

This may all seem rather absurd. It is. Yet, the evangelical corporate crusaders such as Hobby Lobby and Chick Fil A would have us treat their corporations just as we do mere (im)mortals. Where is all this nonsense heading? Well, the Supreme Court of the United States, of course.

[div class=attrib]From the New York Times:[end-div]

David Green, who built a family picture-framing business into a 42-state chain of arts and crafts stores, prides himself on being the model of a conscientious Christian capitalist. His 525 Hobby Lobby stores forsake Sunday profits to give employees their biblical day of rest. The company donates to Christian counseling services and buys holiday ads that promote the faith in all its markets. Hobby Lobby has been known to stick decals over Botticelli’s naked Venus in art books it sells.

And the company’s in-house health insurance does not cover morning-after contraceptives, which Green, like many of his fellow evangelical Christians, regards as chemical abortions.

“We’re Christians,” he says, “and we run our business on Christian principles.”

This has put Hobby Lobby at the leading edge of a legal battle that poses the intriguing question: Can a corporation have a conscience? And if so, is it protected by the First Amendment.

The Affordable Care Act, a k a Obamacare, requires that companies with more than 50 full-time employees offer health insurance, including coverage for birth control. Churches and other purely religious organizations are exempt. The Obama administration, in an unrequited search for compromise, has also proposed to excuse nonprofit organizations such as hospitals and universities if they are affiliated with religions that preach the evil of contraception. You might ask why a clerk at Notre Dame or an orderly at a Catholic hospital should be denied the same birth control coverage provided to employees of secular institutions. You might ask why institutions that insist they are like everyone else when it comes to applying for federal grants get away with being special when it comes to federal health law. Good questions. You will find the unsatisfying answers in the Obama handbook of political expediency.

But these concessions are not enough to satisfy the religious lobbies. Evangelicals and Catholics, cheered on by anti-abortion groups and conservative Obamacare-haters, now want the First Amendment freedom of religion to be stretched to cover an array of for-profit commercial ventures, Hobby Lobby being the largest litigant. They are suing to be exempted on the grounds that corporations sometimes embody the faith of the individuals who own them.

“The legal case” for the religious freedom of corporations “does not start with, ‘Does the corporation pray?’ or ‘Does the corporation go to heaven?’ ” said Kyle Duncan, general counsel of the Becket Fund for Religious Liberty, which is representing Hobby Lobby. “It starts with the owner.” For owners who have woven religious practice into their operations, he told me, “an exercise of religion in the context of a business” is still an exercise of religion, and thus constitutionally protected.

The issue is almost certain to end up in the Supreme Court, where the betting is made a little more interesting by a couple of factors: six of the nine justices are Catholic, and this court has already ruled, in the Citizens United case, that corporations are protected by the First Amendment, at least when it comes to freedom of speech. Also, we know that at least four members of the court don’t think much of Obamacare.

In lower courts, advocates of the corporate religious exemption have won a few and lost a few. (Hobby Lobby has lost so far, and could eventually face fines of more than $1 million a day for defying the law. The company’s case is now before the Court of Appeals for the 10th Circuit.)

You can feel some sympathy for David Green’s moral dilemma, and even admire him for practicing what he preaches, without buying the idea that la corporation, c’est moi. Despite the Supreme Court’s expansive view of the First Amendment, Hobby Lobby has a high bar to get over — as it should.

[div class=attrib]Read the entire article following the jump.[end-div]

[div class=attrib]Image: Gluttony: The circle itself is a living abomination, a hellish digestive system revealing horrific faces with mouths ready to devour the gluttons over and over for eternity. Picture: Mihai Marius Mihu / Rex Features / Telegraph. To see more of the nine circles of hell from Dante’s Inferno recreated in Lego by artist Mihai Mihu jump here.[end-div]

Environs, tD

From Finely Textured Beef to Soylent Pink

Blame corporate euphemisms and branding for the obfuscation of everyday things. More sinister yet, is the constant re-working of names for our ever increasingly processed foodstuffs. Only last year as several influential health studies pointed towards the detrimental health effects of high fructose corn syrup (HFC) did the food industry act, but not by removing copious amounts of the addictive additive from many processed foods. Rather, the industry attempted to re-brand HFC as “corn sugar”. And, now on to the battle over “soylent pink” also known as “pink slim”.

[div class=attrib]From Slate:[end-div]

What do you call a mash of beef trimmings that have been chopped and then spun in a centrifuge to remove the fatty bits and gristle? According to the government and to the company that invented the process, you call it lean finely textured beef. But to the natural-food crusaders who would have the stuff removed from the nation’s hamburgers and tacos, the protein-rich product goes by another, more disturbing name: Pink slime.

The story of this activist rebranding—from lean finely textured beef to pink slime—reveals just how much these labels matter. It was the latter phrase that, for example, birthed the great ground-beef scare of 2012. In early March, journalists at both the Daily and at ABC began reporting on a burger panic: Lax rules from the U.S. Department of Agriculture allowed producers to fill their ground-beef packs with a slimy, noxious byproduct—a mush the reporters called unsanitary and without much value as a food. Coverage linked back to a New York Times story from 2009 in which the words pink slime had appeared in public for the first time in a quote from an email written by a USDA microbiologist who was frustrated at a decision to leave the additive off labels for ground meat.

The slimy terror spread in the weeks that followed. Less than a month after ABC’s initial reports, almost a quarter million people had signed a petition to get pink slime out of public school cafeterias. Supermarket chains stopped selling burger meat that contained it—all because of a shift from four matter-of-fact words to two visceral ones.

And now that rebranding has become the basis for a 263-page lawsuit. Last month, Beef Products Inc., the first and principal producer of lean/pink/textured/slimy beef, filed a defamation claim against ABC (along with that microbiologist and a former USDA inspector) in a South Dakota court. The company says the network carried out a malicious and dishonest campaign to discredit its ground-beef additive and that this work had grievous consequences. When ABC began its coverage, Beef Products Inc. was selling 5 million pounds of slime/beef/whatever every week. Then three of its four plants were forced to close, and production dropped to 1.6 million pounds. A weekly profit of $2.3 million had turned into a $583,000 weekly loss.

At Reuters, Steven Brill argued that the suit has merit. I won’t try to comment on its legal viability, but the details of the claim do provide some useful background about how we name our processed foods, in both industry and the media. It turns out the paste now known within the business as lean finely textured beef descends from an older, less purified version of the same. Producers have long tried to salvage the trimmings from a cattle carcass by cleaning off the fat and the bacteria that often congregate on these leftover parts. At best they could achieve a not-so-lean class of meat called partially defatted chopped beef, which USDA deemed too low in quality to be a part of hamburger or ground meat.

By the late 1980s, though, Eldon Roth of Beef Products Inc. had worked out a way to make those trimmings a bit more wholesome. He’d found a way, using centrifuges, to separate the fat more fully. In 1991, USDA approved his product as fat reduced beef and signed off on its use in hamburgers. JoAnn Smith, a government official and former president of the National Cattlemen’s Association, signed off on this “euphemistic designation,” writes Marion Nestle in Food Politics. (Beef Products, Inc. maintains that this decision “was not motivated by any official’s so-called ‘links to the beef industry.’ “) So 20 years ago, the trimmings had already been reformulated and rebranded once.

But the government still said that fat reduced beef could not be used in packages marked “ground beef.” (The government distinction between hamburger and ground beef is that the former can contain added fat, while the latter can’t.) So Beef Products Inc. pressed its case, and in 1993 it convinced the USDA to approve the mash for wider use, with a new and better name: lean finely textured beef. A few years later, Roth started killing the microbes on his trimmings with ammonia gas and got approval to do that, too. With government permission, the company went on to sell several billion pounds of the stuff in the next two decades.

In the meantime, other meat processors started making something similar but using slightly different names. AFA Foods (which filed for bankruptcy in April after the recent ground-beef scandal broke), has referred to its products as boneless lean beef trimmings, a more generic term. Cargill, which decontaminates its meat with citric acid in place of ammonia gas, calls its mash of trimmings finely textured beef.

[div class=attrib]Read the entire article following the jump.[end-div]

[div class=attrib]Image: Industrial ground beef. Courtesy of Wikipedia.[end-div]

Idea Soup

How Great Companies Fail

A fascinating case study shows how Microsoft failed its employees through misguided HR (human resources) policies that pitted colleague against colleague.

[div class=attrib]From the Guardian:[end-div]

The idea for today’s off-topic note came to me when I read “Microsoft’s lost decade”, an aptly titled Vanity Fair story. In the piece, Kurt Eichenwald tracks Microsoft’s decline as he revisits a decade of technical missteps and bad business decisions. Predictably, the piece has generated strong retorts from Microsoft’s Ministry of Truth and from Ballmer himself (“It’s not been a lost decade for me!” he barked from the tumbrel).

But I don’t come to bury Caesar – not, yet, I’ll wait until actual numbers for Windows 8 and the Surface tablets emerge. Instead, let’s consider the centerpiece of Eichenwald’s article, his depiction of the cultural degeneracy and intramural paranoia that comes of a badly implemented performance review system.

Performance assessments are, of course, an important aspect of a healthy company. In order to maintain fighting weight, an organisation must honestly assay its employees’ contributions and cull the dead wood. This is tournament play, after all, and the coach must “release”; players who can’t help get the team to the finals.

But Microsoft’s implementation – “stack ranking”, a bell curve that pits employees and groups against one another like rats in a cage – plunged the company into internecine fights, horse trading, and backstabbing.

…every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor…For that reason, executives said, a lot of Microsoft superstars did everything they could to avoid working alongside other top-notch developers, out of fear that they would be hurt in the rankings.

Employees quickly realised that it was more important to focus on organisation politics than actual performance:

Every current and former Microsoft employee I interviewed – every one – cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees.

This brought back bad memories of my corpocrat days working for a noted Valley company. When I landed here in 1985, I was dismayed by the pervasive presence of human resources, an éminence grise that cast a shadow across the entire organisation. Humor being the courtesy of despair, engineers referred to HR as the KGB or, for a more literary reference, the Bene Gesserit, monikers that knowingly imputed an efficiency to a department that offered anything but. Granted, there was no bell curve grading, no obligation to sacrifice the bottom 5%, but the politics were stifling nonetheless, the review process a painful charade.

In memory of those shenanigans, I’ve come up with a possible antidote to manipulative reviews, an attempt to deal honestly and pleasantly with the imperfections of life at work. (Someday I’ll write a Note about an equally important task: How to let go of people with decency – and without lawyers.)

[div class=attrib]Read the entire article here.[end-div]

[div class=attrib]Image courtesy of Telegraph / Microsoft.[end-div]

Idea Soup, tD

Corporate Corruption: Greed, Lies and Nothing New

The last couple of decades has seen some remarkable cases of corporate excess and corruption. The deep-rooted human inclinations toward greed, telling falsehoods and exhibiting questionable ethics can probably be traced to the dawn of bipedalism. However, in more recent times we have seen misdeeds particularly in the business world grow in their daring, scale and impact.

We’ve seen Worldcom overstate its cashflows, Parmalat falsifying accounts, Lehman Brothers (and other investment banks) hiding critical information from investors, Enron cooking all their books, Bernard Madoff marketing his immense Ponzi scheme, Halliburton overcharging government contracts, Tyco executives looting their own company, Wells Fargo and other retail banks robo-signing contracts, investment banks selling questionable products to investors and then betting against them, and now ever more recently, Barclays and other big banks manipulating interest rates.

These tales of gluttony and wrongdoing are a dream for social scientists; and for the public in general, well, we tend to let the fat cats just get fatter and nastier. And, where are the regulators, legislators and enforcers of the law? Well, they are generally asleep at the wheel or in bed, so to speak, with their corporate donors. No wonder we all yawn at the latest scandal. However, some suggest this undermines the very foundations of western capitalism.

[div class=attrib]From the New York Times:[end-div]

Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it? Or how about forging documents on an industrial scale to foreclose fraudulently on countless homeowners?

The misconduct of the financial industry no longer surprises most Americans. Only about one in five has much trust in banks, according to Gallup polls, about half the level in 2007. And it’s not just banks that are frowned upon. Trust in big business overall is declining. Sixty-two percent of Americans believe corruption is widespread across corporate America. According to Transparency International, an anticorruption watchdog, nearly three in four Americans believe that corruption has increased over the last three years.

We should be alarmed that corporate wrongdoing has come to be seen as such a routine occurrence. Capitalism cannot function without trust. As the Nobel laureate Kenneth Arrow observed, “Virtually every commercial transaction has within itself an element of trust.”

The parade of financiers accused of misdeeds, booted from the executive suite and even occasionally jailed, is undermining this essential element. Have corporations lost whatever ethical compass they once had? Or does it just look that way because we are paying more attention than we used to?

This is hard to answer because fraud and corruption are impossible to measure precisely. Perpetrators understandably do their best to hide the dirty deeds from public view. And public perceptions of fraud and corruption are often colored by people’s sense of dissatisfaction with their lives.

Last year, the economists Justin Wolfers and Betsey Stevenson from the University of Pennsylvania published a study suggesting that trust in government and business falls when unemployment rises. “Much of the recent decline in confidence — particularly in the financial sector — may simply be a standard response to a cyclical downturn,” they wrote.

And waves of mistrust can spread broadly. After years of dismal employment prospects, Americans are losing trust in a broad range of institutions, including Congress, the Supreme Court, the presidency, public schools, labor unions and the church.

Corporate wrongdoing may be cyclical, too. Fraud is probably more lucrative, as well as easier to hide, amid the general prosperity of economic booms. And the temptation to bend the rules is probably highest toward the end of an economic upswing, when executives must be the most creative to keep the stream of profits rolling in.

The most toxic, no-doc, reverse amortization, liar loans flourished toward the end of the housing bubble. And we typically discover fraud only after the booms have turned to bust. As Warren Buffett famously said, “You only find out who is swimming naked when the tide goes out.”

Company executives are paid to maximize profits, not to behave ethically. Evidence suggests that they behave as corruptly as they can, within whatever constraints are imposed by law and reputation. In 1977, the United States Congress passed the Foreign Corrupt Practices Act, to stop the rampant practice of bribing foreign officials. Business by American multinationals in the most corrupt countries dropped. But they didn’t stop bribing. And American companies have been lobbying against the law ever since.

Extrapolating from frauds that were uncovered during and after the dot-com bubble, the economists Luigi Zingales and Adair Morse of the University of Chicago and Alexander Dyck of the University of Toronto estimated conservatively that in any given year a fraud was being committed by 11 to 13 percent of the large companies in the country.

[div class=attrib]Read the entire article after the jump.[end-div]

[div class=attrib]Image: Mug shot of Charles Ponzi (March 3, 1882 – January 18, 1949). Charles Ponzi was born in Italy and became known as a swindler for his money scheme. His aliases include Charles Ponei, Charles P. Bianchi, Carl and Carlo.. Courtesy of Wikipedia.[end-div]

Idea Soup

Media Consolidation

The age of the rambunctious and megalomaniacal newspaper baron has passed, excepting, of course, Rupert Murdoch. Though while the colorful personalities of the late-19th and early 20th centuries have mostly disappeared, the 21st century has replaced these aging white men with faceless international corporations, all of which are, of course, run by aging white men.

The infographic below puts the current media landscape in clear perspective; one statistic is clear: more and more people are consuming news and entertainment from fewer and fewer sources.

[div class=attrib]Infographic courtesy of Frugal Dad.[end-div]

Idea Soup

D-School is the Place

Forget art school, engineering school, law school and B-school (business). For wannabe innovators the current place to be is D-school. Design school, that is.

Design school teaches a problem solving method known as “design thinking”. Before it was re-branded in corporatespeak this used to be known as “trial and error”.

Many corporations are finding this approach to be both a challenge and a boon; after all, even in 2012, not many businesses encourage their employees to fail.

[div class=attrib]From the Wall Street Journal:[end-div]

In 2007, Scott Cook, founder of Intuit Inc., the software company behind TurboTax, felt the company wasn’t innovating fast enough. So he decided to adopt an approach to product development that has grown increasingly popular in the corporate world: design thinking.

Loosely defined, design thinking is a problem-solving method that involves close observation of users or customers and a development process of extensive—often rapid—trial and error.

Mr. Cook said the initiative, termed “Design for Delight,” involves field research with customers to understand their “pain points”—an examination of what frustrates them in their offices and homes.

Intuit staffers then “painstorm” to come up with a variety of solutions to address the problems, and experiment with customers to find the best ones.

In one instance, a team of Intuit employees was studying how customers could take pictures of tax forms to reduce typing errors. Some younger customers, taking photos with their smartphones, were frustrated that they couldn’t just complete their taxes on their mobiles. Thus was born the mobile tax app SnapTax in 2010, which has been downloaded more than a million times in the past two years, the company said.

At SAP AG, hundreds of employees across departments work on challenges, such as building a raincoat out of a trash bag or designing a better coffee cup. The hope is that the sessions will train them in the tenets of design thinking, which they can then apply to their own business pursuits, said Carly Cooper, an SAP director who runs many of the sessions.

Last year, when SAP employees talked to sales representatives after closing deals, they found that one of the sales representatives’ biggest concerns was simply, when were they going to get paid. The insight led SAP to develop a new mobile product allowing salespeople to check on the status of their commissions.

[div class=attrib]Read the entire article after the jump.[end-div]

Environs

The Corporate One Percent of the One Percent

With the Occupy Wall Street movement and related protests continuing to gather steam much recent media and public attention has focused on 1 percent versus the remaining 99 percent of the population. By most accepted estimates, 1 percent of households control around 40 percent of the global wealth, and there is a vast discrepancy between the top and bottom of the economic spectrum. While these statistics are telling, a related analysis of corporate wealth, highlighted in the New Scientist, shows a much tighter concentration among a very select group of transnational corporations (TNC).

[div class=attrib]New Scientist:[end-div]

An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The study’s assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.

The idea that a few bankers control a large chunk of the global economy might not seem like news to New York’s Occupy Wall Street movement and protesters elsewhere (see photo). But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world’s transnational corporations (TNCs).

“Reality is so complex, we must move away from dogma, whether it’s conspiracy theories or free-market,” says James Glattfelder. “Our analysis is reality-based.”

Previous studies have found that a few TNCs own large chunks of the world’s economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy – whether it made it more or less stable, for instance.

The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company’s operating revenues, to map the structure of economic power.

The work, to be published in PLoS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What’s more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world’s large blue chip and manufacturing firms – the “real” economy – representing a further 60 per cent of global revenues.

When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

[div class=attrib]Read the entire article here.[end-div]

[div class=attrib]Image courtesy of New Scientist / PLoS One. The 1318 transnational corporations that form the core of the economy. Superconnected companies are red, very connected companies are yellow. The size of the dot represents revenue.[end-div]