CSC WORLD Fall 2001

The Return of
Process Thinking
4 Making Business
Processes Manageable
38 The Principles of
Scientific Management

Management
Cultures
10
Why American Business
is That Way
15 Li & Fung:
Confucius Meets
John Wayne
18 Managing a Danish (?)
Bicycle Team

Global
Interdependence
22 From Globalization
to Interdependence I N S I D E

25 Adapting to Change
26 MBAs, Managers, and Change:
An Interview with Henry Mintzberg
28 Findings / Getting Smart

30 In Practice / Building a Customer-Friendly

TelcoFast Putting the Internet in Space
36 Review / Next by Michael Lewis
 With the rest of the world, we watched in horror as terrorists attacked the World Trade Center
and the Pentagon on September 11. This issue was being laid out at the time of the attacks, so it
does not speak directly to the concerns that they have raised. We plan to examine those concerns
in future issues. We are grateful that CSC employees in the targeted areas escaped unharmed.
We mourn the loss of those who were not as fortunate.

IN THIS I SSUE

W hat is good management? What makes a good manager?

These are questions every business magazine tries to address, and we took a
couple of different approaches to them in this issue.
One approach was to go to Henry Mintzberg, the McGill University
professor whose unconventional thinking about management has been getting
increased attention in recent years. He says good managers are not the super-
heroes of business best-sellers. Rather, they are people who have the intuition,
good judgment, and sense of context that come from a deep knowledge of
their business.
Thinking about context also led us to Charles M. Hampden-Turner
and Fons Trompenaars, who look at the impact of national cultures on business
management. The first of three articles on management cultures is an excerpt
from their book, Building Cross-Cultural Competence. Harvard Business School
Professor F. Warren McFarlan explains how two Harvard-trained brothers went
CSC WORLD back to China to modernize their old family company; and Tour de France
winner Bjarne Riis tells us how he manages an international bicycle racing team.
One of the biggest management challenges of recent years was
e-business. In the lead article, Howard Smith, CSCs chief technology officer for
Europe, and Douglas Neal and Lynette Ferrara of CSCs Research Services, explain
why it was so difficult to get e-business right and how it can be made easier.
The answer lies in managing business processes within and across companies.
Then there are those events that are well beyond the scope of
ordinary business management. Kenneth S. Courtis, vice chairman of Goldman
Sachs Asia, discusses the growing interdependence in the global economy.
Theres not much any single company can do about the global economy,
but James Cook, president of CSCs Financial Services Group, tells us how
companies usually react to macroeconomic change.
Finally, we look back at Frederick Winslow Taylor, one of the first
management gurus. His 1911 book on business processes shows just how much
our thinking has changed in the last 90 years.
In this issue, we also look ahead at smart technology, show how
NASA can benefit from putting the Internet in space, see how a business process
approach got a telco startup off to a fast start in the UK, and review Michael
Lewiss latest book.
This is only the second issue of the new CSC World, and wed like
to know what you think. Nearly all the response so far has been positive, and we
want to keep on making our readers happy. Drop us a line at world@csc.com,
and visit us on line at csc.com/aboutus/publications.

Bob Olivier, Publisher

 Computer Sciences Corporation Fall 2001 Volume 1 No. 2

CSC WORLD
features
CSC WORLD THE RETURN OF P RO C E S S T H I N K I N G
4 Making Business Processes Manageable
K. PETER MANERI contributors HOWARD SMITH, DOUGLAS NEAL, AND LYNETTE FERRARRA
Vice President, E-business turned out to be harder than anyone thought. Thats because
Corporate Communications JAMES COOK is president of CSCs Financial Services Group. business still has trouble managing business processes. Thats about to change.
and Marketing
KENNETH S. COURTIS is managing director and vice chairman of Goldman
ROBERT D. OLIVIER 38 The Principles of Scientific Management FREDERICK WINSLOW TAYLOR
Sachs Asia. He also lectures at Keio and Tokyo universities, and is a visiting
Publisher
professor at the Stockholm School of Economics. He has an MBA from the One of the first management gurus did some early thinking about
ROBERT MUTCH European Institute of Business Administration in Fontainbleau, France, business processes in this 1911 book.
Managing Editor and a PhD from the Institute of Economic and Political Studies in Paris.

REDSPRITE MARKETING INC. EDWARD CRISCUOLO, a CSC engineer, is the backup technical lead on NASAs
M A NAG E M E N T C U LT U R E S
Graphic Design 10
Operating Missions as Nodes on the Internet project. Why American Business is That Way
EDITORIAL BOARD: KEITH HOGIE, a CSC engineer, is the technical lead on NASAs Operating CHARLES M. HAMPDEN-TURNER AND FONS TROMPENAARS
F. Warren McFarlan, Nicholas Morgan,
Howard Smith Missions as Nodes on the Internet project. The role of managers is increasingly to manage diversity per se, whatever
its origins in culture, industry, or discipline. An excerpt from Building
Editorial Office: CHARLES M. HAMPDEN-TURNER is senior research associate at the Judge Cross-Cultural Competence: How to Create Wealth from Conflicting Values.
3170 Fairview Park Drive Institute of Management Studies, Cambridge University. He also is director
Falls Church, Virginia 22042 of research and development of the Trompenaars-Hampden-Turner Group, 15
world@csc.com Li & Fung: Confucius Meets John Wayne F. WARREN MCFARLAN
a cross-cultural consulting and training company based in Amsterdam.
Two Harvard-trained brothers bring the family business, founded in the
Subscription Office: He has a DBA from Harvard and has written 15 books. He is a winner of
2100 East Grand Avenue
Qing Dynasty, into the Internet age.
the Douglas McGregor Memorial Award.
El Segundo, California 90245 18
F. WARREN MCFARLAN is the Albert H. Gordon professor of business adminis- Managing a Danish (?) Bicycle Team BJARNE RIIS
COMPUTER SCIENCES CORPORATION tration at Harvard Business School, and senior associate dean and director of How to manage a racing team whose members speak several different
www.csc.com
the schools Asia-Pacific Initiative. He also sits on CSCs board of directors. languages and are seldom in the same place at the same time.
THE AMERICAS
DOUGLAS NEAL is a research fellow at CSC Research Services.
2100 East Grand Avenue
El Segundo, California 90245-5098
G L O BA L I N T E R D E P E N D E N C E
United States RON PARISE, a senior scientist at CSC, was a payload specialist on the space
22 From Globalization to Interdependence KENNETH S. COURTIS
Tel: +1.310.615.0311 shuttle Columbia in 1990 and on the Endeavour in 1995. He is on NASAs
Operating Missions as Nodes on the Internet project. Globalization is the word everyone uses to describe whats going on in the
EUROPE, MIDDLE EAST, AFRICA world economy. But its actually something broader and more complex.
279 Farnborough Road VANESSA REED is CSCs manager for the ipsaris/Easynet account.
Farnborough
Hampshire GU14 7LS
25 Adapting to Change JAMES COOK
BJARNE RIIS is manager of the Danish professional cycling team, CSC-Tiscali,
United Kingdom
which finished 18th in this years Tour de France. A professional cyclist since Its always been beyond the capability of companies or industries to affect
Tel: +44.1252.363000
1986, Riis won the Tour de France in 1996 and the World Cup in 1997. the speed and breadth of macroeconomic change. How do they deal with
AUSTRALIA/NEW ZEALAND it when it happens?
460 Pacific Highway HOWARD SMITH is the chief technology officer for CSC in Europe.
St. Leonards NSW 2065 He also is co-chair of the Business Process Management Initiative.
Australia
Tel: +61.2.9901.1111 FONS TROMPENAARS is founder and president of Trompenaars-Hampden- departments
Turner Group, an intercultural management consulting company based in
ASIA 26 First Hand 30 In Practice
139 Cecil Street
Amsterdam. He has a PhD from the Wharton School at the University of
08-00 Cecil House Pennsylvania and is the author and co-author of several books. He is a In an age of grand theory, Henry Building a Customer-Friendly TelcoFast
Singapore 069539 Mintzbergs unconventional wisdom VANESSA REED How a startup telco got off to
winner of the American Society for Training and Developments International
Republic of Singapore
Professional Practice Research Award. about the actual job of managing is a fast start with a company built to last.
Tel: +65.221.9095 beginning to attract more attention. Putting the Internet in Space
28 Findings EDWARD CRISCUOLO, KEITH HOGIE, RON PARISE
A LEADING EDGE FORUM REPORT NASA is experimenting with Internet protocols
CSC World (ISSN 1534-5831) is a publication of
Computer Sciences Corporation Here are five smart quotients to as a way to reduce the cost of space missions.
Computer Sciences Corporation help you make sense of the new
All rights reserved. Reproduction without permission 36 Book Review ROBERT MUTCH
from Computer Sciences Corporation is prohibited. smart technology.
Printed in the USA. In Next: The Future Just Happened, Michael Lewis
says the kids are taking over. But are they?

3
MAKING BUSINESS
PROCESSES MANAGEABLE
BY HOWARD SMITH, DOUGLAS NEAL, AND LYNETTE FERRARA

What has surprised everyone

in the last few years is how It must change, because shareholders
challenging it has been to still expect companies to fulfill the
promise of e-business. Companies are
actually do e-business. One of under pressure to perform better,
faster, to do more with less, and to be
the reasons why this is so is that
super pleasing to customers. This
companies have found it difficult means changing the way they manage
their business processes, allowing them
to manage their business processes, to innovate around their own strategic
especially when they stretch processes while simultaneously collab-
orating with partners and customers.
across multiple systems, software
WHY SO DIFFICULT?
applications, companies and Many companies tried to make their
countries. Thats about to change. business processes more manageable
10 years ago, by reengineering them.
At the time, reengineering typically
meant designing a new process, then implementing it through
a one-time systems and organizational change program.
These efforts were more about redesigning processes than
about making those processes easy to change and combine
with those of partners. This also was the problem with ERP
and other packaged solutions that emerged later. These
packages implemented best-practice processes, but did so by
embedding business processes in the software applications
that supported them. These solutions had all the flexibility of
wet concrete before they were installed and all the flexibility
of dry concrete after installation.
Achieving process collaboration inside the enterprise has
been difficult enough. Getting processes to collaborate across
the networked enterprise is far harder. B2B is an attempt to
create the networked enterprise from the outside in.

4
MAKING BUSINESS PROCESSES MANAGEABLE PROCESS THINKING

What business needs is

not a one-time fix but a
systems environment that
B2B participants may have informal control over and monitoring of processes performed on their
designs for the processes they need behalf by partners. Firms are also seeking to expose discrete can flex and recombine
to implement, but as they refine business competencies as processes they can sell to others
as required by changes
those designs they also have to or commercialize through channel partners. To do all this,
change the technical implementa- firms need to understand the processes that underpin their in the market.
tions that support them. This may core business competencies. In short, they need a business
be possible in simple cases, but in process management capability, not a new suite of
the more complex cases of supply enterprise applications. and the connections between data
chains, the project may never be The situation is similar to the period before the invention sets in different applications became
completed. Upgrading applications of the relational database management system. Data used to important to the CEO, CFO, and
or adding new suppliers or business be embedded in applications. As the volume of this data grew functional units, it became obvious
units can cause the technical integration activities to escalate that data should be managed outside
out of control. of the application architecture.
In the networked enterprise, collaboration is not restricted By allowing a company to manage its data apart from the
to any one process domain. Collaboration is now 360 degrees, Not all integration problems applications that use it, the DBMS supports a variety of data
going on at all points on the compass. This creates a many-to- are technical. Collaboration models and data management tasks. Today, no one would
many integration requires sharing processes that think of building a new system without a DBMS. The IT
industry is largely founded on the DBMS and related capabilities.
If commerce is to be truly
task, and existing
tools and tech-
once were proprietary, and this is
not an easy step to take. But if
collaborative, the underlying niques simply are companies are under pressure to
not up to the job. be better, faster, and cheaper, they
business processes must IS departments will have to do only what they do
collaborate, too, both often try to develop best. Whatever a company doesnt
business processes do well has to be done by some-
within and across firms. Building up from the top down
by performing one else.
bottom-up techni- If commerce is to be truly A startup telco in the UK got The focus on process meant that developers did not
cal integration, stitching together systems components that collaborative, the underlying busi- started in record time by using have to integrate the component packages at every level.
never were intended to work together at the business level. ness processes must collaborate, a business process management They forged links into the packages only at the functional
They soon find that these projects denude their budgets too, both within and across firms. approach to building its new level, to expose them to the business process engine.
and that delivery time scales are often unacceptable to the This must be achieved at the system. That system included That meant developers didnt have to integrate the
business managers. business level and from the top applications from 12 vendors, applications user interfaces, reporting mechanisms, or
down, leveraging existing systems some of whom estimated that integrating all the pack- databases. They used one single user interface across all
in the enterprise. That is, collaboration must start from the ages would require 14 months. CSC completed the job packages, an interface that has the brand of the client,
business purpose, not the technical details. in half that time. not the application vendor. Extracting business processes
The short development time was made possible by meant less integration and less time for development.
WHAT IS NEEDED building a business process engine into the architecture. This was top-down development, starting with
What business needs is not a one-time fix but a connected The key business processes were extracted from the the business processes themselves rather than with the
systems environment that can flex and recombine as component applications and migrated into that engine. applications that support them. It puts business
required by changes in the market. Most companies now This procedure allowed business processes to be processes back in the hands of business users instead
want more control over their own processes, more interaction configurable by a drag-and-drop interface without of the IT department.
between their processes and those of their partners and some being coded into the applications.

6 7
 PROCESS THINKING
MAKING BUSINESS PROCESSES MANAGEABLE

CEOs never asked for applications in the first place.
When CEOs speak about business processes, they equate
them directly to their companies business objectives.
The processes literally define a companys competitive
advantage and market differentiation. The last things
CEOs want to hear about are standard processes
supported by standard applications that are
available off the shelf to their competitors.
Even where applications are aligned
with enterprise goals, processes
are ingrained within the software,
inaccessible to change and
unable to be integrated with processes in other applications.
The connection with business objectives means that
business processes are complex, unique, numerous, and con-
stantly evolving.
B usiness processes that are The complexity of
the processes
ingrained within software drives complexity
in the technical
are inaccessible to change. infrastructure that
delivers process
management. An effective business process management
system will have to support the great diversity of business
practices with a foundation as strong as that of the DBMS.
A PROCESS LANGUAGE
The first step is to make processes explicit by abstracting
them from application software. This is hardly new. Decades
ago, operating systems were created by abstracting memory
management, file access, and graphical user interface from
applications. Database management systems removed both
the management of data and the management of the schema.
todays applications manipulate data sets. The processes
they support will be reliable, transactional, and distributed,
and will allow collaboration between processes designed
independently by different organizations.
Strangely, the design of a language like BPML had not
been attempted before. Although other process modeling
ment capability that could leverage open systems standards
and interoperate across organizational boundaries.
Its time we did the same thing for
business processes.
One of the key enabling
technologies is Business Process
Modeling Language (BPML). The
first draft of BPML was developed
by a software startup called Intalio,
which worked closely with CSC
and other founders of the Business
Process Management Initiative
(see sidebar). The new language
which, like SQL, has a strong
mathematical foundation is a
standard way to represent any
business process. The new founda-
tion is designed to support process
management, not data management,
and new process-aware applications
will be built upon it. Such applica-
tions will be able to manipulate
business processes as easily as
languages existed, none were designed with the objective of
supporting an enterprise-scale, top-down process manage-
BPML is a business-oriented language designed for top-
down deployment in a process management infrastructure
that leverages existing enterprise and B2B-convergent
standards. It supports dynamic collaboration among partners,
and is more expressive than the process modeling supported
by traditional software engineering paradigms.
REENGINEERING REDUX
Process management is heralding a renaissance in
reengineering, process thinking, and organizational design.
This renaissance is not being driven just by technical
innovation. Just as in the first wave of reengineering in the
early 1990s, tinkering with existing ways of doing business is
not enough. Responding to these new challenges with this
new technology will require two types of people: business
process architects and project managers.
Business process architects will operate at the level of
business concepts, such as implementing a new long distance
leadership by the IT departments. The payoff for this effort will
be the ability to deliver on the vision that grabbed management
attention a decade ago with reengineering.
Business Process Management Initiative
BPMI is a non-profit organization that empowers
companies of all sizes, across all industries, to develop
and operate business processes that span multiple
applications and business partners, behind the firewall
and over the Internet. The Initiative's mission is to
promote and develop the use of business process
management (BPM) through the establishment of
pricing plan. They will sit with
business staff to design, test, and
deploy new business capabilities.
They will do this by orchestrating
fine-grained services and rules to
produce new business capabilities.
When processes fail to perform, the
business process architect will sit
with the participants in the process
to review what each needs to do
based on the data, metrics, and
analytics from the process execution.
To be effective, these new
business process architects will
need deep understanding of their
company. This means that firms
will have to grow their own.
Developing these new business
process architects will require
strong, business-oriented
standards for top-down process design, deployment,
execution, maintenance, and optimization. BPMI
develops open specifications, assists IT vendors for
marketing their implementations, and supports
businesses using BPM technologies. CSC is co-chair
of the BPMI.
For more information, go to www.bpmi.org.

8 9
 M A N A G E M E N T C U LT U R E S
America has contributed disproportionately to the total
volume of business studies. So it is crucial to ask:
WHY Do these business studies tell us how to create wealth
AMERICAN BUSINESS anywhere in the world, or do they tell us only how
IS THAT WAY. wealth has been created in America?
Americans have been very successful in
creating wealth. But they have done that within
a business culture that is different from those
of other countries.
We explored these differences by asking
business managers 46,000 managers from
more than 40 countries a series of questions
designed to reveal the diversity of values. We
measured these values along six dimensions:
universalism-particularism, individualism-
communitarianism, specificity-diffuseness,
achieved-ascribed status, inner vs. outer
direction, and sequential and synchronous
time (see sidebar, page 12).
In the questions we asked our sample of
managers, we presented them with dilemmas
that pitted one value against another. But the
relationships between the two values in each
dimension also can be seen as circular, as com-
plementing as well as contradicting one another.
The fashionable name for this circular thinking
among the business consulting community is
cross-cultural competence. This is what we are
AND WHY trying to illuminate: the capacity for creating
wealth through reconciling cultural dilemmas.
BUSINESS IN OTHER In this article, we will explore only two of the
six cultural dilemmas, univeralism-particular-
COUNTRIES IS NOT. ism and individualism-communitarianism.
UNIVERSALISM-PARTICULARISM
BY Suppose youre riding in a car driven by a
CHARLES M. HAMPDEN-TURNER close friend. He hits a pedestrian. You know he
AND FONS TROMPENAARS was exceeding the speed limit. You also know
that you are the only witness. If you testify
under oath that he was not exceeding the speed
limit, you will save him from serious conse-
quences. What does your friend have a right
to expect from you?
a. He has a definite right as a friend to
expect you to testify to the lower speed.
b. He has some right as a friend to
expect you to testify to the lower speed.
c. He has no right as a friend to expect
you to testify to the lower speed.
More than 75 percent of American managers
answered b or c; fewer than half of Japanese
and French managers gave the same answers.
Religion may help explain these responses. Of
the top 10 universalist countries, all but two
Ireland and Pakistan are stable democracies
and Protestant. Catholics are, on the whole, less
universalist, and Buddhist countries are more
particularist still. This may be why France and
Japan are at roughly the same place on the
scale as Portugal, Belgium, and Singapore.
One historical reason why American
business managers are universalist is that the
United States itself was created as a New World
or universe, complete with a Declaration of
Independence and a written constitution.
Immigrants to the United States have voluntarily
relegated their ethnic and national identities to
a commitment to a new belief system.
What does this mean for business? The
universalist culture accepts and serves all
comers equally, whether they want citizenship
or hamburgers. Universalism is crucial to mass
manufacturing and mass marketing. The danger
is that quantity is seen as a good thing in itself.
Benchmarking, the comparative measurement of
11
 M A N A G E M E N T C U LT U R E S
WHY AMERICAN BUSINESS IS THAT WAY

Universalist cultures excel in mass

manufacturing and mass marketing.
Particularist cultures celebrate
what is unique and incomparable.
industrial processes, tends to assume that the
major challenge is doing things right as opposed
to doing the right things.
Particularist cultures celebrate what is
unique and incomparable, such as French
cuisine and couture. Business in these cultures
excel in customization. Products specially made
for certain customers are an important source
of prototype devices. Taken too far, though,
particularist cultures find that intimidation
and conspiracy become more important than
sanctions of legality. Extreme examples are the
Sicilian and Russian mafias.
ACHIEVED-ASCRIBED STATUS
To place managers on this dimension, we
asked them if they agreed or disagreed with this
statement: The most important thing in life is
to think and act in the manner that best suits
Six Dimensions of Cultural Diversity
Universalism (rules, codes, laws, generalizations)
USA, Scandinavia, Switzerland, Australia
Individualism (personal freedom, competitiveness)
USA, Canada, Scandinavia, Switzerland
Specificity (atomistic, reductive analytic, objective)
USA, UK, Canada, Netherlands, Australia
the way you really are, even if you dont
get things done. Sixty percent of American
managers disagreed, putting them at the
far achieved end of the status scale,
slightly ahead of Canadians and Australians.
Once again, Japanese and French managers
were on the opposite end. Seventy percent of
the Japanese and 65 percent of the French
managers agreed with the statement.
America is among the highest in achieve-
ment orientation of any national business
culture for historical reasons. An immigrant
nation has great difficulty ascribing status to
persons of varied national origins. (Who cares
that you came from Lithuanian nobility?)
What matters is not where you came from but
what you have done recently and what you
can contribute now. While ascribed status
does not travel well, achieved status can be
demonstrated in the New World for all to see.
Even in an achieving society it is still neces-
sary for individuals to say at some point, This
is worth achieving, but that is not so important.
Particularism (unique relationships, special circumstances)
Russia, China, India, Belgium, Japan, France
Communitarianism (social responsibility, cooperation)
India, Japan, France, China, Singapore
Diffusion (holistic, elaborative synthetic, relational)
China, Japan, India, Singapore
Who is to define a particular form of achieve- family-owned, and the family business culture,
ment as important? One solution is to let on the lower left, is represented by le patron,
different activities compete in the market for who was born into his position. China,
popularity. Football, boxing, and basketball Singapore, Hong Kong, and Thailand produce
are important because their fans make these the most family-owned companies.
sports rich. In achieving societies, markets
define what is valuable.
If markets do much of the ascribing in Achieved Status
achieving societies, achievement can do the Incubator Guided Missile
same in ascriptive societies. The French lyce
Particular Universal
and the Japanese high school, for example, Person Rules
are notoriously competitive and achievement-
Family Eiffel Tower
oriented, hence examination hell. But these
countries bring competitive achieving to an end Ascribed Status
relatively early in life. Once you are admitted
to a grand cole or a prestigious Japanese cor-
poration, your ability to achieve competitively The Eiffel Tower culture also depends on
has been discovered and certified. From then people in key roles, but has a strong rule orien-
on you are guaranteed status in return for tation. People in these roles may have achieved
using your abilities to serve the corporation, in the past, at some grande cole for example,
its customers, and the nation at large. but their current authority depends on their
Taken too far, though, ascribed status can formal position, on their ascribed expertise
become laughably absurd. In Britain, the habit rather than on recent successes. This business
of elevating the well-bred was memorably sati- culture is found in many countries but is identi-
rized on television as the Race of the Upper- fied with France and Germany. Both countries
Class Twits. The focus on achievement also can put great stress
be taken too far, allowing winners to eclipse more
creditable performances that did not quite win.
on formal
education but
America is high in
Insisting that varying skills be rank-ordered on thereafter rely achievement orienta-
some arbitrary scale best-sellers, for example on an expert tion. What matters is
places serious biography in the same category culture, which
as How to Erect a Teepee in Ten Minutes. tends to be not where you came
ascriptive and
from, but what you
VARIED CORPORATE CULTURES rule-bound.

Achieved status (what youve done)
USA, Canada, Australia, UK, Sweden
Inner direction (personal conscience and convictions)
USA, Canada, France, Australia, UK
Sequential time (race along a set course)
USA, India, Russia, Australia
Ascribed status (who you are)
Russia, Japan, China, Belgium, Netherlands
Outer direction (examples and influence from outside)
Russia, China, India, Japan
Synchronous time (a dance of fine coordinations)
Hong Kong, China, France, Sweden
In the real world of business, the cultural
dimensions examined above do not exist in
isolation they interact with each other. We
can illuminate these interactions by crossing
the two axes and creating four quadrants of
corporate culture.
A majority of the worlds corporations are
The guided can contribute now.
missile culture
is oriented around teamwork and project teams.
Teams are rule-oriented, but only insofar as
they are trying to achieve set tasks, to generate
new products and systems. NASA pioneered the
use of project groups.

12 13

WHY AMERICAN BUSINESS IS THAT WAY
Finally, the incubator culture is achieve-
ment-motivated but oriented to the particular
genius of the entrepreneur or innovator.
Companies in this culture typically are small
startups in Silicon Valley, Taipei, Bangalore,
Cambridge, and so on. The United States, the
Cross-cultural competence
correlates strongly with
extent of international
experience, but negatively
with technical competence.
UK, and northwest Europe produce most of the
guided missile and incubator cultures, although
Taipei and Bangalore have been at the intersec-
tion of family and incubator cultures.
MEASURING TRANSCULTURAL COMPETENCE
We have just seen that in the real world of
business, corporate cultures are not one-dimen-
sional but are the product of interactions
between different cultural values. It is also true
that business managers do not act
according to only one value.
Our questionnaire gave managers
a straight either/or choice between
two ends of a continuum. Under
normal circumstances, though,
business managers dont have to
make such stark choices. Thats why our new
questionnaire gives five choices instead of two.
Respondents can still choose one value and
reject the other; but they can also choose
various combinations of the two values.
The traffic accident question, for example,
now offers these choices:
a. There is a general obligation to tell the
truth as a witness. I will not perjure myself.
14
M A N A G E M E N T C U LT U R E S
b. I will tell the truth. But I owe my
friend an explanation and social
and financial support.
c. My friend comes first. I will not
desert him before a court of strangers
for an abstract principle.
d. I will support my friend whatever
his testimony. Yet I would urge him
to tell the truth.
e. I will testify that my friend was driving
a little over the speed limit but that
it was difficult to read the speedometer.
After administering the second questionnaire to
American, Canadian, and European managers,
we discovered that there is a capacity to deal
with and reconcile values in general. Cross-
cultural competence as measured by our
questionnaire correlates strongly with extent
of international experience and high positive
evaluations via 360-degree feedback.
Interestingly, there is a negative correlation
with assessed technical competence, which
warns us that manipulative logics may impede
us from relating to living systems.
But and here is the surprise the
transculturally competent do not necessarily
put their own cultural stereotype ahead of LI & FUNG:
foreign values in a logical sequence. For example,
American transcultural competents are as likely CONFUCIUS MEETS JOHN WAYNE
to argue that good communities and teams
generate outstanding individuals as the BY F. WARREN MCFARLAN
reverse proposition.
The role of managers is increasingly to
manage diversity per se, whatever its origins in
culture, industry, or discipline. If there is a way
Harvard did not teach Victor They did that on their own, after earning a
PhD in economics and an MBA, respectively.
of thinking which integrates values as opposed to and William Fung how to
But their management training came in handy
adding value, the implications are far-reaching. make a global company out once the brothers had successfully rebuilt the
This article is based on our book, Building Cross-Cultural of the family business. company their grandfather had founded almost
Competence: How to Create Wealth from Conflicting a century ago. The Li & Fung Trading Co. now
Values (New Haven: Yale University Press, 2000). combines the business cultures and practices of
old China and the modern West.
15

A POSTER-CHILD FOR SHAREHOLDER VALUE
Li & Fung was founded in 1906 as a bilin-
gual broker to match Chinese manufacturers
with English-speaking buyers. By the 1970s,
when the Fung brothers returned from the
United States, it was clear that those days
were over. Li & Fung still calls itself a trading
company and it still is a middleman between
mostly Asian manufacturers and Western
buyers such as Abercrombie & Fitch,
American Eagle, and Levi Strauss.
But now, by managing the entire produc-
tion process from raw materials to finished
product, the company meets its customers
needs by customizing their supply chains.
With 48 offices
T he Fung brothers in 32 countries,
Li & Fung has a
thought B2B exchanges global sourcing
network that
were a molecule thick allows it to
and a mile wide. provide value-
added services
across the entire supply chain in a border-
less manufacturing environment.
A down jackets filling, for example,
might come from China, the outer shell fabric
from Korea, the zippers from Japan, the inner
lining from Taiwan, and the elastics, label,
Velcro, and other trim from Hong Kong.
The garment might be dyed in South
Asia, stitched in China, then sent back
to Hong Kong for quality control,
packaging, and delivery. This supply-
chain customization shortens order
fulfillment, allowing clients to reduce
inventory costs.
Li & Fung does not own any of the
boxes in the supply chain, said Victor
Fung. Rather, we manage and orches-
trate it from above. In recent years,
16
however, the company has begun to improve
operations by controlling or owning strategic
links in the chain. In some cases, Li & Fung
offered raw material sourcing. In the past,
when clients placed an order, Li & Fung
would identify the manufacturer best suited
to supply the goods, and that factory would
source its own raw materials. But Li & Fung
understood its clients needs better than its
manufacturing plants did. By offering raw
materials to its suppliers, the company
ensured better quality control and saved
money for manufacturers by buying larger
and thus more cost-effective amounts of
raw materials.
The transformation has been very success-
ful. In 2000, Li & Fung outperformed the Hang
Seng Index by more than 75 percent. The
South China Morning Post said the company
could be a poster-child for shareholder value.
LITTLE JOHN WAYNES
While modernizing the old family firm,
the Fung brothers tried to preserve the best of
what their father and grandfather had created.
That meant finding a way to combine a focus
on a few relationships the essence of the
old model with the management of large,
complex systems that was the core of the
new business.
The solution: Create small units dedicated
to serving one or a few customers, and have
them run by entrepreneurial executives called
little John Waynes. People who wanted to
run their own businesses turned out to be the
ideal Li & Fung employees. William Fung said,
We give them the resources, opportunities,
and protection against the downside, making
it more attractive for them to work for us.
Senior managers run 90 small, worldwide
management teams as separate and individual
M A N A G E M E N T C U LT U R E S
companies. These dedicated teams
of product specialists focus on the
needs of specific customers and
are grouped under a corporate
umbrella that provides centralized
IT, financial, and administrative
support from Hong Kong. This
decentralized corporate structure allows
for rapid reaction to seasonal fashion shifts.
The term little John Waynes expresses
very well the drive and independence of
Li & Fungs managers worldwide.
These relatively independent, customer-
focused divisions are now the companys basic
operating units. We may be a Hong Kong com-
pany with a Chinese view of life, said William
Fung, but we do not ram notions best suited to
Hong Kong down a Thais throat, for example
we tend to let our foreign operations run to the
best local practices.
OLD VALUES
For all its business-school methods,
Li & Fung is very much a Chinese company.
Li & Fung is a company rooted in Chinese
values, said Victor Fung. We do not retrench
an employee. In fact we retain some of the
retirees as consultants. Furthermore, we do
not believe in the trappings of titles and the
attendant hierarchy; we treat employees of
Li & Fung as family.
Another old company value is the nurturing
of deep relationships with a small number of
customers. This strategy had always served the
company well, and the Fung brothers believe
that it will continue to be successful. The old
relationships, the old values, still matter, said
Victor Fung. It makes a difference to suppliers
when they know that youve been honoring
your commitments for 90 years.
It may have been this outlook that explains
why Li & Fung did not feel threatened by the
Li & Fung is a
company rooted in
Chinese values.
Internet. When the telephone
came along, the Fung brothers
grandfather was shocked.
But he adapted, just as their
father adapted to the fax. Now
the company has adapted to the Internet.
Unlike some other old-line companies, though,
Li & Fung never entertained the idea of
creating a dot-com division and spinning it
off. To start a pure Internet division is as
absurd as starting a fax division, a division
that exclusively uses faxes, Victor Fung said.
What the company did do was add techni-
cal directors to its board, people who can keep
Li & Fung abreast of technological changes.
Anything to do with information technology
is crucial to us, William Fung said. The
Internet is just another technology that
affects the way information is transferred.
The brothers also had no fear of being
disintermediated by B2B exchanges. Those
Internet trading platforms were, as Victor Fung
put it, a molecule thick and a mile wide,
based on many depthless relationships. The
brothers are convinced that a smaller number
of deep and lasting relationships will ensure
that their company lasts another 100 years.
Victor Fung captures this approach in one
phrase: Think like a big company, act like a
small one.
This article is adapted from Li & Fung: Beyond
Filling in the Mosaic, 1995-1998, #9-398-092,
by Anthony St. George, research associate, under
the supervision of Carin-Isabel Knoop, director,
research and development, executive education,
and Professor Michael Y. Yoshino; and Li &
Fung, #9-301-009, by Fred Young, senior
researcher, under the supervision of Professor
F. Warren McFarlan.
17
M A N A G E M E N T C U LT U R E S

MANAGING A
DANISH (?) BICYCLE TEAM
BY BJARNE RIIS

Is managing a cycling team

anything like managing in
business? Probably it is. If I
want to get the best out of
my riders, I have to be very
clear about what my goals are.
Language problems arent a big price to
pay for getting the best riders. Just like in
business, you dont want to settle for hiring
the top people in one country. You want to
hire the top people, period.
A TEAM THAT TELECOMMUTES

And I have to be sure that theyre the The riders on my team dont just come
right goals for the team. When Im sure I have from many different countries. They still live
the right goals, then I go for them 100 percent. in those countries. None of the teams top
riders lives in Denmark. Laurent Jalabert,
AN INTERNATIONAL TEAM
the team leader, lives in Switzerland. Michael
One way that cycling is like business is
that its becoming more international. Team
CSC-Tiscali was founded as a Danish team in
1997 and has been made up mostly of Danish
riders ever since. But almost half the team
members are from other countries: France, the
Netherlands, Sweden, Spain, the United States.
Fortunately, I have a lot of experience
with such teams. I have been on German,
Italian, French, and other national teams,
which had riders from all over Europe. The
language differences do present some manage-
ment difficulties, but communication still isnt
a big problem. Everyone speaks some English,
so that tends to be the common language on
our team. Most of us speak more than one
language, too. I speak French, Italian, German,
and English, as well as Danish. King of the Mounatain
Team CSC-Tiscalis Laurent Jalabert.

19
MANAGING A DANISH BYCYCLE TEAM
Bicycle racing is like war.
Team members must know
they can rely on each other.
Sandstd lives in Spain, Tristan Hoffman in
Belgium, and Rolf Srensen in Italy. All four
riders participate in races around Europe and
train at home. Even I dont live in Denmark.
I live in Italy.
Unlike a football team, we cant meet on
the same practice field every morning. How
Team CSC-Tiscali
This Danish bicycling team was founded
in 1997 and first competed in the Tour de
France in 2000. In the months following
that competition, the team went through
some dramatic ups and downs that led
observers to doubt it could even qualify
for the Tour in 2001.
First, a successful recruiting drive
attracted several experienced riders,
including French star Laurent Jalabert, one
of the top cyclists in the world. Then the
teams ability to pay those new riders was
thrown into doubt when its main sponsor
suffered financial setbacks and had
to withdraw its support.
The teams new manager,
Bjarne Riis, soon found two new
sponsors, Computer Sciences
Corporation and Tiscali, a leading European
Internet communications company. Then the
teams new star, Jalabert, fell from a ladder in
his home and broke three vertebrae.
do I manage a team whose members arent
even in the same place at the same time for
much of the year? Computers. All the riders
have bicycle computers, which provide several
performance measures. After a rider finishes
a training session no matter what country
or time zone hes in he plugs his computer
into a PC and e-mails the data to me. The data
tell a lot about how riders are doing and how
they can improve their performance.
I introduced computers into the team
Fortunately, the recuperative powers of
Jalabert and his teammates were strong
enough to overcome these setbacks. The
team not only qualified for the 2001 Tour
de France but Jalaberts performance in the
Tour ended all doubts about his recovery.
He won two mountain stages, earning him
the polka-dotted jersey that is awarded to
the King of the Mountains.
Jalabert finished 19th overall, 50 minutes
behind winner Lance Armstrong. The team
finished 18th, three hours and 17 minutes
behind Spanish team Kelme-Costa Blanca.
20
M A N A G E M E N T C U LT U R E S
because Ive been using them for several
years and have had good results with them.
It takes some time to learn how to use these
computers the right way, but they allow us to
design very specific training programs.
STARS AND WARS
When I can, I bring the team together at
my home in Italy. Cycling teams have to be
very close. Bicycle racing can be like war and
the team members have to be willing to fight
for each other. They have to know they can
rely on each other. Every rider has a respon-
sibility to the team, and even the least experi-
enced riders have to know that the team can
fail if they dont meet their responsibilities.
A big part of my job is motivating riders,
building up a team spirit. I find that many
riders dont really know why theyre doing
what theyre doing. I want them to think
about that, to explain to themselves why
theyre sitting on a bike so many hours of the
day. I dont want them to do it just because
its what theyve always done. You shouldnt
enter a race just to win some money. It has to
be what you love doing. I try get riders to find
their own motivation, their own ambition.
The teams top riders have a big role in
keeping the team together, too. Laurent
Jalabert, our star rider, is a complete profes-
sional. They have more experience than the
younger ones and can give them valuable
advice and guidance. By sharing their
experience, they make the team stronger
and the team spirit better.
THE CHALLENGE
The challenge is to build a team that
works well together, and that has clearly
defined roles that still leave lots of room for
Bjarne Riis
A professional
cyclist since
1986, Bjarne Riis
rose steadily to
the top ranks of the sport. In 1997, he won
the World Cup in the Amstel Gold Race.
He won the 1996 Tour de France, in which
he wore the yellow jersey for 13 days and
won four stages. He also reached the podium
in the 1995 Tour de France, in which he
finished third and wore the yellow jersey
for a day. He was the first Danish cyclist to
achieve each of these triumphs. He also won
the Danish national championships in 1992,
1995, and 1996.
each riders talent and personality.
My job is to make the racing and training
program for the team. I work with my sports
directors to decide who goes to which race. One
week, we send a group of six riders to one race,
a group of eight to another race, while others are
training at home.
The next week it
will be different.
I bring a lot of
It changes all the experience to the
time, which is
why structure is
job. My experience
so important. is my strength.
Without a struc-
ture, you cant make riders work together, for
each other.
Thats not easy, but I bring a lot of experience
to the job. Ive been a rider in the back of the
pack, Ive been a star, and now Im a manager.
My experience is my strength.
21
 FROM GLOBALIZATION TO
INTERDEPENDENCE
BY KENNETH S. COURTIS

Globalization is the word

everyone uses to describe the United States, the UK all these countries
are generating huge net negative financial
whats going on in the world balances. That means theyre increasingly
economy. But I think its dependent on other peoples decisions to
finance them.
something broader and more Who is making those decisions? Much of
complex. Its the growing the financing of Western economies comes
from Japan. Thats no surprise. But China has
interdependence between invested more than US$225 billion in the US
countries around the world. bond market. There are issues here that need
to be thought through very carefully.
That interdependence is having a huge impact JAPAN. In 1991, Japans debt to GNP ratio
on how we all live and interact. And its not just was 51 percent. It made the rest of the world
the big countries that have an impact on the look totally undisciplined. But today that ratio
small countries. is running at around 146 percent of GNP.
On a Monday afternoon in July 1997, Theyve increased debt, government on-balance Now, what if you had a client who had debt government will have to squeeze back govern-
Thailand devalued its currency. Over the sheet debt, by 100 percent of GNP in but a that was five times sales? Thats what youve ment spending quite aggressively. How will
next few months, that triggered a cascade of decade as theyve tried to struggle with this un- got here. Someone might say it wouldnt matter they finance pensions, life insurance, and
devaluations throughout the emerging markets precedented, at least for Japan, economic crisis. as long as interest rates are at zero, and short- health care?
that finally led to the implosion of Russia, the The off-balance sheet claims on the term Japanese interest rates are at zero. But But if you cut back spending that aggres-
collapse of the currency market in Brazil, and Japanese state, by the most conservative its not servicing your debt thats the problem; sively, with this much debt, with an economy
started to shake the global banking system. estimate, would be 150 percent of GNP, as well. its how you pay back that debt. this slow, and a financial sector this weak,
The Bankers Trust went I think thats the government The core of the crisis is the Japanese youre very likely to push that economy into
bankrupt and Long Term statistic. John Maynard banking system. Last year, we estimated that a huge recession. We saw what Thailand
Credit Management was T oday, its not just Keynes once said there are bad debt in the system was close to US$900 generated. Imagine what this could lead to.
about to implode and the big countries that three types of lies. There are billion. Theres probably been US$100 billion No country has had this much debt and
bring down major insti- lies we make by mistake, added to that since, which makes probably a not seen a major devaluation. Even small
tutions on Wall Street. have an impact on those we make on purpose, trillion dollars of bad debt. That works out to countries that get into this kind of trouble
It was only the very the small countries. and there are government about 20 percent of GNP. To give you a sense create large international consequences.
quick footwork of global statistics. We estimate that of how big this is, the savings and loans crisis, This is the biggest financial crisis that weve
central banks and mone- the off-balance sheet claims at its peak, was 2.8 percent of GNP. ever known, and its in the economy that
tary authorities that enabled us to back off from in the Japanese state are somewhere north Theres also a demographic problem. By finances a very large part of the US funding
the edge of the greatest financial crisis since the of 260 percent of GNP. Total bank loans, 2020 Japan will have aged so much that it needs every day. We should be prepared for
1930s. That crisis is over, but interdependence 132 percent of GNP as of the end of March. will make Florida look juvenile in comparison. it both the opportunities and the risks.
with the vulnerability and potential volatility Other forms of corporate debt bring the total Forty-three percent of the electorate will be CHINA. China is going through a change
it creates is still with us. France, Germany, up to around five times GNP. over 60. With this type of debt load, the of another kind, the kind that happens only

22
FROM GLOBALIZATION TO INTERDEPENDENCE
once every 200 or 300
years. The Chinese
are dismantling the
state, going to a
market economy, and
catapulting themselves
into the 21st century.
These changes are so complex because
different parts of the economy are changing at
different rates. Much of the economy in that
country has operated the same way for 400 or
500 years. Theres also a part thats becoming
like that great industrial class that was created
in the West with the development of mass
production. At the same time, another part is
completely integrated in the latest technology.
For example, I was in Beijing recently,
talking with seven people who have created a
young biotechnology company. All seven have
doctorates from East Coast US universities, and
all had worked in US labs. Their company is
China is going through a change
of the kind that happens only
once every 200 or 300 years.
starting by doing subcontracting for the interna-
tional pharmaceutical majors. What they do is
hire their old professors as consultants, then
get those professors to give them their best
students. The students work for them for three
or four years, then go work in the United States
for five or 10 years. Then they go back to China
and keep this thing rolling.
Their ambition is to turn their company
into a hugely powerful research organization.
Their research will create breakthroughs, which
theyll license to international companies.
24
GLOBAL INTERDEPENDENCE
ADAPTING
TO
I asked them how they compete with
other companies that do the same type of
CHANGE
thing in the United States and Europe. They
BY JAMES
answered that their cost structure is 16
times lower. They dont see any difference
between the quality of work theyre doing
now and the quality of work they were Companies have always had to adapt to market
doing when they worked in the best labs in the change. That was true before the era of global
top companies in the United States. But they economic interdependence that Ken Courtis
have a different cost structure. describes. It remains true when the changes that
But thats only part of whats happening swirl around a com-
in China. On the sidewalk outside their office, pany can begin with
theres a guy whos laid out a tarpaulin to sell
garlic that hes carried on the train for two days
central bank deci- C ompanies
sions made halfway
from his collective farm. The kind of change around the world. tend to respond
China is going through is extremely complex to And today, as Courtis
to change by
manage. But its a country thats rolling ahead, points out, even
in good years and bad. Ten years ago the Chinese decisions made in choosing one
economy was an eighth the size of Japans. small countries can
of three paths:
Today its one-fourth. It wouldnt surprise me to have global impact.
see it double again in the next decade. Its always been expanding,
Were navigating in a world thats going beyond the capability
acquiring, or
through incredibly complex change at all levels.
There are very big risks in the mid-term that
of any company or
industry to affect the hunkering down.
well have to turn our attention to very quickly speed and breadth of
if were to prevent them from becoming huge, macroeconomic
destabilizing factors in the world economy. change that includes currency and trade
instability, financial retrenchment, indecision,
P OSTSCRIPT. The September 11 terrorist attacks and employment uncertainty. That always has
in New York and Washington have altered been the responsibility of those same central
substantially the short-term outlook for the banks and of international monetary authorities.
world economy. This year may show the slowest The inability to affect either the fact or the
global growth rate since World War II. But the pace of change causes some companies to see
determination of governments to fight terrorism these worldwide events as overwhelming.
and coordinate measures to revive growth will But others see those same events as presenting
support a sharper-than-expected recovery by new challenges and opportunities.
the second quarter of 2002. China, however, Companies tend to respond to change by
still is a bright light. Because China is dependent choosing one of three paths:
on domestic demand, it can expect better than Expansionists will attempt to grow out of any
6 percent growth this year. risk of slowdown by investing in technologies
that expand: distribution capabilities;
COOK
portfolios of products and services; and into
new market segments or geographical areas.
Acquirers will buy other companies that
extend their reach, increase their scale,
or expand their offerings.
Conservatives will cost-optimize and hunker
down. They will invest only where the bottom
line value can be justified in the current
climate of economic activity.
Whatever path a firm takes, it must strive
to make change an ally instead of an enemy.
To accomplish this end, the leaders of the enter-
prise must shape a resolute strategy defined by
speed limits. The speed limits will set the pace
of change and the expectations for results and
measurements. These will permit the organiza-
tion to evaluate its success or failure versus the
competition, and to make essential and frequent
mid-course corrections and adjustments.
The merit of this
approach is that it
builds a tolerance Whatever path
for ambiguity into a firm takes,
organizations.
Progress is not it must strive to
for the faint-hearted. make change
It never has been.
Risks need to be an ally instead
taken and IT invest-
of an enemy.
ments need to con-
tinue. The substance
and strength of the implementation at each
company will be the measure of winners and
losers in this fast-paced environment.
First Hand
Teaching Management
Against the Grain:
AN INTERVIEW WITH
Henry Mintzberg
Henry Mintzbergs standing as
one of the worlds most important
management thinkers was under-
scored by two honors last year:
He received the Distinguished
Scholar award from the Academy
of Management, and placed seventh
in the Financial Timess list of the
top 50 business gurus. According to
Management Todays guru guide, not MBAs.
Mintzberg is hotting up fast.
Unlike many other gurus,
Mintzberg isnt known for grand
theory. His emphasis on the prac-
tice of management was evident
in his first book, The Nature of
Managerial Work (1973). One of
the findings of that book was that
managers spend most of their time
putting out fires, a job that isnt
made any easier by studying
general theories of management.
Although much of his writing
is against the grain of business
literature, Mintzberg has spent his
career in business education. He
has been teaching management
at McGill University in Montreal
since 1968, and is now Cleghorn
Professor of Management Studies
there. He also is a visiting scholar
at INSEAD (the European Institute
of Business Administration) in
Fontainbleau, France.
In 1995, Mintzberg put his
criticism of business education into
practice by co-founding the
International Masters Program in
Practicing Management (impm.org).
He and Jonathan Gosling of
Lancaster University in the UK,
working with business schools in
France, India, and Japan, created
the IMPM as the next generation
masters program. He is no longer
director of the program, but hes still
very much interested in changing
business education. Hes working on
a book titled Developing Managers,
CSC World: For a business school
professor, you have been very criti-
cal of the most popular business
school degree, the MBA. What dont
you like about it?
Mintzberg: It trains the wrong
people the wrong way for the wrong
reasons. I dont think you can create
managers in a classroom. You cant
teach management to people who
have never been managers and
T he MBA is good training for schools tell
analyzing business. But managers
dont have to be analysts.
dont have much business experi-
ence. So instead you teach them
about analysis and other functions understand. That goes on all over.
and they walk out thinking they
know how to be managers.
CSC World: Do you mean that
business schools are providing good high school teachers or engineers
education but not the right kind?
26
Mintzberg: The MBA is good
training for analyzing business. If
analyzing business is what youre
going to do, then the MBA is a good
degree to get. But managers dont
have to be analysts.
Good management has to do
with good judgment and under-
standing of context. Managers have
to be connected, in a sense. They
need to have a deep knowledge
of the business theyre in, and
they wont get that in a classroom.
Learning the general principles
of management isnt much help
to people who have to manage
something in particular.
CSC World: And yet there are
MBAs in management positions all
over the world.
Mintzberg: Companies need
managers. Organizations of all kinds
need managers,
and business
them where to
find them. The
MBA is seen
as training for
management. So
companies hire
people with MBAs. Then they give
them jobs running things they dont
CSC World: Why is there such a
large management literature?
Theres nothing like that for, say,
or politicians.
Good management has to
Mintzberg: do with good judgment and
Theres now a cult of
understanding of context.
management. The
literature wasnt that
big several years ago,
but its grown enormously. Maybe
as much as half of that literature
is very similar to self-help books.
How to clean up your psyche, live
a happy life. Probably most serious
managers dont look much at those
books. But a lot of unserious man-
agers who nonetheless have quite
a lot of influence do look at them.
Theres a lot of good management
literature, too, but it doesnt offer information technology was viewed
quick fixes or self-help.
CSC World: Why has this literature
exploded the way it has?
ness always has to incorporate.
Mintzberg: Im not sure why.
One of the key things might be
the growth of business schools.
Business schools werent very
significant before 1965 or 1970. But
theres been an enormous growth
since then. Theres also the obses-
sion with finding heroic leadership.
MBA programs are training heroes.
But business doesnt need heroes.
Business needs good managers.
CSC World: We keep hearing that
the information economy or
reengineering, knowledge manage-
ment, the Internet will change
everything. So far, not much seems
to have changed. Why do you think
that is?
Mintzberg: I think the notion that
we live in this great age of change is
a crock. Certainly there are things
changing. Information technology
is changing. But some things are
always changing, and other things
dont. We drive cars that still use
Model T technology. We fly in air-
planes that still use Comet technolo- importance of knowledge work
gy from 1952. The French came up
with the metric system 200 years
ago, but America has yet to adopt it
and Britain has only sort of half
made up its mind to adopt it. So you They already know what they have
get in your cars and drive miles and to do and they dont need to com-
measure gallons. We dont notice
the things that dont change.
CSC World: What about the rise
and fall of the dot-coms? Wasnt that becoming less engaged and less
an important change?
Mintzberg: The press certainly
hyped the dot-coms. The change in
as very dramatic and utterly differ-
ent. But maybe it was just another
one of the many changes that busi-
overseeing kind of managing, and
Suppose that architectural styles I think its going to wreak havoc.
changed. You wouldnt expect spe-
cial companies to grow up because
they have this new architecture.
Thats not
a perfect
parallel,
but you
Business
get my heroes. Business
point.
The old good managers.
companies
wouldnt
die. Theyd adapt. We used to
communicate by letter, then by
telephone, now by e-mail. These
were all changes in information
technology and business adapted
to all of them.
The hype was that the dot-
coms were going to revolutionize
shopping, but all they really did was
revolutionize ordering. Shipping
what people order is no different.
Sears has been doing it for decades.
CSC World: Will the increasing
bring about a change in manage-
ments role?
27
Mintzberg: It should, but I think
its going in the opposite direction.
Knowledge workers have to be
coordinated, but they dont have to
be encouraged to put out energy.
municate with each other through a
superior. Knowledge workers need
a management style thats engaged
and connected. But managers are
connected, which makes it hard for
them to deal with people who think.
Hewlett and Packard, for
example, set a different pattern for
how you manage knowledge work.
So did Grove at Intel. But now what
youre getting is a reversion to an
CSC World: Why?
Mintzberg: Because theres a trivi-
alization of the
whole sense of
management.
doesnt need Weve driven
out everything
needs that makes a
good manager
intuition,
connection,
context. People just float in and out
without knowing what theyre man-
aging.
do
A great
everything
leader
now.
is supposed to
CSC World: And yet the need to
attract and keep talented employees
is still high on the business agenda.
How should companies do that?
Mintzberg: By treating employees
like human beings instead of
human resources. You dont have to
empower people. If you treat them
decently, they empower themselves.
Support your employees and
encourage them, but otherwise
leave them alone to do their work.
Findings

Smart roads will improve

Getting Smart
long as it stays within a
A LEADING EDGE FORUM REPORT single domain of knowledge.
Expert systems are programs
that capture the knowledge in
a very narrow field and provide
auto traffic. Smart fish will
improve salmon traffic.
classification (e.g., medical and
legal) and problem-solving
(e.g., help desks, design, planning,
Anticipating The culmination of
smart is the anticipating system.
Anticipating systems arent directed
to solve specific problems; they find
problems, recommend solutions,

S
mart systems have always fascinated us.
Since the first practical computers were
conceived, engineers have dreamed of creating
machines that can think like humans.
We havent done that yet.
Computers are not yet as smart,
or as dangerous, as HAL in 2001.
But practical applications of smart
technology are emerging that will
change our lives. Today, though,
many organizations are wondering
how to recognize and make use of
smart systems. To help organiza-
tions understand these systems,
CSC has identified five attributes
of smart, dubbed smart quotients.
Adapting The ability to adapt to
users and the environment to
recognize context is one of the
basic attributes of smart systems.
Nomadic computing envisions a
time when networks will adapt to
individual users by greeting them
with their personal environments
when they log in, no matter
where they are or what device
they are using.
One element of those future
devices is likely to be the human-
ized interface. A still-experimental
example is one developed at the
MIT Media Lab, which is designed
to express emotion. These virtual
assistants are based on the assump-
tion that people prefer talking to a
luxury car makers have incorporat-
ed simple warning and collision-
avoidance systems in their vehicles,
and cars will become even smarter
when they are combined with
smart roads. Smart transportation
systems will manage traffic by
monitoring road conditions and
controlling the speed and location
person instead of to a machine. But of cars. Advances in this area are
its also true that there is a very thin slow, though, because the tech-
line between natural, emotion-laden nology must be absolutely reliable
interaction and annoying stupidity. and there are no standards for
Malfunctioning computers are systems and interfaces.
another source of annoyance. Improving salmon traffic is the
Researchers are finding ways to job of the sensor fish, a mechanical
enable networks to adjust to fish that is sent through hydro-
different levels of stress without electric dams on the Snake and
requiring Columbia Rivers in the United
abandonment States Northwest.
of users by
a wholesale
T here is a very thin Salmon trying to
reach the Pacific
shutdown. line between natural, Ocean through
There already those dams often
are smart disk emotion-laden are killed by
systems that spinning turbine
can predict the interaction and blades and
imminent fail- changes in water
ure of a drive
annoying stupidity. pressure. The
by continuously sensor fish will
monitoring network components. help engineers design safer dams.
In the future, systems will be able Sensors arent just for inanimate
to adapt dynamically to a wide range objects. Some forms of deafness
of stress situations, such as security can be cured by tiny implants that
attacks, performance requirements, directly stimulate the nerves of a
and component failure. persons hearing system.
Sensing Sensing systems acquire Inferring If theres smoke, then
information from the world around theres fire. Computers can do this
them and respond to it. Some kind of simple if-then inferring as
expert solutions to problems in
that field. Examples are Big Blue in
chess and AMOS, the CSC-designed
system that operates NASAs X-Ray
Timing Explorer satellite.
But maybe the fire making the
smoke is small. Or mostly burnt
out. Computers cant handle
nuances like maybe and mostly
they prefer yes and no. Fuzzy
logic was invented to allow comput-
ers to handle such natural language
problems. Antilock braking systems,
for example, use fuzzy logic to
decide what to do when the car is
going fast or slow, with those
speeds being determined by circum-
stances rather than by a specified
number of RPMs.
Another kind of inferring sys-
tem is data mining, which harvests
useful information from mountains
of data. It differs from traditional
statistics in that statistics forms a
hypothesis and validates it against
the data. Data mining, by contrast,
discovers patterns in the data
and forms its own hypotheses.
Organizations are excited about data
mining because the digital age has
provided them with a wealth of data
they know is valuable if only
they knew how to use it.
Learning Intelligent systems
improve through the course of
their interactions with the world.
One learning approach is case-based
reasoning (CBR), which uses a
case base of solutions to previous
problems to analyze and solve
new problems. CBR has been most
successful in domains involving
diagnosis). and in some cases fix them on their
Another approach is neural own. Such systems are not limited
nets, which are simplified computer to one domain, but can apply their
versions of the human brain. Neural knowledge and reasoning across
nets are best suited to problems multiple domains. In this sense,
that are difficult to describe, such asanticipating systems come the clos-
recognizing handwriting. Rather est to modeling human intelligence.
than writing a program for this task, Its also true that mature antici-
systems are trained by being pating systems exist only in the
provided with handwriting samples minds of visionaries and science
and the correct answer. The system fiction writers. Nonetheless, the
learns to generalize from the train- seeds of such systems are present
ing set and recognize most peoples today in goal-directed robots. One
handwriting. Optical character of the most impressive of these is
recognition is one of the most NASAs Nomad robot. Nomad suc-
successful neural net applications. cessfully completed a 200-kilometer
However, most neural nets used in trek through Chiles Atacama desert,
commercial applications
today do not continue to
learn. They are trained A NASA robot made a
when they are designed, but
become static when insert- 200-kilometer trek across
ed into broader applications.
Chiles Atacama desert.
Genetic algorithms,
another approach to learn-
ing, are based on a biological and later traveled through
metaphor: survival of the fittest. Antarctica, finding and classifying
This approach works by creating meteorites and terrestrial rocks.
a large population of candidate
solutions, only the fittest of which Smart new world
survive. New solutions are created The technologies that underpin
from the survivors, through a these smart systems will fundamen-
process analogous to breeding. This tally change the way we live and
process continues through several conduct business. Smart systems
generations, with weak solutions will become our skilled assistants,
being replaced from the ever- adapting to us as needed and, over
stronger population of solutions. time, disappearing into everyday
Genetic algorithms are emerging life. This change will not come
in the pharmaceuticals industry as overnight. But continuing innova-
computational aids for drug design. tion and technology advances will
They have even been used to create help todays smart systems over-
music, although opinions of the come their limitations.
quality vary with the listener.

28 29
In Practice

Building a The focus on business processes

allowed the team to speed up
Customer-Friendly Telco speed up development by not negotiate development by not having to inte-
Fast having to integrate the applications
at every level. They didnt have to
contractual
details and grate applications at every level.
integrate the applications user service
BY VANESSA REED interfaces, reporting mechanisms, provision
or databases. They used one single dates. They can use the same After provisioning, customers
user interface across all packages, self-care function to check on the receive e-mails asking about
an interface that has the brand of progress of their service request the quality of service. If theres a
the client, not the application and are automatically informed fault anywhere on the network,
Marconi PLC didnt want to create achieve as a business. At a nine- vendor. Extracting business process- when service provision is complete. ipsaris automatically e-mails those
just another telco. When the com- day business process workshop, es meant less integration and less
pany decided to transform its dark CSC helped ipsaris flesh out these time for development.
fiber business, they wanted to do goals as well as the means for In February 2001, seven months
more than move up the value chain implementing them. after the project started, the new
to selling managed bandwidth. Like most businesses, they systems had been developed and ipsaris Ltd.
They wanted to build the telco that wanted the flexibility to adapt to tested, company staff had been
was the easiest to do business with. changing business requirements trained and ipsaris was in the In the 1980s, Marconi PLC, Britains biggest telecommunications
Thats not all Marconi wanted. and the scalability to meet future telco business. equipment maker, laid 1,300 kms of optical fiber along the canal
They also wanted the flexibility to growth in the business. Unlike most system in the UK through its subsidiary, Fibreway, a joint venture
adapt to changing business require- businesses, they understood that The customers experience with British Waterways. For several years, the only business of that
ments without getting locked into a flexibility and scalability, if they Because ipsaris wanted to allow
subsidiary, later named ipsaris, was selling dark fiber. That is, it
particular set of applications. And it
were to last more than a few years, its corporate customers to manage
had to be done fast. Marconi want- had to be designed into the system sold fiber to other telecom operators who could light it and
their own requirements as much
ed the new telco to be ready for architecture. That meant avoiding a architecture. This solution enabled as possible, self-care features had provide services over it.
business in the record time of seven common pitfall of startups: integrat- business processes to be configured been built into system architecture. Looking for new ways to boost revenue, Marconi recognized
months. All these requirements ing third-party applications in such in one central function rather than That meant automating as many in mid-1999 that it could improve its investment by turning
were met by using a form of a way that it becomes very costly to hard-coded in many applications. processes as possible, and giving ipsaris into a telco and selling direct to corporate customers. At
business process management to add or replace them when better customers and staff Internet access the time, the equity markets were bullish, so there was a strong
build the system. products become available. Long-lasting, fast-acting to the companys systems.
potential for an IPO to enable them to recoup their investment.
The solution was to Not hard-wiring the applications Customers can order almost
integrate them from the top together brought two more benefits. their full suite of services through That transformation meant creating a company and all the

F lexibility was built into down, starting with the

business processes instead
the system architecture, of with the applications that
support those processes.
so applications can be The team designed an
architecture around prod-
added or replaced ucts from BEA, Tuxedo,
quickly and cheaply. Web Logic, and ELink, and
a workflow management
product from Staffware.
Then they selected commercial
Building a new company applications from 12 leading ven-
In June 2000, ipsaris contracted dors, including the new Oracle 11i
with CSC to design, build, and suite of applications. Developers
deploy all their business support abstracted key business processes
systems. The company-to-be began from these components and migrat-
with a 14-page strategy statement ed them into a business process
outlining what they wanted to engine that was built into the
First, it gave ipsaris a system that
makes business processes easy to
modify. As the business changes
and grows, it will be as easy to
remove existing applications as to
add new ones, thus reducing the
cost of owning the system over
time. The transformation team built
a system that can accommodate a
great deal of change without having
to be rebuilt every few years.
The second benefit was
meeting ipsariss very aggressive
deadline. Not surprisingly, some of
the product vendors thought the
seven-month timetable was wildly
optimistic. But the focus on busi-
ness processes allowed the team to
ipsaris.com. Standard, catalog-based
services are almost self-provisioned
because they are automated
through the business processes,
ordering can be done entirely
through the Web. More complicated
requests ones that require digging
up streets, building or acquiring
physical network, and procuring
and installing equipment are
handed off by the business process
engine as special mini-projects.
To request service and access
the self-care function, customers
register with the company at
ipsaris.com. Through the Web site,
customers can then choose their
services, get price information, and
associated business infrastructure from scratch. Although Marconi
financed this transformation, it kept ipsaris at arms length from
day one. This meant that an entirely new team had to be
recruited to design every aspect of the new business. A few of
the challenges facing the team were: expanding the existing
fibre routes from 1,300 to 3,500 kms, together with the entire
associated infrastructure to house their equipment; designing all
the transmission architecture, which included 10 Gbps SDH and
an 80yDWDM system capable of carrying 500 times the capacity
of Yahoo; and developing a leading edge IP network.
In June, ipsaris was purchased by the smaller telecom and
Internet services company, Easynet. Marconi had not yet spun
off and sold ipsaris when this merger took place. Because Easynet
paid for the acquisition in shares, Marconi, who owned more
than 90 percent of ipsaris, is now the largest owner of Easynet.
Marconi plans to gradually reduce its holdings in the company.

30 31
In Practice

customers who might be affected to
let them know theres a problem.
All billing information is available
on line and once initial service is
provided customers can increase
and decrease their bandwidth auto-
matically without any intervention
by ipsaris.
Theres a similar procedure for
problems that are reported by cus-
tomers. The system automatically
assigns a job number to the report
so the customers can use their
login to see whos working on the
problem and how close they are to
fixing it. When the problem has
been fixed, the customer gets an
e-mail requesting confirmation BY EDWARD CRISCUOLO,
that service has been restored to KEITH HOGIE & RON PARISE
normal. Only when the customer
confirms does ipsaris close the job.
In addition to providing an
unusually high level of self-care,
CSC helped ipsaris customers get
something they always wanted: Putting the Internet in Space
variable bandwidth on demand.
Simply put, ipsaris customers can
log on and turn the bandwidth dial

Are you here yet?

Providing telco services to corporate customers is a
up or down themselves, depending
on their immediate needs. Right
now, ipsaris is one of a handful of
providers offering such a feature.

Conclusion
M ore and better science missions at
less cost. Thats been NASAs goal for years,
This requirement eliminated
most satellites from consideration.
However, the OMNI team
complicated job. The ipsaris transformation team identified When competition is intense, and now theres a way to achieve it: did find UoSAT-12, a British-built
the companies that can differentiate minisatellite that was launched
165 steps in the workflow of a request for service. But ipsaris
wanted corporate customers to be able to track the progress
themselves by the quality and level by extending the Internet into space. from the Baikonur Cosmodrome
of service they provide will emerge in Kazakhstan on a modified
of a service request in somewhat the same way that individual as the winners. It becomes increas- Soviet-era ICBM. Surrey Space
consumers can track packages they send through the ingly important to provide excellent Using Internet technology to shortened mission design and Technologies Ltd., at the
overnight delivery company, Federal Express. FedEx customers service by the customers preferred communicate with satellites and development time and reduced University of Surrey, built UoSAT-
can find out where their package is at any time by logging method and at times when the other spacecraft will dramatically costs for operations. Thats the 12 using low-cost commercial
customer requires it, not when its cut the time and costs involved in goal of the Operating Missions as technology that was well suited to
into the company Web site and entering a tracking number.
most convenient for the operator. designing, developing, and operat- Nodes on the Internet (OMNI) OMNIs purposes. OMNI found
There are big differences between the two services. ing future space science missions. project at NASAs Goddard Space
Customers who are dissatisfied out about the satellite through a
However challenging it may be to organize an overnight One thing that makes missions Flight Center in Greenbelt, Md. team member who had connec-
with old telcos may attribute their
delivery service, the essentials are simple: government problems to companies that are expensive is the specially designed tions to people in the Surrey
provides the infrastructure streets and roads and the burdened with legacy systems and communications systems used to The ham radio connection group through a common interest
company provides the equipment trucks. outmoded procedures. However, control satellites and download The OMNI project did not in amateur space radio.
many recent startups are equally data from them. NASA started have a big budget,
A telco, however, may have to build its own infrastruc-
burdened by a lack of imagination. putting satellites in orbit long though, so could
ture by digging up streets to run cable onto a customers
premises. It will have to install equipment both on customer
Their technology may be brand before the Internet, so it had to
invent its own communications
not afford to
launch its own
U sing Internet protocols means
new, but their business vision
premises and within their own network infrastructure, which is not. Its very difficult to add systems, building a new system Internet-enabled NASA will be able to use more
means it must purchase equipment thats not already in customer-friendliness after your for each new satellite. These satellite. The
inventory. To get all this work done, the telco may have to systems are finished. Ipsariss custom-built systems were, and team began look- commercial software and
still are, very expensive to design, ing for one that
get council permits and contract with third parties. customer-friendliness was built in
operate, and maintain. was already in
hardware on science missions.
ipsaris has taken the highly unusual move of making from the start.
By using standardized Internet orbit and could be
each step in the process visible to its customers. Like individuals protocols to control and receive modified without UoSAT-12 uses high-level data
tracking packages sent for overnight delivery, ipsariss data from satellites, NASA will be great expense to use Internet link control (HDLC) framing,
corporate customers can log into the company Web site to able to use more commercial soft- protocols. What was needed was which is old technology that ama-
track the progress of their service request. ware and hardware to develop and a satellite that used data framing teur radio enthusiasts have been
operate spacecraft for scientific standards that were compatible using for at least 10 years. But its
experiments. The result will be with standard network routers. exactly the kind of framing used

32 33
In Practice
In January 2001, UoSAT-12 became
the first Web server in space.
by commercial routers. functioning node
Putting Internet proto- on the Internet
col packets on top of that low-tech 12 satellite. That is, engineers the first in space. OMNI reached
hardware would allow data to run sent ping packets to the satellites another milestone in January of
right into any Internet router. Internet address and got a this year, when UoSAT-12 became
In April 2000, the OMNI team response, which told them that the first Web server in space.
successfully pinged the UoSAT- the UoSAT-12s computer was a it do things it was not originally
Faster, better, cheaper
Deploying Internet-enabled
satellites would allow NASA
Business benefits of using scientists and engineers to design
space science missions using
Internet protocols
commercial software and hard-
Mission design NASA can design more complex missions at ware. In the past, much of the
less cost and with less need for special training. Standardized Internet cost of designing missions was in
protocols will make it possible to design multisensor missions, in which developing customized software
several satellites communicate with each other, and will even permit and hardware. Communications
single-purpose missions to share data. The use of commercial software code, electrical specifications, and
and hardware reduces costs by reducing the need for customized testing equipment all were unique
to each mission, and required
systems. Training costs also will be reduced because engineers and
extensive documentation and
scientists already will have been trained on these systems.
training.
Software development Using Internet protocols means using Using commercial software
standard, commercial operating systems and program interfaces and hardware means using
that already have been tested and documented. There will be much standard operating systems and
less need to develop mission-specific software with accompanying program interfaces that already
documentation and interface specifications. have been tested and documented.
The need for training on these
Hardware development As with software, using Internet proto- systems will be reduced because
cols means being able to use standard, commercial hardware with people already will be familiar
electrical specifications that already have been tested and documented. with them before beginning
Standard network interfaces, such as Ethernet and HDLC, can be used work on a mission. The transition
in place of specialized interface simulators. from testing to operation will be
smoother because the same soft-
Testing and integration Commercial testing equipment can be ware used to test a system also
used in place of custom-built equipment. The time required for integra- will be used for flight operations.
tion will be reduced by testing subsystems over the Internet before Quicker distribution of data
shipping them to the integration site. That way, problems can be from science missions would be
identified and resolved while subsystems are still at the manufacturer. another benefit. Mission data now
have to be patched through to a
Mission operation Missions designed with standard Internet
particular place, and then must
protocols can be operated with the same software used for testing.
be translated from proprietary
It will no longer be necessary to develop new software when moving protocols into Internet protocols
a mission from the laboratory to flight. Using commercial software to permit wider distribution.
also means that NASA can take advantage of new commercial Data that were already in Internet
developments that occur after launch. Because mission data will
protocol could be distributed
already be in Internet protocol, they will not have to be translated, much more quickly.
and can be distributed more quickly to more investigators. Missions designed using
commercial systems that meet
34
Internet standards are much
more flexible, too. Researchers
can easily upload new software,
new algorithms, and new opera-
tions codes. They can even
modify the mission itself, having
would eliminate the need for such
designed to do. Sensors aboard
one satellite may be used to
gather data for other missions.
This means that researchers
can take advantage of new tech-
nologies even after a mission
has been launched.
Gamma rays and large arrays
Extending the Internet into
space can provide cost-effective
messaging among space and
ground systems. This will give
astronomers increased capabilities
to study, for example, the still-
mysterious gamma ray burst
(GRB) phenomenon. GRB events
last only a few hours and occur
anywhere in the sky, so instru-
ments would have to be alerted
quickly so they could observe
the events with minimum delay.
Detectors, observatories, and
ground stations that communicate
in real time using Internet proto-
cols will enable a cost-effective
solution for automated sense-
decide-act operations for this
type of science scenario, as well
as many others.
Internet protocols will create
opportunities for new types of
collaborative science by allowing
satellites with different missions
to communicate and share data
with each other. NASA, working
with CSC, did succeed in getting
solar science satellites to talk
to one another a few years ago.
But getting single-purpose
missions to collaborate required
time-consuming and expensive
Extending the Internet into space
can greatly improve communication
with space science missions.
modifications of existing systems. sensor web might consist of
Internet communication using many in-atmosphere and orbiting
commercial-off-the-shelf products, instruments that automatically
coordinate their observations in
costly upgrades. It also would real time. A dynamic network of
permit scientists to do something cooperating sensors a sensor
now done only on the ground: web will ultimately enable new
build large arrays of instruments science mission concepts to be
that communicate with each other realized cost-effectively.
and deliver data in real time. In these ways and many others,
This is the goal of NASAs Sensor the evolving Internet promises to
Web concept. expand the horizons of scientific
For example, scientists could research by allowing NASA to
develop sensor webs to study the spend more of its mission dollars
effects of solar phenomena on on science and less on communi-
terrestrial power grids. Such a cations systems.
The satellite in the minivan
However appealing OMNI was as an idea, it meant veering sharply away
from the way NASA always had conducted science missions in space.
OMNI engineers had to provide proof of concept. So they built a
prototype satellite and launched it in a Plymouth Voyager minivan.
The prototype consisted of laptop computers, a power supply and
a transmitter in a crate behind the front seat, and an antenna and
movable cameras attached to a sheet of
plywood that was tied to the rack on top
of the van. Although constructed with
materials lying ready at hand, the result
closely resembled the communications and
scientific equipment on a real satellite.
Using Internet protocols, this satellite
was driven around Goddard as it sent Global
Positioning System telemetry, weather data
(from a weather station on the back of the
van) and video images to the OMNI control
center. Using a Web browser, controllers were able to maneuver the on-
board video cameras. The demonstration was so successful that NASA
used the prototype for its Eclipse 99 project, which provided real-time
coverage of the 1999 solar eclipse from a ship in the Black Sea.
35
Book Review

Next:
The Future information long before
the Internet.
Just Happened Then there are the rebels
who arent kids at all, except in
their fascination with technology.
Michael Lewis The middle-aged guys
who created TiVo and
(New York: W.W. Norton & Co., 2001) Replay have nothing to
do with the Internet.
N o more prime time. That sent
They invented little
black boxes that allow
REVIEWED BY ROBERT MUTCH people to download
any TV program from
anywhere. As Lewis
tour, they organized on the Internet day jobs to pay the rent. That last
and paid for it themselves. That doesnt fit in with one of Lewiss
gave the band the idea of becoming main points: that theres no such
their own middleman. They went thing as a true outsider, that
back to their fans to raise the these high-tech rebels are making
trouble only as a scheme
to get bought off and
brought inside.
Thats not new,
shivers through the boardrooms either. Entrenched elites
always have dealt with
of network TV companies. challengers by squashing
them or absorbing them.
Those elites change over

H
eads up: You may edge about legal proce- describes it, the box does what advance necessary to record anoth- time but unless theyre remarkably
already be a loser. dures to become the VCRs were supposed to do and er CD, then went to the record self-destructive, they dont go away.
Capitalism is changingtop-ranked criminal law more. Which mean that viewers company that had ditched them Theres lots of change discussed
fast, and if youre not
expert for AskMe.com. can not only skip commercials, and gave them a recording con- in this book, but it doesnt all fall
a kid anymore you may not have Granted, the fact they can ignore the program tract. It was a very sweet moment. neatly into Lewiss adolescent
what it takes to keep up. that 14-year olds can use the though. When the scam artists schedules of the networks and Like Lebed and Arnold, takeover theme.
This is the grim and not Internet to manipulate the stock start coming from the ranks of the cable companies. No more Marillion used the Internet to What is new is the pace of
quite believable message of markets is a sure sign that some- suckers, does the SEC come down prime time. That sent shivers redistribute market power. Like technological change that todays
Michael Lewiss otherwise thing has changed. What happened as hard on them as it would on a through the boardrooms of TiVo and Replay, Marillion suc- elites must adapt to, and the fact
informative and entertaining book. is that, partly because of the professional? It didnt do that with network TV companies. ceeded by getting better customer that kids are more comfortable
His point is that the Internet is Internet, the people whom the Lebed. It settled out of court and So the rebels got the networks information. But thats where the with the technology than adults
undermining all the old sources of SEC was set up to protect have let him keep most of his money. to invest in the technology. The similarities end. Instead of using are. Given the way technology is
insider power and that kids have now caught on to the very financial According to Lewis, the SEC backed networks are investing because high-tech snooping gizmos, the hyped today, its not surprising that
the advantage because they get the practices they were supposed to be off because it couldnt prove that the black box comes with a catch: band simply responded to its fans. the whiz kids who rule in the chat
Internet in a way grownups dont. protected against. One result of young Jonathan wasnt doing the Every program its owner watches, But the really intriguing thing rooms should think that experience
Which is why two teenaged that change was that the whisper same thing thats done every day every click of the remote control, about Marillions revolution is that and maturity are, like, overrated.
boys are the main characters in hisnumbers put out by amateur Web on Wall Street. is recorded and sold to marketing everyone came out ahead. The fans But its hard to believe that Lewis
book. By using the Internet to toutsites had as much credibility with So what happens if there are companies. If prime time can no get the music they like, the band really buys that.
the stocks he bought, Jonathan investors as the forecasts put out two, three, many Jonathan Lebeds? longer sell mass audiences to mass gets to keep creating
by Wall Street That prospect must be keeping a
professionals. few people awake at night. It also
marketers, the box can sell niche
audiences to niche marketers.
music, and the
recording company M arillion used the Internet to
T he prospect of two, three, Thats new. makes this first chapter the It means big changes in the makes money it redistribute market power
It also meant strongest support for Lewiss thesis. way networks, cable companies, wouldnt otherwise
many Jonathan Lebeds must be more opportuni- Big law firms probably are not advertisers, and eventually have made. and everyone came out ahead.
spooked by the prospect of many
keeping a few people up at night. ties for the
unscrupulous to Marcus Arnolds. True, Arnold is a
producers do business. So why arent
But if this new technology is these guys the
fleece the credu- case study in how legal knowledge going to shift market power away centerpiece of the book? Maybe Does he really think that a 15-
lous. The only has spread to the masses. But from elites, TV viewers had better because theyre not kids, theyre year old could, say, write a book on
Lebed raked in $800,000 in six thing new there is that kids are theres not a lot of money in take a look at how fans empowered not techies, theyre not even entre- the social impact of technological
months and, at 14, became the now using the Internet to do what passing yourself off as an Internet a rock band that hadnt had a hit in preneurs, except by necessity, and change? Hmmm. Maybe not
youngest person ever nailed by the Herman Melvilles confidence man expert in criminal law. And Arnold almost 15 years. When Marillions their goal isnt to get rich. All they everyone will have to retire at 40.
SEC for stock fraud. At 15, Marcus did on a Mississippi riverboat. is a latecomer. Ex-cons and ex-cops fans learned that the bands record- want is to keep on doing what
Arnold picked up enough knowl- Its a new problem for the SEC, were handing out useful legal ing company wouldnt pay for a US theyre doing and not have to get

36 37
 THE PRINCIPLES OF SCIENTIFIC MANAGEMENT
BY FREDERICK WINSLOW TAYLOR
EDITORS NOTE: This article is taken from the book of the
same title, first published in 1911. To make it easier to read,
we have not followed the standard procedure of using
ellipses to mark omitted words and passages.
T
he principal object of management
should be to secure the maximum
prosperity for the employer, coupled
with the maximum prosperity for each
employee. The words maximum prosperity
mean not only large dividends for the company
or owner, but the development of every branch
of the business to its highest state of excellence,
so that the prosperity may be permanent.
Maximum prosperity can exist only as the result
of maximum productivity. It follows that the most
important object of both the workmen and the
management should be the development of each
man to his state of maximum efficiency, so that
he may be able to do the highest grade of work
for which his natural abilities fit him.
In the best of the ordinary types of management,
the combined knowledge and skills of the work-
men in an industrial establishment is far greater
than that of the managers. Experienced managers
therefore recognize the task before them as that
of inducing workmen, in return for some special
incentive, to do their hardest work so as to yield
the largest possible return to his employer. It is a
rare case in which this end is attained.
Under scientific management, managers assume
the burden of gathering the knowledge possessed
by the workmen and reducing this knowledge
to rules, laws, and formulae. In addition to
developing a science in this way, they select,
train, and develop the workmen, and cooperate
with them to insure that their work is done in
accordance with the principles of that science.
38
The most prominent single element in modern
scientific management is the task idea. At least
one day in advance, managers plan the work of
every workman, describing in detail the task
which he is to accomplish, as well as the means
to be used. And whenever the workman succeeds
in doing his task right, he receives an addition
of from 30 to 100 percent to his ordinary wages.
These two elements, the task and the bonus,
constitute two of the most important elements
of the mechanism of scientific management.
The rules, laws, and formulae of a science
replace the judgment of the individual workman.
Managers take over all work for which they are
better fitted than the workmen. The old-fashioned
single foreman is superseded by eight different
men, each one of whom has his own special duties.
Can an elaborate organization of this sort pay for
itself? This question can best be answered by
stating the results at the Midvale Steel Company.
The number of yard laborers was reduced from
400 and 600 to about 140; the average number of
tons per man per day increased from 16 to 59;
the average earnings per man per day rose from
$1.15 to $1.88; and the average cost per ton was
reduced from $0.072 to $0.033. The total saving
amounted to $36,417.69.
As the whole people becomes acquainted with
scientific management, it will no longer tolerate
the employer who has his eye on dividends
alone. No more will it tolerate tyranny on the
part of labor which demands one increase after
another in pay while at the same time it becomes
less instead of more efficient. It will demand
the largest efficiency from both employers
and employs.
 CSC WORLD
Computer Sciences Corporation 2100 East Grand Avenue, El Segundo, CA 90245-5098 USA 310.615.0311 www.csc.com

2001 Computer Sciences Corporation