Small Business Crusade – Page 2

Small Business Crusader Presents: Slate Coffee Roasters

Photo by © Yana Alexandra Crow

As I mentioned in my travel reflections, it is not enough to treat my visit to Seattle's Slate Coffee Roasters as just another thing I did during my trip to the West Coast in August. The place definitely deserves its own dedicated post.

I personally know espresso aficionados who are obsessed with Slate, and I can totally understand why: Even if you are a jaded connoisseur, you will have a novel, unforgettable experience here. From the very beginning, Slate's founders conceptualized their business out of three exceptional building blocks: niche high-quality raw materials, superior preparation techniques, and singular finished products.

Conceived and founded by Chelsea Walker in a partnership with her brother and mother, Slate was born two years ago, in November 2011. It started its life in an Airstream trailer strategically positioned in Seattle's Capitol Hill. Now, transplanted to one of Seattle's northwestern neighborhoods, Ballard, the establishment continues to cultivate the same aesthetics of grace and elegance that inspired the founders to start the business in the first place. It applies to everything: the offerings, the methods, the decor, the ambiance, the hospitality, even the service sets.

What fascinates me the most is that this young woman did exactly what I advocate all young people to do. She found something that she (a) feels the most passionately about; (b) has talent for; and (c) knows well how to do, both technically and commercially. She utilized her reputation as an innovative espresso barista to solicit valuable advice from local coffee-business celebrities and went full force after her entrepreneurial dream, attacking the odds on all fronts: Her business model includes the wholesale of Slate's roasts to other coffee boutiques (so far 9 locations in Washington, California, Massachusetts, and Illinois), the online store selling the current selection of beans as well as a few signature coffee implements, a coffee subscription, and, of course, the bar itself, where you can experience the magic firsthand and then leave with a bag of the fresh roast you've just tasted.

Everything in Slate Coffee Roasters is unique. The uncluttered decor complements the minimalist menu very well: There are no lattes, cappuccinos, macchiatos, frappes, and such other potions here. The only espresso-based drinks you can get are, well, espresso – either neat or cut with milk, in various proportions. The rest are hot or cold-brewed coffees – usually from no more than 3 or 4 sources. The coffee bean is treated here as a tropical fruit that it actually is. So, just like good wine makers, Slate folks pursue rich bouquets and go after small-batch sources that harvest the most flavorful products: a 1500-farmers estate in Kenya, a specific lot on a Panama estate populated exclusively by Gesha trees, an Ethiopian co-op, etc.

The single-source beans are roasted in house twice a month in 15-kilo lots. Slate abandoned the tradition of the deeply roasted espressos and goes light on the heat for the sake of preserving the flavors. In order to provide the bar's customers with an unadulterated experience, no sugar or any other sweeteners are offered. They use non-homogenized local-farm milk here – so sweet and real, you feel happy for the cows that gave it away, and the desire to taste it on its own motivates some people (me!) to order the full Espresso Deconstructed set twice in a row. If you do like something solid to complement your espresso or coffee, you should try the hand-dipped in chocolate… no, not conventionally dried orange peels, but syrup-soaked fresh orange slices. It only makes sense that these exquisite offerings are served in a bar (rather than the common coffee house) setting, with espresso presented in designer stemware. Other straight coffees are brewed to perfection in a variety of methods expertly matched to specific beans.

Of course, when judged by the field's elite, this, for a lack of better words, artistic and somewhat rebellious approach to the provisioning of coffee-based beverages, elicits high recognition and praise: Many a West Coast barista know of Slate; the wonderful Brandon Paul Weaver, who's been at Slate from the start, won the 2013 North West Regional Brewers Cup; and Slate's team captured the title of America's Best Coffee House 2013 in Seattle, which, considering the city's history with the drink, is a feat, especially for such a young establishment.

It goes without saying that all these elements set Slate apart from the rest of Seattle's coffee scene and theoretically should've given them a tremendous competitive advantage. Yet, the company struggles commercially. And it is my strong opinion that it has a lot to do with its geographical location – not just the remote Ballard specifically, but Seattle altogether. Of course, the bar has its own devotees, who come in all the time (some are even willing to fly cross-country just to feel the magical brews on their lips), but, generally speaking, there are simply not enough people to generate a steady stream of clientele to the counter. There is no question in my mind that the good people of Slate would be so much better off in a place famous for its unyielding hyperactivity.

Yes, New York City is the most competitive place on this planet. And yes, it is especially true for the majority of food establishments – according to Business Insider, 80% of restaurants here close in their first year of operation. It makes total sense to me: you've got to do something extraordinary to survive here as yet another deli, a French or Italian restaurant, a Japanese sushi bar, or a Chinese take-out. That said, the field of designer espresso is pretty barren. Well, we maybe have about 20 highly rated specialized places – a ridiculously small number for NYC! Yet, people with really discriminating tastes still complain that it is impossible to get a good espresso in New York.

The top places in competitions and recognition by connoisseurs are great, but at the end of the day, for a consumer-dependent establishment it's all about the statistics of public exposure: the more people pass a place, the higher the number of those who will enter. And only then can you start wowing them with your miracles, hopefully achieving a sufficient level of the customer retention: In order to succeed a small coffee-bar business needs a steady 10-people line during the morning, lunch, and coffee-break rushes. Alternatively, this particular business can position itself as an exclusive Art House of Espresso with people coming in specifically for the Slate's religious experience and willing to pay exorbitant prices for it. Neither possibility, unfortunately, is going to present itself in Ballard.

To illustrate how the statistical probabilities are impacted by geographical locations, let me use an analogy from my recent music experience: Royal Canoe, a great small band from Winnipeg, Manitoba (don't jump to Wikipedia – they are not there) primarily performs at alternative festivals and small peripheral venues with, let's say, 50-300 people capacity. What is the probability that someone who sees them at The Garrison in Toronto (capacity 270) will go out of their way to attend their concert in Brooklyn? I'd say, close to zero. But on 09/14 they opened for Alt-J at NYC's Hammerstein Ballroom (GA Floor capacity 3400, plus galleries) and I know of at least 5 people (two independent groups), who went to Canada specifically to see them play again. And there might have been more. And even if only 10% of the live audience buys t-shirts and CDs, it translates to 27 music lovers in Toronto, but at least 400 in NYC.

Numbers - they don't lie. So, is it surprising that at this moment Slate has only 28 reviews on Yelp, while Lucid Cafe (even though a very nice place, but no award winner or espresso breath-taker) located 4 blocks from Grand Central has 93?

What I hope for is that Slate's current operations will create enough momentum to ignite in owners the desire to solidify their success and branch out to the busiest spot in the world, the city that never sleeps and, therefore, is in a dire need of Chelsea Walker's heavenly concoctions. Plus, we have the highest concentration of people who adore the high-end, luxurious, elite products and services. So, see you in New York?!

Economic Reflections of a Traveling CFO

Some Economists Say That a Robot Can Replace My Paige. For Real?

There are
quite a few optimistic economists out there who convinced themselves
that, even though the Industrial Revolution, which was responsible for the unprecedented economic development of the United States since the 19th century, is pretty much over, there is no need to panic and envision impending doom. According to them, we are yet to pull through. Do you know what will save us? Artificial intelligence and 3D printing, i.e. fucking robots and compressed plastic powder.

Ok, let's leave the 3D printing alone for now. I'm quite impressed with the replication capabilities of the so-called printers: the manufacturing of complex forms, moving parts and all directly from scanned or modeled images looks like magic; and I do think that this innovation will revolutionize toy-making and change sculpture forever. However, because the "printing" powder recipes are kept secret, I cannot really say anything about the quality and/or safety of the household items, tools, auto parts, etc. made this way. I hear the plastic guns shoot people dead pretty well, but what else is new?

I am more curious about the robotized future though. From the vantage point of the economists in question, 65% of American employees are engaged in tasks that they classify as "information processing" (sounds pretty arbitrary to me, but let's go with it) and these poor "dehumanized" worker bees will be replaced with super-efficient highly intelligent machines, who never get depressed because information is what they do. And it doesn't matter that the damn toasters will never be able to look at a plant and pick an appropriate tool to trim it (it's just something that cannot be programmed).

In case you are wondering, the other 35% will be occupied in professions and functions that require superior intelligence and talent: executive management (you wouldn't believe how many executive dumbasses I know, but whatever!), strategic planning, creative work, and of course, gardening (on account of the robots' deficiencies mentioned above).

Seriously though, I hope you agree with me that defining ALL tasks performed by office employees as "information processing" essentially turns these people into some sort of robots already, which creates an illusion that replacing imperfect human tools with slick intelligent machines is an efficient, easy, and necessary process. And yes, some of the office routines can be tedious and dehumanizing. Yet, the reality is that only in large companies, marked by narrow specialization, standardization, and redundancy, work can be likened to the repetitive conveyor operations. Everywhere else people multitask!

Ever since my doctoral studies of economics (many year ago), I had a problem with the pervasive tendency of theoretical generalization; with the application of the macroeconomic approach to microeconomic systems. Again, maybe such abstractions are somewhat pertinent to giant enterprises, but you and I know that every small business operates differently – none of them will fit into an artificially constructed etalon. It scares me to think that these pseudo-scientists possibly envision the future without any entrepreneurship at all – just fucking GMs, GEs, Microsofts, Starbucks, Smithfields, Apples, Googles, COSTCOs, and Carl's Jr. (Wait a minute, doesn't this ring a pretty loud bell?)

But what if this nightmare doesn't come true? (Call me a fucking optimist!) Imagine that 20 years from now small businesses still exist, but now they can be outfitted with highly efficient (and affordable!) intelligent machines available to step in as your trusted office workers. Let's conduct a mental experiment and see how a robot will deal with three (could've been 100) straightforward issues customarily handled by one of my most reliable and teachable subordinates of all time (I call her "my Paige"). In other words, let's see if a robot can really replace my Paige.

#1. A commercial customer has a $300K credit line. The total of the customer's open invoices is $265K. A $51K order for the product your company really needs to move is transmitted for the robot's credit approval. Of course, a discretionary flexibility is programmed into the algorithm (robot designers are not stupid) – it's 5% above the limit (remember, standardization is unavoidable with machines), making the total allowable credit exposure $315k. But approving the order would exceed it by a mere $1,000. The robot rejects it, denying its employer an opportunity to move the product, increase the revenue, make a nice profit. In addition, the relationship with a long-time customer is at jeopardy over a thousand bucks; and the salesperson is mad because he lost his commissions. And what are you going to do? Fire the robot? It cost the company a fucking mint!

#2. The operations department (also robots) needs to make sufficient room in the storage facility to accommodate the upcoming delivery of 5000 mt of a product from overseas. They transmit a message to Sales to start pushing the shit faster. Sales plea and beg customers to take as much product as they can – discounts and all kinds of other tokens of gratitude are flowing. One customer says that he can take a delivery on September 29th, but he doesn't want the inventory on his books just yet and the invoices must be dated October 14th (the "I do something for you, you do something for me" principle). This information is relayed to my accounting robot. It's perplexed: It's programmed to record sales according to the order terms; the terms in this case are Delivered; the proof of delivery transmitted into his system by the trucking branch states September 29th; yet, somebody is overriding his algorithm and forces the wrong date! SCREECH! SYSTEM FAILURE!

#3. The payments-to-suppliers program kicks in. The robot tallies all invoices that need to be paid – the total is $3.3M. Now, funds-sufficiency program kicks in: there is only $300K available on the account and the robot transmits a funding request to the CFO's all-in-one communication device installed into her left ear's diamond stud. The borrowing and investing functions are still done by the human CFO, because the risk of some crafty thief hacking into a fucking toaster is, as you can imagine, pretty high. The problem is that the CFO is in London dining with a Financial Director of a company her employer targeted for acquisition. She is trying to pump the stiff for some information beyond the official reports, and she just got him talking, and there is no way she can lose this opportunity on account of some payments. But the robot must do his job – he must be timely, the payments must be made. Yet, he sees that, if he actually makes the payments, the account will be overdrafted by $3 million. The conflicting algorithms are tearing the machine apart, literally – it short-circuits.

What? Are you telling me that the economists don't have these tasks in mind; that these are semi-managerial-somewhat-analytical duties? Guess what, Mr. Big-Shot-Futurologist? That's what's going on in small businesses with flat structures: Every sector of the value chain is manned by one executive/manager and a handful of her direct reports aka the "the information processors." No middle management. You cannot possibly reassign these minute but essential issues to CFO's and Controllers – that's just too expensive in terms of the compensation, wasteful in terms of the time taken away from more strategic obligations, and demeaning in terms of the moral incentives. And if I have to buy robots AND keep my subordinates for the semi-managerial-somewhat-analytical work, what kind of progress is that?

According to the US Census data, there are over 6 million companies in this country with less than 100 employees. Obviously, they are too small to see from the top of the theoretical mountain. So, in articles for academic magazines and thick manuscripts for Wiley publications, their diverse office workers first get bundled together with the narrow-niched redundant zombies of large bureaucracies, and then replaced by robots in one sweep of a Montblanc pen.

Just for argument's sake let's get back for a second to the scary possibility: The economists, politicians , and the big businesses paying for them actually erase small companies from the national map. The intellectual flexibility is ignored in the interest of standardization, and all of the "information processors" in the remaining giant conglomerates are replaced by machines. What kind of plans do the movers and shakers have for these 65% of American workers? How about their children, lately multiplying at the three-per-family rate? Considering the dramatically falling IQs of the general population, it's unlikely that they will be viable candidates for high-level managerial or creative work. So, how is the robotization going to make the whole nation wealthier in the same way the Industrial Revolution did? I see a more polarized society with hordes of people pushed below the poverty level.

But the biggest question I have for the big-time big-picture economists is: Where the fuck are you going to get the energy to power all those robots and their managing network servers?

Economic News Flash: Another Dinosaur Bites the Dust

In case you didn't hear, during the past 4-5 days BlackBerry Ltd. (formerly known as Research in Motion, or RIM) has announced that they (1) have generated a $1 billion loss (!) in the last fiscal quarter alone; (2) plan to lay off 4,500 "staffers" (35% of the company's employees); (3) will become private again if the intended $9/share stock buy-out by a Canadian hedge fund Fairfax Financial goes through.

So, after allowing a healthy company (modest $300 million volume in 2002-2003; respectable and still okay $3 billion before the introduction of the iPhone in 2007) to get unmanageably huge ($20 billion in 2011), the mastodon got crushed under its own weight.

Well, first of all: Dah! I thought it was obvious to everyone that sleek iPhones will keep pushing BlackBerries into the proverbial corner – when you stop being "the cutting edge," you can only go this far on the price incentives. In fact, not only iPhones, but also Google's Androids and Microsoft's Windows Phones surpassed BlackBerry's devices in their service capacities.

I do have some questions, though, regarding the etiology of this grand failure.

How did the company get so stagnated in less than 30 years since it was formed and mere 14 years since it introduced its first email pager? Where were all those Ivy-League graduates who were hired to manage innovations, operations, marketing, finance and human resources? Where were the $700/hour consultants and public accountants? What did they do with all those expensive Business Analytics and Performance Indicators organized into pretty dashboards? Why didn't they regroup, contract, reinvent, restructure?

I'll tell you where and why? The dumb asses, greedily preoccupied with the value of their personal stock options, were staring at the market ticker instead.

When a company grows with an exponentially increasing speed, like cancer, the sensible management by capable people becomes impossible, simply because their supply is too short. To fill the gaps, a trivial approach is adopted, i.e. hiring according to the laundry list of garden-variety requirements. Unfortunately, conceptual thinking and understanding of fundamental principles cannot be substituted by expensive diplomas, high test scores, and flowery resumes. If you go the standard route, all you get is a bunch of highly-presentable empty suits with steely eyes, strong voices, unsubstantiated self-confidence, and not a single original thought in their heads. Thus, the entrepreneurial brilliance that made the company possible in the first place completely disappears.

Real business is not a multiple-choice test or a text-book case study. It's far too dynamic and complicated to be approached with basic school techniques, no matter how ivy the school is. And the world doesn't slow down for a creature too big to coordinate its own movements. There are unproven theories that giant dinosaurs, such as Stegosaurus, had a "second brain" - an additional nervous center responsible for the movement of their hind legs and tails. Makes sense to me, because an ogre with no brain power at all, is not able to coordinate any of his movements; let alone quickly react to changes around it.

Even more important question for me personally is why wouldn't people let this diseased monster die its very natural, evolutionary death of being stomped out by the stronger competitors? Why pour almost $5 billion into this carcass? Has Fairfax Financial been bribed by the Canadian government into preventing even larger job losses? Did US Treasury, so keen on protecting the stock-market investors, participate in this scheme as well? Unless the hedge fund is seating on some miraculous technological break-through, politics is the only explanation I can come up with for this waste of money.

Maybe if BlackBerry were let to die, the other members of the dinosaur herd would've taken notice and treated their gigantism with some surgical partitioning. Maybe they would've even stopped hiring according to the bullshit diploma-ranking and personal connections and started looking for the real spark of an intellect in their management. Alas, we probably will never know.

The American Revival of Failed Soviet Labor Constructs

Let me admit right off the bat that Matthew Shaer's article The Boss Stops Here in the June 24th issue of New York magazine has brought my already high level of agitation to a boiling point. So, if some of my comments appear to be hostile, don't be surprised – you've been warned.

The article takes up a subject unusual for a life/politics/culture publication - it ventures into the business discipline of organizational management; specifically, a post-modernist pseudo-innovative spectacle of a "non-hierarchical workplace." Fancy verbage and incorrectly-used business terminology aside, Shaer focuses on a few companies, whose owners, to put it simply, replaced management leadership with the collective's (as in all employees) show of hands.

At Menlo Innovations (one of the companies in focus, a software developer), for example, "there are no bosses … and no middle managers." Instead, "every morning, the entire staff circles up to discuss" the distribution of assignments." Valve Corporation (a video-game company) operates as a network of self-governing teams, with employees choosing at random which team to join and when to switch to a new one. In all the companies mentioned in the articles, the projects' progress reviews are the collective exercises as well. Obscenely, personal achievement means nothing, because it's the whole team that gets evaluated: the brilliant guy who comes up with incredible solutions at lightning speed gets no recognition and his mediocre team members, who spend weeks gnawing at their portions of work, get to share in his professional triumphs.

Now, get ready for it! At Menlo et al, hirings, promotions, layoffs, and firings are handled by a committee. At W.L. Gore & Associates, once a year all (!!!) "employees gather to rank their colleagues based on their contributions to the overall success of the company. Those rankings are used by a separate committee of associates to determine pay raises or cuts." The article omits the exploration of how such committees are elected and/or appointed.

As far as I am concerned, all of this is nothing if not yet more evidence of the incredible ignorance I bring up so frequently. Most people learn so little about World History, they are not capable of recognizing that there is nothing new about these "experiments." It has all been done before: In the Soviet Union and other countries of the former Eastern Bloc everything was decided by various committees, starting with the ones in every single place of work and residence through the different medium levels all the way up to the Central Committee of the Communist Party!

Moreover, all these team-work models have already been tested (and failed) in the Soviet Union. Such groups were given a very special name - they called them Brigades of Communist Labor. The main purpose of these constructs was to eradicate any form of individualism – intellectual, political, emotional, spiritual.

Throughout the article, the author kept making an unfortunately confused mistake by calling these unformed socialistic blobs of companies "flat structures." That just fucking hurt me! A flat organizational structure is a typical attribute of a small business. But instead of eliminating the leadership and reducing everyone to some equalizing average, it actually elevates each employee to the level of a multi-functional manager. Every person handles a multitude of tasks covering entire sectors of the value chain. Moreover, they do that with little supervision and only general guidelines from senior and executive management. This is how they achieve, what I call, "career growth in the same chair," raising themselves from one level of expertise to another. And I'm not talking about mom-and-pop candy shops here – this is how $50-$750 million companies are ran by 10-20 hard-working people.

I have been working in such environments my entire career. So, it was laughable to me that the article made a big deal about companies with employees setting up their own schedules. You must be kidding me! Who in a small, or even a mid-size company has got the time to set up their subordinates' schedules!

The author praises some Fortune 1000 companies for trying to fix their management problems through workplace decentralization. Look, I don't give a flying fuck whether a Fortune 1000, or any large company, recognizes that there is something wrong with it and takes a stab at fixing itself through decentralization and "flattening." It's not enough to make them more efficient, because, to paraphrase Woody Allen: You know what's wrong with them? Everything. Companies are not supposed to be that big – break them up into small entities and the flat structures will come naturally (see above).

While reading the article I couldn't help but notice that in these companies only functions related to daily operations, general administration, and HR management (much despised and largely ignored by many entrepreneurs) get "delegated" to the workforce masses. The labor is not actually involved in the decision-making responsible for the strategic development and the survival of the company: which commercial directions to pursue, which projects to undertake, which clients to accept, where to procure the financial resources, etc. It is so evident that Matthew Shaer had to acknowledge that "overseeing strategy, the long-term vision of Menlo as a whole, still falls" to the two owners, who "also serve as representatives of Menlo at scads of management and business conferences," both in the US and overseas. Nobody else gets to go.

What can I say? This is the precise recipe of building the absolute power used by the Soviet leaders (and still employed by their contemporary successors): You let the hoi polloi pretend that they are the "power," delegate to the "collective" the most unpleasant tasks of dealing with each other, but leave yourself with the rights for the real leadership, for the ultimate decisions. And guess what? In that top-of-the-Olympus realm, there is nobody who can challenge you, because you got rid of all qualified personnel aka managerial talents. In Russia, they first called them the enemies of the people and then "cleanse" them out, if you know what I mean.

I found it very emblematic that the owners of Menlo Innovations consider Thomas Edison a "patron saint" of the company and keep his bust in the middle of their open-style working space. That same Thomas Edison who hired a very talented engineer named Nicholai Tesla and stole all of Tesla's ideas, patenting them in his own name. That Thomas Edison who later staged public electrocutions of puppies and other small animals in his attempt to discredit the viable Westinghouse/Tesla high-voltage system, in order to eliminate the competition.

And "the lady doth protest too much": Menlo employees' readily provided self-convincing quotes insisting that their "self-management" meetings keep the morale high (What about that guy who donated his outstanding one-of-a-kind solution to his team?) and make them feel that they are working toward a common goal. Oy! Hurts again! I have always propagated that creating in employees the sense of being important, of being a part of the bigger picture is a key to the successful management of human assets. But it's not achieved through making everyone into an unrecognizable little screw in a homogeneous pile. It's done by raising the awareness of each and everyone's crucial value and singular necessity for the company's survival.

In reality, just as it happened in the Soviet Union, all these collective decisions and committees' resolutions, usually lead to dilettantism. These people may be great designers and coders, but what the fuck do they know about business administration and organizational development. In fact, most of the high tech pros I've ever worked with were incredibly disorganized individuals, intellectually far removed from any administrative skills.

Another false agenda the poor schmucks who work for these "organizational innovators" subconsciously force themselves to accept is what I would define as the "evolution of rewards pretense." Since pre-historic times to these sad days, only three main factors have been stimulating people to work hard: the adequate merit-based pay, the recognition of achievements through promotion (not just title-assignment, but the real elevation of responsibilities), and the self-realization aka pride in your own professionalism.

When there is no middle or senior management, the promotions are out as well. It's not like you are going to take over an Owner's position. Turns out (here comes the funny part) that material stimuli are "irrelevant" as well. There is a quote in the article from one of the developers at DreamHost, who explicitly says: "Twenty years ago, it was about higher pay. Now it's more about finding your work meaningful and interesting." Well now, is that why you are ogling Mark Zuckerberg's photos in Forbes and invest your 401k pennies into high-risk stocks? And don't deny it, because I know you do. But hell, of course money is "not important." What else are they going to say? The decent jobs are scarce and the candidates are a plenty. So many young people went into coding and computer engineering; they are literally a dime a dozen. Those who get employed consider themselves lucky, and if you tell them to drink that "teamwork" and "money's not important" Kool-Aid, they will.

But the aspects that make this whole collective/committees bullshit especially inconceivable to me have to do with the very core of the business management, i.e. the behavioral science, the human nature itself. Did these business owners somehow develop some sort of a new breed of people, the kind that's inherently free of the evolutionary pre-built competitive instincts? Or maybe they psychoprofile every single employee and keep only those who are uncommonly fair and just, or, more likely, idiotically indifferent?

Incredibly, like all fanatics, these commy-following bosses manage to fool not only their employees, but themselves as well. Let me remind my readers that the greatest incentive for all organizational restructurings is profitability. I have no doubt that the private owners of the businesses highlighted in the article are under the impression that by eliminating the key decision-makers they significantly increase their profits. Let's face it: even in the current market, high-quality execs still make relatively decent salaries. Unfortunately, these owners, marred by their own special brand of entrepreneurial ignorance, are unable to see the big picture: while their worker-bees spend unnecessary long hours on trying to inexpertly debate the organizational issues, they are not attending to their primary responsibilities, e.g. ACTUALLY WORKING!!! Talking about real losses!

The article's author describes one of these long meetings, which started at 11 am and went until 2 pm (!), "and by the midway mark, the proceedings were moving a little more slowly, with more exasperated sighs, or slight but conspicuous head shakes, and sometimes everyone seemed to be talking simultaneously, in one big warbly squawk." But don't worry. There is always the pressure-relieving tool introduced at Menlo a few years ago, "walkies" – ten-minute group walks around the block.

As my readers know, I am a small-business crusader, who believes that giant corporations structured around towering hierarchies of management are cancerous. At the same time, people of extremes and ideological fanatics (and don't be fooled: this is exactly what we are dealing with here) always terrify me, regardless of whether their views are "progressive" or "reactionary." Why does everything always have to be so categorical: either a pyramid of useless bosses, or no bosses at all? Why can't their be a middle ground: a handful of well-qualified key decision makers whose expertise allows them to make high-priority decisions quickly, without slowing the business down, while all functional decisions are left to the employees?

I'll tell you why: Because that's a "small business" model. Unfortunately, these "innovative" owners don't want to remain small and work hard to survive. Notice that most of them are high-tech. They want to grow big as fast as possible and sell themselves either to a larger competitor or a private equity firm, or (oh, the sweet dream!) make billions by going public. Meanwhile, just like the Soviet Commies before them, they pretend to be "just and fair" by "empowering" their "collectives," only to completely abandon and betray them in that bright future. I fucking hate this phony bullshit!

The Late Robb Stark, CEO of House Stark

Let me say first that I mourn the death of Robb and Catelyn Stark just like the rest of the Game of Thrones fandom. Yet, the sadness doesn't cloud my judgement; it doesn't prevent me from fully grasping the ironclad logic of good storytelling. I am fully aware that the tragic events of the Red Wedding were not written for the sake of shock and gore. They were consequences of the characters' actions and motivations, consistent with the specific circumstances and forces at play. They had a lot to do with matters of executive responsibility, obligations of power, burdens of leadership, i.e. with the "weight of the crown." As the Bard said, "Uneasy lies the head that wears a crown." (Henry IV, Part 2, Act 3, scene 1, 31).

To those who read CFO Techniques I would like to offer my apologies for using the analogy from The King's Speech here again. It's just that the Brits, who's been living under monarchy for over 1500 years, understand this royal-duty business better than anybody. (Also, they seem to speak the same language as the Seven Kingdoms' folks.) So, in the movie, Prince Albert (Colin Firth) tells King George V (Michael Gambon), "Father, we are not a family, we are a firm." And the king replies, "We are the oldest, most successful corporation in the world and sitting on thrones is our business."

Yes, ruling a nation is a family business, and that makes a king the Chief Executive Officer of his land and his people. And in this position, just as it is in any company, he is responsible for

strategic development – expansion, contraction, restructuring, hostile takeovers,
foreign policies – establishing or severing connections with external parties, forming partnerships and alliances,
tactical decisions – laws, decrees, rules, governing appointments, organizational infrastructure,
fiscal adequacy – financing day-to-day operations and all those strategic moves,
economic balance – most important for prevention of revolts, backstabbing moves of dissatisfied courtiers, and the fleeting of labor,
human relations – the adoration and support of one's subjects doesn't hurt.

In fact, in George R. R. Martin's world, a king's enterprising is very entrepreneurial, very hands-on. Nothing like the make-believe leadership we see in the dangerously large governing bodies of contemporary conglomerates/countries. In the Seven Kingdoms, a true leader cannot be a mere token sitting on a throne (in King's Landing they have Joffrey for that, while Tywin rules). A ruler's job requires a lot of personal involvement and micromanagement: from weaving intricate intrigues to beheading those you condemned; from charging in front of your troops to skinning a damn large deer – the one with the executive power cannot avoid rolling up the sleeves and getting his/her hands dirty.

Most importantly, the king must take personal responsibility for doing the right thing by his nation. He'd better have his priorities straight: the crown is so heavy because the burden of authority calls for selflessness and sacrifices. Those few business owners that earned my personal respect over the years concentrated all their efforts on the prosperity and success of their companies. They were acutely aware that business is nothing if not a continuous struggle for survival.

So, what about Robb Stark? How did he do as a CEO? Not very well, I'm afraid. He was like one of those young rich boys, who inherited his father's business too early due to an untimely death – full of great potential, brilliant ideas, and… illusions. The childish sense of invincibility has not yet evaporated from his body. He thought he could break and rebuild the word any way he wanted. And so, he went and violated the millenia-old custom of building political alliances through marriages: he broke off his engagement with Lord Walder Frey's daughter. His Love was above any rules. How beautiful!

How cheeky and irresponsible! It was an unforgivable insult to House Frey. It was disrespectful to the memory of his father who made an arrangement and himself inherited Catelyn as a bride after his older brother's death. And, as far as the well-being of his land, his subjects, and his mission are concerned, it was plain reckless. In the business environment, this would be the equivalent of breaking contractual obligations with your commercial partners or violating the terms of your financing agreements. Actions of this kind result in companies loosing their reputation, market share, procurement resources, creditability, funding, and eventually going bankrupt, i.e. die.

As many young entrepreneurs, Robb Stark was a person of extremes: he was quick to break rules practically written in stone, yet many of his actions were marred by poor, hesitant decision-making. Whether due to inexperience or a lack of talent for long-term strategic thinking (his military campaign proved him to be a good tactician), he was never quite sure what was the right thing to do. It's bizarre, really: sometimes he neither followed the solid logic presented to him by his advisers, nor did he go with his own gut. The foolish execution of Lord Rickard Karstark, which resulted in a loss of a huge chunk of allied troops is an obvious example.

I've been forever writing and talking about psycho-profiling as a key management skill. One simply cannot succeed without it. Robb's inability to read people and their motivations might be the main reason for his downfall. What made him think that old Lord Frey will forgive the insult and tolerate Robb's wife being shoved into his face in his own home? How could he forget that you cannot trust anybody and must always be on alert for betrayal? If we think rationally about it, the probability of retaliation was very high.

In contrast, there is a reason why a few smart people reluctantly realize that Tyrion Lannister is King's Landing's only hope. Not only that he is sharp, brave, incisive, and fair, but he also understands that if one wants that family business of ruling kingdoms to be successful, he must be ready to forsake a thing or two, including personal happiness.

It's great to find out that I'm not the only one who saw the parallels between the demise of Robb Stark and the small-business leadership. The article below was prompted by TypePad as a related post.

Cutthroat Leadership Lessons from Game of Thrones

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