More On Nonproductivity

Please read “Ohno’s Theory of Nonproductivity” for context before continuing. Below is a recent DM conversation that you may find interesting, followed by some insights into the Theorem of Least Work and Artificial Intelligence.

Mr. D: “I made a presentation to executives a few weeks back, It was a full day meeting and I closing the day, everyone ahead of me was so complementary of each other and sending praise on how wonderful things were until I showed up and said, ‘this is all BS, we are not doing well, we have all the[se] issues, etc.’ They took it, in shock, and said they had to do something about all of this. I had facts they couldn’t deny but they wished it could be pushed under the rug… It’s a very superficial world at the top with the occasional desire to make meaningful change.”

Bob E: “Regarding your presentation to your bosses… I have been a retiree now for two years. As a retiree, I do what I want to do, when I want to do it etc. This feels to me very much like CEOs who have made it to the top and do what they want to do, when they want to do it, etc. They have a good life and don’t want it disrupted by having to face serious problems. Small problems that keep the wheels turning are OK, but not serious structural problems.”

Mr D: “Exactly, it’s a lot of work and they have so much disposable income, they don’t want to work this hard. One CEO I know of, had some investment properties and multiple investments on the side, being the CEO of this 600M company was a part time job. He had ‘people’ to take care of things, which in reality were also taking care of themselves. They all said they were in control working hard but the decisions they made had little to no meaningful impact on the business. Most of it was adding tasks lower down so they could have better and more efficient dashboards to follow what the numbers were doing while not being there. I think they [CEOs] get to a point where the business they lead is just one more thing in their portfolio and they see that investment as an effort versus return ratio.”

COMMENT: Reflect on these words: “I think they [CEOs] get to a point where the business they lead is just one more thing in their portfolio and they see that investment as an effort versus return ratio.” How far from the truth is that? And how far from the truth is it that one might sort-of retire once they have made it to the top?

Prior to the late 1970s, CEO compensation was typically 90 percent cash and 10 percent stock options. Within a decade or so, CEO compensation flipped to roughly 10 percent cash and 90 percent stock options. It is easy to understand the company as a significant part of CEOs personal investment portfolio, and that the focus on stock price would be consuming significant amounts of daily thought or decision-making from the office.

Italian railway engineer Carlo Alberto Castigliano (1847-1884) formulated the Theorem of Least Work. It reads:

The redundant reaction components of a statically indeterminate structure are such as to make the internal work (strain energy) a minimum.

These words articulate conservation of energy in regard to load-bearing structures (e.g., beams, trusses, arches). When we study Nature we find that it has a strong tendency to conserve energy. If we anthropomorphize Nature, it means she is lazy. Humans, being a product of Nature, are likewise lazy. Consequently, we have a preference for:

  • Lazy thinking (lack of critical analysis and open-mindedness; dependence on biases, stereotypes, and other heuristics; beliefs and untested assumptions, and illogical thinking)
  • Following the herd (e.g., rapidly adopting fashions and fads)
  • Doing what the boss or some influencer says
  • Diluting or deconstructing new ideas and methods to make them align better with preconceptions and pre-existing ideas and methods

I propose a Theorem of Least Work, version 2.0, for humans in general, and particularly for those at the top of the corporate hierarchy:

“Status and accumulated knowledge compels minimization of cognitive and physical work.”

Where “accumulated knowledge” is akin to “redundant reaction components” which create a “statically indeterminate structure” (leaders’ ontology and epistemology) that minimizes internal work (mental and, especially, physical work).

How are status, accumulated knowledge, and work, or least work, related?

Let’s examine decision-making as a function of hierarchy under typical business conditions where problems are of a routine nature. The ratio of decision-making “by rights” (metaphysical world) and “by facts” (material world) changes depending on one’s rank in the hierarchy. When you are a worker at the bottom of the hierarchy, decisions are almost 100% fact-based (de facto). When you are a CEO at the top of the hierarchy, decisions can be almost 100% by rights (de jure) and less so by facts because facts are often inconvenient and interfere with leaders’ rights. Decision-making by rights is easy, non-productive work.

Decision Making Gradients 1a

The situation is substantially different when big problems arise such as a corporate crisis of the kind that Boeing has faced in recent years. Here, the CEO retains 100% of decision-making by rights, though those rights may be significantly weakened by external (government) or internal (board of directors) parties who demand changes. The CEO, and every level of management below the CEO, must now pay much closer attention to the facts than is the case under typical business conditions. Decision-making by facts is difficult, but productive work.

Decision Making Gradients 2a

When a crisis occurs, top leaders are forced to learn what workers know — the facts about the processes and its problems that produced the crisis. But absent a crisis, leaders at the top of the corporate hierarchy ignore processes and they typically view the low-status workers who run the processes in much the same way as generations of their predecessors have: lazy, untrustworthy, unreliable, error-prone, overpaid, etc., until proven otherwise. Doesn’t the same way of thinking apply to top leaders as well? At least until proven otherwise.

The combination of ignoring processes, the material world, and thinking poorly of workers, metaphysical world, invites corporate crises. That is why it is so important for leaders at all levels to be in periodic contact with the genba, the workers and the processes, via kaizen. Gemba walks and visual boards are not sufficient for leaders to understand the facts. For leaders, the Theorem of Least Work may be very attractive, but it opens the door to crisis for leaders and injury to the company and its stakeholders.

Finally, imagine how much more nonproductive CEOs will be when artificial intelligence analyzes their problems and makes decisions for them. AI will produce the same old answers to the same old recurring problems, rooted in classical management, only much faster, thus giving CEOs more time to do other things that interest them. The genba will probably not be one of them.

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