The Collision of Nation State Bias and High School Science Club Management

November 28, 2022

CNN offered some interesting pictures of the labor management misunderstanding in Zhengzhou, China. Even though I have been to China several times, I was not sure what made Zengzhou different from other “informed” cities struggling with what may be an ill-advised approach to Covid. In fact, the images of law enforcement and disgruntled individuals are not particularly unique. These images are more interesting when a blurry background of Apple and a Taiwanese company add a touch of chiaroscuro to the scenes.

What is interesting is that “Apple Has a Huge Problem with an iPhone Factory in China” mentions the “Taiwan contract manufacturing firm Foxconn.” CNN, however, does not offer any information about the involvement of individuals who want to create issues for Foxconn. China and Taiwan sort of coexist, but I am not certain that the Chinese provincial government either in Henan or the national government in Beijing are particularly concerned about what happens to either Apple of Foxconn.

The fact that workers suddenly became upset suggests that I have to exercise a willing suspension of disbelief and assume the dust up was spontaneous. Sorry, a “Hey, this just happened because of pay” or some similar dismissive comment won’t make me feel warm and fuzzy.

The write up asserts:

The Zhengzhou campus has been grappling with a Covid outbreak since mid-October that caused panic among its workers. Videos of people leaving Zhengzhou on foot went viral on Chinese social media in early November, forcing Foxconn to step up measures to get its staff back….  But on Tuesday [November 22, 2022] night, hundreds of workers, mostly new hires, began to protest against the terms of the payment packages offered to them and also about their living conditions. Scenes turned increasingly violent into the next day as workers clashed with a large number of security forces. By Wednesday [November 23] evening, the crowds had quieted, with protesters returning to their dormitories on the Foxconn campus after the company offered to pay the newly recruited workers 10,000 yuan ($1,400), or roughly two months of wages, to quit and leave the site altogether.

Seems straightforward. A  confluence of issues culminated in a protest.

Now let’s think about the issue this way. These are my working hypotheses.

First, Foxconn may not perceive the complaints of its employees as important. Sure, the factory workers have to do their job, but these are Chinese factory workers. Foxconn has a Taiwan spin. This may translate into Chinese government passivity. Let the Taiwan managers deal with the problems.

Second, Apple is a US outfit and it embraces some of the tenets of the high school science club management method. The kernel of the HSSCMM is that science club members know best. Others do not; therefore, if something is not on the radar of the science club, that “something” is irrelevant, silly, or just plain annoying.

Third, the workers have some awareness of the financial resources of Foxconn and Apple. Thus, like workers from an Apple store to the quiet halls of the Apple core spaceship, money talks.

Fourth, Covid. Yep, not going away it seems.

What happens when China is not too interested in Foxconn, Foxconn is not too interested in Chinese workers, and Apple is busy inventing ways to prevent people from upgrading the Mac computers?

That’s what CNN understands. Protests, clashes, and violence. Toss in some Covid fear and one has the exciting story for consumers of CNN “real” news.

Is there are fix? For China and its attitude to Taiwanese businesses which allegedly exploit Chinese workers, sure. I won’t explore that solution. For Foxconn, sure, but it will take time for Foxconn to de-China its production operations. For Apple, not really. The company will follow the logic of the science club: Find some people who will work for less.

Net net: Apple and its HSSCMM will probably not find too many fans in the Middle Kingdom. And Foxconn? Do China and Apple care?  Apple cares about money. China cares about the Middle Kingdom. Foxconn cares about what? Building plants in the US… soon?

Stephen E Arnold, November 28, 2022

Apple, What Does Significant Mean?

November 28, 2022

It is not a secret that advertising fees generate a large amount of profit on the Internet and they are increasing like rabbits in spring. Nobody likes dealing with ads, but big tech companies do not care because they only want to increase their bottom line. While Apple has revamped how ads are viewed in its App Store, 9 To 5 Mac says, “Report: Apple Currently Doesn’t Plan To ‘Significantly’ Increase Number Of Ads On iPhone.”

While Apple is currently satisfied with its net revenue from ads, there have been plans since 2018 to place more advertising on features in its products. Spotlight search was supposed to include ads, but that never happened. It appears that some Apple employees empathize with consumers:

“The report covers the tension of Apple product experience and advertising, describing an “antipathy” that some employees have toward the ad group. The Information says even some members of the ad team raised concerns with leadership that Apple was going too far. This is perhaps one reason why the plan to launch ads in Spotlight did not go ahead.”

App developers lashed back at Apple with the new changes to the App Store’s ad spots, because there were too many scams and gambling ads that appeared. Apple has paused showing certain controversial ad categories.

Apple has also angered third-party ad networks, because of its App Tacking Transparency policy that allows users to opt-out of sharing their personal information. User data is the key component in making the digital advertising world go round and the policy is viewed as Apple’s way to eliminate competition.

Apple continues to leverage its products and their features to build ad revenue. There are plans to add them to the Maps, Books, and Podcast apps. Ads might not appear on the iOS main screen yet, but given “significant” time it could happen.

Whitey Grace, November 28, 2022

Management Follies: High School Science Clubism at Scale!

November 22, 2022

Several years ago, I floated the idea of a “high school science club management method.” A big time “real” journalist said, “That’s wrong. There is a bro mafia management style.”

I said, “Yeah, you are right. I paid the coffee bill and vamoosed. I wanted to bide my time until I had a few rock solid cases of the HSSCMM or high school science club management method. I am speaking from experience because I was in my high school science club. I was one of the three musketeers who liberated the morning public address announcement with Jerry Lee Lewis’ “Great Balls of Fire.”

Yep, a half century ago a band of merry teens (both young men and a couple of young women) met weekly to do science like the PA address thing. Why? I have given this great thought over the last 64 years, and here are the three main reasons we pursued our high value projects.

  1. We believed that we were special because we earned top grades, accrued honors (one of our club’s members published a short article in a peer-reviewed astronomy journal and yours truly had a story published in the St. Louis Post Dispatch for which I was paid $10. Net net: We thought we were really smart.
  2. We believed that we knew exactly what to do in any circumstance life in a Midwestern corn and factory town could plop in our path. We have confidence, which I now understand is near fatal hubris.
  3. We conducted ourselves as if our world was the one, true world: Math, science, logic, etc. etc.

Over the years, I have interacted with a wide range of companies. I have watched the HSSCMM move from the weird world of immature and naïve teens into the mainstream of business, leadership, and — dare I say it — techno worship.

Now back to the real journalist dismissing HSSCMM. That bright individual was incorrect. The HSSCMM is the driving force of several fascinating business dramas now unfolding in real time. These are real people (still locked in the teen year immaturity hormone rush), and having a profound impact on families, children, culture, and the way people perceive the world.

Let’s take a look at the three modern dramas, which if we were in Athens in 440 BCE, would be the stuff for the modern version of Oedipus at Colonus called “Dorks of Silicon Valley” or a bop variant of Women of Trachis named “Bros of Business.”

The first is the Twitter hellscape and the space Karen calling the shots with HSSCMM spins. A Silicon Valley infused article in the Verge provides basic information of a consequence of an informed management decision. To keep the story short, lots of people are just quitting. So the lead Tweeter is shutting down the company for a cou8ple of days. Brilliant cost savings and publicity in one fell swoop. That’s a hallmark of the HSSCMM: Act without considering consequences.

The second is the FTX thing. The estimable Bloomberg has covered the story with slightly more thoroughness than the news organization did its story about fiddled motherboards. I am not going to review this case example because I am not sure about what’s fact and what’s fiction. It does seem as though adding some chemical compounds to a mathematical experiment produced consequential results. Ah, who lost their retirement savings? Too bad. The events appear to follow a path my science club took when we poured calcium carbine and concentrated hydrochloric acid into a lab table drain. Yep, someone ignited the resulting gas. Exciting and no one got expelled.

The third is the Amazon termination of a mere 10,000 humanoids. You can get a sense of what goes into a brilliant and logical decision to cut costs in a recent CNBC report.  The reality is the science club or Amazon carpetland. Those not walking on squishy floor coverings cannot be expected to understand. A basic precept of the HSSCMM is that no one in the science club really, really cares.

I am tempted to step back and offer a few thoughts about the broader implications of allowing the HSSCMM to dominate a major part of current business. I won’t. If you read some of the 12,000 posts we have published in Beyond Search since 2008, you can figure out that the fixes are going to be difficult because no one wants to confront the naïve teener mentality which has implemented businesses which leave scorched earth and burned lives.

Yapping and hand waving won’t solve the problem. I am too old to care. I won’t even remind the big time “real” journalist that it is HSSCMM, not bro stuff.

Stephen E Arnold, November 22, 2022

Apple: Curating with Care. What Are the Odds?

November 22, 2022

No one likes ads. They are a necessary evil to keep services free. Unfortunately, users are experiencing more ads than their desired content. Even worse, Apple has transformed its App Store into a giant ad scam hole. Ars Technica shares Apple users’ frustration about the latest iOS update: “Why The App Store’s Tone-Deaf Gambling Ads Make Me Worry About Apple.”

The newest iOS update included important security upgrades, bug fixes, and new features. The App Store’s ad services framework was also included in the upgrade, but instead of repairing problems, the store is now an obnoxious purveyor of irrelevant ads. The store is flooded with ads advertising gambling and get-rich-quick crypto scams. What is even worse is that these ads are playing next to games intended for kids.

Apple is aware of the problem and shut down the worst of the ads, but long-term problems are still an issue.

The bigger question is that Apple is no longer differentiating itself from its rivals. Unlike Microsoft, Facebook, and Google, Apple used to make most of its revenue from hardware sales. Its hardware sales are down, so Apple is compensated for the lower profit margins. It comes at the cost of users’ confidence that their Apple products protected their privacy more than others.

“That’s why Apple’s excursions into the ad business and the increased importance of the Services division to Apple’s continued growth worry me. Not because I think Apple’s products will become unusable or because I think the iPhone or Apple TV home screen is going to become dominated overnight by Roku-style half-page ads, but because I think that the pressure for Apple to degrade the experience for users and developers in the name of expanding its ad business will gradually increase as Apple tries to satisfy shareholders looking for perpetual growth.”

Apple is regarded as a high-quality product, a cut above a basic PC. The expensive price tag and the better privacy OS augments that reputation, but if Apple becomes more like its rivals it will not long per elitist. UGH!

Whitney Grace, November 22, 2022

Is This FTX Math?

November 21, 2022

I recall hearing or reading that the top dog of Aurora, the FTX affiliated entity, thought that running a crypto outfit required basic math skills. I read “FTX Owes more than $3 Billion to Top 50 Crypto Creditors.” The write up points out:

Roughly 1 million customers unable to withdraw funds from crypto currency exchange

Okay, let’s do some modern day basic math. Follow along:

  • 50 kind hearted and understanding creditors
  • $3 billion in US dollars or a suitable equivalent like Teslas or designer bags
  • One Enron experienced super manager.

Now the math:

50 times $3 billion equals 20 years

I will get a middle school student to check my math. I may be off a few years with the prison sum.

Stephen E Arnold, November 21, 2022

Estonia and e-Residency

November 21, 2022

I have been to Estonia a couple of time. Once I visited in the summer. Another time I visited in February. Here’s a tip: “Leaves of Grass” weather is preferable in my opinion.

I mention Estonia because I noted a link to the Estonian government’s e-Residency information. You can find the basics at “Become and E-Resident.”

The main idea is that one can join Estonia’s digital nation. E-Residency is open to people from other countries. The idea is that the business would be “location independent” and the company would be an EU outfit.

The benefits include:

  • Grow your business remotely
  • Minimized bureaucracy (keep in mind that this is an EU company within a Baltic state with a Russian border)
  • Joining an international community.

There are nominal fees, probably less than US$200, and a background checking process.

The idea is an interesting one. However, the e-Residency does not appear to include one of those “golden passports” available from some countries.

Are there downsides? A few, for example:

  • Explaining to a US tax authority what’s going on
  • Anticipating how the program will evolve; for example, laws passed in Estonia going forward
  • Dealing with litigation in the US, EU, and elsewhere
  • Resolving issues arising from payment to vendors and collecting money from customers.

If this approach to business appears attractive, check out the Estonia government’s Web site.

Stephen E Arnold, November 21, 2022

TikTok eCommerce: Will It Work in the US?

November 18, 2022

Douyin, TikTok’s predecessor and home-nation counterpart, made a very fruitful decision to emphasize e-commerce in 2020. As owner ByteDance sought to export that success via TikTok, however, the effort has been less lucrative. In an effort to understand why, Rest of World‘s Rui Ma takes a step back and examines “How TikTok Became and e-Commerce Juggernaut in China.” One key factor was live stream shopping events, an arena Douyin dominates despite entering a year after rival Kuaishou and several years after e-commerce titan Alibaba. The interloper chose to focus on brands themselves and smaller sellers instead of major influencers whose audiences could evaporate with a single PR blunder. Ma considers:

“So how does Douyin actually make money from livestreaming e-commerce? If you guessed ‘by commission,’ you would only be half-correct, as the platform actually charges very little — typically 1%–5% of sales value, depending on the category of goods being sold. The take rate is low, partly because of the stiffly competitive environment, and partly because this helps boost turnover as more sellers are encouraged to use the platform. But in order to succeed, most of those sellers will have to pay Douyin in other ways, via different forms of advertising. Sound familiar? That’s right — much like how Amazon sellers pay to show up in top search results, Douyin allows you to advertise your live stream in users’ feeds. TikTok has just one option for creators to have paid posts (straightforwardly called ‘Promote’). But Douyin has at least two more, targeted towards boosting the live streams of business accounts. Together, these are believed to be a significant revenue stream for Douyin, and presumably, still part of the playbook TikTok hopes to bring overseas. Since Douyin requires live stream e-commerce transactions to be completed on the platform instead of being redirected elsewhere, this all forms a ‘closed loop,’ where the user never strays from the app. It’s the ideal flywheel, and the envy of platform companies everywhere.”

Then there is Douyin Partners, an imitation of Alibaba’s Taobao program. Third-party partners will set up and operate a seller’s account, from advertising strategy to storefront to logistics. We are told ByteDance has not yet tried to insert Partners into TikTok. Why did step one, the livestreaming e-commerce approach, fail in Europe and the US? We are not sure, but it does not look like ByteDance is ready to throw in the global aspiration towel just yet. Stay tuned.

Cynthia Murrell, November 18, 2022

Post Pandemic Blues: Tablets and Chromebooks Struggle

November 17, 2022

Might smartphones make some devices irrelevant? We learn from The Register that “Tablet, Chromebook Shipments Come Crashing Down.” The article examines IDC’s report of third-quarter shipments. It states a mere 38.6 million tablets were shipped between July 01 and September 30, a decline of almost 9% since the previous year. Only Huawei grew its sales as demand escalated in China and Russia, where sanctions barred the way for Western tech. Writer Paul Kunert reports:

“Apple saw sales decline 1.1 percent to 14.5 million, according to IDC estimates. Samsung was down 4 percent to 7.1 million, Amazon fell 8.1 percent to 4.3 million, Lenovo shipments dropped 36.6 percent to 2.7 million, and Huawei grew 2 percent to 2.4 million. In its results filed late last week, Apple said iPad sales to end users were up 21 percent to $8.3 billion in Q4 of its fiscal ’22 ended 30 September despite supply constraints. IDC tracks sales into the channel, hence the difference in the figures. Chromebook shipments fell at a far faster rate, down 34.4 percent year-on-year to 4.3 million devices. This was the fifth straight decline for this sector of the PC industry. The downward trajectory began in the US, which accounted for 70 percent of global shipments. … IDC placed Acer as market leader with shipments of 1 million, albeit down 23.8 percent on a year ago. Dell shrank 19.9 percent to 900,000 units, HP was down 26.8 percent to 800,000, Lenovo plunged 54.8 percent to 700,000, and Samsung was down 37 percent to 300,000.”

Researchers point out Chromebook sales spiked during the pandemic as students connected from home, so its decline is simply a return to normal levels. As for the rest, a tough economy was likely at play. Apparently one can endure a slightly smaller small screen when fuel and groceries are difficult to afford.

Cynthia Murrell, November 17, 2022

Discovering Bunsha. Wow, the Past Can Provide Some Wisdom to Whiz Kids

November 15, 2022

In early 1992 I gave several lectures in Japan. At the Kansai Institute of Technology in Osaka, I learned about bunsha. I recall that one of the people from MITI attending my lecture mentioned the concept. A representative of Kinokuniya (the then giant of Japanese bookselling and information) arranged for a slim volume to be delivered to my hotel when I arrived in Tokyo for another lecture.

I received two slim volumes: Bunsha. Improving Your Business through Company Division and Bunsha. Company Division. What Good Is a Stuffed Tiger? After leaving Japan, I added a third book: To Expand We Divide. The Practice and Principles of Bunsha Management.

These books made a significant impression on me. The authors Kuniyasu Sakai and Hiroshi Sekiyama, along with translator David Russell, explained how to avoid the management pitfalls of becoming too big. Teams can be too big. Companies can be too big. When big happens, some employees are stifled and leave the company.

The basic idea is to create smaller units and when an employee has a desire to start a company, give that employee an opportunity to do that new thing within the existing company. A brief summary does not do justice to the ideas in these three slim volumes.

The idea of bunsha had a significant impact on how I viewed certain types of management challenges. I suppose one could say, “That’s just common sense.” I am not so sure because these books codified the idea of bunsha and provided examples about the principles. Shortcomings and benefits are explained.

I read “Split Your Overwhelmed Teams: Two Teams of Five Is Not the Same as One Team of Ten.” (If the link goes dead, you have another example of knowledge erosion. A perfect example of our current management plight.) My immediate reaction was that the idea of bunsha is not familiar to the author. As I reflected on the essay, I realized that most people don’t know about bunsha and if they heard about the concept, the reaction was that it was irrelevant.

Several observations seem to be warranted:

  • Information about important management ideas is not diffusing. The disheartening failures of management at technology companies essential to economic performance illustrate what happens when big fails.
  • Japan itself has overlooked the importance of bunsha. The disappointing trajectory of well known Japanese high technology companies provides a number of examples. Hello, Toshiba.
  • Management consultants — at least the ones I have encountered in the last 20 years — know how to gather data, cut expenses, and get their bonuses. I am not sure these individuals or some of their mentors know about bunsha.

May I suggest that a greater familiarity with bunsha will pay knowledge dividends. The books are short and are, therefore, suited to the TikTok and Instagram generation. For those older, bunsha may be too little, too late. Rediscovering ideas from a half century ago illustrates the peculiar narrowness of the Googlized information.

Stephen E Arnold, November 16, 2022

Google Did What? Misleading Users? Google!

November 15, 2022

In the midst of an economic downturn, most businesses try to avoid: [a] bad publicity regarding a sensitive issue and [b] paying lots of cash to US states. I suppose I could add [c] buying Twitter and [d] funding the metaverse, but let’s stick to the information in “Google Will Pay $392m to 40 States in Largest Ever US Privacy Settlement.”

For a big outfit like the Google my thought is that the negative publicity is more painful than writing checks. But advertisers are affected by the economic downturn and may be looking for ways to make sales without cutting deals with companies found guilt of user/customer surveillance.

The write up, which I assume is mostly on the money, says:

The states’ investigation was sparked by a 2018 Associated Press story, which found that Google continued to track people’s location data even after they opted out of such tracking by disabling a feature the company called “location history”.

The article points out:

It [the penalty] comes at a time of mounting unease over privacy and surveillance by tech companies that has drawn growing outrage from politicians and scrutiny by regulators.

Free services are great as long as users/customers don’t know exactly what’s happening. In the early days of the Google, there was not a generation interested in dinobaby ideas. Well, this decision suggests that some dinobabies with law degrees expect commercial enterprises to act with some sense of propriety.

The article makes clear exactly what Google did:

The attorneys general said Google misled users about its location tracking practices since at least 2014, violating state consumer protection laws. As part of the settlement, Google also agreed to make those practices more transparent to users. That includes showing them more information when they turn location account settings on and off and keeping a webpage that gives users information about the data Google collects.

Hmmm. What about targeted ads which miss their targets? Perhaps that’s an issue which will capture the attention of US attorneys general? Perhaps, but I am not optimistic. Awareness and subsequent legal processes move slowly, and slow is the friend of some firms.

Stephen E Arnold, November 15, 2022

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