Isegoria

The Moral Life of Cubicles looks at their “cybernetic” origins as a tool to create equality, creativity, and collaboration in the workplace:

The cubicle has its roots in the cybernetic school of thought that arose in the middle of the last century. The meaning of “cybernetics” has largely been swept up in the exuberant imagery of movies and commercials with their glowing rivers of ones and zeros flowing through the air. However, cybernetics has an older and deeper history, predating both the personal computer and the cubicle. Fred Turner’s recent book, From Counterculture to Cyberculture, shows how the cybernetic idea of seeing the world in terms of information flows grew out of government-sponsored World War II military research and into the information technology industry of Silicon Valley. In the 1960s and 1970s, cybernetic ideas brought groups of military-funded computer researchers together with Deadheads, radical environmentalists, and art communards in the San Francisco Bay area. This collection of long-haired eccentrics began to think of everything from bee behavior to dance parties to computer programming as information processes. In doing so, they liberated the images of information and the computer from the clutches of the military-industrial complex, joining them instead to a new cybernetic-counterculture vision of egalitarianism, communal networks, and democratic “people power.”

Architecture textbooks and journals in the 1960s and 1970s began to talk about a new “cybernetic” idea of the office. Starting with the assumption that offices were fundamentally places for the exchange of information, advocates of the cybernetic office aimed to eliminate walls that stop the “free flow of ideas,” replacing them with cubicle workstations. If the pictures in cubicle advertisements of the time are any indication, cubicles helped ideas flow quite freely indeed. Employees in these ads lack computers, to say nothing of e-mail and the Internet, yet they always seem caught in moments of frenzied, often low-tech, information exchange: pointing to each other across the room, handing papers over and around the burnt orange (“aesthetically pleasing and humanly satisfying”) partitions, all while talking on the phone and jotting down notes.

As California computer companies grew into large businesses, then, cubicles were their natural office form. It was through these companies that cubicles first entered the public imagination. In the late 1970s and early 1980s, business sections of newspapers and magazines described the radical work arrangements of Silicon Valley with curiosity and often breathless enthusiasm. Intel served as the chief example of the creative and egalitarian cubicle workplace. The company had no time cards, no dress codes, no assigned parking spots, no special cafeterias for executives, and above all, no offices, just a sea of half-wall partitions. The long, low buildings of Intel were fields of shared labor, like the communal farms that had so recently dotted the hills around Intel’s campus. CEO Andrew Grove, hip and casual in an open-necked wide-collar shirt and gold chains, was an unpretentious man of the people. He moved among the workers of Intel “empowering” them to do their jobs, and sat at a cubicle at one side of the vast work floor ready to help. Most incredible of all (and unlike the communal farms) this social experiment was economically viable. In a time when the great industrial giants were falling to Japanese competition, Intel was making money hand over fist. For some observers of American business, the Intel office model seemed like a savior. In The Atlantic, James Fallows asked the question on the minds of so many who dared to hope for the future of American industry, “Could the tire companies, the machine tool makers, the color TV industry, learn to work this way?”

Workers at Best Buy found out that you can have a freelance lifestyle in a corporate workplace:

Picture an office where no meeting is mandatory and employees can come and go as they please as long as they get the job done.

“Too good to be true,” most cubicle occupants would probably say, but an upcoming book about this results-only work environment is not fiction. In fact, authors Cali Ressler and Jody Thompson pioneered the concept while working at consumer electronics chain Best Buy Co Inc, which now makes the option available to about 3,000 of its 4,000 corporate staffers.

In Why Work Sucks and How to Fix It (Portfolio, $23.95), Ressler and Thompson maintain that time — or control over it — heals many corporate wounds.

Too often, they say, a company will treat employees like children incapable of working without supervision, while promoting mediocre performers simply because they put in a lot of time at their desks. Meanwhile, the traditional work week of 8 a.m. to 5 p.m. Monday through Friday no longer serves the needs of many customers.

In a results-oriented work environment (ROWE), however, a company focuses exclusively on job performance, rather than work schedules or office politics. At Best Buy, productivity has increased, and fewer of the employees that the company wanted to retain have left, although “involuntary” turnover rates have increased as unsatisfactory workers were exposed.

Employees can do their jobs at home or in Starbucks, first thing in the morning or in the middle of the night. One of the hallmarks of a ROWE is that a person who goes home at 2 p.m. is not leaving early, while someone who arrives at that time is not late.

The book, which is set for publication on Monday, includes the story of an e-learning specialist who typically wakes up without an alarm and does at least some of his work at home in front of the television set. Meanwhile, a dot-com employee has been able to spend more time with her son.

The authors have gone on to apply the ROWE concept at a small financial services company in Wisconsin through CultureRx, the consulting firm they have founded.

IKEA’s creative corporate structure and financing might be called flat-pack accounting:

What emerges is an outfit that ingeniously exploits the quirks of different jurisdictions to create a charity, dedicated to a somewhat banal cause, that is not only the world’s richest foundation, but is at the moment also one of its least generous. The overall set-up of IKEA minimises tax and disclosure, handsomely rewards the founding Kamprad family and makes IKEA immune to a takeover. And if that seems too good to be true, it is: these arrangements are extremely hard to undo. The benefits from all this ingenuity come at the price of a huge constraint on the successors to Ingvar Kamprad, the store’s founder, to do with IKEA as they see fit.

So IKEA is a Dutch non-profit?

The parent for all IKEA companies — the operator of 207 of the 235 worldwide IKEA stores — is Ingka Holding, a private Dutch-registered company. Ingka Holding, in turn, belongs entirely to Stichting Ingka Foundation. This is a Dutch-registered, tax-exempt, non-profit-making legal entity, which was given the shares of Mr Kamprad in 1982. Stichtingen, or foundations, are the most common form of not-for-profit organisation in the Netherlands; tens of thousands of them are registered.

Most Dutch stichtingen are tiny, but if Stichting Ingka Foundation were listed it would be one of the Netherlands’ ten largest companies by market value. Its main asset is the Ingka Holding group, which is conservatively financed and highly profitable: post-tax profits were €1.4 billion ($1.7 billion) — an impressive margin of nearly 11% on sales of €12.8 billion — in the year to August 31st 2004, the latest year for which the group has filed accounts.

Valuing the Inkga Holding group is awkward, because IKEA has no direct competitors that operate globally. Shares in Target, a large, successful chain of stores in the United States that makes a fifth of its sales from home furnishings, are priced at 20 times the store’s latest full-year earnings. Using that price/earnings ratio, the Ingka Holding group is worth €28 billion ($36 billion).

That’s more than the Gates Foundation — which actual does charitable work.

James Surowiecki looks at The Open Secret of Toyota’s Success:

At the core of the company’s success is the Toyota Production System, which took shape in the years after the Second World War, when Japan was literally rebuilding itself, and capital and equipment were hard to come by. A Toyota engineer named Taiichi Ohno turned necessity into virtue, coming up with a system to get as much as possible out of every part, every machine, and every worker. The principles were simple, even obvious — do away with waste, have parts arrive precisely when workers need them, fix problems as soon as they arise. And they weren’t even entirely new — Ohno himself cited Henry Ford and American supermarkets as inspirations. But what Toyota has done, better than any other manufacturing company, is turn principle into practice. In some cases, it has done so with inventions, like the andon cord, which any worker can pull to stop the assembly line if he notices a problem, or kanban, a card system that allows workers to signal when new parts are needed. In other cases, it has done so by reorganizing factory floors and workspaces in order to allow for a freer and easier flow of parts and products. Most innovation focusses on what gets made. Toyota reinvented how things got made, which enabled it to build cars faster and with less labor than American companies.

But there’s an enigma to the Toyota Production System: although the system has been widely copied, Toyota has kept its edge over its competitors. Toyota opens its facilities to tours, and even embarked on a joint venture with G.M. designed, in part, to help G.M. improve its own production system. Over the years, more than three thousand books and articles have analyzed how the company works, and things like andon systems are now common sights on factory floors. The diffusion of Toyota’s concepts has had a real effect; the auto industry as a whole is far more productive than it used to be. So how has Toyota stayed ahead of the pack?

The answer has a lot to do with another distinctive element of Toyota’s approach: defining innovation as an incremental process, in which the goal is not to make huge, sudden leaps but, rather, to make things better on a daily basis. (The principle is often known by its Japanese name, kaizen — continuous improvement.) Instead of trying to throw long touchdown passes, as it were, Toyota moves down the field by means of short and steady gains. And so it rejects the idea that innovation is the province of an elect few; instead, it’s taken to be an everyday task for which everyone is responsible. According to Matthew E. May, the author of a book about the company called “The Elegant Solution,” Toyota implements a million new ideas a year, and most of them come from ordinary workers. (Japanese companies get a hundred times as many suggestions from their workers as U.S. companies do.) Most of these ideas are small — making parts on a shelf easier to reach, say — and not all of them work. But cumulatively, every day, Toyota knows a little more, and does things a little better, than it did the day before.

The system doesn’t necessarily preclude missteps — in 2006, Toyota ran into a series of quality problems — and it’s possible that the focus on incremental innovation would be less well suited to businesses driven by large technological leaps. But, on the whole, the results are hard to argue with. They’re also phenomenally difficult to duplicate. In part, this is because most companies are still organized in a very top-down manner, and have a hard time handing responsibility to front-line workers. But it’s also because the fundamental ethos of kaizen — slow and steady improvement — runs counter to the way that most companies think about change. Corporations hope that the right concept will turn things around overnight. This is what you might call the crash-diet approach: starve yourself for a few days and you’ll be thin for life. The Toyota approach is more like a regular, sustained diet — less immediately dramatic but, as everyone knows, much harder to sustain. In the nineteen-nineties, a McKinsey study of companies that had put quality-improvement programs in place found that two-thirds abandoned them as failures. Toyota’s innovative methods may seem mundane, but their sheer relentlessness defeats many companies. That’s why Toyota can afford to hide in plain sight: it knows the system is easy to understand but hard to follow.

Clayton Christensen describes The New Economics of Semiconductor Manufacturing:

Never have so many smart people worked so hard for so little money.

Walk into a multibillion-dollar chip-fabrication plant — a fab — and you may very well get the impression that the industry is headed for a spectacular meltdown. One of the first things you’ll see is a bay the size of two basketball courts packed with equipment for projecting a lithographic design onto wafers. Nearby, you’ll find a towering bin, called a stocker, filled with wafers waiting to be processed by this equipment. The wafers are worth from US $10 million to $100 million — all of it idle inventory.

Why? To amortize the $5 billion investment in a fab over a five-year schedule costs more than $3 million a day. Conventional wisdom holds that to generate that much money you must keep all the equipment running all the time, even if that means creating large unused queues of wafers. What’s more, to justify that scale, you have to produce a semiconductor product in volumes of at least 5000 to 10 000 wafers per month.

More than anything else, Moore’s Law has been responsible for the gigantic costs. It takes huge amounts of capital to support the incessant cycles of investment and obsolescence that keep Moore’s Law on the march. That rapid cycling explains why a company’s shining jewels can turn into white elephants in just five years.

Idle inventory? This sound like a job for … Just-In-Time! Or Goldratt’s Theory of Contraints! Or Lean Manufacturing! Yes, lean manufacturing — also known as the Toyota Production System:

In early 2007, we had the opportunity not merely to emulate Toyota’s system but to apply its principles to a logic fab belonging to an integrated device manufacturer (IDM). As consultants, we are not at liberty to divulge the company’s name; however, it’s safe to say that the company is highly competitive — that is, it has survived and prospered by pursuing Moore’s Law, always remaining at the forefront in technology and operational excellence. But Moore’s Law was turning this jewel of a fab into a white elephant while the equipment was still relatively new.

In just seven months, the organization was able to reduce the manufacturing cost per wafer by 12 percent and the cycle time — the time it takes to turn a blank silicon wafer into a finished wafer, full of logic chips — by 67 percent. It did all this without investing in new equipment or changing the product design or technical specifications. And this short experiment has exposed only the tip of the iceberg. We believe that these early results point to what we call the new economics of semiconductor manufacturing and that this will have a profound and lasting effect on the industry and create new opportunities for growth.
[...]
Spear and Bowen distilled TPS into four rules, which in summary are (1) highly specify activities, (2) clearly define the transfer of material and information, (3) keep the pathway for every product and service simple and direct, and (4) detect and solve problems where and when they happen, using the scientific method. When we present these rules, even in their fully detailed form, clients generally protest that they “do it that way already.” But on closer examination — while auditing their fabs — we often find something quite different [see sidebar, “The Toyota Production System Sanity Check”

I suspect the most important change initiative was the switch to a new TPS report cover sheet.