Thoughts on Shop Class as Soulcraft, by Matthew Crawford

I received Shop Class as Soulcraft as a gift, probably because I’m an avid scooterist and the author is a motorcycle mechanic. Imagine my surprise when I realized this book wasn’t about motorcycles at all, but about business. In fact, I would say it’s an essential item for any business leader’s bookshelf, and a pretty important item for rank-and-file employees.

Crawford (or “Dr. Crawford”, since he has a PhD in political philosophy) pitches the book as a defense of mechanical labor — the work of carpenters, electricians, plumbers, and mechanics. Beyond that, it is a scholarly and wide-ranging treatise on the nature of human labor: why do we work? What do we gain from it? How is modern employment structured? How and why are we motivated to work? How does management keep us working? How have corporate governance and the economy developed to build the modern labor force?

These are wide-ranging questions, which Crawford lays out in the first section of the book. His essential thesis is that industrial society has broken down the process of labor into pieces, pieces that can be documented and simplified. The motivation to do this is to eliminate expert knowledge, and render employees into a fungible, globally efficient resource.  In manufacturing, this process started with machine automation and culminated in the assembly line. Crawford recounts that Henry Ford’s early assembly lines had to hire 900 people just to retain 100. The applicants were blacksmiths, sheet metal workers and carpenters looking for steady work, but they found the task of assembly-line work so execrable that only a few would stay.

This trend continues to the modern day. Modern “knowledge workers” see their jobs broken down into pieces, then the pieces are analyzed, scripted and outsourced to non-skilled workers who work entirely from a script. Outsourcing of human resources, accounting, payroll are just a few examples. Crawford proposes that so-called “creative trades” are next on the chopping block, as creative jobs like computer programming, graphic design, and others are broken down to their fundamental building blocks, then outsourced to armies of minimally-skilled workers around the planet. If you don’t believe this can happen, go have a look at a site like Photoshop Disasters, then ask yourself if consumers will know or care who develops their creative work.

A particularly good example of this trend is the development of banking. A century ago, bankers were important members of the community. Their decision to loan money or offer investment services was not merely based on a formula, but on their keen observation of people, property, and the local economy. They operated in a constantly changing landscape of risk, and only synthesis of many factors could inform their decisions to offer credit.

Yet, in the 21st century, we find that banking has been disassembled into its constituent pieces. A marketing company develops the leads, a mortgage broker finds the deal, a loan officer closes the deal, a servicing company handles the payments, the bank sells the paper to an investment firm, which securitizes the loan into tiny pieces and re-sells the investment to hundreds of downstream purchasers. Almost nobody is local, and the borrower is just an account, their identity barely known to the processes and procedures that make the loan happen. In fact, the system discourages that knowledge — anything that might derail the deal.

Well, we’ve seen the result of that disaster.  With the local banker’s knowledge of property, people and economy eliminated, the system has been unable to properly quantify risk, with the result that something like 30% of the money invested in mortgage securities has disappeared. Now the system is poised to go the other way, with overly conservative formulae denying credit to people that would be deemed safe risks by a local expert. Now that the expertise and adaptability of the banker has become a process, it is clear that errors in the process will be magnified across the entire system.

It’s surprising how easily we have become conditioned to see standardized, formulaic handling of work tasks as normal, or even better, than local expertise. As Crawford points out, in the eternal quest for low cost, the assembly line provides more labor for less money. But it doesn’t provide more quality in less time.

Crawford proposes that the mechanical trades — building, plumbing, mechanics — are the best avenue for people who want to actually accomplish whole tasks, without large amounts of antecedent education and without the threat of their jobs being torn down, “stupidified” as Crawford might say, into tiny pieces. As a side note, Crawford admits that most of his experience is with male-dominated industries, but concedes that female-dominated tasks like gardening and nursing enjoy similar rewards and protection. Essentially, you’re looking for a combination of locality (the requirement that work be done in a specific location) and embedded expertise that can only be learned through experience.

Crawford backs up his claims with personal, and often hilarious, anecdotes from his own life. Unlike many of us, he has lived as a rank-and-file laborer, a mechanic, a “knowledge worker”, a leader (of a DC think tank) and an academic. This history gives him a unique perspective on labor.

Crawford claims that he offers no formula for job satisfaction, yet there is a message here, and a powerful one for managers and leaders that want to fully engage their employees.  It’s clear that rewarding labor brings more responsibility, more autonomy, and greater opportunities to see the final results of one’s work. Essentially, if we want to have the best employees doing the best work, we need to resist the urge to break down the labor process quite so much, and give employees more opportunities to see the whole product. I was reading an HBR article on this very issue, pointing out that the way to groom new leaders and innovators was to give them an opportunity to work across the enterprise. In fact, I’d say that’s the way to improve almost any employee’s motivation; there are awfully few employees who really want to keep their heads down on a single task for their entire career.

Crawford certainly accomplishes his task of defending the mechanical arts, and I admit this is one of the few nonfiction books that I couldn’t put down.

Four Months of Tire Tariffs

Scott Linicome, who knows more about national and international trade than I ever will, has a fantastic breakdown of the consequences of the tariff on Chinese tires. Go there now and read it. Go!

Unsurprisingly, the price of Japanese tires for my Honda Helix has gone up about 20%.

An Important Lesson from Fake Steve Jobs

This rant by Fake Steve Jobs pretty much sums up all that is wrong with the telecom industry (and by extension, many other industries) in the US.

It doesn’t take much business education to see what’s going on here. To use Michael Porter’s terminology, AT&T no longer feels the need to differentiate their service. Instead, they are adopting a cost leader strategy, which is completely incompatible with a company like Apple which differentiates on quality and features.

The Passing of a Modern Renaissance Man

Earlier this week I learned that Professor Harry Hurt of the University of Southern California passed away due to complications from surgery in Pomona, CA. He was 81.

Harry Hurt is well-known in the motorcycling community because of the Hurt report, an early-80s study of motorcycle safety in Southern California that dispelled many of the myths about motorcycle safety. Important conclusions from the Hurt report included the safety value of full-face helmets, the criticality of motorcycle driver training, the importance of motorcycle visibility and the role of alcohol in motorcycle accidents.

Dr. Hurt was also a naval aviator, an acclaimed textbook author and an expert in a wide range of transportation safety issues. His contribution to the safety and quality of modern transportation is almost incalculable.

I’ve read the unabridged Hurt report almost line-by-line, and I think it makes clear that there is no cheap shortcut to knowledge. Hurt,  his assistants and students performed extensive crash reconstruction on more than 900 accidents; investigator training alone took six months. Hundreds of accident survivors were interviewed and their motorcycle skills were evaluated on a test range. They analyzed thousands more police reports to provide a baseline to their detailed analyses. In a world of punch-card computers, they performed correlation analysis to determine the factors that were associated with accident and injury in the crash data.

We like to think of great scientists and engineers as ivory-tower eggheads who sit in a library all day and study books. The reality is far different. True knowledge is hard-won, and Dr. Hurt taught us that success requires getting down with a tape measure among the blood and glass and sirens.

A new motorcycle safety study has been in the making for more than 3 years, but the lead researcher and the donors can’t agree on funding issues. But if it happens, it will be done with the same investigative techniques established by Dr. Hurt.

Ford wins the prisoners’ dilemma

So, let’s imagine that you run a business. You and your two major competitors are looking at bankruptcy if sales trends continue, but the government offers you a deal to remain solvent.

You might think that it’s a simple question of solvency versus insolvency, but the smart player realizes that the decision to take a government bailout, or not to take one, might significantly change the sales forecast.

If all three take the bailout, then the sales figures are probably accurate. If none take the bailout, then little has changed. But if some take the bailout and some do not, the strategic situation has changed dramatically.

Ford made that bet, and won.

By refusing to take government money, they convinced US consumers that they were dedicated to success without handouts, and they became the car of choice for consumers looking to buy American.

It’s good to see a company rewarded for doing the right thing. It’s also a lesson for business students: Ford realized that the consequences of its decision were dependent on the decisions of others. So they were less concerned about their own decision, and more concerned about the decisions of their competitors. By correctly predicting that both Chrysler and GM would take government bailouts, Ford set themselves up for success by refusing. It was an ambitious decision that probably would have cost Alan Mulally his job if it didn’t work out.

These kinds of decisions fall into the statistical and economic realm of game theory, that tries to define which decisions will result in the highest payoff, considering the possible decisions of your competitors  (the “other players”). Game theory is a fascinating subject and any text on business economics can give you the essential elements.

Sexual Flirtation and the Workplace

As you’ve probably heard by now, unless you live in a cave on Mars with your fingers in your ears, David Letterman has admitted to a history of sexual relationships with women in his employment.

There seems to be a common thread that Letterman isn’t a public or moral leader, and so the world shouldn’t really care. I disagree. Letterman’s behavior is not just a poor example, but it’s probably left him and his production company hung out to dry in a legal sandstorm.

Sexual harassment rules exist to protect all of us, both those who are pressured into an inappropriate relationship, and those who must work alongside Letterman’s sexual partners. Why did Letterman do so much fishing off the company pier? Why get into relationships with his staff, rather than women in the larger community?

Because Letterman knew he could keep them quiet.

It’s all about power. They want to work in TV, and he’s a big man in the TV business. As the owner of the company, his words will have a long-reaching effect on their careers, positive or negative. The women who work for him know this, and there is no way to freely enter and leave a relationship in this environment. The employees who did not enjoy this “blessing” are now scanning the past, looking for situations when their co-workers received favors.

I have no idea whether Letterman abused his power over his employees, and ultimately it doesn’t matter if he took any specific action either for or against particular employees. Now that he has admitted to sexual relationships, every one of his decisions is going to be evaluated and second-guessed in terms of his admitted sexual proclivities. Every former sexual partner is asking themselves, “Was I really a free participant in that relationship, or did I do it because I was scared to say no?”

Worldwide Pants has produced some successful shows, and if Letterman wants that venture to continue, he needs to distance himself from day-to-day operations right now. Employees demand equity in their environment — a sense that they and their co-workers are being evaluated on their performance of the job. That equity is destroyed, and to paraphrase Benjamin Franklin, equity is like fine china: easily cracked, and never well-mended.

Steal from the Poor, Give to the Noncompetitive

It should be no surprise coming from Cato, but it’s good to see others coming to the realization that trade protectionism is nothing more than a regressive tax on the poor. It’s like a perverted Robin Hood: steal from the poor, and give to noncompetitive US businesses.

We all understand that those who have wealth should be willing to give their fair share for public health, clean streets, basic education, etc. You don’t have to be a socialist to realize that the budget for basic services has to come from somewhere, and taxes that disproportionately affect the wealthy are generally perceived as a fair solution.

But trade protectionism is aimed at cheap products and basic commodities, not luxury goods. Tires, food, clothes are all products that poor people desperately need. Raising tariffs in a recession is a disastrous policy that takes from the poor when they are least able to pay.

Ding. Tire prices going up!

Time to pay the tariff.

I believe in tires at midnight

Over the weekend, the Obama administration issued a 35% tariff on Chinese-made tires. This power was a provision of a 1970s trade agreement that allowed the president to unilaterally apply a tariff against Chinese goods if the executive branch felt that China was trying to dump goods or disrupt the US market for a product.

Who pays this tariff? Since Chinese companies have to pay the tax to get their tires past US customs, you might think they are the targets. You would be wrong.

At a time when US citizens can least afford a new tax, rest assured that the money will come right out of our wallets. This restraint on trade will cause all tire suppliers — both domestic and foreign — to raise their prices. Why not? As long as their pricing stays competitive with Chinese-made products, they won’t suffer. Pirelli, Michelin, Metzler, Goodyear, Bridgestone, Continental — you can bet that every one of them will raise prices in response to this new market condition.

Vista, or the Upgrade that Wasn’t

Yeah, I’m late to this party. I decided to install Vista on my home system. We’re never going to use it where I work — smart money says that we’re going to skip straight to Windows 7 — but I wanted to see what all the fuss was about.

It’s pretty much a slapdash interface rewrite on good old Windows XP/2000. Honestly, I could be using Windows 2000 and hardly notice a difference. The new interface looks cute, but has numerous fatal flaws that make it exceedingly difficult to deal with it. For example, good luck trying to apply color preferences to your windows or anything. Many pieces of the interface will simply ignore your settings, no matter what you specify. I’ve been trying to get my taskbar away from this horrible two-tone, but apparently it can’t be done unless I revert all the way back to Windows 2000-style menus.

Anyway, when trying to copy some files from a USB drive I received this wonderful error message:

Really? I put in the wrong diskette. If only I had Volume Serial Number: in my drive Windows6.0-KB948465-X64.exe!

The fact that this operating system has been out for 2 years, been through 2 service packs and these wizards can’t manage to display the correct data fields in the error message is, I think, generally indicative of the quality control I see throughout the product. And error number 0×80070022? Although there are thousands of references on the Internet and a couple of dozen on Microsoft’s own user support bulletin boards, Microsoft has published no end-user information about this error, although it’s documented in their API guide. So how, if I am Joe Q. User, will this error message be useful if I get additional help?