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Profitable reading.

Catching up on some reading while we wait for the government to rescue the economy ...

Larry Bossidy is known as the man behind one of the largest business mergers in history, that of Honeywell and AlliedSignal. But what Bossidy, who was chairman of the merged company, has to share in Execution: The Discipline of Getting Things Done, which came out last year, may surprise you. That's because Execution isn't about balance sheets or market timing or quality systems: it's a treatise on how to manage people.

Yeah, that's right. People. Even more revealing is what the authors (coauthor Ram Charan has taught business at Harvard and Northwestern) say are the three little actions that execution comes down to: Developing a system and having the discipline to adhere to it, hiring the right people for the system, and developing a market-based strategy in which all executives are active participants in minute operational details.

Unlike Execution, which cites several case studies, another recent book, Moneyball, is an account of the running of a single company, the Oakland Athletics baseball team, through the eyes of its general manager, Billy Beane. (What other industry does the subtitle--"The Art of Winning an Unfair Game"--remind us of?) For the uninitiated, Beane has overcome an anemic budget and a small local market to compete successfully at the highest level of the sport. Beane recognized that, given his limited resources, he couldn't compete with the big market teams like New York. So he changed the rules. He didn't overspend on players who could only marginally contribute. And he concentrated on picking young (read: cheap) talent using a rating system that values actual performance data over human perception, and in doing so reinvented the way many teams evaluate players.

Beane relates his management philosophy to actuarial science: "Predictability, predictability, predictability. What's the path to least risk? What's the greater chance of getting some return on this asset? We stay disciplined on that--and over time, with an accumulation of those decisions, you end up with something successful." On Beane's watch, the Oakland franchise has been among the elite, with more wins than all but three franchises over the past four years and at a cost-per-win of less than half that of the next "most efficient" team ranked in the top 10.

The parallels and lessons of these books for PCD&M readers are many. Among them: 1) Have a plan that is tailored to the market realities (in our case, that means rampant cyclicality and occasional recessions); 2) leaders must know how the company works (that doesn't mean they should operate the plating bath, but they had better know how it runs and why it's important); 3) proper coaching is critical to employee success; 4) discipline reduces risk; 5) sometimes you have to reinvent the "rules"; and finally, forget what the factory looks like--there's nothing prettier than a clean balance sheet.

Although they qualify as captains of industry, neither Bossidy nor Beane is known for their politicking or "I have a dream" type speeches. Rather, they have focused on the oft-mundane, nitty-gritty inner workings of their companies. And although they at times have pulled off jaw-dropping deals, their success is rooted in the fact that they don't always try to hit the home run. In one Bossidy speech I heard, he noted that AlliedSignal's goal was to grow 8% a year, every year. Nothing sexy about that, bur who wouldn't take it now?

This month's cover story, our annual NTI 100, lists the largest PCB firms in the world. What the list can't show, of course, is which is the best. Rest assured, the winners in the PCB game are determined not by how much money they bring in but by how much profit they make, a benchmark Bossidy and Beane are certain to value highly.
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Title Annotation:Our Line
Author:Buetow, Mike
Publication:Printed Circuit Design & Manufacture
Date:Sep 1, 2003
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