File this under funny…

The Economist ran a brilliant (the sad but true kind of brilliant) article last week about the increasing meaninglessness of job titles (see Too Many Chiefs). Their take-away: “Inflation in job titles is approaching Weimar levels.”

Kim Jong Il, the North Korean dictator, is not normally a trendsetter. But in one area he is clearly leading the pack: job-title inflation. Mr Kim has 1,200 official titles, including, roughly translated, guardian deity of the planet, ever-victorious general, lodestar of the 21st century, supreme commander at the forefront of the struggle against imperialism and the United States, eternal bosom of hot love and greatest man who ever lived.

When it comes to job titles, we live in an age of rampant inflation. Everybody you come across seems to be a chief or president of some variety. Title inflation is producing its own vocabulary: “uptitling” and “title-fluffing”. It is also producing technological aids. One website provides a simple formula: just take your job title, mix in a few grand words, such as “global”, “interface” and “customer”, and hey presto.

The rot starts at the top. Not that long ago companies had just two or three “chief” whatnots. Now they have dozens, collectively called the “c-suite”. A few have more than one chief executive officer; CB Richard Ellis, a property-services firm, has four. A growing number have chiefs for almost everything from knowledge to diversity. Southwest Airlines has a chief Twitter officer. Coca-Cola and Marriott have chief blogging officers. Kodak has one of those too, along with a chief listening officer.

…The number of members of LinkedIn, a professional network, with the title vice-president grew 426% faster than the membership of the site as a whole in 2005-09. The inflation rate for presidents was 312% and for chiefs a mere 275%.

Although I believe that title inflation is a real phenomenon, I’m not sure that citing the growth in vice-president, president, and chief titles listed on LinkedIn over the period 2005-2009 is the cleanest evidence of such (however clever). It could just as easily indicate that senior officers who were reticent to join LinkedIn in the early going finally recognized its value and joined en masse later in the game.

But back to the article:

What is going on here? The most immediate explanation is the economic downturn: bosses are doling out ever fancier titles as a substitute for pay raises and bonuses.

Not sure that’s quite the right explanation. Although the downturn has probably fed title inflation, I doubt bosses have been systematically doling out fancier titles in lieu of pay. They haven’t had to. After all, who’s going to leave the firm in this market??

Rather, my hunch is that it has just as much to do with displaced workers being forced into becoming chief of their very own micro (single person) enterprise. That, and an increasing trend toward independent contracting (explanations that are not mutually exclusive).

I would have been more willing to buy the “bosses are doling out ever fancier titles” to try to manipulate an employee’s sense of worth within the organization. After all, title inflation is not a new phenomenon. It’s an increasing trend that predates the financial crisis, and even the dotcom era.

One of the oldest jokes floating around the financial industry for as long as I can remember is that “Everyone’s a VP at a bank.” And part of the fun during the high-tech/dotcom era was watching the titans of this new industry eschew traditional titles while, at the same time, mocking convention. So I found myself disagreeing with the author’s assertion that:

The American technology sector has been a champion of title inflation. It has created all sorts of newfangled jobs that have to be given names, and it is also full of linguistically challenged geeks who have a taste for “humorous” titles. Steve Jobs calls himself “chief know it all”. Jerry Yang and David Filo, the founders of Yahoo!, call themselves “chief Yahoos”. Thousands of IT types dub themselves things like (chief) scrum master, guru, evangelist or, a particular favourite at the moment, ninja.

Rather than engaging in title inflation, if anything, by adopting quirky titles, I think the chieftains of tech are really just calling “Bullshit” on the whole title inflation charade.

But my nitpicking aside, I encourage you to take a read of the whole article. Hysterical!

Several weeks ago the Economist ran a special on the job market for MBA graduates (see the first article in the series). According to the Economist, the job market for MBA graduates from the class of 2010 has been much better than feared.

I, like many others, thought that the job market for MBA grads would be worse in 2010 than 2009 (see Update on the Job Market, Visit to the FT, or Crisis for MBA Grads). But this was before the unprecedented fiscal and monetary stimulus, and the bailout of the banks.

The Economist tagline summarizes the current situation nicely:

Firms are starting to hire again, but the heady days for MBA’s are not yet back.

Viewed through the lens of MBA hiring, the unprecedented level of economic support provided by the Fed/Treasury seems to have been somewhat of a success. Students are getting jobs again, not quite at the rate that they were two years ago, …but certainly better than in 2009.

In the past, consulting and finance firms did by far the most hiring. The recession hit them both, but while recruitment by consultancies is almost back to the pre-recession level, finance positions have dried up.

So MBAs are looking for alternative employers, including unfashionable organisations that were neglected in the past.

This is consistent with my observations of the current job market for MBA grads. Finance jobs are not abundant, but some financial institutions have slowly started hiring again. With the finance industry largely (though not completely) shut, consultancies seem to be the most desired employer in the current environment. And I too have spoken with many students who have been more willing than in years past to expand their search to general management, marketing, accounting, and other non-finance fields. The MBA students I have spoken with have even been entertaining offers from governmental agencies.

And given likely regulatory changes in the finance industry, I expect this trend to continue in the coming years.

Interestingly however, while the job market for MBA grads has improved markedly from last year at this time, the market for college and high school grads remains in crisis (see Teens Suffering Most and College Grads Flood Labor Market).

From the Time article:

The job market is tough for everyone. But this recession has become a jobs disaster for 16-to-19-year-olds. “The numbers are incredible,” says Andrew Sum, head of the Center for Labor Market Studies at Northeastern University and a nationally recognized expert on teen employment. “Proportionally, more kids have lost jobs in the past few years than the entire country lost in the Great Depression.”

The retail and construction sectors, which are usually key employers of young workers, have been among the hardest hit. Manufacturing, another typical job source for those lacking a higher education or even a high school degree, is not the force in the economy it once was. The result: the teen unemployment rate neared 28% in October before falling slightly the next month. That’s the highest ever recorded since the Federal Government began tracking it, and it’s almost triple the 10% rate for all workers. Teens make up a relatively small portion of the 139 million people employed in the U.S., and by most accounts they would be better off staying in school than entering the workforce.

But things only look slightly brighter for those with an undergraduate degree. According to Bloomberg:

Schools…will soon begin sending a wave of more than 1.6 million men and women with bachelor’s degrees into a labor market with a 9.9 percent jobless rate, according to the Education and Labor departments.

The graduates’ plight has been the subject of high-level discussions within President Barack Obama’s administration, which so far has concluded the best response is to focus on reviving overall employment and bolstering assistance for higher education, said Peter Orszag, the White House budget director.

[But] Unemployment among people under 25 years old was 19.6 percent in April, the highest level since the Labor Department began tracking the data in 1948.

Taken together, I think these stylized facts speak to the gulf in economic recovery between Main Street and Wall Street.

Every couple of years, the popular press muses whether the research conducted at Business Schools has any practical relevance. It looks like it’s time again (see Value of B-School Research).

According to the Economist:

Most MBA students will never read an issue of Administrative Science Quarterly, a well-regarded business-research journal…A recent issue included “Forging an Identity: An Insider-Outsider Study of Processes Involved in the Formation of Organisational Identity” and “Socioemotional Wealth and Corporate Responses to Institutional Pressures: Do Family Firms Pollute Less?”

Don’t worry if you can’t make heads or tails of the research from the titles. Truth be told, you’re not supposed to, and sometimes, neither can I. But I’m ok with that.

Anyhow,

If vapid bestsellers like “Who Moved My Cheese?” are at one end of the spectrum of management writing, then the typical ASQ article is resolutely at the other. The task of a business-school professor is to meet students somewhere in the middle. Over the last decade, there has been a chorus of critics proclaiming that they have not done a good enough job.

This year’s Sumantra Ghoshal Conference, held at London Business School, debated whether strategy research has become irrelevant to the practice of management. The late Mr Ghoshal published a paper in 2005 castigating business schools for heaping “bad theory” on their students.

I have attended several of the Ghoshal Conferences and have written about my experiences (see On Managerial Relevance, Initial Thoughts from LBS Conference, and Final Thoughts from LBS Conference). I was unable to attend the conference this year due to scheduling conflicts, but I still think the conference is a wholly worthwhile endeavor, …and I look forward to returning in coming years.

But back to the Economist article:

…Warren Bennis and James O’Toole, both at the University of Southern California, published an article in the Harvard Business Review [similarly] criticising MBA programmes for paying too much attention to “scientific” research and not enough to what current and future managers actually needed. Business schools, they argued, would be better off acting more like their professional counterparts, such as medical or law schools, nurturing skilled practitioners as well as frequent publishers.

But since, according to Bennis and O’Toole, Business Schools don’t act like medical or law schools, the question then becomes:

…should a prospective student worry about a faculty’s research prowess when applying to a school?

I have argued YES (see Should Students Care About Research, Impractically Relevant and On Managerial Relevance).

Although I understand (and even agree with) some of the criticisms of Business School research, I believe current, and future, executives can benefit from being exposed to research emanating from Business Schools.

And it’s not only research exposure that students receive in the classroom. Many professors are imparting critical-thinking skills by applying that research to real-world problems. For example, in Impractically Relevant I wrote:

I believe that we, as professors, …play an important role in bringing current research into the classroom. It is up to us to expose students to state-of-the art research, to discuss the important questions of the field, to synthesize the existing findings, to explain those findings in an accessible way, to impart received wisdom, to identify remaining gaps and unanswered questions, and to honestly acknowledge the shortcomings of our work. If we can do all these things, we (and our students) gain a better appreciation for the complexities of the real world. In fact, I believe so strongly in this charge that I feel that if we are not bringing research into the classroom, then we are failing our students. We owe them the best education possible, and it doesn’t mean spoon-feeding them “the answers”, but rather, engaging them in intellectually stimulating discourse and debate so that they can come to their own (informed) conclusions.

In addition to our function as translators, dissemenators, and synthesizers of scientific knowledge inside the classroom:

We also impact practice in other ways too. For example, hardly a day goes by that I see a newspaper without a quote from business school faculty. We are constantly asked to give our opinions on current events. What’s more, business school faculty are often asked to inform policy – whether  by proffering opinions to politicians or testifying on business practice. In this sense then, we help shape the game and inform the agenda – helping decide which issues are important and which are not.

[Further], ask the folks from the investment community and hedge fund universe if business school professors have had any impact on their practice. Ask government employees at the Justice Department whether business school economists have had any impact on the cases they bring and/or the outcomes of those cases. Ask CPA’s whether accounting faculty have had an impact on how they practice their craft.Although the full impact of our research on practice varies depending upon the business school discipline (accounting, finance, economics, marketing, strategy, organizational behavior, operations management, etc.), I’m sure I could find an example of some profound impact that an academician from each discipline has had on practice.

So my reaction to this article is consistent with that which I’ve expressed in the past: I think the stories of our demise have been greatly exaggerated. I think we do have a profound influence on practice, although not always in ways that are widely recognized, and in ways that are often difficult to quantify.

As I concluded several years ago:

Do I believe that business schools  ought to be relevant? Absolutely. Do I believe that rigorous research serves an important role in our field? Absolutely. Do I think that we are failing in our goals to be both relevant and rigorous?

Not necessarily.

Although I will be the first to acknowledge that there is room for improvement, so far, I continue to believe that research-oriented Business Schools are providing a public good.

I’ve just now been catching up on reading since returning from Iceland. In perusing the periodicals I most enjoy, I came across an interesting article about high tech in Taiwan (see Taiwan’s Tech Firms Conquer the World). The article, aside from providing an interesting read in its own right, holds some important lessons for the People’s Republic of China.

Taiwan is now the home of many of the world’s largest makers of computers and associated hardware. Its firms produce more than 50% of all chips, nearly 70% of computer displays and more than 90% of all portable computers.

This is, no doubt, quite an achievement.

Acer, for example, surpassed Dell last year to become the world’s second-biggest maker of personal computers. HTC, which started out making smart-phones for big Western brands, is now launching prominent products of its own.

Much of the credit for the growth of Taiwan’s information technology (IT) industry goes to the state, notably the Industrial Technology Research Institute (ITRI). Founded in 1973, ITRI did not just import technology and invest in R&D, but also trained engineers and spawned start-ups: thus Taiwan Semiconductor Manufacturing Company (TSMC), now the world’s biggest chip “foundry”, was born. ITRI also developed prototypes of computers and handed the blueprints to private firms.

Taiwan’s overall economic development over the past 50 years has been nothing short of spectacular. And there is no doubt in my mind that China is trying to emulate elements of Taiwan’s development strategy. However, a strategy centered almost exclusively around manufacturing (whether it be in high tech or other industrial goods) comes with some serious risks. As the article explains,

This strength, however, is also Taiwan’s weakness. Most firms are junior partners in the world’s IT supply chains, making things others have developed. They are good at incremental innovation, mostly related to manufacturing…many of them are stuck in a “commodity trap”, cautions Dieter Ernst of the East-West Centre, a think-tank in Honolulu. Profit margins, he says, are razor-thin and do not allow adequate investment in R&D and branding. The Taiwanese industry is particularly weak where the most valuable intellectual property is created these days: in software, services and systems.

Hmmm, a commodity trap!

That’s an appropriate moniker, and exactly the position that China (and many other developing economies) risks finding itself in as it continues its commitment to manufacturing and export-oriented growth. I have discussed these issues in various blog posts (see Emergence of Emerging Market Innovation, China Attracting High-Tech Research, China Alternative Energy, and Globalization Discontents). The key for countries like Taiwan and China is to transition from an economy that simply manufactures the goods that are designed and developed elsewhere to one in which innovation, creativity, and high value-added services take root. Unfortunately, for developing countries, those transitions take an inordinate amount of time.

Just returned from a visit to Iceland, …hence the radio silence. Was there for a few days of work, followed by a few days of pleasure.

What an amazing place. The country is absolutely stunning in its beauty. And the people are absolutely wonderful. I can’t wait to go back.

That said, it’s sad, really, that the majority of Icelanders don’t seem to understand the full gravity of the debt problems that they currently face (for background see here). If they decide to go along with the current debt repayment plan they will have to accept years of sub-par growth at a minimum, and potentially, live through a few years in which they teeter on the verge of default. Refusal to pay now, however, could quickly propel Iceland into economic crisis as foreign credit dries up and hard currency becomes scarce.

What a mess!

Personally, I think that in voting down the most recent Icesave Referendum, Iceland is trying to play hardball with the UK and the Netherlands, hoping it will lead to a more favorable negotiated settlement while convincing them to shoulder some of the burden for the outstanding debt.

I hope they (the Icelanders, Brits, and Dutch) can work it out.

If not, that would make my movie choice on the flight over somewhat ironic. I found it interesting that Iceland Air would even offer “Wall Street” for its passengers as an in-flight option; but ironic how, for Iceland, Bud Fox’s sales pitch touting “extraordinary opportunities emerging in the international debt markets” might desperately be put to use.