Machine Design

The sound and the fury signifying nothing

Editorial Comment
July 26, 2001

The publication you are reading is a special supplement to Machine Design devoted to the subject of management. The articles run the gamut from managing product design data to how companies measure their product-development processes.
The question to ask is whether or not there's anyone whose essential skill lies in "managing." Engineers like to think managers need technical knowledge of the business being managed. If you're going to run a company that makes cuckoo clocks, you should know how to make cuckoo clocks. Alas, we know this isn't true. In fact, conventional wisdom in business schools is that unless engineers also have an MBA, they have too much tunnel vision to successfully run a corporation.
On the opposite side of the coin, accepting management as a science has brought with it a host of undesirable attributes that are glaringly apparent in today's business climate.
Managers need massive doses of Ritalin. There is a form of destructive hyperactivity infecting the top brass of corporate America. Throughout the 1990s, many corporations grew 20% annually. Sadly, too many of the bigwigs in American industry can't get it through their heads that growth is not a permanent fixture of the economy, and certainly not growth at a compounded rate of 20%. Figure it out. To sustain a 20% growth rate, a company must double sales every four years. Does our economy need that much stuff? Probably not.
Just say "no" to Wall Street. The root of this financial frenzy can be traced to investors who incessantly demand ever-increasing "performance" or, simply put, stock prices inflated with helium. These "investors" are merely speculators unwilling to keep their money in one place for any reasonable period of time. They don't buy stock based on a company's earning potential or dividends. Rather, they buy expecting the stock price to rise, and fast. It is of no consequence whether or not the price increases because of a solid, profitable business. Everything is golden if the stock rises. And, unfortunately, the Federal Reserve prolongs the hyperactivity with rate cuts any time stock prices head toward sane levels. This chaos would end if the top dogs had the courage to say "no" to speculators.
Ethics have gone out the window. Accountants are supposed to keep CEOs honest. But do they? This brings to mind a joke. An accountant, asked for the answer to two plus two replies: "How much do you want the answer to be?" Sadly, that humor has too much truth in it. For example, there are ethical questions surrounding the matter of when companies should ring up revenue from sales. When the product is shipped, or when it arrives at the customer's plant? Or should it count as a sale only when the bill is paid? There are stories of defective products knowingly being shipped so that revenues land in a particular quarter to make the investors happy with the numbers.
So what's the real harm in all these games? Lives are destroyed, families uprooted, and communities decimated when the numbers don't work out to the satisfaction of Wall Street. We need to take a deep breath and head back to sound and methodical business practices. And perhaps a colossal dose of Ritalin for the people at the top.-- Sherri Koucky, Associate Editor

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