Teamwork issues and being a leader = more work

A couple of rants:

Grad school focuses more on group work than tests. I believe that is at least partially due to the fact that professors want fewer papers to grade, but I'll leave that for another rant. So most classes entail a group project due at the end of the term that counts for a significant portion of the grade. Coming in to MIT, I had a delusion that group work in grad school would be different than group work in the workplace. I'm sad to report it is not. I'm part of a group for each of my four classes. Each one has had a non-trivial amount of "teamwork issues" that has caused more stress and delays than anything else. Lots of reasons for this ranging from people having different objectives and motivations for a class to the classic teamwork issue of people just not getting along.

Second, I've found that being a leader in these groups often leads to more work for the leader. The person that usually voices his opinion about something and tries to set direction for how to proceed has to begin with taking some part of the assignment. If you have 4 or 5 people in a group, the last 1 or 2 people to speak up often have very little to do. Or through the course of a discussion, people will generally agree to take some part of the assignment. But those that don't voice their opinion much, also don't volunteer for stuff. I'm not exactly sure how work would get done in these groups if they didn't have any leaders, but I guess that is true of most situations.

Charlie Duke, Former NASA Astronaut

In my Engineering Apollo class, I had the pleasure of attending a talk by Charlie Duke, former astronaut during Apollo. I've listened to a lot of professors, CxOs, inventors, etc. this semester and I can say without hesitation that Charlie's talk was the best yet! It was informative, interesting, and intelligent. Imagine having a former astronaut recollect his personal (and very candid) experiences of being in space and on the moon to a group of about 30 people.

Charlie was an MIT grad (Course 16 of course) and best of all he is a North Carolina native (Charlotte)! His thesis advisor was Professor Young (who is one of our professors for this class), whose thesis advisor was Jim Nevins (who was present in the class for the Duke talk), whose thesis advisor was Dick Battin (who spoke to our class a couple of weeks ago). That means 4 generations of student/teachers in the MIT Aero/Astro department were on hand, all of whom had a significant impact on space exploration. Only at MIT.

Charlie's talk was filled with all sorts of interesting tidbits about being an astronaut and flying to the moon. I got wrapped up in his talk and didn't take many notes. Guess you kind of had to be there anyway. Charlie did show some footage they took while on the moon. Previously, I'd only seen mini-clips of astronauts on the moon. Charlie showed us a good 15 minutes worth.

And over on Yoav's blog, Yoav still doesn't get the usefulness of listening to someone like Charlie. Aside from the coolness factor, it is interesting to hear how people went about trying to solve large systems problems that had never been faced before. A good space story will make my ears perk up every time over the same ol' business and technology stories I've heard from so many CEOs time and time again. Throwing in a bit of the old with a lot of the new isn't a bad thing. I've learned several good lessons on engineering complex systems from the class.

I stole a picture of Charlie from Matti's blog:

Jack Welch

The campus was a flutter on April 12th with the news that Jack Welch would be speaking from 12-1pm at the Wong Auditorium. I have a class that runs right up to 12pm, so I knew I'd be unlikely to get a seat. Fortunately, Ilana was nice enough to save me a seat. And oh was it a seat! We were just 3 rows back from center stage directly in front of Jack. Thanks Ilana!

Jack was great. He is a real lively character that's obviously been around the block a time or two. He had a lot of great advice and I tried to capture as much of it as I could.

BTW, the auditorium was filled to capacity at 11:30am so they moved everyone else to an overflow room. After the talk, Jack signed copies of his new book Winning, but it was so crowded I didn't stay around.

Jack's Bio

Notes:

As CEO of a big company, you are really in the people business regardless of what your company's primary business is

He wasn't in the plastics business or light bulb business, as CEO of GE he was in the business of people

It is all about putting people in the right place and giving them the resources they convince you they need

Your job won't be doing what you are doing in MBA school – it will be more about building teams and rallying smart people to do the job

What should students focus on? Have good analytical background, but you need to be able to make decisions, execute, and care about people

Emphasized the importance of leadership, not just knowing how to do the financials

Budget reviews are the worst thing

At GE he measured his people against their competition and how they did compared to last year

Gave bigger bonus to appliance biz that grew only 1% in a tough market compared over the plastics biz that grew 25% in an easy market

Bonuses and promotions were transparent

Talked about the 20-70-10 rule (His managers had to promote the top 20% of their people each year, they got to keep another 70%, but they had to terminate the bottom 10%.)

You have an obligation as a leader to let your people know where they stand

Always try to field the best players

Better to work with bottom 10% on phasing them out than to cut them quickly during a recession

Anytime he gave a raise, stock or bonus, he would give the employee a sheet on what they did well and what needed improving

If you are going to build the best team, you have to be on it all the time

The job of managing is the paradox of managing short and thinking long

Strategy reviews were also people reviews

You should look at everyone as a mentor

Error on the side of being bold, take the big swings, take risks while you are young. Be safe later.

With a MIT background, why be cautious?

Work/life balance is a real struggle

Crisis management will be a big part of your job and life

Should you use management consultants? Rarely – The profession is a bit of a shame.

Can leadership be taught? Yes

Leaders come in all shapes and sizes

Inherently, extroverts do better as leaders

It is about incremental steps – building self confidence through experience

After he blew the roof off a chemical plant in his 20's, he never beat someone while they were down.

Culture counts as much as financials when making deals

Everywhere you see "values", substitute it with "behavior"

Someone shouldn't know why another person got the promo and they didn't

Openness and transparency are so important

Could you have accomplished what you did if you were female? No, he doesn't think so, but he thinks it would be possible today.

Daryl Morey, SVP Operations and Information, Boston Celtics

Daryl was a lunchtime speaker at Sloan a couple of weeks ago. He discussed his job at the Boston Celtics. He does a lot of data analysis to help the Boston GM make decisions on which players to pick/draft/trade. Pretty interesting stuff. He says that only a handful of NBA teams are using a statistical approach to help them make decisions. I can only imagine that will change over time. And since there are so few teams that use stats heavily, it is hard to break into the field.

Daryl's Bio

Notes:

2000 Sloan grad

Consulted for 3.5 years at Parthenon

Teams get most of their revenue from tickets and TV

Most cost is from player salaries (60%)

Winning is all about getting the right players

Big reinforcing loop both ways (The better you do the more money you get the better players you can get. The worse you do, the less money you have, etc)

He thinks a baseball team could be run by a computer these days (referenced Moneyball), but not true with a basketball team. Too many intangibles that are hard to measure. Basketball is more of a team game than baseball.

FG%, Rebounding, Turnovers, and Free Throws are the most important stats for winning

Hard to pick high school players because stats are unreliable

New Enterprises – 4/11/2005

It has been a while since we've had a lecture in my New Enterprises class due to spring break, SIP, and student business plan presentations, but the one on Monday was worth the wait. First, a lawyer that deals with start-ups named Bill Schnoor spoke to us about legal issues that entrepreneurs face, then Noubar (the professor) took over and described a bit about how venture capitalists work.

Bill is an experienced lawyer and a real personable guy (not the pretense you sometimes sense with lawyers). He gave us a lot of good advice; Noubar estimated at least $2000 worth :-)

Bill Schnoor's Biography

Notes:

The avg time from "test tube to tank car" is 7 years (ie, the average time to take a company public from inception)

He sees in tomorrow's winners: smaller scale (doesn't have to be a huge company); capital efficient; patient, slow incremental improvements

The difference between a fraud and an entrepreneur is a fraud tries to sell you something that doesn't exist, an entrepreneur tries to sell you something that doesn't exist YET.

"Legal issues with starting a company are simple by and large."

Rule 1: In the eyes of the law, there's no such thing as a "founder." It carries no legal rights.

You need to set the relations among founders: who owns how much; who keeps what if someone dies/quits/is fired; need for NDA or non-compete? Who makes decisions? Who goes on the board? Are the founders "clean"?

Stay away from a Limited Liability Partnership (LLP) because they are expensive. Set up a corporation instead.

Reoccurring Intellectual Property Problems: use of consultants; joint dev/ownership with another company; open source; loss of trade secret protection; absence of any strategy

Outside financing is a big deal – it means you will lose some control of the company

When splitting up shares, always use number of shares, not percentages

Top 10 Issues for raising venture capital money:
1. Track record for VCs
2. Understand the economics
3. Timing/conditions of funding
4. Future role for Founders
5. Board make-up
6. Vesting
7. Leverage for future financing
8. Obstacles to sale
9. Valuation
10. Personal liability

www.nvca.org has a template term sheet and other legal docs

www.pwcmoneytree.com is a good source of investing info

You should have a relationship with your lawyer. You need someone with expertise that is responsive at a reasonable cost.

Noubar Notes:

A venture capitalists two primary jobs: find money to back their fund and find companies to invest in

Noubar went into a bit of detail about the structure of a VC and how they operate. Quite interesting.

VCs are looking for 30-50% ROI and 5-10x multiple on invested capital

Uncommon for VCs to sign NDAs

Not uncommon for a VC to talk to 50-100 people about a company before investing

Dennis Bakke, Author of "Joy at Work", Co-founder of AES, President and CEO of Imagine Schools

Dennis presented at a lunch time talk to discuss his popular book Joy at Work. Dennis ran AES for 12 years and focused on making the workplace as enjoyable as possible for his employees. It was nice to hear a different perspective about what should drive a company rather than the usual "increase shareholder value" spiel that is so common these days.

Dennis Bakke's Biography

Notes:

HBS grad

When visiting a plant, you can learn a lot more during the middle of the night than during the day.

70% of people in the US don't like their job

75% are looking for a new job

Realized 15 years out of school that bosses like him were the reason why employees weren't having fun at work (because he thought he had to make all the decisions and that he should make the decisions)

The natural thing is to make the workplace miserable

He had to give up some control and needed to let other people have the "ball"

When you come out of HBS or MIT you think you are god's gift to decision making. It was hard to understand that it isn't true.

Does not believe "increasing shareholder value" should be a business' primary goal

People don't work to make money. It is not the goal. Of course you need money, but it isn't the goal.

People want to serve and make a difference in the world and make money along the way.

This has got messed up in mainstream business in the last 50 yrs

If you aim for joy as a goal, you are likely to increase productivity and increase shareholder value

If you treat employees as tools to add value, you will lose them

He doesn't believe in the "management" of people. You manage money, assets, etc. but not people. We "lead" people.

Strong character is the most important trait of leadership. Two parts:
* humility - Trump is the anti-example. You have to realize at the core you are the same as everyone else
* love - Need to be willing to love the people you serve so much that you are willing to give stuff up to make them successful/happy

Don't put people in boxes – at AES they never used org charts

Doesn't like the term "human resources" and doesn't think you need HR departments

He isn't talking about being nice to everyone – it is about giving people a chance to take the ball

You don't want to keep unneeded people – one extra person is bad because it is not sound economically and reduces opportunities for others

Free them to be who they want to be but don't treat them like children

If you have a fun place to work, people will hold each other accountable. You don't need artificial metrics to do that.

Dan Lickly, Programmer (Apollo), Manager (Apollo and Intermetrics), Professor (Univ of New Hampshire Computer Science)

Dan Lickly's Biography

One of the assignments for my Engineering Apollo class was to interview someone that worked on some aspect of Apollo. After a bit of research I came across Dan Lickly. Dan worked at the MIT Instrumentation Lab (before it was called Draper Labs) and joined the NASA group responsible for the Apollo Guidance and Control computers. Initially he was responsible for the re-entry software and later led a larger team. In 1969 he left the project and started a company called Intermetrics with some of his colleagues. Intermetrics was heavily involved with the space program and wrote some of the software for the shuttle. After a distinguished career at Intermetrics, Dan joined the Computer Science faculty at the University of New Hampshire where he taught classes on C++ among other things.

I met Dan and a companion of his named Sue at the Harvard Science Center. We spent two hours chatting about everything from his time working on Apollo to the future of space travel. Dan even gave me a crash course in orbital re-entry mechanics including chalkboard illustrations! Both Dan and Sue were extremely nice and I believe Dan enjoyed telling the stories as much as I enjoyed hearing them. I had enough material for an 8 page report, which I submitted to my Apollo professor this week. I won't include the report here, but I will list some of the more interesting notes I took during the interview:

Notes:

Most aspects of Apollo were affected greatly when humans were added to the equation but not the re-entry team. Astronauts didn't have much to do during re-entry so all the re-entry team had to do was enhance some of the displays.

They wrote their own assembly language to program Apollo because 1) there weren't many languages to pick from at the time (ie 1960) and 2) they wanted some specialized functions like matrix and vector multiplication.

Astronauts could only change the lift vector of the re-entry vehicle—they couldn't make it go side-to-side. By the time the astronauts were came back to earth (after 1-2 weeks in space), they didn't want to have to control anything—just get them back on the ground!

The astronauts started re-entry at .05g which felt like a lot more because they had been in 0gs for several days. They would experience up to 6.8gs during re-entry. Dan said he can only imagine how that must have felt.

He believes that in 1960 50% (or more) of programmers were female! This was due to the evolution of data entry (which women typically did) to more specialized programming. It wasn't until scientists (mainly men) thought that programming computers was a worthwhile effort that they started pushing woman out of the field (now he thinks 10% or less of Computer Science students is female).

He thinks we are really far away from being able to send a human to Mars (or even the Moon). Referenced the Columbia disaster which occurred during re-entry. He thinks there is nothing to re-entry.

He thinks the "engineering risks" (i.e., the little things) are the biggest hazard to a complex project like Apollo. He gave an example where someone used 22/7 as an approximation for pi in some of their software. Turns out that they needed it to be much more precise. This caused some problems on the early Apollo flights. Another example is the metric mix-up on the Mars Rover. He said it is hard to quantify these types of risks.

Snow in April

Yes, snow in April (mid-April no less). Yesterday, although briefly, it did snow in Cambridge. It felt like February all over again. Give me a ticket south!

Caltech vs MIT

A classmate forwarded this today. Pretty funny but I agree, the hacks aren't very inventive ;-)

Edward Tufte, Professor Emeritus at Yale, Author of Seven Books including "The Visual Display of Quantitative Information"

A couple of weeks ago, Edward Tufte was in Boston giving a seminar. I've been pretty busy lately, but have heard good things about Tufte's ideas on presentations so I made the time to attend one of his courses. It ran from 10-4:30pm with a 1 hour lunch break. Along with the session, I got copies of three of Tufte's books, a poster of Minard's Napoleon's Death March, and a pamphlet on Powerpoint. It cost me $180 because I was able to get the student discount, but normally it is $320, which is still pretty cheap. Overall it was a good value.

Tufte is an interesting character indeed. His teaching style is unique. He obviously has a deep understanding of the material and tries to teach it in such a way to give the student an appreciation for presenting information in a useful manner not just an understanding of how to do it. He also doesn't hesitate to speak his mind even when his opinion is negative (especially regarding Powerpoint).

I've posted my notes below. Tufte references his books throughout the session and constantly showed visual examples (including really old first print editions of books by Euclid, Galileo, and Newton). My notes are just text so it doesn't have quite the same effect.

Notes:

One way to think about your presentation: what is the rate of information transfer (or resolution)

Tufte reviewed Euclid's book on Geometry

He referred to "escaping flat lands" many times; the thought is that we have to describe a three dimensional word in two dimensions which is difficult. In some cases, such as Euclid's book (Tufte has also done it in his book), he included foldouts that help the reader visual certain points.

One way to escape flat land is to use a model

He described 8 principles of analytical design:
1. Show comparisons
2. Show causality, process, dynamics, and mechanisms
3. Show multi-variant examples (more than 1 or 2 variables)
4. Completely integrate word, number, and image; it is all evidence
5. Document everything and tell people about it
6. Presos stand or fall on the quality, relevance and integrity of the content; At least "do no harm" to the content; Powerpoint does not meet this minimum bar
7. Try to show information adjacent in space rather than stacked in time.
8. Use small multiples. He showed Galileo's example figure of sun spots – showed one big sun and 37 smaller versions to illustrate that sun spots move; Great for comparisons; Easy on the viewer; Has inherent credibility; Deflects suspicions of cherry-picking

Your evidence (or cherry-picked evidence) is an important issue to consumers

It is important to put your name on your work to show personal responsibility

At the beginning of a preso, you should cover the problem, relevance and solution

Tufte analyzed magicians because they try to hide information. He wanted to under their principles and then attempt to do the reverse (to unhide information)

He likes wall charts for managing projects, not a single computer screen (because it has such low resolution)

On a presentation, make remarks as small as is readable

Tufte does not like letter codes used within figures or graphs; You should be able to look at a figure and understand it without needing to constantly refer to a legend in a different location.

It is ok for the viewers of your preso to look at different parts of the slide than what you are currently discussing

If it looks cluttered on a computer screen, fix your design. A computer screen can't hold too much data – its capacity isn't big enough

To clarify, add detail – don't remove detail

Need simple underlying designs with rich, complex information

The viewers time should be spent rolling around in all of the content

Simple design and intense content

How to display financial data:

Consider what is the thinking task that this preso is suppose to help with?

Graphs don't have to show the 0 point

Show more data horizontally than vertically

Confirming a previous known detail helps credibility

Use annotations to help with causal explanations: "Annotate everything"

Steal from the best – use excellent conventional designs

Look a the Wall St Journal or NY Times – they have it right – 3 million sold everyday

"Talent imitates and genius steals" –TS Elliot

Sparklines (more available on Tufte's website):

You should try to be approximately right rather than exactly wrong

Intense content, simple design

There are only two industries that refer to their customers as users: Software and Illegal Drugs

For authoring sparklines, he recommends Adobe Illustrator, SAS or some stat package, and Quark Express or some publishing/layout tool. Currently it isn't cheap.

Web Design:

Design mimics bureaucracy

Two most embarrassing words in web design: Skip Intro; This forces users to become interface designers of a site

Mimic one of the good existing sites (he recommends Google News)

Use links as a last resort. Scrolling is ok.

Need to consider the computer's more precious resource: screen real estate

There is a contest for screen space: coming in first is usually OS imperialism; then browers, apps, etc. take up the other portions

Remember that navigation is not content

90% of every screen should be content; Most are 15-30%

All you need is a navbar at the top (not the side or bottom). The rest should be information

He doesn't think there is / needs to be a "web design" field – should be more like web editing: editing content, not designing it

Cognitive Style of Powerpoint:

Tufte reviewed his analysis of the Columbia accident

Powerpoint is medieval with its preoccupation with hierarchy

If you see test data, you should ask yourself it is truly independent or is the author not showing us something (ie Cherry-picking)

Powerpoint is not a serious method of presentation

There should be no bullets, no indentions, no logos

Use full screen images and full sentences

Provide a hardcopy sheet of data to your audience

Your presentation display technology should be Word (ie, Word should replace Powerpoint)

Don't announce you are using something other than Powerpoint – Don't attract attention to the presentation method

Presentation Guidelines:

Show up early to your own presentation

Tell them up front what the problem is, the relevance to them and the solution

Use paragraph form with sentences, no bullets

Never apologize in your opening (eg, Sorry I'm late, Sorry we had to stay late, etc)

Always give the audience a piece of paper (tech report style)

Think about what your audience reads

Only show full screen images

Make the presentation a content experience not a design or presentation experience

Alienate your audience on the merits of your content not a ghastly throw away joke

Think the best about your audience (respect them) don't treat them like idiots

Get up close and be appropriately demonstrable; don't just clutch the podium

Finish early

Before you give a presentation make sure you Practice, Practice, Practice and get the best content you can

Bruce Harreld, SVP of Strategy at IBM

The MIT General Management Club brought Bruce in to speak as part of the Executive Management Workshop series. Bruce is the former CEO of Boston Chicken and CIO of Craft General Foods. He is now an SVP of Strategy at IBM where he has worked for the last 9 years.

Bruce Harreld's Biography

Notes:

Purdue undergrad; HBS grad

340,000 employees at IBM

Started at Boston Consulting Group

Talked about IBM's decline in the 80's

What was wrong with IBM?
* Costs were out of line
* Lost touch w/ customers
* Decentralized way too far
* Stayed w/ old strategy too long

They started working on these problems

They didn't have a grand to fix things

"We don't need a vision right now" –Lou Gerstner

Went from 400k to 200k employees

Ripped costs out

Established 7 Global Core Processes

Customer First – established partner executives and made R&D funding dependent on customer impact

All the process led to lack or risk taking and lack of growth

Recommends: "Alchemy of Growth"

Standards need to move higher – even business standards

Why do leaders falter? Can't get out of their own way

Why do so many change efforts fail?
* Organizational inertia in the face of compelling need to change
* Org success and deep seated policies and processes
* Management inability to lead the necessary cultural and structural changes

He doesn't think strategies last very long in his business

Culture is a social control system

You change culture through the actions of the leaders

Showed candid camera clip of people in an elevator turned the wrong way and people invariably follow the crowd

Why Winners Win: The Secrets of Outstanding Performance by Alan Weiss, Ph.D.

Alan is a big-time consultant and author. He gave a lunch-time talk at MIT on the secrets of being successful.

Alan Weiss Biography

Notes:

Nobody that succeeds gets bogged down in bureaucracy

Power doesn't corrupt – powerlessness corrupts

Unless the customer is impacted, then it don't matter (thinks many of the quality initiatives are failures because they don't actually impact the customer)

You should focus on output not input

90% of your time should be focused on external and only 10% on internal

You just need to win by a nose

What you think of yourself will paint how you act

Self-esteem is the biggest problem people have with getting ahead

Logic makes people think; emotion makes people act

People are most motivated by gratification from work (not money)

One of the biggest advantageous successful people have is they are ok with the 80% solution and are not perfectionist: "success not perfection"

If you improve by 1% a day, you become twice as good in 70 days

People focus on the next big thing too much instead of trying to improve incrementally

Can take out 20% of middle management at most companies and the next day no one would notice

People that are successful deal with stress

It is crazy to get rid of all the stress at work. It is good to have some stress to instill a sense of urgency

Increasing high performers productivity by 2% is much more valuable than increasing a bunch of low performers by 20%

High performers carry the day

People have an equal right to the same starting line, but not to the same finish line

Introvert/Extrovert has nothing to do with success

Always give people options instead of leaving the decision to them

Need to stand out in a crowd

Need to hit people emotionally with your value

There is a simple thing you can do to succeed: focus on results self-esteem, and value

Bob Parker, Former Astronaut, Director of the NASA management office of the jet propulsion laboratory

Bob spoke to my Engineering Apollo class on Wednesday about astronaut training. He is a former astronaut and a delightful speaker.

Bob Parker's

Notes:

Bob started off as an interstellar-matter astronomer

NASA hired him as a scientist

Astronauts train for 3 or 4 years and fly for 2 weeks (at least back in the Apollo days)

Astronauts don't fly for a living; they train for a living

Fly as you train; train as you fly

Train to mitigate risk, become proficient, and design and develop the technology

Even though they've done something 85 million times, pilots use checklists

They use hundreds of checklists – one for every task

At age 30, Bob was an Astronomy professor at the Univ of Wisconsin

Left for NASA (having never flown before) and was put through flight school

To be accepted with other astronauts, the scientists needed to fly T38s

For the shuttle computers, IBM required a 2 year advance notice for any requirement changes

Keyboards needed big keys due to the size of astronauts' gloves

Looks like I picked the the right school

US News just released their Graduate School rankings for 2006. MIT's Engineering School is first and the Business School is fourth overall. The program I'm in (SDM) is a joint effort with the Engineering School and Business School (Sloan). You can get the run-down of the departments that came in first in their respective areas here.

Vern Raburn, CEO and President, Eclipse Aviation Corp.

Vern gave a lunch-time talk about how he started Eclipse Aviation, his thoughts on jet aircraft manufacturers and the impact on air travel industry.

Since 1998, Vern Raburn has led Eclipse Aviation in its quest to change the way people travel. Eclipse wants to revolutionize the way people fly by using Eclipse jets as "air taxis". Eclipse is well on its way to do just this and today has more than 2,000 orders for its 5 passenger $1.3 million aircraft to be delivered starting next year.

About Vern Raburn

Vern Raburn is a successful serial entrepreneur and information technology veteran with 25 years in the industry. He was Microsoft's employee #18 in 70s where he served as President of Consumer Products Division. Following his tenure at Microsoft, he served as Executive VP and General Manager of Lotus Development Corporation, where he played an integral role in the successful launch of Lotus 1-2-3. He has also served as Chairman and CEO of Symantec Corporation and Slate Corporation. Prior to founding Eclipse, Raburn worked as President of the Paul Allen Group, overseeing high technology investments for Microsoft co-founder Paul Allen.

Notes

Sees his business as disruptive so he doesn't know exactly how people will use his product.

Vern started with a historical perspective of the aviation industry (which is 102 years old)

There are 4 tracks: military, space, airlines, general aviation

Pratt was always involved with major breakthroughs with engines

Airline deregulation in 1978 made airlines available to the mass markets; prices reduced 300%; because a huge growth market; general aviation (GA) market contracted because it was very expensive and only for the elite

He thinks now is the time to bring GA back on parity with airlines

Eclipse plane performance is equal or better than current jets; price ¼ cost of current entry-level jets and ½ operating cost

Designed for airline: high hours, high cycle operations, with equal reliability and dispatchability

He said people have told him that he is "building a 6 seat 737"

Classic disruptive innovation – leads to market expansion and growth

Eclipse 500 Markets:
* Owner pilots – Jet ownership now within reach; "Experts" agree that this market exists; He thinks 600-700 unit/year market for next 10 years; 90 million in sales in first 3 months of this year
* Corporate aircraft – Benefits of a private jet at all time high; Need a billion before you can by a G550; Wants more than just the VPs of companies to use corporate jets (e.g., a tech that needs to be rushed out to a customer site)
* Training – Flight training in a jet now possible for civilian students; More efficient way to fill the need for new commercial pilots; Vietnam pilots will help for next 10 years but must change the way we train new pilots
* Same-day Logistics – Deliver packages same-day for smaller items (e.g., medical items – blood, urine samples, etc.)
* Air taxies – On demand air travel service; In aviation industry (unlike the IT industry), the non-existence of a technology is proof it won't or shouldn't work; NASA thinks there is a big latent demand; Avg portal to portal speed is declining for first time in our history; 300-500 nautical miles with Eclipse 500 (not coast to coast)

Technical Innovation:
* Using Friction Stir Welding
* They thought they were going to build a composite body, but compared with aluminum, it isn't that much better
* He thinks composite material is still not mature (He's not saying it is unsafe)
* Boeing may change the perception of composite with the 787
* So they used aluminum for the Eclipse but used welding not rivets

Business Innovation:
* Focus on core competencies and outsource everything else
* GA industry is phenomenally vertically integrated
* He isn't going to fabricate a single part
* Investing in lean manufacturing
* It will take 4.5 days (two shifts) to build a plane
* Leveraging IT
* $225,000 for a full-blown SAP implementation
* 14 TB of data storage
* Price all offerings from a cost basis, not market basis
* This goes against the rules but they don't know the right price for new markets; this creates a competitive advantage for them
* Real value change produces new demand
* Market estimates for disruptive products are NEVER correct (e.g., telephone, computers, etc.)

Eclipse 500 Jet
* Worked with IDEO and BMW on the design
* Will hold 6 occupants; twin-engine; can operate from over 10,000 airports; This was important because it puts them within 25 miles of 94% of all airports
* Cost: $1.175M but could go up because of aluminum process
* Cruise speed: 375 kt; range: 1280 nm; Useful load: 2250 lbs; Ceiling: 41,000 ft
* Designed to be fixed in 4 hrs or less
* All electronic – no hydraulics
* No incandescent bulbs – used LEDs instead
* Used HALT lab and beta aircraft – continuously running to see where it breaks
* Used Pratt and Whitney for the engine: PW Canada PW610F
* 2200 orders on the books
* 400 employees in the company

Spring!

Yesterday was the first day I haven't needed to wear a coat outside since I moved to Boston on January 1. Boston is much nicer with a little sun and warmth, but it doesn't make up for the 3 months of miserable weather I've experienced so far ;-) The walk across the Mass Ave bridge with all of the sailboats in the Charles River is quite nice. I'll post some pictures eventually.

Peter Senge, Author of "The Fifth Discipline", Senior Lecturer at MIT

Peter is a well-known author on leadership and popularized the concept of "learning organizations". He spoke to my SDM '05 class and provided many insightful while not always mainstream thoughts on leadership.

Peter Senge's Biography

Notes:

MBA students have different responses about what they think leadership is versus SDM students (MBA students tend to say leadership is about "getting people to do what I want them to do"). Shows lack of experience actually leading ;-)

If you are trying to be a leader, you probably aren't doing a good job

We talked about the Sloan Leadership model and what it means to us

People can lead from any position

Management and Leadership are different concepts (so true! and very often confused at my workplace)

Definition of manager: A person that can be held responsible for the results produced by others

Management is a hierarchal concept whereas leadership is not

People often use leadership as synonymous with management

Dictionary definition of leadership: to step ahead

Should use my time in SDM to reflect and think about what I want out of life and work

He's found most leaders have a deep sense of purposefulness

Considers purposefulness was a key trait

As a business you should think of who would miss you if you were gone (and it won't be an investor)

Businesses should not have as their primary goal to provide a return on invested capital

Profit is important – like air to people – but it shouldn't be the purpose (just like oxygen isn't people's purpose for life)

In your company you need to foster who we are, why we are, who would miss us if we were gone

This isn't radical stuff, Peter Drucker said it for 40 years

The importance of a mission/vision statement is the mission/vision NOT the statement

He doesn't think everyone should say the company slogan if asked about the vision. It should be a personal statement from each person that taken together are harmonic with the company's vision

Source of potential for leadership:
* Deep sense of purposefulness
* Desire to serve. Recommends "The Leader as Servant" by Robert Greenleaf. It has been proven time and time again in combat that people only follow leaders they think truly care about them.
* Reflective openness – truly open to not having all the answers. He thinks it is ridiculous that Sr Mgrs feel they have to portray a sense of knowing all the answers. Biggest trap when getting into a role of authority is to stop asking for help
* Appreciation of wholeness. Not surprised by the ethical issues of Enron and Worldcom. He said the business world is kind of a basketball game where the players pay the refs after the game.

Duane Ackerman, Chairman and CEO of Bellsouth

Duane spoke to my Entrepreneurs in Innovation class. He is a southern native and Sloan alum. I'm not so sure about the long-term viability of his company, but he had some interesting perspectives on leadership.

Duane Ackerman's Biography

Notes:

He has been CEO for 9 years

Was a Sloan Fellow (sent by AT&T)

Bellsouth has 63,000 employees

Mentioned several times the fact that his workforce is unionized which makes it difficult to compete in some situations with newer companies that aren't (e.g., healthcare is extremely expensive)

Can talk about communications for pages and pages not mention the phone:
* Instant messaging
* Email
* Skype
* Text messaging

2 fundamental trends for his company:
* From Narrowband voice company to broadband services company
* From a wireline to a wireless company

Gave financial background for Bellsouth

Wireline voice market is steadily declining

Cell and broadband DSL are growing

Been hard to make money retrofitting existing homes with fiber (due to digging up sprinklers, cable, etc.)

Most voice losses are going to wireless not cable (like 80%), but they are staying even w/ the wireless gains (from Cingular)

Have to adapt constantly in business; gave Bill Bryson analogy: earth is 3.8 billion years old and 99.9% of all species are extinct)

He looks for the following in a leader:
* Integrity
* Know your center
* Seek change
* Learn to live with ambiguity
* Treat associates with respect
* Be professional
* Take care of yourself (because no one else will)

You have to be pretty comfortable with yourself to be an executive because you will always have detractors and ideas will be critiqued constantly

Arrogance is a fatal flaw

Being professional means doing your job even when you want to

75 years = 650,000 hrs; Really need to think about what you want to do with the time you have left

Have to make tough calls w/o complete information.

Joe Gavin, Former Director of Lunar Module Program at Grumman, Former President of Grumman

My Engineering Apollo class continues to have high-profile people that were involved with Apollo come in to speak. Joe Gavin worked on the Lunar Module (the thing that actually landed on the moon).

Joe Gavin's Biography

Notes:

Was in the Navy during WWII

After war, went to Grumman and was involved with jet airplanes

His team was successful with Apollo because they were well "calibrated" (i.e., they had worked together before and each person knew what the others were capable of)

Engineers can't be treated like commodities (i.e., not like bricklayers)

Deliverables are always due during major holidays :-)

Had standup meetings every morning for ears so people could identify dependences. Cut it to 3 days/week after things were running smoothly.

Grumman didn't believe in org charts

Employees, friends and family owned about 50% of Grumman stock

Started off using Pert charts to track everything related to the Lunar Module, but gave it up because it was too complicated.

4 people kept track of the schedule

It all worked because they had a group of people that had worked together before and respected each other

There is no such thing as a random failure

Take nothing for granted

If you are doing something novel, no one can come up with an accurate schedule or know what problems you'll encounter

With projects such as this, you need a bold leader

Ken Morse, Senior Lecturer at MIT and Managing Director, MIT Entrepreneurship Center, Co-Founder 3-Com and Aspen Technology

Ken is a well-known entrepreneur that spoke to my New Enterprises class last week. Ken's focus was on sales at high-tech start-ups.

Ken Morse's Biography

Notes:

Executive Summary has to say why people are going to buy your stuff

"enable" should be in the first paragraph of the Exec Summary

In the first paragraph you need to talk about the person who will sign the PO to buy your product

Second paragraph should have economic justification. How are you going to sell it? Why members of the "jury" will say Yes.

Selling is much harder than getting the technology to work.

Coming from MIT, people just expect the technology to work

Sales is a science

If you don't understand how you are going to sell it, you don't have a company

Has to be a pain that you are going to solve. People have to be staying up late at night worry about the problem you are going to solve.

Need a sales force that has sold to the decision maker you are going after before.

Start recruiting outstanding sales people after your technology/product is proven.

Good compensation for sales people is 50% base, 50% bonus or 60% base, 40% bonus. Range is from $90K-$250K+

You have a right to expect passion from anyone joining an early stage startup

Entrepreneurship is all about the people