The Schneider corporate culture

Schneider has an interesting history, dating back to 1836. It evolved a financial conglomerate until the 1980s, when it changed focus through a series of major acquisitions. You can see the list of major acquisitions, and more background in the more detailed version of this eNews at the "Schneider Corporate Culture" weblink below.

According to senior managers, here is what makes Schneider's business culture different:

• Diverse culture
  Schneider is very open to any type of culture. This is probably due to the fact that the group was built on acquisitions over the past 20 years. One way or another, all companies in the group share a common beginning - they were all acquired by Schneider. As a consequence, there is not such a thing as a predominant culture. It is very difficult to spot a real true Schneider original employee, there are not more than a handfull. The diverse cultures have probably been helpfull in successful integration of very diverse companies such as Digital in Japan, and Clipsal in Asia.
• Local cultures
  Because of the many acquisitions, Schneider is very respectful of the local cultures of the countries where they work. They have far fewer "expats" (French transplants) than any similar companies, and rely more on the growth of local people in the operations. Schneider prides itself on being very "local".
• Brand names
  Schneider recognizes the value of the business acquired. When it makes sense, they keep the brands in the company portfolio - there are 70 different brand names, unusual for any company.
• Sales Channels
  Schneider is more partner and distributor orientated than most of their competitors.
• Corporate focus
  Schneider is focused on Automation and Electrical distribution, by choice. It does not diversify into businesses such as Medical, Telecom, or Financial services.
• Management team
  Schneider's 11-member executive management team includes 4 non-French members. Of the industrial automation majors, perhaps only ABB is more internationalized at the top. The corporate management program is designed by top management (about 100 people in various companies).
• New product development
  The R&D budget is decided at the corporate level. New products come from R&D centers located in France, US, UK, Singapore, China, Sweden, Japan etc.
• Incentive plans
  There are good bonuses for the management (approximately 40% of staff level employees), and stock options for the top managers.

Outsourcing technology innovation

People who oppose offshoring sometimes use smug expressions like, "You get what you pay for!" and "Cheap and dirty". But those excuses don't apply any more. In the global market, proven performance makes a difference. Whoever does the job cheaper, better, faster wins. And clearly many offshore suppliers have upgraded their capabilities to where they are winning on all counts.

The next fallback was, "Oh well, we'll never outsource our key strengths: innovation, research and development". But steadily, that too is now being eroded in pursuit of profits. R&D is the biggest single remaining controllable expense - and it is now being chopped mercilessly.

Business Week (March 21, 2005) featured "Outsourcing Innovation" on its cover. It's clear that many major US and European companies have now started to sub-contract their R&D to Asian developers. This is fast, efficient - and yes, it's cheaper. The long-term economic implications are enormous.

Asian contract manufacturers and design houses are now being used for nearly every technology product - laptops, high-definition TVs, MP3 players and digital cameras. Initially, western customers were involved with the design specifications; but now design and innovation is being outsourced too. Many just buy the finished product and simply slap their label on it.

The problem for US and European companies is that their own R&D spending isn't yielding good results. I have brought up the point, "You cannot simulate hunger". It seems increasingly evident that "hungry" foreign developers are more innovative and productive. Technology information is available to everyone over the Internet, and aggressive, "hungry" people seem to be more effective and innovative.

A complete rethinking of corporate structure is taking place. What must be done in-house, and why? Many leading companies are moving towards a new model of innovation - using global networks of partners. These can include designers, engineers, software developers, and factories anywhere in the world. When the global chain works in concert, there is often a big leap in the speed and efficiency of product development. All the collaborators seem to stimulate and push each other.

This outsourcing of innovation has huge implications for the global economy. The biggest gains in tech employment are migrating to countries where wages remain low and new engineering graduates are abundant, and hungry.

Google Desktop Search & Gmail

GDS indexes your emails, Word, Excel, Powerpoint and pdf documents, text and audio files, web history and even instant message chats. You can exclude any formats you do not want indexed and skip specific folders. Google insists that nothing is shared with Google or anyone else.

A small search box appears on your taskbar, or can be positioned anywhere on your desktop. Type in whatever you are looking for and an almost instant list of results appears in your web browser. The results are categorized, linked to the original file, thumb nailed where appropriate.

The free 2MB Google download makes an initial search of your hard drive. This may take a few minutes, or a few hours, depending how large full your hard drive is. It doesn't affect performance because it only runs when the computer is idle for more than 30 seconds.

Gmail is ANOTHER Google revolution that's coming soon: free, search-based webmail service that includes a gigabyte (wow! 1,000 megabytes!) of free storage . Gmail's search engine can quickly find any message you have ever sent or received, so there's no need to file messages to find them again.

Key Gmail features:

• Search, don't sort: Use Google search to find messages, no matter how old
• No more deleting: 1000 megabytes of free storage.
• Context display: Messages grouped with replies and displayed together.
• No pop-up ads, or nuisance banners: Only relevant text ads and links
• Languages: Only available in English now, but can send & read any emails.
• Access: Free automatic forwarding and POP3 access.
• Cost - free.

Roomba robot update

About 1.3 million "personal or domestic service robots" were in use in 2003, expected to increase to 6.7 million by 2007 (Oct 2005 survey by UN Economic Commission for Europe). About 600,000 of these are designed for domestic jobs, and the other 700,000 are entertainment and leisure robots. But the home-help robots market is forecasted to grow much faster.

I announced previously (eNews 17 Dec. 2004) that I bought a Roomba floor-vacuuming robot for Christmas. Many people have been asking how we're doing with it. Here's an update.

Well, we've had Roomba for about 3 months now, and are pleased with it. We realize that if we want to do some quick vacuuming, we can't expect it to rush around quickly like a human, covering every part of the room just once. It takes its own time, wandering around and covering some already-clean spots several times. What we usually do is to get it started on a room, or an area, when we're going out for a while. When we come back, Roomba's done, and is happily purring away in its charger, ready for its next mission.

Making the numbers

Events have created a climate in which accounting fraud isn't just possible, it's likely, according to Robert Simons, a Harvard professor. This, he says, is accounting's perfect storm: unprecedented growth combined with inordinate incentive compensation, executive inexperience, and extremely aggressive management culture. Taken individually, some of these may be good. But together, it's a disaster waiting to happen.

It's very clear that all these risk factors exist today. The boom in the last decade, coupled with investors' myopic focus on profits, has put pressure on corporate officers. You're thought to be smart, to be doing your job well - if you "make the numbers". For executives that don't "make the numbers", sometimes even by as little as pennies, the price is steep - the stock price tanks, and their jobs are at risk.

Pressure to make the numbers was intense at WorldCom. The company was growing at more than 50% a year '96 to 2000, mostly through acquisitions. This was compounded by management inexperience. While still in his mid-30s, Scott Sullivan was suddenly controlling finance for one of the largest companies in the US. A sense of hubris develops. The media idolizes these people as heroic figures, and they start to think they are invincible.

Ultimately, it comes down to greed and ego. People lose sight of their responsibility to shareholders, and focus on building wealth for themselves. Sullivan received a $10 million retention bonus in 2000, and cashed in stock worth some $30 million during his tenure at WorldCom. He started to build his $15m Mediterranean-style palace - a sprawling home, on 4.3 acres of lakefront, with a game room, 18-seat theater, BBQ and wet bar, domed exercise room, library, art gallery, wine cellar and separate wine room, 8 bedrooms and eight bathrooms, terraces and walkways. The master bedroom was 34 ft. long, with a sitting area, gas fireplaces and an 'art niche' in one corner. The courtyard was flanked by 2 3-car garages, with maid's quarters above. The house was wired for 9 refrigerators, 4 microwaves and 6 Jacuzzis. There were 3 reflecting pools and fountains. Past the entry fountain, the grand hall opens onto a central staircase rising to the second level, with an elevator for those who'd rather not walk up the 30 stairs.

During economic growth periods many people, including the not so smart, get sucked into this "lure of the lifestyle", and get greedy. Risk-taking seems to pay off and is admired and rewarded. Exaggeration is acceptable - after all, TV advertising does it all the time. One doesn't really believe all those claims - or does one?

It is disingenuous to think that Enron and WorldComm are isolated instances. The disease is endemic in a market that measures the worth of companies by their ability to meet quarterly forecasts. The temptation is too great. All you have to do is "Make the numbers!"

eFeedback

"The comments are not unique and are shared by many customers. Most of the time these issues are raised by engineers with a hardware background. These are people who generally expect to install a PLC and have had it work for upwards of 10 years with no major issues. The engineers with a software background tend to be much more sympathetic, since they are already used to dealing with software updates every 2 to 3 years at least.

"So why do vendors work closely with Microsoft? Well, there are several reasons. Microsoft is the dominant operating system vendor and basing our products on their operating system means that we have immediate access to 90% or more of the installed base. If we were to use a different operating system, then we would need multiple versions and more development and support staff and the related costs would make the software much more expensive than it already is. Another benefit of working with Microsoft is the leveraging of open and Microsoft standards, such as OPC, CSV files and ODBC, not to mention VBA, .NET and others. This allows applications to communicate with each other which is a major benefit. Another reason is that Microsoft operating systems are easy to use. A user with minimal training on Windows XP can, with some understanding of the theory, configure a department-wide Windows 2003 server. This is because the look and feel of the software is the same. If the server was to be based on Linux, then the skills required would be very different even if the underlying theory is the same.

"I have many years of experience working with Microsoft and many of the complaints directed against them are unfair. I remember prior to Office and Windows that tasks we take for granted today (such as networking, printer support for all applications, copy and paste from one application to another and co-operative multitasking) were hugely complicated or impossible before. In many cases when Windows crashes it is not the operating system but instead a poorly written driver or even a hardware problem. Microsoft is also targeted by the majority of viruses and other attacks, but this is due to their popularity as much as any vulnerabilities in their operating systems. Yes, computer security is a major issue, but this is an issue that affects all operating systems and that can be overcome by the correct operating procedures. I think that many people love to hate Microsoft but there is no alternative that is universally acceptable.

"I believe that software users have to change their mentality to the way the software business works. Yes, this means an endless cycle of upgrades, applying patches and service packs, keeping your anti-virus software up to date and employing firewalls. But this is the price to pay for using the software and connecting it to other software applications. There is an alternative, which is to install a system and then keep it totally isolated from anything else. You will also need to make sure that you have adequate spares to cover you for the projected life of the system. Some of our customers have taken this approach and have systems installed which are approaching ten years old. But this means that you cannot connect to other software applications and many of the benefits of employing a software solution are lost.

"I think that the anonymous author has spotted the main problem which is that software systems can be made to work, "but most people don't know how". I believe that engineers have to take it upon themselves to learn how to implement these features. The alternative is that the corporate IT/IS department will take responsibility for plant floor computer applications and engineers will lose control at this level."

"I appreciate your willingness to take on the difficult topic of eWaste. Personally, I am convinced, like you, that sooner or later those who purchase computers will pay upfront for their disposal as part of the purchase price.

"I also agree with your conclusion that developing countries don't have the environmental regulatory framework, nor the necessary infrastructure to deal with the issues of high technology waste and disposal.

"That said, who says that computers are obsolescent after two years? What criteria is used to make such an assessment? There are millions upon millions of computers still in use that are running Windows 95 or Windows 98. In fact, I believe the share of these "obsolescent" computers is greater than that of the computers running Windows XP and Windows 2000 put together. Millions of people who still happily utilize Windows 95 are not technological luddites. They just don't have a major requirement to update their operating systems.

"Basic personal computer technology has not really changed much. Even the most up-to-date versions of the premier browser and office productivity software suite require the user to only have access to a level of PC technology that was available at least 4 or 5 years ago and probably more.

"When you claim that 2 or 3 year old PCs are obsolescent, aren't you really 'pouring gasoline on the fire' and inflating the disposal problem?"

"I think Mr. Ding Junying misunderstands how many of us in the US feel about the situation. It is not about leadership, but rather about taking care of our own people, whom we have been neglecting.

"No one is trying to stop China or any other third world country from doing better for themselves. I believe that Americans have supported countries improving their quality of life. But if it takes putting Americans on the street, with no jobs, in order to give another country's people our work, we are not being 'helped'.

"When Americans are jobless and government support runs out, they often have to take positions of lesser pay. Many factory workers do not have further skill sets, and therefore cannot, without further training (and financial support during that training), take on a job in "high tech". There are many people in this country that don't want to, or who may not have the capacity, to work with computers and high tech. Why should they have to, just because other countries want our jobs?

"Not to mention that because we are a society that has become lackadaisical about personal debt, these job losses and low-paying service positions can snowball into home ownership losses - or even homelessness, the inability to send ourselves or our children to further education, and the unwillingness of the government to provide adequate retraining when company owners give away our ability to work and provide for our own families.

"What I really don't understand is Ding Junying's belief that we should give away our low end tech to China. I'm sorry. Am I missing something? This sounds similar to a national problem that we already have at home, where certain groups of people deem that they should have a free ride while the rest of us pay for it."