Just a guess: it's software from the early 1990s (maybe older) that has received just enough maintenance to keep it running, but is not architected to perform well in today's computing environments.
Late 90s my first employer was using some old mainframe based email system. When we switched to something new I found out it was Notes and gave a deep sigh when I saw it. It looked antiquated and clunky even for the 90s.
Notes mostly kinda worked when I used it 20 years ago. Company had built up some forms and whatnot and it was clunky but worked.
However I do especially recall a hilarious incident, where one employee sent an e-mail to the entire company email alias, forging the sender address to that of his boss.
The e-mail contained some NSFW pictures and text. As most here will know, back then there was no validation of the sender address with SMTP, so forging that was easy. However the Notes gateway happily translated the e-mail address such that what we got in Notes did indeed look exactly as if our boss had sent it from Notes.
I work for an equally big firm, any big changes planned by IT for the end of the quarter get shutdown ASAP so nowadays IT never plans anything for the end of the quarter. Even the end of a "simple" month is met with worries. I can't believe that in IBM the don't act the same
Maybe they had to do it now after all the delays due to a different deadline ?
Wow what a disaster. This doesn't make for good PR for either IBM or HCL. I'm sure such migrations are complicated in practice, but email comes off as something simplistic that should just work. Customers may look at this and wonder how they can trust an organization that claims to be experts in software when they can't get their own house in order for something basic.
IBM is migrating off HCL, I'm not sure how much of the blame HCL has to bear here. (Although, knowing HCL, I'm entirely unsurprised that they are trying to get the hell away.)
'"They claim it’s only about a dozen 'clusters,'" the individual said, insisting that the number of affected clusters is more like 15'
The article used this quote to imply there is some deception going on regarding the number of clusters affected. 15 is close enough to 12 that I would consider it within the scope of about a dozen.
And whether it's 12 or 15, it's clearly plenty enough to bring things to a halt. If it shuts down major operations, it really doesn't matter whether it's 1 or 100, except possibly for the ETA on a resolution.
> The Register has been unable to determine the specific technical problem that upended the email migration. But in a comment posted to Hacker News, software engineer Bernd Verst suggested that people who really understand how to deal with Notes data are few and far between.
This is a first. Do journalists make it a habit of using random HN comments as an authoritative source?
As far as I can see the comment is being used as an authoritative source for the opinion of the person who posted the comment, and nothing more.
Journalists have long had a habit of printing opinions of random bystanders, self-proclaimed (and possibly actual) experts, and even people with particular opinions that will push the angle that the journalist hopes for.
This particular case seems pretty harmless and probably correct although it doesn't actually say anything about whether IBM is lacking in Notes experts or has anything to do with the problem (it could be in a different layer of the stack).
This is a pretty bad quote to include though. The original comment (which they at least linked to) doesn't actually say anything about IBM specifically. Rather, it references generic Notes knowledge at Google.
I'm not sure it's okay to publish a comment someone left on HN using their full name (the user account doesn't currently include a full name). I'd hope they at least contacted the user before including their comment (but I'm not holding my breath).
> This is a pretty bad quote to include though. The original comment (which they at least linked to) doesn't actually say anything about IBM specifically. Rather, it references generic Notes knowledge at Google.
That's why I say it doesn't necessarily relate to the situation at IBM. As I said, journalists like quoting people to push an agenda or lend legitimacy to a story even if they are not experts or on the complete periphery of the story.
It's nothing new though, and very tame as far as journalistic honesty goes -- it is not incorrect to say that there is some email problem at IBM, that IBM has been known to use Notes for email, and that there are not many Notes experts around.
> I'm not sure it's okay to publish a comment someone left on HN using their full name (the user account doesn't currently include a full name). I'd hope they at least contacted the user before including their comment (but I'm not holding my breath).
I'm not sure what you mean by okay, but journalists have been quoting people's public utterings and public writings for as long as there have been journalists. Including taking selective parts out of context to push their agenda. If it's a verbatim quote even out of context I consider that to be well clear of the bar for journalistic integrity.
And really, anything you say in public will be used against you. And it will be linked with your person if you don't cover your tracks carefully. We all know this. No journalist is going to contact us before taking something from a comment we write here!
The Register is kind of low-brow tabloid-style tech journalism.
They still do their own stories and commentaries instead of just reposting random online blogspam (like Forbes), but they also are not the highest of journalistic integrity.
You know, it serves them right. They’re a major part of the opaque, shitty “enterprise” software ecosystem that over-promises, under-delivers, and somehow manages to bag a fortune in the process. Looks like they’re eating their own dog food on this one.
It's really remarkable how out of touch large companies can get; especially after years of cost cutting and out sourcing.
I once worked at a company that who, after 15 years of RIFs, offshoring and chasing ever increasing margins, finally cut too deep. One of the critical people cut was my boss, the VP over a product that was an add on to one of the companies major products. Due to accounting the profits showed up on the main products financials, but our product was a critical enabling piece.
My boss was RIF'd, simply called one day and told not to come in again, ever. Like some low level employee. After the boss was gone there was literally no one in the executive team who knew anything about the product, it's customers or customer commitments ie signed contracts for features to be delivered. It was a beautiful train wreck I watched first hand. It was amazing to see the VP who did take over slowly learn the magnitude of the f-ck up over the course of several months. They lost several customers. These customers were pissed and literally had no one to talk to at our company. We had support reps fielding calls from CEOs at our customers complaining. A few law suits ensued. It was glorious to see.
A couple years ago, Hootsuite announced that they were laying off 20 employees at one location, but they termed it as "assisting them in their transition to the next stage of their careers." It was beautifully horrific phrasing, and the predictable field day followed.
I worked at IBM a long long time ago, and this reminds me of one of my favorite stories. At the time I worked at IBM, they were going through a series of layoffs (what's new huh?). I kept hearing this term, "opportunity for redeployment" from my fellow team members and others. Sometimes it would be phrased as, "I heard Bob got 'the opportunity'". I eventually asked my bitter/cynical team lead what it really meant and why everyone shook their head in sadness when they heard that someone else got "the opportunity". The answer was simple. These people were being "redeployed" to other companies. And they should probably find the company they will be deployed to next, because IBM is no longer employing them. And the word opportunity made it sound less crappy than reality.
Maybe this is my favorite story, because redeploying myself from IBM years ago gave me many opportunities. I hope to someday forget Lotus Notes, Sametime, CMVC, Rational Rose, etc. And good luck to anyone trapped in a place like that.
Your "redployment" saved you from their current email migration problems.
And, ironically, perhaps, I find myself daily battling what I call "The IBM hangover," where large orgs (gov't and private) deal with the legacy systems they now own and the RUP requirements policies left behind. Domino on Powerbuilder; official polices governing change management via UML diagrams.
For sure. At the time I felt like earning a full time job at IBM was a career maker. I now realize that the guidance that made me think that was not great. But it came from my parents and my professors at the time. I hope people who used to be my age are getting better guidance.
~20+ years ago, the old AT&T was doing a lot of government contacts. They optimized getting business and providing services, but couldn’t get their billing process straight. Which frequently resulting in them being unable to get paid for work preformed. Literal penny pinching incompetence was costing them millions for years and fixing it was never a significant priority. A classic case of management optimizing for what was being measured.
This was also the same company took years to realize they should be consistently charging more money for faster connections. At various points customers would get significant discounts for ordering faster service which cost AT&T more to provide.
And the fun part is that hundreds at AT&T knew about that error.
I used to be on an innovation team and we did shadow days with staff in other areas of the company to see what was going wrong. We had these crazy sci-fi type projects going on and our sales reps couldn't get brochures and/or visuals consistently as there was no consistent process to order them. Dozens of other similar problems were reported and zip was done.
> My boss was RIF'd, simply called one day and told not to come in again, ever. Like some low level employee.
Just wanted to say that respect is not only for the C suite. Any employee (including sone low level employee) should be treated with respect. Especially when laid off. You’re basically fucking with someone’s living, housing, food, and family when you’re laying someone off. Whether you’re at the bottom of the totem pole or at the top. And chances are it’s a lot more devastating at the bottom rather than the top.
It sounds like they were foolish in terminating him (and poor in how they handled it), but an org shouldn't fall apart like that because of a single individual -- particularly a senior one.
In this case, yes, he was fired, but he also could have been hit by a proverbial beer truck, tapped to run another part of the business, etc.
Isn't that what this story is about? It likely wasn't like this before, but they fired people until one became the critical individual...why blame him?
Warren Buffett bought IBM shares in 2011 at $170, and sold them in 2018 at $145. Oops.
When he bought, he marvelled at how the CEO was targetting 20% returns on capital. When I heard this, I realised that Buffett had forgotten one of his lessons that he himself espoused: that companies that "target" returns on capital are should be avoided. IIRC, it was one of his reasons for bailing out of Fannie Mae (?). His timing was impeccible on that one, as the whole thing exploded not long thereafter in the 2008 financial crisis.
Also at the time of his purchase, it was known that the company was beginning to offshore. It struck me at the time that this could cheapen the whole thing and turn into a disaster.
So there were at least two facts at play here that should have forewarned Buffett that it might not be a good purchase. I was actually pretty astonished at the time that a guy as savvy as Buffett didn't seem to anticipate the problems ahead.
And now we come to the $64,000 question: how does a company add value to shareholders? It's a simple question, but I bet most won't know the answer to it. The answer is provided by Prof. Damodaran Aswath: a company adds value by targetting returns on capital in excess of the cost of capital, risk-adjusted.
So actually, doing stuff like maximising returns on capital is a sub-optimal goal. Not that you should invest in something marginal, either.
Another problem with these corporate-type guys is that they do a lot of "management by numbers". It's all about "KPIs" (Keypoint Indicators) and other "metrics".
Back when Motley Fool wasn't a shitpile that it is today, there was a guy in the UK that put together a portfolio of "family companies", i.e. quoted companies with a substantial management and/or family stake.
How did the companies fair? Very well, actually. The portfolio did great relative to the indices. Why? Well, my conclusion is that family-concentrated businesses were run conservatively as proper operating businesses, rather than a bunch mathematical formulae to be tweaked and fiddled with.
> So actually, doing stuff like maximising returns on capital is a sub-optimal goal.
Could you explain why this is sub-optimal? It's sub-optimal because of the added risk?
How does this work for very big companies that have to engage in multiple markets simultaneously (due to couplings between markets and other competitors - eg. FB bought Instagram, but FB's main market was not buying other social media companies, but it fit into their strategy to get more active users)?
> Could you explain why this is sub-optimal? It's sub-optimal because of the added risk?
What usually happens is that they make it a quarterly or annual target, so they do things that expensive in the long term to hit the target for the period.
For example, I can increase my profit for the quarter in an airline by deferring maintenance, so the plane flies more. But if the plane ends up being out of service for longer next year because of that decision, that is sub-optimal.
Another thing they can do is shift revenue around or offer large future discounts for upfront orders or shift project work depending on when end of year is. All things that are suboptimal, but work for the numbers.
As a non financial example, one company I worked for had quarterly goals around test coverage. But they didn't really budget time for it. It was just expected that it would somehow be done.
What happened was that worthless tests that called as much code as possible without testing anything were written to hit the coverage number. So even when time was available to write tests, the perception was that we already had test coverage so they never got fixed.
> Could you explain why this is sub-optimal? It's sub-optimal because of the added risk?
Suppose my cost of capital is 5%. My current business (selling widget A) is returning 20%. Great, my ROCE is 20%. Now let's say I can't expand my current product line any further. I can only sell so many widget A's.
But supposing I invent a new widget, widget B. Its return on capital is, say 10%. Should I manufacture widget B? The answer is: yes. My cost of capital is still 5%, but I'm earning a 10% return on it.
So the value of my business has increased. My overall ROCE will go down, though, because they'll now be a mix of sales at 20% ROCE and some at 10% ROCE. But even though my ROCE has decreased, it is still a good idea for me to produce widget B.
It may "look" bad to investors that my ROCE is going down, but I'm actually producing value for them. That's why I say that ROCE maximisation is sup-optimal. If I scrap widget B, them I'm actually doing investors a disservice.
I'm assuming "all things being equal", like risk profile.
In practise, they of course won't be. Companies could play a short-term game, like IBM seems to have done, by outsourcing to India, or whatnot. Sure, in the short term, ROCE has increased, but in the long term people will get cheesed off by their poor service.
It can work they other way, too. Take, for example, Kraft vs Nestle. Let's call it the "American" model vs the "European" model ;). Kraft took over UK chocolate manufacturer Cadbury's a few years ago now. They cut costs and produced something that consumers didn't like so much. In some ways I guess they had to, considering the amount of dough they blew on the acquisition.
Nestle, OTOH, tried to sell their stuff in Africa. That required a lot of money spread over a long period of time, because Africa has poor infrastructure. But what it meant was, when things got going, they were in a position to sell products to Africa when others weren't.
It's a long game vs a short game. Of course, just because it's a long game doesn't necessarily imply it's better.
But you can see that "hitting next quarter's targets" is apt to produce disappointing results over the longer term.
As regards FB buying Instagram, I have no sage advice. I could never see what the fuss was about with FB anyway, but they're making plenty of money, so I make plenty of mistakes.
Big companies often trot out phrases like "synergy" and "strategic acquisitions". They might work, they might not. Statistically speaking, odds are against acquisitions. Companies generally overpay for what they believe is exciting stuff, only to have the whole thing be a huge financial fiasco. Just ask Yahoo. They did alright with Alibaba, though. As another example, take Google's acquisition of YouTube. As far as I'm aware, they never made a profit out of it.
So isn't "returns on capital" measured in dollars, not percentages? I mean investors/shareholders will look at dividends and stock price appreciation, not ROCE.
> It's a long game vs a short game. Of course, just because it's a long game doesn't necessarily imply it's better.
Yes, exactly. Maximizing returns is not specific enough, "maximizing over X timeframe" is. And this should be decided by shareholders, right? (And so they elect a board that then picks a strategy.)
> YouTube
YouTube brought in revenue of $6.01 billion in advertising revenue during the quarter. Sure a lot of that goes to content creators, royalties, etc. And running the site costs a lot of money too, but if YT can't make a profit on this much money then I'd be very surprised.
"Another problem with these corporate-type guys is that they do a lot of "management by numbers"" --> What is the alternative to this? Management by intuition? Coordinating a company with ~350,000 employees around the world is definitely going to require some structure and metrics to measure how things are going. There are certainly ways that this can be abused, but I don't think the answer is to have no measures of how the business is performing.
I feel like I've been reading only bad things about IBM for a long time now. Like, over a decade.
If I had to take a shot in the dark, I'd guess it's likely a complete middle-upper MBA management fuckup catastrophe grinding the company into the ground.
> Clearly you have a preconceived stereotype of what an MBA is
Someone who would not necessarily swear off working for IBM, and who is not a superhuman who can prevent major IT project debacles? I don't think that's exactly a stretch.
> and I doubt I’d be able to change that with facts.
Well, why not try? Your fictions certainly didn't help.
I worked at IBM a few years ago. When I started we were had to use Notes for email, not long after we got migrated to Verse (IBM's webmail system). Verse was better than Notes (damning with faint praise).
One day I wondered why Verse took so long to start, i.e. time to first render of emails. So I profiled the startup using a browser performance profiler. It didn't take me long to discover there was a sleep(5) in one of the Javascript files. Every employee was subjected to a sleep(5) for every single login. Of course for security reasons your email session timed out every 12 hours or so, meaning that every employee is logging into email at least once a work day. Some napkin math: at the time IBM had almost 400k employees, so that's 555 hours per day of wasted employee time. Or 138,888 hours per year of wasted employee time. To be fair some large number of IBMers may not have had jobs that subjected them to Verse.
Oh it's very much a thing although maybe in different contexts.
My tech director in games used to have a ~40mb static array at the top of main.cpp with a big comment along the lines of "DO NOT TOUCH". When we'd come up on a demo or critical milestone and just could not get everything to fit in the ~512mb of ram we needed because the art team put in too many textures or our new subsystem too much memory he'd go in and knock 5-10mb from it and "save the day".
The same tech director removed mip level zero to get back ~33% of our texture memory. About a week later he told the art team that we'd optimized the game and asked if they noticed any visual differences. The art team said they didn't, about 4 weeks later it got out what he actually did and they were livid.
This reminds me of that episode of Star Trek: TNG where they find Scotty in a transport buffer, and he's shocked to learn Geordi gives accurate estimates to the captain.
It's telling junior developers don't click on IBM threads or else they'd be on this sub thread screaming that GP story is horrible, lying, cheating, and immoral. Oh how wayward the younger generations are!
1. I assume you're paraphrasing the details because JavaScript doesn't have a `sleep`, do you mean there were setTimeout loops or something?
2. Other than a job security sandbag, I wouldn't be surprised if this was an an even sloppier solution to a sloppy race condition where session token wasn't reliably cached across a distributed system or something. Gross either way.
Was it maybe a bodge to avoid a race condition somewhere else? Some kind of timeout to let some other system catch up? I could see waiting for a session to populate in a database or cache on first login. Hopefully it was only for the first login...
Not exactly what I'd call an elegant solution, but it is at least one semi-plausible explanation for a fixed wait.
82 comments
[ 2.9 ms ] story [ 152 ms ] threadWhen it works, it's great. When it doesn't, ye gods
However I do especially recall a hilarious incident, where one employee sent an e-mail to the entire company email alias, forging the sender address to that of his boss.
The e-mail contained some NSFW pictures and text. As most here will know, back then there was no validation of the sender address with SMTP, so forging that was easy. However the Notes gateway happily translated the e-mail address such that what we got in Notes did indeed look exactly as if our boss had sent it from Notes.
The article used this quote to imply there is some deception going on regarding the number of clusters affected. 15 is close enough to 12 that I would consider it within the scope of about a dozen.
This is a first. Do journalists make it a habit of using random HN comments as an authoritative source?
Journalists have long had a habit of printing opinions of random bystanders, self-proclaimed (and possibly actual) experts, and even people with particular opinions that will push the angle that the journalist hopes for.
This particular case seems pretty harmless and probably correct although it doesn't actually say anything about whether IBM is lacking in Notes experts or has anything to do with the problem (it could be in a different layer of the stack).
I'm not sure it's okay to publish a comment someone left on HN using their full name (the user account doesn't currently include a full name). I'd hope they at least contacted the user before including their comment (but I'm not holding my breath).
That's why I say it doesn't necessarily relate to the situation at IBM. As I said, journalists like quoting people to push an agenda or lend legitimacy to a story even if they are not experts or on the complete periphery of the story.
It's nothing new though, and very tame as far as journalistic honesty goes -- it is not incorrect to say that there is some email problem at IBM, that IBM has been known to use Notes for email, and that there are not many Notes experts around.
> I'm not sure it's okay to publish a comment someone left on HN using their full name (the user account doesn't currently include a full name). I'd hope they at least contacted the user before including their comment (but I'm not holding my breath).
I'm not sure what you mean by okay, but journalists have been quoting people's public utterings and public writings for as long as there have been journalists. Including taking selective parts out of context to push their agenda. If it's a verbatim quote even out of context I consider that to be well clear of the bar for journalistic integrity.
And really, anything you say in public will be used against you. And it will be linked with your person if you don't cover your tracks carefully. We all know this. No journalist is going to contact us before taking something from a comment we write here!
https://www.ibtimes.com/hackers-warn-about-future-threats-ho...
> “We can write good software, but it costs a fortune and business priorities often mean good enough is good enough,” Reddit user “noir_lord” wrote.
They still do their own stories and commentaries instead of just reposting random online blogspam (like Forbes), but they also are not the highest of journalistic integrity.
I once worked at a company that who, after 15 years of RIFs, offshoring and chasing ever increasing margins, finally cut too deep. One of the critical people cut was my boss, the VP over a product that was an add on to one of the companies major products. Due to accounting the profits showed up on the main products financials, but our product was a critical enabling piece.
My boss was RIF'd, simply called one day and told not to come in again, ever. Like some low level employee. After the boss was gone there was literally no one in the executive team who knew anything about the product, it's customers or customer commitments ie signed contracts for features to be delivered. It was a beautiful train wreck I watched first hand. It was amazing to see the VP who did take over slowly learn the magnitude of the f-ck up over the course of several months. They lost several customers. These customers were pissed and literally had no one to talk to at our company. We had support reps fielding calls from CEOs at our customers complaining. A few law suits ensued. It was glorious to see.
Maybe this is my favorite story, because redeploying myself from IBM years ago gave me many opportunities. I hope to someday forget Lotus Notes, Sametime, CMVC, Rational Rose, etc. And good luck to anyone trapped in a place like that.
And, ironically, perhaps, I find myself daily battling what I call "The IBM hangover," where large orgs (gov't and private) deal with the legacy systems they now own and the RUP requirements policies left behind. Domino on Powerbuilder; official polices governing change management via UML diagrams.
~20+ years ago, the old AT&T was doing a lot of government contacts. They optimized getting business and providing services, but couldn’t get their billing process straight. Which frequently resulting in them being unable to get paid for work preformed. Literal penny pinching incompetence was costing them millions for years and fixing it was never a significant priority. A classic case of management optimizing for what was being measured.
This was also the same company took years to realize they should be consistently charging more money for faster connections. At various points customers would get significant discounts for ordering faster service which cost AT&T more to provide.
I used to be on an innovation team and we did shadow days with staff in other areas of the company to see what was going wrong. We had these crazy sci-fi type projects going on and our sales reps couldn't get brochures and/or visuals consistently as there was no consistent process to order them. Dozens of other similar problems were reported and zip was done.
Just wanted to say that respect is not only for the C suite. Any employee (including sone low level employee) should be treated with respect. Especially when laid off. You’re basically fucking with someone’s living, housing, food, and family when you’re laying someone off. Whether you’re at the bottom of the totem pole or at the top. And chances are it’s a lot more devastating at the bottom rather than the top.
It sounds like they were foolish in terminating him (and poor in how they handled it), but an org shouldn't fall apart like that because of a single individual -- particularly a senior one.
In this case, yes, he was fired, but he also could have been hit by a proverbial beer truck, tapped to run another part of the business, etc.
When he bought, he marvelled at how the CEO was targetting 20% returns on capital. When I heard this, I realised that Buffett had forgotten one of his lessons that he himself espoused: that companies that "target" returns on capital are should be avoided. IIRC, it was one of his reasons for bailing out of Fannie Mae (?). His timing was impeccible on that one, as the whole thing exploded not long thereafter in the 2008 financial crisis.
Also at the time of his purchase, it was known that the company was beginning to offshore. It struck me at the time that this could cheapen the whole thing and turn into a disaster.
So there were at least two facts at play here that should have forewarned Buffett that it might not be a good purchase. I was actually pretty astonished at the time that a guy as savvy as Buffett didn't seem to anticipate the problems ahead.
And now we come to the $64,000 question: how does a company add value to shareholders? It's a simple question, but I bet most won't know the answer to it. The answer is provided by Prof. Damodaran Aswath: a company adds value by targetting returns on capital in excess of the cost of capital, risk-adjusted.
So actually, doing stuff like maximising returns on capital is a sub-optimal goal. Not that you should invest in something marginal, either.
Another problem with these corporate-type guys is that they do a lot of "management by numbers". It's all about "KPIs" (Keypoint Indicators) and other "metrics".
Back when Motley Fool wasn't a shitpile that it is today, there was a guy in the UK that put together a portfolio of "family companies", i.e. quoted companies with a substantial management and/or family stake.
How did the companies fair? Very well, actually. The portfolio did great relative to the indices. Why? Well, my conclusion is that family-concentrated businesses were run conservatively as proper operating businesses, rather than a bunch mathematical formulae to be tweaked and fiddled with.
Could you explain why this is sub-optimal? It's sub-optimal because of the added risk?
How does this work for very big companies that have to engage in multiple markets simultaneously (due to couplings between markets and other competitors - eg. FB bought Instagram, but FB's main market was not buying other social media companies, but it fit into their strategy to get more active users)?
What usually happens is that they make it a quarterly or annual target, so they do things that expensive in the long term to hit the target for the period.
For example, I can increase my profit for the quarter in an airline by deferring maintenance, so the plane flies more. But if the plane ends up being out of service for longer next year because of that decision, that is sub-optimal.
Another thing they can do is shift revenue around or offer large future discounts for upfront orders or shift project work depending on when end of year is. All things that are suboptimal, but work for the numbers.
As a non financial example, one company I worked for had quarterly goals around test coverage. But they didn't really budget time for it. It was just expected that it would somehow be done.
What happened was that worthless tests that called as much code as possible without testing anything were written to hit the coverage number. So even when time was available to write tests, the perception was that we already had test coverage so they never got fixed.
Suppose my cost of capital is 5%. My current business (selling widget A) is returning 20%. Great, my ROCE is 20%. Now let's say I can't expand my current product line any further. I can only sell so many widget A's.
But supposing I invent a new widget, widget B. Its return on capital is, say 10%. Should I manufacture widget B? The answer is: yes. My cost of capital is still 5%, but I'm earning a 10% return on it.
So the value of my business has increased. My overall ROCE will go down, though, because they'll now be a mix of sales at 20% ROCE and some at 10% ROCE. But even though my ROCE has decreased, it is still a good idea for me to produce widget B.
It may "look" bad to investors that my ROCE is going down, but I'm actually producing value for them. That's why I say that ROCE maximisation is sup-optimal. If I scrap widget B, them I'm actually doing investors a disservice.
I'm assuming "all things being equal", like risk profile.
In practise, they of course won't be. Companies could play a short-term game, like IBM seems to have done, by outsourcing to India, or whatnot. Sure, in the short term, ROCE has increased, but in the long term people will get cheesed off by their poor service.
It can work they other way, too. Take, for example, Kraft vs Nestle. Let's call it the "American" model vs the "European" model ;). Kraft took over UK chocolate manufacturer Cadbury's a few years ago now. They cut costs and produced something that consumers didn't like so much. In some ways I guess they had to, considering the amount of dough they blew on the acquisition.
Nestle, OTOH, tried to sell their stuff in Africa. That required a lot of money spread over a long period of time, because Africa has poor infrastructure. But what it meant was, when things got going, they were in a position to sell products to Africa when others weren't.
It's a long game vs a short game. Of course, just because it's a long game doesn't necessarily imply it's better.
But you can see that "hitting next quarter's targets" is apt to produce disappointing results over the longer term.
As regards FB buying Instagram, I have no sage advice. I could never see what the fuss was about with FB anyway, but they're making plenty of money, so I make plenty of mistakes.
Big companies often trot out phrases like "synergy" and "strategic acquisitions". They might work, they might not. Statistically speaking, odds are against acquisitions. Companies generally overpay for what they believe is exciting stuff, only to have the whole thing be a huge financial fiasco. Just ask Yahoo. They did alright with Alibaba, though. As another example, take Google's acquisition of YouTube. As far as I'm aware, they never made a profit out of it.
So isn't "returns on capital" measured in dollars, not percentages? I mean investors/shareholders will look at dividends and stock price appreciation, not ROCE.
> It's a long game vs a short game. Of course, just because it's a long game doesn't necessarily imply it's better.
Yes, exactly. Maximizing returns is not specific enough, "maximizing over X timeframe" is. And this should be decided by shareholders, right? (And so they elect a board that then picks a strategy.)
> YouTube
YouTube brought in revenue of $6.01 billion in advertising revenue during the quarter. Sure a lot of that goes to content creators, royalties, etc. And running the site costs a lot of money too, but if YT can't make a profit on this much money then I'd be very surprised.
"Another problem with these corporate-type guys is that they do a lot of "management by numbers"" --> What is the alternative to this? Management by intuition? Coordinating a company with ~350,000 employees around the world is definitely going to require some structure and metrics to measure how things are going. There are certainly ways that this can be abused, but I don't think the answer is to have no measures of how the business is performing.
If I had to take a shot in the dark, I'd guess it's likely a complete middle-upper MBA management fuckup catastrophe grinding the company into the ground.
[0]: (German; millions for inventing digital signatures) https://www.heise.de/news/Digitaler-Corona-Impfpass-IBM-Ubir...
You implied that MBAs wouldn't work there. Which is pretty, safe to say, false. (They even have a page advertising to MBAs: https://www.ibm.com/services/careers/mba-graduate )
Someone who would not necessarily swear off working for IBM, and who is not a superhuman who can prevent major IT project debacles? I don't think that's exactly a stretch.
> and I doubt I’d be able to change that with facts.
Well, why not try? Your fictions certainly didn't help.
You have an MBA, I'm guessing?
One day I wondered why Verse took so long to start, i.e. time to first render of emails. So I profiled the startup using a browser performance profiler. It didn't take me long to discover there was a sleep(5) in one of the Javascript files. Every employee was subjected to a sleep(5) for every single login. Of course for security reasons your email session timed out every 12 hours or so, meaning that every employee is logging into email at least once a work day. Some napkin math: at the time IBM had almost 400k employees, so that's 555 hours per day of wasted employee time. Or 138,888 hours per year of wasted employee time. To be fair some large number of IBMers may not have had jobs that subjected them to Verse.
https://thedailywtf.com/articles/The-Speedup-Loop
My tech director in games used to have a ~40mb static array at the top of main.cpp with a big comment along the lines of "DO NOT TOUCH". When we'd come up on a demo or critical milestone and just could not get everything to fit in the ~512mb of ram we needed because the art team put in too many textures or our new subsystem too much memory he'd go in and knock 5-10mb from it and "save the day".
The same tech director removed mip level zero to get back ~33% of our texture memory. About a week later he told the art team that we'd optimized the game and asked if they noticed any visual differences. The art team said they didn't, about 4 weeks later it got out what he actually did and they were livid.
https://scifi.stackexchange.com/questions/99114/source-of-sc...
2. Other than a job security sandbag, I wouldn't be surprised if this was an an even sloppier solution to a sloppy race condition where session token wasn't reliably cached across a distributed system or something. Gross either way.
Not exactly what I'd call an elegant solution, but it is at least one semi-plausible explanation for a fixed wait.
/ shudder /
The latest version from Notes I happened to use was Eclipse actually cross compiled to run on the browser (Notes nowadays uses Eclipse underneath).
As "Exhibit A" shows it did not go as planned.
https://news.ycombinator.com/item?id=27692965