 |
     |
|
|
No, this isn't a personal posting. I'm referring to the irony in the following sentence from a Globe & Mail story about the SBC purchase of AT&T: SBC to buy AT&T in $16-billion deal.
Dallas -- SBC Communications Inc. has agreed to buy former parent AT&T Corp. for $16-billion (U.S.), creating the largest communications company in the United States . . .It was, of course, two decades ago that SBC was born of AT&T. So that would about mean it grew up, went to college, got lucky in the tech boom, became a millionaire, and now owns the house . . .
I think all bets about the state of telecomm and especially the more interesting parts of it -- wireless and VoIP -- are off. We knew consolidation was coming; we saw it start earlier with the AT&T/Cingular deal in wireless; now it's getting interesting.
I need a little help and hope that you can provide it. I've had a thought which I haven't the time or will to research. It's a question that goes like this: If an underlying premise of capitalism is that the greatest good results from the collision of individual self-interests (i.e., firms acting in their own self-interest – for profit) is acceptable as a truth on the macro level, does the same thing apply at the micro level? In other words, at the firm level does the greatest good result from the collision of individual self-interest?
As I recall, whether its Mill, Smith, or Locke, we accept that the rationality of the firm makes its interests primarily profit, growth, efficiency, etc: making the best use of capital to create wealth. As long as this premise doesn’t change, capitalism appears to hold. Should the primary rationale of the firm be different – to do good things, to distribute rather than accumulate wealth (so it can’t be reused as capital to generate more wealth) – the capitalist logic begins to falter, I think. Be that as it may, let's say that on the whole capitalism works as intended.
That's at a macro (firm) level. But does it hold at the personal level inside a firm? Could the combination of competing self-interests of stakeholders (shareholders, directors, executives, employees) result in the greatest good for the firm? I can think of relatively trite and exceedingly hollow answers both for and against. On the one hand, yes: the allocation of capital within a firm will be made to the self-interest that shows best utility for the capital. So it holds. On the other hand, no: self-interests that are rewarded are not genuine individual self-interests but the interests of the firm (e.g., an initiative to create a new line of business) brought forth by an individual. The true self-interest of the individual within a firm has to be presumed to be greater wealth, status, and/or power which are the rewards for best defending the interests of the firm. What’s left out of the equation is self-interests that are not oriented around those drivers, such as meaning. So it doesn't really hold except as a second order effect.
Scratch the surface of these two answers – and so many more – and there are only more presumptions of rationality, none of which to my knowledge (which is, admittedly, limited) are proven out. Adam Smith did raise the matter of the principle v. the agent and divergent interests consistent with those raised above. But, I'm relatively sure that A. Smith didn't contemplate mega corporations of the like that bestride the world today.
The question fascinates me (and don't get me wrong, I don’t stay awake at night wondering) because of the fairly extensive study I’ve done of chaos and complexity theories. One of the features of chaotic and complex systems is that they are recursive. Like a Mandelbrot, every feature is itself made of the same shape and so it goes ad infinitum. That is, every time you zoom in on a part of the shape, the same shape appears in your view. There is good cause to believe that the principles of non-linearity, etc. being defined within chaos and complexity science have application in business and economics. That is, just as the more recent “Law of Increasing Returns” questions the fundamental economic wisdom of the Law of Diminishing Returns, in certain circumstances, other bedrock presumptions about business and economics may be worth re-evaluating.
It also fascinates me because it ought to call into question the corporate entity of the firm – particularly the large, publicly traded, multi-national share capital corporation. That is, if the individual stakeholders and their own self-interests are not fundamental (except in a second order way) to the mind of the organization, then the organization is its own consciousness (in a peculiar and, undoubtedly misused sense of the word). What I'm trying to say is that if capitalism doesn’t hold within the firm then the firm has to be outside the system rules. If that's the case, there is something to study because it’s an interesting circumstance in the complexity science context. There's a lot more to this business of being outside the rules of the system yet being part of the system, but I've gone on quite long enough already.
So, to the question: Does anybody know whether this has been studied and addressed somewhere? Can you point to the literature?
I've been busy over the past months writing to support the reason for a new advertising response service that a colleague and I "invented" and is being tested in the next few months. A couple are here ("Losing the Name Game") and here ("From Martial to Marital Marketing").
Briefly, the first one is about the problem with CRM and the desire to capture names and personal information from everyone that a marketing business comes in contact with. The second is about the shifting consumer environment and how we marketers have to get over our addiction to "pushing" so that we can engage with consumers and let them pull relevance from us.
Please, my readers, have a browse through. Your comments are, as always, welcome.
A few days ago, Joe Kraus (at Bnoopy) posted about the Stockdale Paradox, coined by Jim Collins in Good to Great. Kraus is reading it; I haven't and probably won't if only to be contrarian. (Besides, what of mine has Collins read recently?)
The paradox and the post resonated with me deeply and not only because of my entrepreneurial bent and past, but because it was the first time I'd read anyone lay out so eloquently the distinction between faith and optimism in the work sense. It's crucial, and it got me to thinking about faith, leadership, and making great things. In short, I think making great things -- say like an entertainment career, a new business, or a work of art -- are always about faith in the end (per Stockdale). It requires an unwaivering attachment to that visualized end
even through troubling periods and naysaying. It demands soul.
Let me give you a few examples from the worlds of art and business. John Mellancamp is affectionately known as the "little bastard" for his unflagging instistence on getting his way with the sound and meaning of his music. It has in no small part resulted in a stellar career. Bono, of U2, has -- I imagine -- driven the group's and his own status in the world of music over 20 years by managing his vision and the world's view of it. Madonna, similarly, had a view of fame that was unserving despite many various criticisms levelled at her. The number of "hardassed" musicians and artists goes on forever. The consistency is (a) that they ultimately reached their goals and (b) they were not the easiest to get along with because of their unflinching view and tenacity.
In business, it would seem that there are very few businesses that grew from nothing without the firm hand and vision of the entrepreneur. Note that among those who presided over the genesis of Walmart, Disney, Ford, Exxon, Microsoft, and so on there isn't a single technocrat, administrator, or professional manager. The story I find most interesting is Steve Jobs's. Bad boy who started up Apple. Brought in the professional marketer who, ironically, eventually booted Jobs out of the company he started and was the first in a line of professional business people who led the company into the abyss. Brought back to help out, it was Jobs again who gave Apple it's groove back. My take on it is that Job's is Apple's soul, and without it Apple had no purpose.
Not every organization has a soul though. Some -- perhaps all -- eventually become soulless like IBM, General Motors, and so on. They become entities with their own inertia and are for the sake of being. That is, however, an epistemological question best left for other times. The point though, I think, is that at the early days (which can be a long time -- remember Apple was already about 10 years old when Jobs was booted, and is 25ish now) a business is a reflection of its founder: the Stockdale who never lost faith in the end. It can't afford to lose its soul.
It's all about soul It's all about joy that comes out of sorrow It's all about soul Who's standing now and who's standing tomorrow - Billy Joel
The Toronto Star carried an article yesterday addressing the number portability issue (or absence thereof) here in Canada. Article here: Message to telco watchdogs: Bite. The gist of the article is: Hey! Why not?
The point is that in the year since portability was introduced in the US, the world has not shuddered to an end. The industry was not upended and consumers didn't cause companies in the industry to fall apart. Ultimately it seems to have been a good thing. Here's a snip:
According to an FCC report on the first anniversary of wireless local number portability, or wireless LNP, more than 8.5 million U.S. customers ported their existing number to a wireless carrier. Of those, about 10 per cent kept their number when moving from a wireline to wireless service.
The mobile telephony business is, I think, at point in the curve where its expansion -- especially revenue -- goes vertical. The reason is the increase in valuable services using handsets as pointed out in this USA Today piece about Verizon: Verizon Wireless expands multimedia service for cell phones. Here's a taste:
Beginning Feb. 1 in more than 30 U.S. cities, Verizon Wireless launches a multimedia service called VCast, which promises to let folks watch streaming on-demand news, weather, sports, music and other videos and play three-dimensional games. VCast exploits the company's high-speed, third-generation telecom network, known as EV-DO (Evolution-Data Optimized).That's for others though. I still think that the real killer app for a mobile phone is talking to other people.
Interesting article about the British post office re-entering the phone business. Mail is declining, of that there can be no doubt. Always interesting to watch the response to threat. The article, from The Register, is here.
I love articles like this one about GM accelerating development of a non-fossil fuel burning vehicle. I always wonder: is it competition (Honda, et al), threat of supply (Iraq war, Yukos problems, etc.), or just what structural changes would cause GM to move faster like this? The article from the aptly titled "Fuel Cell Today" is here: Fuel Cell Today - GM Sequel: Reinvented Automobile No Longer Just a Dream. The snip:
The technologies embodied in Sequel, such as fuel cells, by-wire and wheel hub motors, have developed so fast that GM has been able to double the range and halve the 0-60 mph acceleration time, compared to current fuel cell vehicles, in less than three years, according to Larry Burns, GM vice president of research and development and planning.