Also, check out: "Death of The Corporation", "From a Nation of Producers, to a Country of Gamblers", "War Is Great. Peace Sucks. Long Live NATO!", "What's a Trill Here, a Trill There...?", "More, Cheaper Service Jobs," "Two Faces of Globalism", "The Upsizing of America,", "Small Caps Sinking First", "Russia Is Still the Bogey"
The copyright-protected information contained in the ANNEX BULLETINS is a component of the Comprehensive Market Service (CMS). It is intended for the exclusive use by those who have contracted for the entire CMS service.
GLOBAL TRENDS"Strategy Guru" Announces Death of Progress, But Fails to See the Looming... Death of The Corporation There Is No Business Like Show Business: The Hamel Show
BOSTON, July 13 - There is no business like show business, they say. And Gary Hamel is certainly in the show business. He proved that with an outstanding shtick - the opening keynote speech on June 12 at the "CSC Exchange" executive business conference, here in Boston, MA. The Hamel Show had drama, laughs, sex, intrigue all necessary ingredients for a successful entertainer. But it also had lots of food for thought, not a typical element of todays media shows.
What The Hamel Show didnt deliver, however, is a clear vision of the future. And no wonder. As Winston Churchill once said, "I never like to prophesy about the future. It is a much better policy to prophesy about events which have already taken place." We dont know how much of Churchills writing Hamel has read, but he certainly practices his advice. You wont find any forecasts at his Web site. Nor did he stick his neck out during his shtick.
Hamel kicked off his speech with a dramatic announcement that, "the age of progress is over." The progress which started in the Renaissance days, "is now dying in the closing days of the century."
By "progress," Hamel meant, of course, the industrial era. But by a clever substitution of the two terms, he produced the desired goal of every performer - grab the audiences attention early.
It was at this moment that this writer realized that he was attending a show, not a lecture. Because Hamel had just sacrificed accuracy for effect. A real scientist, lecturer or a strategy guru would never have stooped that low. True, the show must go on, even in the world of academia, but only if the integrity of facts and opinions is preserved.
So what was wrong with Hamels startling intro-bomb?
It went off late. Way too late, especially for someone billed as a "strategy guru." The industrial era, or "progress" as he put it, has been dying for about three decades now, not just "in the closing days of the century. Weve said in a number of Annex Research reports and executive workshops, some going all the way back to1983, that Corporate Americas downsizing was merely a symptom of the industrial eras mortal agony.
Weve pointed out many times, for example, that the Fortune 500 employment peaked in 1969 as percent of the total U.S. jobs. And that it crested out in absolute terms in 1979 - 20 years ago.
The number of Annex Bulletins and workshop slides which cited these trends over years is to be referenced here individually. But you can easily check out our comment to that effect from the Mar. 8, 1996 issue of the New York Times, for example, which was also included in the subsequently published Times book, "The Downsizing of America" (Random House, 1996).
But even if Hamel doesnt read the Times, or if he has missed this writers quotes in the business media about the earlier deaths of his "progress," there is no excuse for any so-called "strategy guru" not to have read the 1979 book, the "Third Wave," by Alvin Toffler.
Two years before the IBM PC was born, and one year after Hamel quit his medical administrator job to study international business at the University of Michigan, Toffler spelled out with uncanny precision the various reasons why the industrial era was at an end, and the new information era was being born.
Building on Tofflers work, we have added to it new elements which have helped our clients and seminar attendees during the last 16 years see what the future will look like, as well as understand why the old business world was disintegrating.
And then there were some things Hamel could have said on the subject of the "death of progress" but didnt. Such as that, while Corporate America was downsizing, the Main Street America was booming. Starting with the September 1996 executive workshop in Phoenix, we have been presenting to our worldwide seminar audiences a section on global trends titled, "The Upsizing of America," just as the Wall Street Journal Sep/96 upon which it was based. In it, we pointed out that the U.S. economic growth was fueled from the bottom of the business pyramid.
So 18 million new American jobs in the 1980s were generated by small and medium enterprises, not the Big Business and Washington, both of which are taking credit for the "strong U.S. economy."
This would have been a natural counter-point to Hamels "death of progress" theory, yet he never mentioned it. Why not? Because he lists so many of the Fortune 500 companies as his clients?
Whatever the reason, the moment Hamel announced that the "progress" and the 20th century would die at about the same time, we not only realized that this was a show, more than a lecture; we suspected that a point-counterpoint report about it could make an interesting essay. So we whipped out our notebook and starting making detailed notes.
Overall, we have found ourselves to be in violent agreement with nearly everything Hamel had said. And we enjoyed a quiet satisfaction realizing that we have also said it all, and then some - except years or decades earlier!
It was only then that it dawned on us how much of a jump on competition our clients had. Well, at least the few who had had the courage to turn our irreverent forecasts into actionable business strategies. Especially in the Internet world which has shrunk the calendar year to a few months.
It was only then that the penny also dropped about the full weight of a comment made to us by a professor of philosophy, who now consults for top executives on how to change corporate cultures. "Relative to (Gary) Hamel, you have a softer edge and a nice smile," he said.
But evidently not as much showbiz savvy. At the time, however, this compliment went right over this writers head. "Hamel, Hamel the name sounds familiar, but who is he?" I kept wondering.
Finally, days later, I remembered that Hamel was also a speaker at another business conference in Boston, hosted by Groupe Bull of France in 1993. But evidently his speech back then was a forgettable experience.
So before we take you through a play-by-play of the silent Hamel-Djurdjevic debate, let us properly introduce him. So that your mind doesnt go blotto, too.
About Gary Hamel
Of course, youd never know that Hamel is in show business from the official bio at his Web site. Except, perhaps, for the rarity of two photos in a single CV - one showing a smiling Hamel as an artistic expression, and another rendering him as a formal portrait, with his costume on. Just like Cindy Crawford, who has two photos at her Web site, one with her costume on.
What you will see instead is that this former hospital administrator (Hamel, not Crawford) has a Ph.D. in international business from the University of Michigan. And that his resume also lists him as a visiting professor of the London Business School, and as a Fellow, presumably a good one, of the Harvard Business School.
But it seems that Hamel has not been doing much teaching these days, unless his lectures were padded with quite a few zeros as the speaker "honorarium." According to an August 1996 article in the Business Week, during the prior 18 months, Hamel had "delivered nearly 75 speeches and built a consulting company that is generating revenues of $20 million a year." And this was before he was officially ordained as "the worlds reigning strategy guru" by the Economist magazine.
"How much did you pay Hamel?"
"Dont know," replied Jim Saviano, the newly promoted vice president of e-business strategy at Computer Sciences Corp. (CSC), and the host of a conference which attracted 40 CEOs and over 200 vice presidents from 14 countries and 12 industries. "But I know it was a lot of money."
"How much did you pay Hamel?" we also asked Kirk Arnold, the newly promoted president of CSC Consulting, and the number two CSC executive at the "CSC Exchange" conference.
"Dont know, but I know it was a lot of money."
It must have been. If the two top executives who hosted the conference didnt know the amount. For the sake of CSC shareholders, hopefully they didnt give Hamel a blank check. He is good. But nobody is THAT good. And CSC is a publicly owned company, not a Rockefeller or a Gates foundation.
The Hamel Show
Now, every good showman has to have a good producer. The Hamel Show is produced by "Strategos Studios" of Menlo Park, California.
Never heard of "Strategos Studios?" Not surprising. Neither had we. Before this conference. But thats only because we must have all been looking in the wrong places. Such as the Hollywood or the Broadway directories?
Just as Hamels official bio doesnt say he is in the show business, the Strategos Web site doesnt explicitly show it is The Hamel Show producer, either. Instead, it states that it is a consulting firm, and that Hamel is its chairman. And to prove it, it lists as its clients some unlikely movie-goers - multinational companies like Shell, Nokia, General Motors, Kraft and others.
As for Hamels professorships and fellowships, he wears them just as he wore beige dockers, horn rimmed glasses, a mustache and carefully ruffled hair, instead of a business suit that everybody else in the room wore. The casual, slightly disheveled "professor look," therefore, is a part of the gig; a costume designed to make him look the part.
Another thing intended to make Hamel look the part was the introduction; the crowd-warming build up, delivered by a CSC toastmaster. Among other accolades, it said that Hamel had published eight articles in the Harvard Business Review during the past decade.
It was the latter reference to the Harvard Business Review that first sparked this writers interest. For, it was in 1984, yes 15 years ago, while the 29-year Hamel was probably still working on his Ph.D., that we were hired to devise and teach a course on "clear writing" to a group of top Greyhound Corp. executives in Phoenix. And one of the texts we had held up as an example of bad and confusing writing came from the Harvard Business Review:
"Though not basically concerned with how promotion gets done - not requiring absolute proof of promotions value - management does want a logical rationale supported by dollar evaluation."
We rewrote that paragraph as follows:
Guess the Harvard Business Review must have come up in this world since then. For, when Hamel eventually took the stage, what followed was anything but a case of bad and confusing speaking. It was a dazzling performance. Not only did Hamel, the showman, sell the sizzle, even his steak was well cooked. If you like your steaks well done, that is (we dont).
"It may have seemed smooth and natural, but its all highly rehearsed," one of the senior executives at the conference later said critically. "Ive now heard him speak a few times."
Well, Pete Sampras tennis game, for example, also seems smooth and natural. And it is also highly rehearsed - to the tune of 5-6 hours of practice every day for most of his life.
Nothing wrong with that. On the contrary. "Excellence is not often gained upon easier terms," noted the British writer, Samuel Johnson, over two centuries ago (1709-1784). Hard work and practice are two preconditions of success, with luck and talent being some of the others.
But while The Hamel Show indeed deserved an A+ for presentation, the contents ORIGINALITY was less impressive.
"I kept thinking of you the whole time Hamel was talking about stock buybacks," said CSCs Saviano, as had some other executives (see page 10).
"Only about the buybacks?" this writer replied jokingly.
But we wont hold that against Saviano since CSC is not (yet) an Annex Research client, and thus had to depend on its information mostly from the media reports about our work.
And now, let us now take you through a "play-by-play" review of the silent Hamel-Djurdjevic debate.
White Collar Shackles
The notion of planning for the future and having a strategy is a relatively recent phenomenon, a byproduct of the industrial era, Hamel said. "Throughout the human history, life repeated itself in endless circles."
And now, after all this enormous "progress" claimed in the last two centuries, what were finding is also "enormous anxiety" among the workers strapped to the wheels of progress.
"They were promised relief from tedium, yet put in white collar factories. The only difference is they dont sweat as much" as the blue collar workers in the early days of industrialization.
Until the next performance review, or the next "streamlining of operations" announcement (read layoffs) by top management, when the white collar workers also break out in cold sweat, a thought crossed this writers mind.
But Hamel said no need to fret. "Never before have we had an opportunity as great as now For the first time in history, heritage is not our destiny."
For the first time in history? Well, that may be a bit of an exaggeration, as any jail bird who has ever escaped from prison would attest. His heritage was no longer his destiny, either.
Chalk up another point for Hamels showmanship, and mark him down another notch for academic accuracy.
Never Say "Never"
"Never before has there been a better time to be a revolutionary; never before more dangerous time to be an incumbent," Hamel continued. "The corporate oligarchy is hunkered down in their castles. The barbarians are no longer at the gate; they are eating off of their best china."
Agreed in principle. And kudos for Hamels eloquence. But once again, the showman prevailed over the scholar. Heres how we expressed similar sentiments in an August 1996 Annex Bulletin without the use of "never" or "ever," which no self-respecting guru ever uses (an excerpt from Annex Bulletin 96-42, 8/22/96):
" For instance, (the) PC revolution was driven by individuals, (the IBM chairman, Lou) Gerstner asserted (at a Toronto, Canada meeting for consultants in August 1996). Network computing is about... enterprises. Its about transformation of the way institutions do business.
Pardon me? Thats like saying MTV is about senior citizens!
The Internet alone has over 15 million users, only a small fraction of whom are large enterprises. As weve pointed out on numerous occasions in the past (see ANNEX BULLETIN 94-52, 11/12/94, for example), the PC and the Internet have empowered individuals and small companies to compete with giant enterprises on a level playing field. Theyve become equalizers. Kind of like the invention of handguns. The latter enabled even the little old ladies to overpower the giant sumo wrestlers if accosted by them.
No wonder corporate America has been forced into downsizing and restructuring in a desperate effort to catch up with the Internet-aided masses. It wont succeed, of course, any more than dinosaurs could have prevented their own extinction. At best, corporate America will prolong its mortal agony.
"No more bull!" Hamel said, succinctly summarizing the shift of power from producers to consumers which the Internet and the PC have facilitated. "Neutrality rules on-line."
In other words, consumers can instantly shop for the best deal before making their purchase decisions. And thanks to the global nature of the Internet, the result is also a "death of geography" (as an inhibiting factor in business).
Echoing our 1983-1994 remarks about the new technologies empowering individuals at the expense of large companies, Hamel said that the future will be "the world of consumer control."
Small Is Beautiful
Hamel also said many small companies have also shown themselves to be more valuable than the industry giants in terms of their market capitalization-over-revenue ratios.
Which is exactly what we said in a September 1996 Annex Bulletin (96-48, 9/27/96), and in this writers column, "Bet on Small Asian Caps," Forbes magazine Oct. 21, 1997 edition. Except that we also compared the worlds market value leader against earnings, not only revenues.
Overall, however, Hamels charts and conclusions on this subject were remarkably similar to those we published almost three years ago. Heres an excerpt from the Annex Bulletin 96-48:
"The Wall Street Journals Sept. 26 special report on global market value leaders (whose data was used as the basis for Annexs analysis) has illustrated the very points we have been highlighting repeatedly for at least 10 years now: that small is beautiful; that being big has its disadvantages; that there is a massive transfer of wealth taking place on a global basis - from the industrial giants to the smaller and nimbler competitors."
In the brave new world of the Internet entrepreneurs and small companies, "innovation matters," Hamel said. It does.
And that Corporate Americas culture - driven by the "how not to fail," rather than by "how to win" principle - is stifling creativity. It is.
Check out this excerpt from Annex Bulletin 94-52, 11/14/94:
Industrialists of the 21st century will be the farmers of the 20th century!
"The Western ability to have fun while working hard (i.e., being creative) is the best defense against the Asian (Japanese) discipline and hard work. The flight of factories into Asia and South America is inevitable (see ANNEX BULLETIN 94-42, 9/30/94). So rather than buck the trend, we should help it. The same goes for the telecommunication highways. For, the industrialists of the 21st century will be the farmers of the 20th century! (i.e., low on the food chain).
Will there be work left for us to do?
There will be plenty of brain work needed to provide the traffic on the global electronic superhighways by the time the Third Wave economies (as defined by Alvin Toffler) are in full swing. But we must revamp our government and educational institutions to better prepare our work force for the new challenges."
Fusion of Arts and Sciences
Another thing we noted in that 1994 Annex Bulletin is that the new information era will lead to a (re)fusion of arts and sciences. Which why we had said to some IBM executives prior to publishing that report that perhaps companies like IBM "have too many engineers and not enough musicians." Or visual artists. Or movie-makers. Or
Heres an excerpt from the Annex Bulletin 94-52, 11/14/94:
Fusion of Arts and Sciences
A major flaw in World Bank's logic (used for its 25-year forecast) is that the leading economies of the 21st century will not be industrial (as it assumed). They will be information-driven mixtures of arts and sciences.
By the way, that's a blend which a 16th century great (Western) mind also possessed. If a TV reporter stuck a microphone in front of Leonardo da Vinci, and asked him to separate his art from his science- he would probably have trouble doing it!
Whats the difference between the two? the old master would have likely replied.
It's the industrial era's penchant for compartmentalizing things so as to be able to mechanize them that has driven us to differentiate between the two. Artists lived in a world which could not be mechanized. Until now, that is. With the advent of information technology, the (re)fusion of arts and sciences is also inevitable. In a way, man will be returning to nature courtesy of the silicon."
Amoebas and Strategy Decay
"What we are seeing in big business is a strategy decay," he said.
We are. Provided that what Hamel meant with the above comment that Big Business leaders dont seem to grasp that the ONLY way to put off their deadly leap is to foster creativity within their organizations. And to keep breaking up their companies into ever smaller units, like an amoeba, so as to maintain nimbleness necessary to survive amid shrinking product and strategy cycles:
But the latter idea was NOT something about which Hamel talked. We did. In the March 1993 Annex Bulletins on EDS and ISSC (93-16, 3/18/93 and 93-17, 3/19/93):
"One of our challenges is our sheer (big) size, said Les Alberthal, EDS chairman, in a March 1993 conversations. Weve seen the problems of size at GM, IBM, the Federal Government... Which is why we continue to break up the company into pieces. The idea of a virtual company is becoming a reality, added Gary Fernandes, EDS senior vice president.
In a private conversation at that Dallas meeting, Alberthal also told this writer that that optimal size of an industry unit within a services company is between $50-$60 million and $500 million in revenues, in his opinion."
And we also said it an April 1995 Annex Bulletin about IBMs five-year outlook. Heres an excerpt from 95-35, 4/27/95:
"It is apparent to us that, in order for the company to grow above the growth rates included in our forecast, the Big Blue will need to reinvent itself - again! That means getting into some new businesses, and/or rid of some of its existing operations.
In other words, IBM will need some fresh ideas, and the courage to pursue them. Will the current top management be capable of meeting such a challenge? Frankly, we just dont know. Weve said many times before that running businesses of the future will be a lot more art, and a lot less engineering, than had been the case in the past. So far, the Gerstner team has done a very good job at engineering - fixing what was broken. But that task was pretty obvious, and goals quite explicit.
Which says nothing about how good Gerstner & Co. will be in the art of architecting the new new IBM - the main reason we applauded the choice of an outsider as IBMs new CEO, in March 1993. Nor does it tell us much about how open-minded they will be to hire such missing talent from the outside, instead of protecting the turf on which they are comfortable - (re)engineering. Or if theyd be prepared to act as an amoeba, and split up when the size of an operation starts to get in the way (see Annex Bulletin 93-16, 3/18/93).
As the Austrian sociologist, Leopold Kohr, wrote in his 1957 book, The Breakdown of Nations, (thats right - 1957, not 1975!), it is always bigness, and only bigness, which is the problem of existence - social, as well as physical. Kohr concluded that the only solution must lie in cutting down of the substances and organisms which have outgrown their natural limits.
Frankly, some recent statements by the two top IBM executives, in which they sounded more like army generals than artists, raised renewed questions about their suitability to rebuild basically an early 20th century (Tom Watson) creation, into a nimble and creative 21st century company."
Productivity.For many large companies focused on improving productivity, earnings have grown 15 to 16 times faster than revenue, Hamel said. Offering a rule of thumb for how to gauge the top management effectiveness, he added that if a companys earnings grow at more than twice the revenue growth rate, it is a surefire sign that the "strategy is dead."
We agree. As you saw from our IT services annual Hexathlons, only IBM Global Services is significantly above the Hamels rule of thumb ratio.
Mergers & Acquisitions. A huge growth in M&A activities is another sign of corporate management being led by their noses by Wall Street into deals which possibly improve efficiencies, but otherwise generate little or no new wealth. "This may be the only place outside of the Jurassic Park where you can watch the dinosaurs mate," Hamel said tongue-in-cheek.
As you saw earlier the dinosaur metaphor is also something which we used in an 1996 Annex Bulletin (96-42) in reference to the same companies. And we ran a cartoon about them, which we reproduce in this report, too.
"The you have to be big to compete Big Business leaders-proclamation is nonsense," Hamel said. "The you have to be global-line is nonsense. M&A is the last gasp of the cost cutters. (But) two drunks dont make a stable person."
Stock Buybacks."Buying back your own stock is what people do who are bereft of ideas," Hamel opined. Its usually done in companies run by "a 60-year old CEO running his stock options to the bank."
Wonder who Hamel might have had in mind when he said that? J
"If you cant grow, buy back shares," he quipped.
Which is something, of course, we have been saying ever since 1997. There are too many Annex Bulletins to reference individually, but let us mention some pieces which were this topics milestones (see "Is IBM Mortgaging Its Future, Again?," 97-16, 4/23/97); "Some Insiders Cashed In On IBM Stock's Rise, Buybacks" 97-22, 7/27/97; Djurdjevics Forbes magazine column, "Is IBM Back?," 6/10/97; "Corporate Cabbage Patch Dolls," 98-39, 10/31/98; Djurdjevics Chronicles magazine column, "Wall Street Boom; Main Street Doom," October 1998).
But ever the politician, not only showman, Hamel said he did not want to name the names of the companies he had analyzed before arriving at his conclusions. "It could be embarrassing," he explained.
For whom? Only for the companies which engaged in such shareholder rip-offs. And, to the extent that some of them may be Hamels clients, we can see that it could also be bad for his business.
Which is why what we found really embarrassing at that moment in Hamels presentation is that this showman is selling himself as a scholar. "Fellow this, Ph.D. that " Just check out his CV. Yet, when it came to calling a spade a spade, there were no spades in sight. No self-respecting scholar would ever stoop that low.
Hamel is also kind of late for the bash-the-buybacks party - by over two years. Still, "welcome aboard, Mr. Hamel!" Better late than never, as is the case with most Wall Street analysts.
The latter were also seven to eight years late to our "bash-the-IBM-lease-base-sell-off" party held in 1983 (see "Is IBM Mortgaging Its Future," April 1983).
All of which reminds us of an old truism offered by the German philosopher Arthur Schopenhauer (1788-1850):
Such as our claim, first voiced publicly in early 1997, that stock buybacks are a scam.
Earnings & Stock Prices. Close to the end of his presentation, Hamel demonstrated that even smart, witty, suave, highly paid, two-photo "strategy gurus" arent immune from being afflicted by common folly. And from gullibly accepting at face value the Wall Street "truisms" which arent true.
Hamel said that the reason for continued "bull" market was the tremendous growth in corporate earnings, which pumped $1.7 trillion of new money into the stockmarket.
To which we say, bull!
In 1998, the Fortune 500 aggregate earnings, for example, FELL 1.8% to $318 billion. The broader market indices (e.g., S&P companies), of course, were better than the dinosaurs profits. But they are nowhere near even the fraction of the $1.7 trillion figure of new money which Hamel cited.
So what is fueling the "bull" market? Increased cashflows, as we have been telling you for years.
"Modern Wall Street is a game of cashflows, not that of GDPs (Gross Domestic Products). So it is a market ruled by supply and demand. The more money is available for Wall Street to invest, the higher the Dow Jones matadors' capes will fly."
So, the main reason for the continued "bull" market was the $1.7 trillion, or whatever other large figure, of new money added to the equity cashflows, as massive amounts of capital fled the emerging markets in Asia, Brazil, Russia, etc. Most of it washed up at Battery Park in New York (figuratively speaking; thats the Lower Manhattan port closest to Wall Street).
Hamel also came through with less than flying colors when he said that companies which want to survive must foster "different regimes for innovation."
Regimes for innovation? Thats an oxymoron. One thing which innovators do not tolerate is "regimes" of any kind. Which is why they leave companies which constrain their creativity to start their own.
Guess this faux pas was an example that a residue of the "dinosaur mentality" (perhaps picked up by rubbing shoulders with, or collecting checks from, the dinosaurs?) is still left even in such a would-be intellectual revolutionary as Hamel?
An exaggeration? Not according to The Hamel Show.
"Unless you can launch an industrial revolution, you cannot become one of those wealth-creating superstars," Hamel said. Such as, as he aptly put it, the "gray-haired revolutionaries" are doing today.
What Hamel Didnt Say
At one point in his presentation, Hamel eloquently said that a good business strategist takes innovation "from serendipity to capability." Meaning that he reduces the blue sky forecasts to an actionable game plan for his company, or his clients, to follow.
We agree. Thats certainly what we try to do in all of our executive workshops on global and/or industry strategies.
So we asked ourselves at the end of his most entertaining show what actionable game plans had Hamel offered his audience? And we were aghast to realize that he never provided any forecasts, let alone actionable plans. The entire talk was about the past and the present, not about the future, which remained shrouded in mystery. It was meant to entertain you, not to make you money.
And thats the best the "the worlds reigning strategy guru" does? (per the Economist). Entertain? Is there an extra charge for forecasts and actionable plans?
If so, sponsors of such talks should print a disclaimer in their promotional materials so that potential attendees can decide if they should skip the sizzle and wait for the steak to be served somewhere else.
But since weve got the barbecue already stoked up, let us try to supplement an otherwise excellent and thought-provoking Hamel Show with some actionable forecasts, using little more than the information which this "guru" had imparted upon his Boston audience.
Death of The Corporation
Perhaps the most significant logical conclusion which flows from Hamels expose about the supposed "death of progress," and from his assertion that the small and nimble Internet competitors are eating the corporate dinosaurs lunch, is that the death of The Corporation must follow. At least the death of the Big Business as we know it today. And as it has been known for over two centuries.
Since most of us in the consulting business derive our incomes from various corporations, talking about their upcoming funeral wake may be more than a bit of a heresy. Yet not talking about it would be an even greater sin. Not only because it would injure ones professional and scholarly integrity. But because it would be irresponsible to some terminally ill clients. That would be as if a doctor refused to tell a patient stricken by cancer the truth about his/her condition.
Now, to be sure, the death of The Corporation may not be as imminent as the preceding cancer example suggests. Except perhaps for companies whose clock will run out along with the Y2K hourglass. But even for most other enterprises which do not act fast, and mutate into a more viable 21st century organism, the prognosis is just as terminal. In the long run.
"I find that hard to believe, sitting right here," a strategy guru for one of the worlds top computer companies told us upon hearing the preceding evidently devastating prognosis in a private conversation at the Boston meeting.
Thats not surprising. How many ocean liner owners of the mid-20th century thought that their pride and joy floating assets would become scrap, or be used as pleasure boats for the rich and idle?
The Internet-induced transfer of wealth from the incumbents to the "barbarians" will be several orders of magnitude faster, if the recent events are any indicators.
So you dont like your job? You quit and you create a new one. Or a few hundred, thousand new ones. Enter Netscapes, Yahoos, and other "hot" Internet stocks.
All it takes courage to pursue a dream that no one had dreamed before. The opportunities abound, as Hamel also noted.
"But wait a second," we hear the naysayers, "youre still talking about companies."
Of course, we are. True, they are the smaller amoebas, but nevertheless corporate amoebas.
Thats because we are today in a transitional phase between the decaying industrial world, and the budding, but not yet quite fully formed, information era.
Startled by such "radical thoughts?" You shouldnt be. Here is an excerpt from an Annex Research editorial written on Nov. 14, 1983 (see APPENDIX A, enclosed below, for the rest of it):
"What IBM probably did not realize, was the fact that the PCs success will begin to undermine the underpinnings of the very structure upon which the IBM culture rests. Its pin-striped suits, modern office buildings, a strong corporate identity, have for years typified prosperity and success.
Moreover, the PC era is likely only the beginning of a process whose destructive force will change the shape of Corporate America. The change will be more dramatic than even the strongest and the most militant of labor unions could ever have hoped to achieve. And nobody will have to go on strike, either."
So you see, the writing was on the wall for those with wide open minds and eyes as far back as 16 years ago.
And today, we see individuals, some writers for example, frustrated by the long and drawn out publishing cycle of the incumbent book publishers, simply say "nuts" to such establishment dimwits, and publish their own books via the Internet.
We see the independent newsletters, often "one-man shows" (e.g., Drudge) outscooping the major media not only because they are fearless promoters of truth, but because they are much faster at the draw.
In time, we see an "idealistic world," perhaps a utopian one, but not unlike the world of Leonardo da Vinci, in which the master craftsmen in various fields of human life and endeavors lead man back to nature. And bury once and for all the most ghastly period in human history called the Industrial Revolution.
Make it Industrial Revulsion.
Let us conclude this long essay the way this writer ends most of his executive workshops. With a poem written by the Indian poet Rabindrant Tagore:
Happy bargain hunting!
By Bob Djurdjevic
PHOENIX, Nov. 14, 1983 - It is seven oclock. The alarm goes off. A heartless beast! You try to swat it, but it is too far out of reach. Grudgingly, you roll out of bed, wishing your day wouldnt have to start so brutally.
A scene like this is played out in millions of American homes every day, Monday through Friday. At least, thats the way a day starts in those homes, whose breadwinner is lucky enough to hold a nine-to-five office job. It seems, its been like this forever, as one generation of office workers succeeds another. Having an office job and a set routine has become a kernel of the social fiber of industrial nations.
Yet, only a short hundred years ago, people rode horses across this vast land. Railroads were just gaining a foothold in the nations economy, and the word "interchange" meant a conversation, an exchange of goods or ideas, rather than a freeway loop. Working nine-to-five, if you basically lived off the land, was something only lazy people did.
In other words, office towers, freeways, subways, cubby-hole apartments, big city congestion - the byproducts of an industrialized society, are all relative infants on the chart of human history. Yet, to city-dwellers who have known no other way of life, the ring of the hated alarm clock is also a security blanket, a reassurance that all is well, that the world is unfolding as it should.
Then, circa 1981, an event took place, which was later to send shock waves through the industrialized society. IBMs "Personal Computer" was born on August 12, 1981, out of the ruins of the failed 5100 and 5110 "portable computer" programs (I still have to regularly visit my chiropractor for having carried these "portable" computers in the mid 1970s).
In just over two years, thanks to IBMs clever advertising, owning a "PC" has become the business version of the keeping up with the Joness-syndrome. The fact a lot of first-time users still dont know what to do with it once they buy it, is also a sign of its relative infancy. But, thousands of corporate users have flocked to it happily, regarding the PCs as their savior from the long queues for projects previously relegated to the back burners of their DP shops.
What IBM probably did not realize, was the fact that the "PCs" success will begin to undermine the underpinnings of the very structure upon which the "IBM culture" rests. Its pin-striped suits, modern office buildings, a strong corporate identity, have for years typified prosperity and success.
Moreover, the "PC era" is likely only the beginning of a process whose destructive force will change the shape of Corporate America. The change will be more dramatic than even the strongest and the most militant of labor unions could ever have hoped to achieve. And nobody will have to go on strike, either.
I suggest that WITH EACH PERSONAL COMPUTER SALE, ONE LESS OFFICE DESK WILL BE NEEDED IN THE FUTURE. That spells trouble for the desk-makers, but also for a whole host of other professions.
Last year, for example, a Vice Chairman of a stock brokerage firm, asked me what stocks, or industries, I thought, would do well in the future? I said I could more easily tell him which ones wont.
"Commercial real estate firms which have invested heavily into urban downtown office complexes, will be the next smoke stack industries to go", I speculated. "But, the residential real estate, by contrast, especially in the Sun Belt, should do well."
On the other hand, new and more fulfilling jobs are being created. As corporate databases are becoming accessible from remote locations, an increasing number of people are realizing the "nine-to-five" syndrome is a remnant of an era whose time is passing. If one can get the job done from a remote "field" location, why then bother to come to the crowded downtown head office at all? Why not try to get it done from ones home, or a closer office?
This is not a novel idea, of course. Tofflers "Third Wave" book (1981) predicted this would happen. What is new, is the fact that thanks to the PCs, the time for such change is today, not tomorrow, as Toffler thought.
Creative people around the industrial world - rejoice! Liberation from the rigidity of corporate shackles is just around the corner. The PCs will do for you, what the invention of gun powder did for the weak. You will no longer have to have the biggest muscle to wield the greatest power.
But, this thought will undoubtedly strike a fear into the hearts of millions of others, whose morning routine will be so rudely disrupted. Professional managers without employees to manage, government bureaucrats without the forms to fill out, even filing clerks without the files to file, will all feel a trifle uncomfortable having to rely on their wits alone in a competitive world. Yet, thats just what their forefathers had to do, too. For those who fail to adapt, the old alarm clock will be but a fond memory. Some may still leave it on. Just to be sure to clock in on time at the unemployments office computer, using their PCs, of course.
Does all this sound too far-fetched to you? Let our kids worry about that one?
The text youre now reading was created in my "office-at-home" on an IBM PC on November 14. From there, the column was transmitted electronically to NewsNet1 , some 2,000 miles away. The electronic edition of this editorial has been "on the air" since November 21 (1983).
Welcome to the brave new world!
Footnote 1: Thats right, no mistake there. NewsNet, based in Philadelphia back in 1983, was a precursor of the "electronic superhighway." And Annex Research was one of the pioneer on-line publishers, putting out electronic editions of our reports on NewsNet as far back as October 1983, about 10 years before the birth of the Internet. Check out our editorial, "ACR Goes Electronic," in the November 1983 issue.
Can you afford not to know such things if you're a global competitor? If you agree, call us as (602) 824-8111.
Or check out also... "From a Nation of Producers, to a Country of Gamblers", "War Is Great. Peace Sucks. Long Live NATO!", "What's a Trill Here, a Trill There...?", "More, Cheaper Service Jobs," "Two Faces of Globalism", "The Upsizing of America," "Small Caps Sinking First", "Russia Is Still the Bogey" Annex Bulletins.
Editor: Bob Djurdjevic
5110 North 40th Street, Phoenix, Arizona
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