Friday, December 20, 2013


by Charles Snow

A reader responded to my post on Great Business Books by asking, Are there any great books on business ethics? Or is that term an oxymoron?

Yes, I've heard business ethics referred to as an oxymoron, along with jumbo shrimp, military intelligence, and British cuisine. But, oxymorons aside, behaving ethically in business is hugely important. Just look at what happened in the U.S. before the financial crisis in 2008 and the Great Recession that followed when some businesspeople behaved unethically, illegally, and immorally -- often at the same time!

Your comment caused me to chat with a colleague who does research on business ethics as well as conduct some armchair research of my own. I learned that "Ethics books have never been well received in the marketplace," according to HarperBusiness Executive Editor Dave Conti. That probably explains why you couldn't think of a "great" business ethics book. Therefore, given your particular objectives, you might try reading one or more of the following books:

1. Dan Ariely, The (Honest) Truth About Dishonesty (Harper Collins 2012). Ariely is a behavioral economist and is considered to be one of the best experimentalists in the social sciences. This is an evidence-based book that describes how we all cheat and lie -- but only up to a point where we still feel good about ourselves.

2. Linda Trevino and Katherine Nelson, Managing Business Ethics: Straight Talk About How to Do It Right (John Wiley & Sons, 2011). These authors, both business school professors, have done a lot of research on codes of ethics. You can learn about the experiences of various organizations that have formulated and used ethical codes.

3. Joseph L. Badaracco, Jr., Leading Quietly: An Unorthodox Guide to Doing the Right Thing (Harvard Business School Press, 2002). Another business school professor whose book is targeted towards middle managers.


By Ronald Fox
On December 4th, American news outlets reported the results of the Organisation for Economic Co-operation and Development (OECD)-administered 2012 Program for International Student Assessment (PISA) test. Once again it showed American teens to be lagging in global education rankings. Our students scored below average in math and roughly average in reading and science compared with teens in the 65 nations that participated in the test. Among the 34 OECD countries, which include most western industrial countries, plus Japan and Korea, the U.S. ranked 26th in math, 21st in science (from 17th in 2009) and slipped to 17th in reading (from 14th in 2009). Already the finger-pointing has begun.

The PISA test is far different from the standardized tests students take in the U.S. Administered every three years to 15-year olds, the PISA test is designed to measure a student’s ability to think critically and solve problems in math, reading and science (it was initiated in 2001). PISA demands fluency in problem solving and the ability to communicate, skills that its framers believe are necessary for working, thinking and adapting to the world beyond school, a world choked with information and subject to rapid economic change. I find the PISA test a valuable instrument for cross-national comparisons of what teens know.

I don’t claim to know why our students test so poorly internationally, nor do I want to get into a debate on the subject; I’ll leave that to the finger-pointers, who will undoubtedly have their say in assigning blame for our latest educational black mark. What I want to do in this post is talk about what one high-scoring country does differently from the U.S. in educating their kids. This country is Finland. Up until a few decades ago, Finland was a largely illiterate farming and logging nation with failing schools. A concerted effort to turn its education system around, however, has resulted in a remarkable success story. Finland now regularly ranks near the top in PISA scores in math, science and reading. What changes did Finland make? How is that country’s education philosophy different from ours?

Wednesday, December 18, 2013

Response to a Subscriber Regarding my Goodbye to the A-10 Posting

Subscriber, Larry Slayen, wrote: “Why has nothing changed?  You could have written this article 10, 20, 30 and 40 years ago.  The military continues to overspend at the expense of the taxpayers and the troops.”  
You’re exactly right, Larry. The Pentagon’s addiction to gold plating, which often makes weapons too expensive to purchase in planned numbers, goes back a long time. The weapons acquisition system is structured to virtually guarantee cost overruns, biased testing, poor combat readiness, and a great deal of waste (see my 8/22 post on why our weapons cost so much). Seymour Melman wrote about structural problems in our procurement system back in 1970 in his book, Pentagon Capitalism. He followed this work up with a broader treatment of the problem in, The Permanent War Economy (1985). The addiction to excessively high technology was covered in a 1982 book by Mary Kaldor called, The Baroque Arsenal. Over the years, many works on procurement problems have been published.  So, yes, there is a long history of concern about the kind of practices I wrote about.  
What is most remarkable is that nothing seems to significantly change. The military-industrial-Congressional complex, which Gordon Adams referred to as “The Iron Triangle” (The Iron Triangle: the Politics of Defense Contracting), is a powerful symbiotic alignment that is self-promoting and impervious to reform. Politicians in key military appropriations committees, and other Members who just love to take military contracts back to their home districts (the bigger the better) are all in on the procurement charade. Few politicians have had the courage to take the system on.  On this there is bipartisan consensus.



By Ronald Fox

In a previous post, I focused on the case of the air force’s new super-airplane, the F-35, as yet one more example of our military’s persistent tendency to understate cost and overstate performance of major weapons systems. Specifically I questioned the veracity of F-35 Program Manager, Lt. General Christopher Bognan’s boast that the unit cost of the F-35 will settle in at about $85 million per plane. Well, with the cost per plane now over $160 million and climbing, that prediction appears pure fantasy, if not outright duplicity. But that’s not the worst of it. It appears that to free up funds to purchase the overpriced F-35’s, the Air Force will phase out the A-10 Warthog, the best airplane ever made for the task of close air support (CAS) for combat troops on the ground. In the end, the costly F-35 will degrade our CAS capability, making our soldiers more vulnerable on the battlefield. This is yet another example of the military addiction to high technology trumping good old common sense.

Monday, December 16, 2013


by Charles Snow

John Jordan, a colleague of mine at Penn State, writes a periodic newsletter called Early Indicators. It’s about the latest techie stuff and trends, and I find it quite interesting. John’s latest newsletter, however, was entitled What Makes a Great Business Book?

In this post, I’d like to summarize John’s ideas on great business books and then conclude with my own. John’s thought process was kicked off when he finished reading Brad Stone’s book on Jeff Bezos and Amazon entitled The Everything Store. Although he enjoyed the book, he concluded that it lacked “greatness.” After making his own list of great business books (shown below), he began to eliminate the categories of business books that, in his opinion, were not worthy of the label “great.” These are:
  • “Self-help” books such as Stephen Covey’s The Seven Habits of Highly Effective People.
  • “Patterns of success” books such as Tom Peters and Robert Waterman’s In Search of Excellence or Jim Collins’ Good to Great. (John points out that successful companies today are often unsuccessful companies tomorrow.)
  • “Strategy” books such as Michael Porter’s Competitive Strategy, Hamel and Prahalad’s Competing for the Future, or Kim and Mauborgne’s Blue Ocean Strategy. (These seem like “exercises in hindsight” rather than “scientific discovery.”)
  • “First-person tales” (too numerous to mention). 

Tuesday, December 10, 2013


By Ronald Fox

I’ve had countless arguments with conservatives opponents of the Affordable Care Act (i.e., Obamacare). I’ve done so even though I’m not a big fan of the Act. It is extremely complex, key provisions are vague, which will probably lead to inconsistent and arbitrary enforcement, and, worst of all, it contains no public option, making it unlikely escalating healthcare costs can be controlled. These legitimate concerns, however, are rarely topics of discussion among the conservative ACA critics I’ve encountered.

Almost without exception, I’ve found these people to be uninformed, misinformed, and downright duplicitous debaters. It’s the same old ideologically dogmatic, hyper-partisan story: ignore facts and accept as truth only what conforms to one’s ideological beliefs and prejudices. I don’t think, however, that disagreement over facts lies at the heart of the current Obamacare divide; rather, the bitter divide seems to me to follow from differing philosophies about whether health is a basic human right and whether public authorities have an obligation to ensure realization of this right.

Friday, December 6, 2013


By Ronald Fox 

Numerous polls show that President Obama’s job approval rating has dropped to a new low. Over 50% of Americans now disapprove of his job performance. The recent decline in public approval appears largely a result of criticism over the ACA rollout debacle, but also reflects bipartisan revulsion over revelations about the mind-boggling extensiveness of NSA spying. Dissatisfaction with Obama encompasses the full political spectrum, from right to left. I’ve been thinking about what Obama’s declining popularity portends for Democrats in 2014 and his legacy as president.

The disastrous rollout reinforced dislike of the ACA among Republicans, but also antagonized many independents and pulled some Democrats away from supporting the plan. More importantly, perhaps, it diverted attention from the government shutdown gambit that alienated many Americans and gave a bump to the President and the Democrats. NSA spying revelations have angered liberals and conservatives alike. Those on the left are particularly vexed in light of Obama’s 2008 campaign rhetoric to conduct the war on terror with transparency and due respect for civil liberties. He promised to do things differently from his predecessor. Little did we know that this difference would mean more spying, less transparency, and more drone attacks. This comes on top of Obama’s weak response to conservative economic challenges, and his wholesale embracing of the tax cutting/austerity framework, which has also bothered many on the left.

Sunday, December 1, 2013


by Charles Snow 

Normally, we think of firms competing against one another; however, a growing number of successful companies are working together to find solutions to common challenges. For instance, Innocentive uses a global network of millions of problem solvers to help companies overcome R&D business challenges that they can’t overcome themselves. Several member firms of have together developed an innovative computer server application for the Asian Art Museum in San Francisco, California. Along with major research universities and the national governments of six countries, IBM is using its “collaboratories” to develop solutions to such complex problems as electricity distribution on the island of Malta and traffic congestion in Moscow, Russia. Lego helps entrepreneurs start their own businesses by providing a toolkit featuring its famous building blocks. My M&M’s web site enables chocolate lovers to design their own candies just as NIKEiD allows sports enthusiasts to design their own shoes.

All of these firms – and many more around the world – are using some form of collaborative innovation to expand and improve their business. In knowledge-intensive industries like biotechnology or computers, the ability to collaborate is a must because the knowledge base required to innovate is complex, growing, and widely diffused. But even in less dynamic industries, collaboration can be useful to firms for a variety of reasons, including lowering the costs of product development, starting new businesses, retaining customers, and building brand equity.