STRENGTH IN NUMBERS: WHY YOUR FIRM SHOULD KNOW HOW TO COLLABORATE

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 Blade.org 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.

RUNNING THE COUNTRY AS A BUSINESS

By Charles Snow


In his book The (Mis)management of America, Inc., Lawrence G. Hrebiniak uses the metaphor of a large corporation and applies it to the U.S. economy. He examines how top management -- the White House and Congress -- runs the country and artfully describes a "perfect storm" of irresponsible top executives managing a corporation whose customers (U.S. citizens) are  largely disengaged and misinformed. The consequences are potentially catastrophic. Although the book is five years old, its thesis is still valid -- perhaps even more so given the events that have unfolded over the past few years.

From a management perspective, consider how closely the U.S. resembles a large corporation. America, Inc. is a $3.5 trillion business. It is diversified, operating businesses in defense, health care, banking, science, education, and many other industries. It hires people, fires people, has retirement programs, makes money, loses money, and so on. The company called America, Inc. is larger, more diversified, and more powerful than Wal-Mart, IBM, Exxon Mobil or any other company in the world.

WILL HEAVY FINES DETER WALL STREET MISDEEDS?

 

By Ronald Fox

A reader, responding to my posting on economic inequality and institutional corruption, sent me a note asking whether I thought expanding civil and criminal probes into the financial dealings of Wall Street firms represents a turning point in holding large corporations accountable for criminal misconduct. These investigations, which have touched on such misdeeds as mortgage and derivative fraud, inner-bank interest rate manipulation, energy trading practices, insider trading, rigging global interest and currency rates, and passing out bribes to secure business, have already resulted in some record fines. The federal government promises there’s more to come. Globally the cost of banks cleaning up misdeeds is expected to soar to over $125 billion. I’m far from an expert on human behavior, business practices, and complex legal maneuverings, so in responding to the reader all I can offer is an educated opinion. I will draw on practical wisdom to argue that I don’t believe fines alone will be enough to deter Wall Street malfeasance.

The current legal troubles of JP Morgan Chase (henceforth, JPM), long considered one of our strongest and best managed financial institutions, is illustrative of recent government efforts to investigate and punish financial institution malfeasance. JPM is currently facing dozens of federal and state legal probes. As reported in the New York Times, a couple of foreign governments have also launched investigations. The company has already paid over $5 billion to resolve Federal claims that it misled Fannie Mae and Freddie Mac about risky home loans and securities they bought before the housing market collapsed, nearly $1 billion for failure to oversee trading that led to a $6 billion loss in its “London Whale” caper, and $410 million in a settlement with the Federal Energy Regulation Commission (FERC) for its alleged manipulation of California’s electricity market from 2010 to 2012. Among other legal probes, Morgan is presently being investigated for its connection to the Barnard Madoff Ponzi scheme and is in the final stages of negotiations with the U.S. Justice Department on a multi-billion dollar settlement for activities related to the financial crisis. Our “best managed financial institution” appears now to be possibly our biggest corporate crook.

THE CLIMATE CHANGE SAGA: OH MY, WHAT IS WRONG WITH US?

By Charles Snow

When I was a third grader in San Diego in the 1950s, my teacher was Leta Lipp. She was a wonderful teacher who, among other things, taught us how to think about and interact with the natural environment. Ms. Lipp loved the American Indian way of life, and every summer she would spend some of her time visiting the Hopi reservation in Arizona. When she returned to teach in the fall, she would introduce American Indian philosophies and practices to her students in the form of stories and projects (e.g., carving kachina dolls out of balsa wood). Ms. Lipp taught us that the relationship between humans and Mother Nature was sacred. The earth’s God-given resources are precious and should be respected. When someone uses a resource, such as removing a bucket of river water for drinking or killing a buffalo for food, he should not be wasteful. The environment should not be despoiled in any way and should be preserved for future generations. Essentially, Ms. Lipp taught us to be in awe of Mother Nature’s wonders and to do everything we could to preserve them.

If she were alive today, I believe Ms. Lipp would be pleased with the attention the environment has been receiving lately. I’m certain she would be appalled at how we’ve let the environment degrade, and probably she would be angry at the U.S. for being one of the world’s biggest polluters. A few years ago, 65 scientists received a Nobel Prize for summarizing the research done to date and concluding that climate change is real and that it is largely due to the actions of mankind (using fossil fuels for energy, emitting carbon dioxide into the air from automobiles, etc.). A recently released U.N. report, which was held up as scientists agonized over its wording, stated these same conclusions even more forcefully. Just last month, the head of the Organization for Economic Cooperation and Development sought to make climate change a higher priority on the global agenda, urging the world to eliminate all emissions from burning fossil fuels sometime in the second half of this century.

AFTER IRAQ AND AFGHANISTAN: WILL THE U.S. BE LESS INCLINED TO USE FORCE ABROAD?

By Ronald Fox

The U.S.-Russian diplomatic initiative to induce Bashar al Assad to abandon chemical weapons and join the Chemical Weapons Convention (CWC), which voided Washington’s threat to use military force, inspired me to reflect on the legacy of the Iraq and Afghanistan wars. Does the U.S. opting for diplomacy rather than force in Syria mean that Washington learned valuable lessons from its policy debacles in Iraq and Afghanistan? Could it be that the Syrian crisis represents a turning point in the U.S. proclivity to project global power through the use of military force? Unfortunately there is no reason to believe, Syria notwithstanding, that our recent experiences in the Middle East will produce any significant moderation in American militarism. As the Vietnam War failed to produce any lasting dovish tendencies in U.S. security policy, so won’t the wars in Iraq and Afghanistan.

There are, to be sure, a number of positives to draw from the apparently successful diplomatic effort in Syria. We worked closely with the Russians and through the U.N, rather than in our usual unilateral way, President Obama went to Congress for the authority to order military strikes, rather than acting imperially, as all recent Presidents have done, and the American public sent a clear message that it was in no mood for yet another military adventure in the Middle East. A deeper reflection, however, leads me to believe these positive developments will be fleeting. There is little evidence to conclude that President Obama and the national security elite have lost any appetite for using force first, rather than as a last resort, as the operational code in our approach to peace and security. Expect Washington continue to pursue global dominance in the name of peace, framed in the lofty ideals of promoting democracy, civil society, economic development, and rebuilding failed states.

THE COLLAPSE OF INVESTIGATIVE JOURNALISM AND THE GROWTH OF INSTITUTIONAL CORRUPTION

By Ronald Fox

In my essay on economic inequality and the cheating culture, I admonished our governmental regulatory system for aiding and abetting the growing prevalence of institutional corruption and individual cheating in America. I would be remiss if I did not also include the changing face of political journalism in my indictment. Political journalism in the United States has suffered a serious decline in the last three decades. This is primarily the result of greater concentrated media ownership in the hands of large corporations, who have adopted market-driven, business models mandating, among other things, the downsizing of news divisions, which they no longer consider profitable. A number of once great newspapers and news magazines have even ended daily publication. The result has been less coverage of political issues and elections and a narrower defining of newsworthiness to the priorities of the owning corporation‘s bottom line. These priorities no longer include watching out for, and going after, institutional corruption and wrong-doing.

Corporate media has become full-fledged members of the power structure. Rather than speaking to power, as was the press tradition for most American history, today it largely echoes the priorities and policies of the economic elite. Free-market theories and prescriptions are the corporate media’s guiding light, which in practice leads them to take a generally conservative, pro-business slant on economic and fiscal issues. They use their financial and communication power to consolidate the power of the economy in the service of the economic elite. This makes off-limits and unquestioned those areas that people in power agree should be left alone. As business conglomerates, with vast arrays of diverse holdings, the media giants tend to avoid presenting any bad news about topics near and dear to their own financial hearts (they certainly wouldn’t want to bite the hand that feeds them).

ECONOMIC INEQUALITY AND THE CHEATING CULTURE

By Ronald Fox

The notion that each American has the right to pursue happiness and the freedom to strive for a better life through hard work and fair aspiration lies at the heart of the “American Dream.” This idea, which drove the hopes and aspirations of Americans for most of the country’s history, begin to be transformed in the late 1970s when wealth began to steadily ascend to the top of the economic hierarchy. According to David Callahan, in his book, The Cheating Culture: Why More Americans are Doing Wrong to Get Ahead, the soaring income gap has given rise to a fundamental value shift in America: the time-honored commitment to community, self-reliance, fair play, truthfulness, compassion for the less fortunate, and rule-following, has morphed into selfishness, hedonism, greed, jealousy, and an excessive preoccupation with materialism. It has also inspired a growing number of American institutions as well as individual citizens to cut corners to get ahead.

The growing income gap has divided Americans and weakened our social fabric—undermining the notion that we’re all in this together and no person is above the law. The lavish and ostentatiously displayed lifestyles of the super rich, relentlessly displayed everyday on TV and in movies and magazines, has transformed perceptions of what it means to live the good life. Instead of aspiring to a standard of living relative to one’s peer group, the proverbial Joneses, a growing number of Americans now aspire to emulate the lifestyles of the rich and famous. Everyone wants not just a better life, but one filled with jet-setter luxuries. In an earlier time when there was less wealth at the top, Americans aspired to get a “fair share;” now they seem to want it all, whatever it takes. America is now engulfed in a greed-driven, money culture that has reshaped the moral climate of corporate America as well as the personal ethics of American citizens.