- Entries : Category [ Globalization ]
- Spanning the world with your corporation
09 June
2006
Outsource your highest risk, hardest to place position ...
A Modest Proposal found in the New York Times
Lawrence Orlowski and Florian Lengyel take outsourcing to the next step, where Fortune 500 board of directors should consider for greater shareholder value.
Why didn't I think of that? What better way to get the most tactical, best subject matter expert, with the best relationships, with the largest pool of candidates and the most cost effective - read more
In an Op-Ed today in the NYT ("The Corner Office in Bangalore"), the writers present the case sure to tingle nerves on the boards and exec suites of all companies.
Outsource the CEO
This modest proposal has a certain desire, especially considering the revolving doors through which top execs are rapidly shooting these days. For finding new cost reduction strategies to keep alive the gains of the prior 4-5 years is getting pretty tough, and we all know that inevitably more extensive use of globalization is the only way we can keep competitive. So why not apply it to the top of the organization as well as others?
Before you write it off, consider the qualifications of this vast pool, and the fact that these are the ones with the best business knowledge of Indian and China, can cut the most ruthless of deals, have no limits on going too far, have no trouble at all in signing off on corporate financials, and have excellent survival instincts. See? I did get your interest!
Consider the value of having so many in supply! Even if you run into an SEC investigation, the ability to "flip" to a new one to keep up the momentum on business progress cannot be underestimated. And the elusiveness of this group of executives is also highly underrated - they can lead auditors on a merry chase through dozens of countries legal systems, eventually blurring any gray zone situation back into acceptable legal risks.
Satisfied? Good. I'd glad we've gotten your signature for that. Now, I'd like all of your resignations. You see, the next step is for this company to be represented on its board by new members chosen from all of the world. Then we'll have the most efficient board globalization can provide.
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02 May
2007
Health, cheap food, and the race to the bottom
Human food chain consumed tainted pet food
Unsurprisingly, adulterated pet food entered the food chain and was consumed by millions (see Feds: Millions have eaten chickens fed tainted pet food).
Expect to see more like this - the competition to extract more profit out of cheaper food by any means is in high gear. Read more ...
In the cold war times, the second world everything was adulterated - watered down useless antibiotics, contaminated meat, vegetables poisoned by inappropriate pesticide - all for more cash with low chance of reprisal.
Flawed economies suffer from optimizing out controls like health agencies, legal systems, and market traceability. It's all about what you can get no matter what you do.
Years earlier there were stories of how Chinese companies had sold fake anti-malarial drugs, doctored to pass tests and fake efficacy, but be cheap to make and useless. These have claimed many lives, poisoned the market for real drugs, and made it impossible for health workers to sort out fake from real. Now this has broadened to all other markets.
Its not strictly a "Chinese" problem - its just easiest given history and culture. With globalization, it can occur anywhere, even more around as controls attempt to "zero in" on such subversion. In China and in Soviet Russia, the occasional crackdown of killing or sending to the Gulag a few now and then was the only control. While a lowest cost approach that any true Republican could admire, more costly and effective measures like a real legal system, and more honest, less bribed health inspectors seem to be out of the realm of possibilities for globalization.
The chief advantage of globalization is not low cost labor, its absence of controls, and thus the biggest "unfair advantage" - so why are we surprised when it isn't used fairly?
So now the game is "cat and mouse" - we'll inspect and they'll evade. Then we'll have another disaster, and then we'll find out how they evade, adapt inspections, and they'll evade again. What ends this game?
Have foodstuffs actually be eaten by animals, and track actual health against absolute source of food. Which is far more expensive to effectively implement than the cost reduction of production outside the US, which eliminates the advantage of globalization.
Which is why we're in for a long cycle of quality challenges and frauds with globalized products and services.
Temporarily, "near-shoring" allows us to get a halfway deal with countries nearer to us in legal/controls/culture, yet not necessarily as cheap as elsewhere. Its temporary because competitive cost pressure makes the obvious market opportunity that some cannot resist - thus restarting the cycle once again. And so it goes.
17 November
2009
Intel in the 80's is like the US in 2009
Andy Grove's experience keeps teaching us lessons from decades prior ...
In reading Bob Herbert's column "What the Future May Hold" (on the lack of investment in American infrastructure) in the New York Times, I was struck by Professor Jai Prakash's comment which saw this through the lens of over investment in American power influence rather than domestic infrastructure.
It reminded me of a fascinating parallel with Andy Grove's struggles with the growth of Intel - when he almost lost that company. Professor Prakash is definitely tracking on the American psyche to a "T". Read more.
[This comes from my M&A background which started when I worked in Corporate Strategy for a Fortune 500 firm years back.]
In "Only the Paranoid Survive", Andy Grove tells us of when Intel had to evolve as a company to risk it all on a potentially hypergrowth monopoly of processor chips, but only by doubling down on its successful memory business, knowing it to be a one-way bet that would have unacceptable consequences to take, yet it was the correct move.
He thought he was about to be fired by the board, and that the new CEO would embark on this direction when he walked in through the door the first time. So he chose to take courage and be, in effect, the new CEO. He symbolically walked in his own door!
Like what Professor Prakash calls out for a distracted America, Grove was at the time being distracted by many corporate acquisitions seeking to extend influence of a sort - in the book he describes them as the sign of a company about to go into decline - on the edge. Why were these occurring?
In both the US and Intel (of that time), there were deep internal divisions, where the middle ground had been intentionally eroded. Any attempt to find consensus or build bridges would have the bridges undercut and destroyed - because powerful influences wished to dominate and not share - thus no middle ground was possible. So rather than face the internal (domestic) conflict, an Intel CEO (or President of the United States) could avoid conflict by focusing on external (foreign) opportunities instead.
This is precisely the point - we need to confront head on the issues that injure the ability of the US to lead internationally, by developing its strengths internally. The cost is in enduring the endless ideological battles. By finding the success in reinventing America so that it works effectively once again, it can be relied on as a world leader through its strengths.
Not the supposed strengths of the past administration of fear and intimidation using America's over taxed military. But on investment in country reinvention - next generation infrastructure / energy technologies / industries / space vehicles / software architectures / communications technologies / and more. We have to move the bar higher and become the world's foremost source of the beyond the current state of our industry/technology.