Upside Down

I am depressed, a word not used lightly. Part of it may be winter-in-Vermont. But the larger part, I think, is the world of business ideas, that I’ve participated in as more than a bit player, is being turned upside down. I feel somewhat like Alan Greenspan, who said his core beliefs are undergoing close examination. This is not a “hair shirt” Post—it is a musing of importance to me, and perhaps you. The following are not “assertions,” for they are not definitive by any means. They are instead Question Marks, and I’ve illustrated each one with a single anecdote, offered without analysis:

***The guiding premise of ubiquitous Globalization, of which I have been among the most vociferous champions, is under assault:

“The world has become normal again. The years immediately following the Cold War offered a tantalizing glimpse of a new kind of international order, with nation states growing together or disappearing, and increasingly free commerce and communications. … People and their leaders longed for ‘a world transformed.’ …

“But that was a mirage. The world has not been transformed. In most places, the nation-state remains as strong as ever, and so, too, nationalist ambitions, the passions, and the competition among nations that have shaped history. … Nationalism and the nation itself, far from being weakened by globalization, have now returned with a vengeance.”

From: Robert Kagan, The Return of History and the End of Dreams. The title of the 2008 book is, in effect, a stinging rebuke to The End of History and the Last Man, a wildly influential 1992 book by Francis Fukuyama, in which he argues, “What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.” (Kagan is on most anybody’s top five list of influential foreign affairs intellectuals—as is-was Fukuyama, a leading “neocon.”) (Not so incidentally, the “exponentially interrelated global commerce ends the likelihood of war” theme was predominant among Europe’s “leading intellectuals” in 1910–1912.)

***The Ubiquity of the benefits of extensive outsourcing and new organizational forms emerging is turning out to be a much more complex “transformation” than many expected, me included, again as a “cheerleader-in-chief”:

Boeing, according to the Wall Street Journal [1205.08], is getting ready to announce another 6-month delay to delivery of its Dreamliner, bringing launch delays to date to two years. Part of the latest cock-up is attributed to “the volume of work that Boeing outsourced.” I.e. coordination is turning out to be nightmarish.

Outsourcing is hardly a discredited idea—but the implementation [ah, execution, the “last 98%”] of extensive outsourcing has been far more difficult than most anyone imagined.

***Good ideas, private equity buyouts aimed at rapidly shaping up ailing firms, are often resulting in unspeakably predatory behavior:

“When [private equity firms, including Chrysler owner Cerberus] bought Mervyns from Target, they promised to revive the limping West Coast retailer. They stripped it of real estate assets, nearly doubled store rent, and saddled it with $800 million in debt while sucking out more than $400 million in cash for themselves. … The moves left Mervyns so weak it couldn’t survive.”

From: “What Have You Done to My Company?” BusinessWeek, 1206.08. In July 2008 Mervyns entered bankruptcy and a few months later 18,000 employees were let go without severance. The title, “What Have …” was uttered in October by 88-year-old Mervyns founder Merv Morris as he visited employees recently at a shuttering store, and was cheered by employees.

This literally sickens me.

While acknowledging the downfalls of private equity deals, I more or less drank the Kool Aid. The saving grace, of some sort, on this one is that many, but not all of us, have been taken waaaaay aback by the magnitude of the expression of greed revealed with each passing day—but that’s hardly an adequate excuse. The bloated “guru class” is supposed to issue red alerts long before the bombs drop.

Shit, what a year.

[Belatedly, albeit with a vengeance, I have turned 163.82 degrees toward a radical “back to basics” approach—which was more or less the In Search of Excellence melody. Recall one of the chapter titles from the Bogle book (see immediately above) was: “Too Many Twenty-first Century Values, Not Enough Eighteenth-Century Values.”]

Tom Peters posted this on December 8, 2008, in Markets.
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