Monday, July 17, 2006

Stupidity: Corporate Division

At some time in the life cycle of virtually every organization, its ability to succeed in spite of itself runs out. ~ Richard H. Brien

How stupid are corporations? Plenty stupid. Now, you probably want to say, “Oh yeah? Well, if they're so stupid how do they get so rich and powerful?” How about through connivance, unethical behavior, purchasing politicians to pass favorable legislation, and so on? Sure, most companies that succeed do so initially by providing good products and/or services at a reasonable price. But, sooner or later, they all seem to slip, getting lazy and short-sighted, resorting to the tricks and games mentioned above to dominate a market and keep going. Even the ones that do the right things to get successful frequently treat their employees badly on the way up, prior to firing most of them on the way down.

The dot-com bust was a laboratory that demonstrated the process over and over again. Because things happened so quickly, companies came from nowhere, dissipated themselves, screwed their employees while making their executives rich, and disappeared into the night. A few like Intel, Microsoft, and Dell crushed their competitors through illegal tactics (like Microsoft) or by incredible marketing tactics (like Dell), acquiring then dismantling competitors (Microsoft), or some combination thereof (Intel, although AMD spoiled their party by making better, cheaper products, then suing Intel's brains out to stay in business).

Or, away from Silicon Valley, there's Enron which had to be the biggest scam ever perpetrated on this country. Despite trying to purchase every politician they could, their excesses and illegal tactics ultimately grew so egregious that they the whole rotten structure collapsed.

Because corporations are so powerful, their leaders are arrogant to a remarkable degree. Sometimes this catches up with them, although the executives seldom suffer. Even companies in bankruptcy have the gall to go to bankruptcy court begging for huge bonuses for top managers so they can prevent them from leaving. Think about that. The corporate bosses think that it's a good idea to pay huge bucks to the very people who got them into this mess. Now that's chutzpah, brother.

We get evidence all the time, it seems, about corporate stupidity, but lately there seems to be a bit of an epidemic. Here are some examples.

National Semiconductor recently gave all their employees video iPods. Employees were led to believe that these were given as a reward for its best fiscal year ever. However, when, after their best fiscal year ever, they laid off 35 workers at one plant, the company demanded the return of the iPods. They had been given solely for employees to be able to enjoy words of wisdom from company execs in the form of podcasts.

So, let's see if we've got this straight. You give everyone a gift and don't make clear that it's no more “theirs” than their phones or desks. Then, after a record-setting year, you're laying off people and taking back the toys you gave them. That should certainly help employee morale.

Mastercard has decided to change their logo. This is not a cheap process, probably costing the company millions between paying consultants to come up the new logo, replacing all the stationary, reprinting company literature, and sending out new materials to merchants to replace their old logo. And what is the change? They added a third circle that is transparent and overlaps the two existing circles. Mastercard's reasoning for the change is as follows:

The three circles of the new corporate logo build on the familiar interlocking red and yellow circles of the MasterCard consumer brand, and reflect the company's unique, three-tiered business model as a franchisor, processor and advisor.
Unique business model? I guess they've never heard of Visa and American Express. And, of course, people looking at this new logo (those that actually notice the change) will immediately say to themselves, “Gee, I didn't realize Mastercard had a three-tiered business model.”

Then, there's Apple, who is being sued in two separate suits by shareholders for playing fast and loose with stock options. Apparently having learned nothing from the dot-com fiascoes involving stock options, Apple executives decided to turn back the clock and reward themselves in a manner that did some sort of violence to Generally Accepted Accounting Principles. The company has already admitted that perhaps they engaged in some hanky-panky and is conducting an internal investigation. The stockholders, though, who aren't being rewarded with guaranteed instant capital gains, have decided to take matters into their own hands.

And McAfee, the anti-virus people, is being investigated by the SEC for doing the same sort of thing.

And then there's Google. Google, whose slogan is supposed to be “Do no evil” or some such malarkey, has already come under fire for knuckling under to China's censorship demands, so that Chinese citizens can't spend their time looking up such prurient terms as “democracy.” But, recently it came to light that the founders got into a hair-pulling argument (figuratively speaking) over what sort of beds should be in the corporate jet. The corporate jet is a Boeing 767. CEO Eric Schmidt, last seen running Novell into the ground, settled the argument by saying the spoiled brats could each have whatever kind of bed they wanted in their individual bedrooms.

A 767 with individual bedrooms for each executive? No wonder Schmidt referred to the thing as a “party plane.” A few years from now, Microsoft will engage in whatever predatory practice is necessary to cut Google down to size. Or, thanks to the U.S. Congress pandering to the telcos and squelching the concept of Internet neutrality, Google will have to shell out millions to have sufficient bandwidth to operate. Or, maybe they'll have shady financial dealings of their own that will bring down the wrath of the SEC and their stockholders. In any event, that 767 is going to look pretty silly gathering dust on some runway. Oh, well, maybe they'll be able to peddle it to some oil company.

Of course, the greed of the oil companies may finally push people over the edge, and the demand for alternative energy sources could reach critical mass. All-electric vehicles and homes getting their electricity from fuel cells would make for a lot of excess petroleum looking for a buyer.

Like I said, corporations are stupid.

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