Company without a Country

In the internet age, it is possible for a company to operate without a country, but they could find themselves longing for a country like the protagonist Philip Nolan in Hale's "The Man Without a Country" (Hale, 1863).

Nolan, a fictitious conspirator with Benedict Arnold, is sentenced to spend the rest of his life at sea and to never hear of the United States again. This suits him at first but later he longs for his country.

The technology exists today for a company to literally be without a country. Business scholar Kobrin (2001) put it this way:

"Virtual firms can race to the jurisdictional bottom at the speed of light; moving the business to a locale with a less onerous regulatory structure may entail no more than a few keystrokes" (p. 691).

This has happened. Online gambling companies have made the small inland country Antigua a hotbed of internet gambling(Can online betting change its luck?). These virtual companies, though, run the risk of being caught in a Cuba of the 1960s or a Grenada of the 1980s; revolutions could make them long for the stability of the United States like Nolan.

But is this virtual flight an ethical use of technology as a strategy? I would argue no because of the ethics of Utilitarianism. The cost in jobs, tax base, and stability out weights the profit for a single company (Velazquez, 2007).

Researchers estimate that the internet could have a "meltdown" by 2010 without significant ($43 billion to $52 billion) investment in backbone technology (Thomson,2007). Moving away from a tax structure that would help fund these improvements is unethical.

The possibility of political unrest, the unethical avoidance of tax responsibilities make a virtual company strategy too risky. It is better to be a company with a country than without.

 

References

Can online betting change its luck? Retrieved 11/27/2007, 2007, from http://www.businessweek.com/magazine/content/04_51/b3913097.htm

Hale, E. E. (1863). The man without a country Project Gutenberg

Kobrin, S. J. (2001). Territoriality and the Governance of Cyberspace. Journal of International Business Studies, 32 (4), 687-704.

Thomson, I. Internet facing 'meltdown' by 2010 - computeract!ve. Retrieved 11/27/2007, 2007, from http://www.computeractive.co.uk/vnunet/news/2203809/internet-face-meltdown-2010

Velasquez, M.G. (2006). Business Ethics: Concepts and Cases. Upper Saddle River, NJ: Pearson Education.

Different Drummer

"I left the woods for as good a reason as I went there. Perhaps it seemed to me that I had several more lives to live, and could not spare any more time for that one.

It is remarkable how easily and insensibly we fall into a particular route, and make a beaten track for ourselves. I had not lived there a week before my feet wore a path from my door to the pond-side; and though it is five or six years since I trod it, it is still quite distinct. It is true, I fear, that others may have fallen into it, and so helped to keep it open. The surface of the earth is soft and impressible by the feet of men; and so with the paths which the mind travels. How worn and dusty, then, must be the highways of the world, how deep the ruts of tradition and conformity!

Why should we be in such desperate haste to succeed and in such desperate enterprises? If a man does not keep pace with his companions, perhaps it is because he hears a different drummer. Let him step to the music which he hears, however measured or far away. (Thoreau, 1854)

 

Modern management is based around the planning, the controlling, the organizing, and the leading function (Daft, 2007), but innovation and having a first-move strategy often goes against those functions.; management has to make a conscious effort to nurture innovation for those who hear Thoreau's different drum.

 

Intel created the first CPU, 4004 processor; this chip was created in violation of the planning, controlling, organizing function of management. The engineers at Intel were told to design a multiple chips set but they designed a set with few chips and one was a CPU(Gardiner, ). This violation of the planning function would be Intel's core business for next 35 years as they moved away from making memory chips and focused on CPUs.

 

I worked at Intel in the 1990s and they fostered innovation through creating a strong culture of innovation. Culture has many components: heroes, and stories are two of them (Daft, 2007). The Intel Hero of 4004 PCU effort was Ted Hoff. Company literature focused on his part in the 4004, even though others were involved. He was given an Intel Fellow position, which translates into a job for life. This Hero story enforced Intel support for going against planning, controlling, organizing when you had a better idea.

 

Another method a manager to use in creating a strong culture is stories. I worked at the Intel plant in New Mexico, and that plant had epic about innovation. A plumber, who supported the ultra-clean water supply for computer chip manufacturing, devised a plan to recycle factory water. The plan would save Intel over $100,000 and he received 10% of those savings. This story was repeated ever year when the cost saving contest was launched. This story shows Intel's commitment to innovation through a generous payout.

 

Organizations need to innovate but we also need control. The solution, I think, is be very selective about what part of the business we control and what part we allow innovation on. When I was at Intel, we always knew chips were "production" and which were "engineering experiments." We stuck to the standard process on production chips and we never experimented. If someone heard a different drum beat, they knew they could work with engineering and try to prove that beat.

 

References

Daft, R. (2007). Management (8th ed.). Boston: Thomson Southwestern.

Gardiner, B. Intel 4004 microprocessor turns 35 - news and analysis by PC magazine. Retrieved 11/19/2007, 2007, from http://www.pcmag.com/article2/0,2704,2059163,00.asp

Thoreau, D. H. (1854). Walden. Retrieved January 28, 2007, from http://www.gutenberg.org/dirs/etext95/waldn10.txt

Fiero vs Miata Product Life Cycle

The product life cycle is can be a valuable tool for strategist and if managed it can provide more sales and higher profits. The product life cycle of the Pontiac Fiero (1984-1989) compared to Mazda Miata (1989-2006) illustrates the value of managing the product life cycle as a strategic tool.

The stages of product life cycle are Market development (pre-launch), Market growth, Market Maturity, and finally market decline. The key for the strategist-scientist is to predict the length of each stage (Levitt, 1965).

The unit sales of the Fiero and Miata illustrate the growth, maturity, and decline of the cycle (See Figure 1). The Fiero was much more meteoric and catastrophic while the Miata held in maturity phase for a 3x over the Fiero. The Miata matched the sales of the Fiero in seven years sold and doubled the over sales of the Fiero.

The Miata versus Fiero figures show the typical short-term vision of American carmakers in the 1980s. It was well know inside Pontiac that the Fiero had safety fire issues before release (Ingrassia & White, 1994). Pontiac executives should have been able to predict a short product life cycle for a fire-prone vehicle because of the high profile safety related demise of the Chevrolet Corvair in the 1960s.

What seemed to be missing from the Pontiac executives and strategist was a since of the environment. They misinterpreted the value Americans placed on quality and they decided to fight the National Highway Traffic Safety Administration efforts for a recall (Ingrassia & White, 1994).

Finally, Pontiac executives knew the activities they needed to do to make money (new and exciting models) but they lack a focus on sustainability (Porter, 1996). If they had considered the long-term management of the life cycle, they might have fixed the fire problems in the Fiero and results would have been better. One Pontiac executive was quoted as saying, "The Fiero could have been a Miata" (Ingrassia & White, 1994).

Figure 1.

References

Ingrassia P. & White, J. (1994) Fiero Firing Squad. Autoweek September 26, 1994. Retrieved November 2, 2007, from

Levitt, T. (1965) EXPLOIT the Product Life Cycle. Harvard Business Review; Nov/Dec65, Vol. 43 Issue 6, p81-94, 14p

Porter, E. (1996, Nov. - Dec.). What is Strategy? Harvard Buiness Review , 61-78.