Tuesday, August 20, 2013

BlackBerry is Closer to the Rule than an Exception

BlackBerry is Closer to the Rule than an Exception

Joe Nocera analyzes the quick demise of Blackberry and draws comparisons to Wang.  http://www.nytimes.com/2013/08/20/opinion/nocera-how-not-to-stay-on-top.html?ref=opinion

Human beings aren’t terribly good at peering over the horizon.  Whether its political prognostication, economic forecasting, or corporate strategy most of us aren’t very good at it.  Moreover, those many of those who we hold up as enlightened seers are probably just lucky in their guesses.  I think we are too ready to condemn Wang or Blackberry, and too quick to laud IBM or Apple.  Failure is a constant component of our economy.  Thanks to our creative investment banks, many of these failures are buried through ill-advised acquisitions, rather than being sorted out in bankruptcy.  As a result, I suspect that failure is grossly understated.

For example, the worst sins have been committed by the likes of Hewlett Packard, and I am not talking about their attempts to develop new internal strategies.  Rather, it’s been HP’s repeated attempts to reshape the company through acquisitions.  The mid-range computer business, Apollo, DEC, and Tandem, were all acquired and died inside HP.

Since most corporate executives are very poor at predicting the future, we should make sure that the vast majority of their compensation comes through long-term ownership of their companies’ stock, rather than short-term cash payments and stock options.  When their strategies ultimately fail to anticipate the future, at least they would be forced to suffer along with all the other stakeholders.

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