Big Red Synergies?

Debates over corporate scope–synergies v. focus–have become staples of the business pages. Activist investors keep turning up, demanding greater business focus and less sprawl across industries and activities. Management teams either acquiesce (Xerox, HP, DuPont-Dow) or resist, following their passion for synergy-seeking (Agrium, Siemens, Yahoo). Now we have an interesting meta-case of a university seeking greater synergy in business education, as Cornell’s top management group–president, provost, and board of trustees–forces a merger of the School of Hotel Administration, the Dyson School of Applied Economics and Management, and the Johnson School of Business into a new and improved College of Business.

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Good Strategy/Bad Strategy: Obama Foreign Policy Division

An overview article in the Wall Street Journal about President Obama’s foreign policy, apparently fueled by White House image-polishing sources (such as noted foreign policy expert David Axelrod), brings to mind what Richard Rumelt called “bad strategy” in his opus Good Strategy/Bad Strategy. (I would have preferred to call it “anti-strategy” or “pseudo-strategy” to distinguish it from actual strategies that are bad, but we go to war with the terminology we have.) For anyone with a passing acquaintance with today’s world, the lead of the WSJ story tells the tale:

President Barack Obama gathered his foreign policy team in the White House Situation Room several weeks after his 2012 re-election for a meeting to set his second-term agenda.

Now that he was free from the politics of another presidential campaign, Mr. Obama told the group, he wanted a “blue skies” assessment of all policies worth considering, according to participants. Nothing was off the table.

What emerged was a sweeping and fundamental re-orientation of U.S. foreign policy, highlighted by four initiatives: conclude a nuclear deal with Iran; renew diplomatic relations with Cuba; elevate climate change to a national-security issue; and complete a free-trade deal with Asia.

This set of four disconnected initiatives, whatever their individual merit (my personal scoring vector: -10, -1, -2, 5) does not add up to anything like a coherent foreign policy or national security strategy. Not surprisingly, the WSJ article goes on in great detail to describe how the actual imperatives of the United States’s foreign environment–aggression and irredentism from Russia, China, and Islamic State, as well as the continuing battle with militant Islamic supremacists globally–impinged on and “crowded out” much of Obama’s agenda.

This dog’s breakfast of random objectives, even if achieved, would do little or nothing to make the U.S. stronger or safer or to advance American ideals. It is not attached to a serious diagnosis of threats and opportunities, strengths and weaknesses, or adversary and allied incentives. None of the four objectives materially reinforces another, nor do they work together to accomplish a coherent foreign-policy goal. While I could put on a debater’s hat and cobble together a diagnosis and guiding policy to which these objectives could be attached to form Rumelt’s kernel, that is not a debating position I’d expect to be able to defend effectively. Good luck, for example, trying to reconcile the elevation of climate-change objectives–which can only be accomplished by preventing emerging economies from developing along the same lines as the OECD nations–with a devotion to free-trade principles. A best-case scenario deal with Iran would inhibit that country’s use of nuclear power, a precedent that would also hinder the climate-change objective. Recognizing Cuba without preconditions sends a signal to the Iranian government that they can get what they want with minimal concessions, making a deal harder to close and ratify. And those are just the internal contradictions. The lack of contact, for the most part, between these initiatives and the actual pressing problems facing the United States is glaring.

What comes through clearly from this and other articles, as well as memoirs from Administration insiders and foreign counterparts, is how much of what passes for “big picture” thinking in the White House is purely reactionary–not to events in the world but to what are perceived as the sins and errors of past American policy. Anything smacking of the “Cold War,” whether it be opposition to Russian expansionism or to Cuban human rights violations, is automatically downgraded. Anything smacking of the “Bush Doctrine,” even such no-brainer moves as cashing in the hard-fought (and blunder-filled) victory in Iraq with a Status of Forces Agreement permitting a permanent contingent of U.S. troops to stabilize Iraq, is treated with negligence bordering on contempt. The problem, of course, is that even though the Cold War is indeed over (and even if you were lukewarm about it at the time) and even if Bush’s war in Iraq was a blunder, that has little or no bearing on the current situation facing the U.S.

The ironic thing is that in moving away from Bush’s counterinsurgency approach (population security, hearts and minds, build up indigenous state institutions) toward a pure counterterrorism strategy (assassinate enemy leaders) the Obama administration ended up doubling down on many of Bush’s legal and tactical innovations, such as broad surveillance of Americans and drone strikes. But that shouldn’t mask the fundamentally reactionary nature of the new approach. Unfortunately, countries cannot succeed with a George Costanza approach of simply doing the opposite of what they have attempted previously.

Say It Ain’t So–Baseball Hero and “Small Government” Fan Turns Failed Crony Capitalist

Over at Reason.com they have interesting text and video on the sad tale of 38Studios, New England baseball hero Curt Schillng’s collapsed videogame venture that attracted nary an independent private investor but sucked up $100 million from Rhode Island taxpayers. Some takeaways from the story:

1) When inexperienced and undermanaged quasi-public economic development corporations go chasing glamour ventures to try to cover up their state’s abysmal business climate, bad things are likely to happen.

2) When the glamour venture is headed by a star athlete with zero experience or expertise in his chosen field, and appears to have no experienced management at all, the odds go down.

3) When a venture making a totally conventional product, such as a massive multiplayer game, can’t get any private investors, there’s probably no conceivable public policy justification for a subsidy.

4) People like Schilling who claim to be against big government but then reach their hands into the taxpayers’ pockets to fund their own dreams are, at best, intellectually stunted.

5) Schillings’s pro-Bush political views may helped save the taxpayers of Massachusetts, because Democratic governor Deval Patrick turned Schilling down flat even though the pitcher is an immensely popular legend among Boston Red Sox fans.

Laundering the University of California’s Past

Apparently the University of California system decided it needed to update its image, so they cooked up this. Here are the old and the new side by side:

When I see the old  logo, I think of quaint values like learning and truth. When I see the new logo, I imagine little enzymes acting like keys to unlock the stains in my laundry.

UPDATE: The UC bureaucracy folds up like a tent a mere five days after this was posted. Maybe the new logo should say vox populi somewhere. (H/t David Hoopes in the comments.)

A Bad Day at the Lectern

Ever teach one of those classes where you’re off a beat, forget points you want to make, and ramble a little bit? Maybe your preparation wasn’t up to its usual standard. Fortunately, there isn’t an opponent in the room compounding the problem by trying to make you look bad. Barack Obama did not have that luxury tonight.

I had fun watching the president’s discomfiture, but I sure wish Romney had a better five points on the economy and that he would explain why cutting the growth of entitlements is not an optional choice. (Although his Spain remark wasn’t bad.)

Is the Resource-Based View (RBV) Useful? Yes.

I am visiting Lund University this week – and they have conclusively shown that the Resource Based View indeed is useful.  Useful for what?  As a door stop to their conference room.  (I also sent the proof/picture to Jay, one of the originators of the theory.)

Strategic renewal through franchisee innovation?

Entertaining story of how the Applebee’s restaurant chain is trying to improve asset utilization by adding late-night karaoke and G-rated cut-loose partying to its traditional family-friendly but competitively besieged regular-hours dining experience. The impetus for this innovation appears to have been franchisees who went to their privately-held franchisor and asked for permission to experiment, which was enthusiastically granted.

My favorite part of this story is the superhero-like switch from regular-hours Applebee’s to creature of the night “bee’s” with the “Apple” part of the electric sign turned off, the lights switched from green to white, and the space cleared for dancing and DJs. My second-favorite part is the image of some naive soul coming in for a snack after 10:00PM–“oh, look honey, Applebee’s is still open; let’s get some pie”–and being confronted with hard-partying suburbanites belting out Foreigner tunes and dancing drunkenly. They’re going to have some delicate marketing and branding issues going forward, but it’s hard not to cheer for the entrepreneurial spirit displayed. After all,  there are suburban archipelagoes of shopping centers where the only late-night place to go out will be “bee’s.”

Organization design: articles and videos

Nicolai’s post at O&M made me aware of a new journal, Journal of Organization Design.  I definitely think org design deserves to experience a renaissance/comeback, so I welcome a journal dedicated to the topic. (Though, I do think we have far too many journals in strategy/management – many of them are of suspect quality.)

 I just now checked out the web site of the journal and they have some killer features, including short videos of the authors describing their papers:

• Here’s John Mathews talking about his paper, Design of Industrial and Supra-Firm Architectures.
• Timothy Carroll on Designing Organizations for Exploration and Exploitation.
• Raymond Miles on Designing the Firm to Fit the Future.
• And, here’s a longer video of Raymond Levitt discussing virtual design teams.

I like the video feature.  Nice.

Good analysis: Exactly How Screwed Is PayPal? (Hint: Very) http://t.co/CUD17vYU

via http://twitter.com/mdryall

The anti-platform?

There is now a large stream of scholarly literature on “platforms” – loosely, third-party services designed to bring transacting parties together. Amazon.com and eBay are obvious examples. Broadly interpreted, so are services like online dating sites (see the work by Hanna Halaburda and colleagues).

With this in mind, I came across the following article: Ghostery: A Web tracking blocker that actually helps the ad industry | VentureBeat. Ghostery is an app offered by the advertising technology company Evidon. The app is used by privacy-conscious web surfers to block web tracking services. When a new tracker attempts to install a tracking cookie on a browser sporting Ghostery, the tracker is blocked and Ghostery sends the tracker information back to Evidon to be added to the company's database of web trackers, which improves the quality of the app.

The interesting twist in the business model is that Evidon then turns around and licenses its tracker database to the very ad networks its app is designed to block. In fact, says Evidon CEO Scott Meyer, “When a new web tracker comes on the scene, they often want to be listed in Ghostery. It’s proof that they’ve arrived and have influence.”

So, what do we call a service that helps side A avoid side B while helping side B pursue side A? Seems as if this phenomenon should have its own, suitably clever-yet-scholarly term.

Posted with Blogsy

Hackery about education

I must admit that Andrew Hacker has been a byword for fatuousness to me for quite some time. His latest, however, is especially meretricious because it plays directly into what so many people desperately want to believe–that ignorance of algebra is AOK, so we shouldn’t bother trying to teach it. Apparently, algebra drives people to drop out of high school and fail competency tests, and these are Bad Things we can avoid by no longer teaching or testing it. (Next up–placing the thermometer in an ice bucket to cure your fever.)

Hacker’s most superficially compelling argument is that almost no workers use algebra in their day-to-day work, including a large number of people working in technical fields. (In a parody of Deweyism, he does want students to learn “citizen statistics” and “quantitative literacy” so they can understand how the Consumer Price Index is put together, although how you can understand a weighted average without understanding algebra is beyond me.) In case someone brings this job-relevance argument up at a party, here are some quick responses:

1. Jobs don’t require algebra largely because there aren’t very many people who are good at it. If no one could read, jobs wouldn’t require literacy, either, but there would be a significant productivity loss in many cases.

2. In the novel and movie The Caine Mutiny, the intellectual (though evil) character points out that in the Navy “everything was designed by geniuses to be run by idiots.” We could equally say that in the modern world everything is designed by people who know algebra to be used by people who don’t. The fewer people who know algebra, the more unnecessarily elitist that world will be.

a) It’s almost impossible to understand financial relationships without being able to manipulate algebraic formulae. You can plug and chug different numerical values into a calculator or spreadsheet formula, but you’ll have no idea about the sensitivity of results nor will you be able to check or modify the formulae.

b) Probability and statistics are doable, in a very limited and rote way, using prepared templates, for people who don’t know algebra. Anything beyond that, though, is impossible to figure out if you can’t manipulate the symbols properly. Would you trust someone to run a regression or interpret its results if they didn’t know in their bones what a coefficient represented, much less a log-linear relationship?

c) Some functional relationships can be grasped by drawing graphs without algebraic manipulation. If you need more than two dimensions or want to prove which way the curves have to move when you change assumptions, though, you’re going to have to be able to do some algebra.

d) Lots of non-STEM jobs involve spreadsheet formulas of various kinds. Media planning, job-cost estimation, tax planning, budgeting, etc. are common sorts of work for “office” employees. The people who use these spreadsheets probably could get by without algebra, but anyone who wants to write one is going to be at a big disadvantage without it.

3. It indeed would be a lot easier for people to learn algebra if it were contextualized better by being tied to applied topics in other subjects. But that approach would result in algebra becoming a more important step along the way to passing science, economics, and other courses rather than a less important part. Moreover, some of it requires rote memorization just as does learning the multiplication tables or irregular verbs in a foreign language. It will not always be fun, but some necessary things just aren’t fun.

4. Last I checked, very few jobs require writing or reading Elizabethan English, knowing about Reconstruction, drawing or painting, worrying about environmental issues, knowing the parts of a frog or flower, or understanding why potassium burns when placed in water. I bet I could reduce dropouts and improve test performance by removing those topics from the curriculum and who’d know the difference? Voc-ed uber alles!

5. Hacker’s earlier work questioned the cost/benefit ratio of college. If my hypothesis about the higher education market is correct, then Hacker’s suggestion to stop teaching algebra in high school would fuel the very phenomenon he decries.

Welcome Sheen Levine

We’re excited to have Sheen Levine join us here at StratetgyProfs.net.  Sheen is currently a faculty member at the Institute for Social and Economic Research and Policy at Columbia University.   His research focuses on social networks, institutions and markets.  You can learn more about his research etc here.  You can also follow Sheen on twitter @sslevine.

And a quick plug: if you are going to the Academy of Management in Boston (Aug 3-7), be sure to check out Sheen’s (co-organized with Shayne Gary) cool Behavioral Strategy 3.0 workshop (learn more here). It promises to be a great session with lots of interdisciplinary interaction.

Great to have you here Sheen!  We look forward to your posts.

Retractions and Fraud in Strategy and Organization Theory

[H/T to several folks on Facebook talking about this: Nicolai Foss, Russ Coff, Marcel Bogers etc.]

We’ve talked about the extensive fraud of Diederik Stapel before, but apparently there have been retractions even closer to home: the journal Strategic Organization retracted an article.  And, over at the blog Retraction Watch there is an active discussion about Dirk Smeesters’ retractions and recent resignation.   A bit more in a short Wired magazine piece.  A Nature journal interview with Uri Simonsohn who discovered the Smeesters fraud.

Melissa Schilling

We’re excited to welcome Melissa Schilling to StrategyProfs.net!  Melissa is a Professor of Management and Organizations at the Stern School of Business, NYU.  Her research focuses on strategy, innovation, and technology.  You can learn more about her work here.

We look forward to Melissa’s posts!