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TomTom, Open Source, Microsoft and Death by Reactive Management - Page 2

Rob Enderle

Sun: Reactive Squared

 

Sun is a sad case of seeing a train coming and thinking that throwing rocks at the light on the front of it could somehow derail or stop it. In this case, the train was the industry's move to a software-centric model with much lower-cost hardware, and the headlight was Microsoft. Granted, it dented the headlight a lot, but with what appears to be an acquisition by IBM looming for a price that is a small fraction of what it was once worth -- or the alternative, complete failure -- Sun's fate is self-evident. IBM, instead, transformed over the same period into largely a software/services company and is the only large-scale firm that has proven, for now, nearly invulnerable to the economic downturn -- and so is able to buy Sun. IBM focused on where the market was going and thought strategically. Sun on Microsoft and thought tactically and the result is also self-evident.

 

Obama's Similar Failure

 

What triggered my thinking was a well-written piece in the Washington Post on the current U.S. administration's response to economic crisis. In the $787 billion package, there is $350 million for auditors and investigators. This is reacting directly to the lack of oversight that created the problem in the first place. But it's contrary to the goal of creating a healthy financial ecosystem. When a person or an industry is sick, the correct process isn't to overwhelm them with monitors so that every symptom can be reported, but to focus efforts on making them well again. What the government is doing is equivalent to locking the barn and surrounding it with armed guards after the horses have run off. What it needs to first focus on is getting some more horses. My own view wasn't that the industry was under-regulated; it was that the regulation and oversight wasn't doing the job.

 


In this case, the strategic goal is financial health, the tactical is oversight, and right now the excess focus on the tactical may actually prevent the strategic result that is intended. Take a look at the 90 percent tax on bonuses; this is a tactical response to the problem. What should result is that the good people in places like AIG leave and those who can't find employment elsewhere stay. AIG gets sicker and, to save a few million in bonuses, Congress loses billions in wasted recovery dollars. The focus should have instead been on getting rid of the bad employees and eliminating the policies that created the problem in the first place.

 

Before it is done, this tactical excessive focus on regulation could actually kill the financial industry much like over-medication can kill a person. The Bush administration largely did the same thing after 9/11. The proper fix to prevent similar airline attacks from recurring was to simply change the policy with regard to hijackers and harden the doors into cockpits. Instead, the Bush administration and most of Congress' overreaction did more damage to the economic health of the country and individual freedoms than the terrorists could have ever hoped to accomplish on their own.


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