A fool’s paradise for CEOs

It's not just the numbers that don't add up for today's corporations. The products they sell are usually broken, too.

Topics: Enron,

A fool's paradise for CEOs

For those of us with experience selling complex products to corporate information systems departments, a comment made by Sun Microsystems CEO Scott McNealy in a New York Times article published Monday says reams about what’s going on in corporate America today.

McNealy was discussing a new requirement that CEOs attest to the accuracy of corporate financial statements.

“I haven’t convinced myself that it is in the best interest of our shareholders,” McNealy told the Times. To comply fully with the requirement, he explained, would mean attending quarterly meetings to close the books, usually chaired by the chief financial officer.

“That’s what I’d be doing instead of being out here on the road, talking to customers and trying to generate more business for Sun,” he said.

What investors should actually read McNealy as saying is: “My job as CEO of Sun is to be the chief pitchman, to glad-hand executives at my own level and convince them that Sun products are the right ‘solutions’ for their corporate needs. Determining whether the solutions actually work — or whether it’s even profitable for my company to sell them (and how would I know anyway?) — is not my primary responsibility. In fact, if they don’t work, or if our accounting is misstating our long-term profitability — well, frankly, I resent the suggestion that I ought to have any legal accountability for my ignorance.”

McNealy’s attitude is the culmination of the last decade’s ascendant ethos for U.S. business: near worship and lavish compensation for people who “make things happen” coupled with near contempt and minimal rewards for people who “make things work.”

What “happened” is exactly what could have been expected: a tidal wave of scandal, corporate reverses, meltdowns and bankruptcies — set to a chorus of denials from the people at the top that they had the slightest idea of the accounting, organizational and product “solution” deceptions on which the appearance of success was based.

Accounting scandals aside, another huge shoe is waiting to fall for many large organizations: many of the products and services supplied by companies offering “solutions” never worked, or never worked properly.



All of us are familiar, as individual consumers, with companies (and their leaders) who profited handsomely by arranging the purchase of their products by other, larger entities — even though their products and services were ill designed or badly supported, sometimes even to the point of being, as a practical matter, useless.

What’s less widely appreciated, except by the people who install and use them, is that many of the “productivity” solutions supplied over the last decade to U.S. businesses were broken.

They didn’t work at all, or they worked worse than the systems they replaced, or (most frequently) they “worked” in only the sense that though they operated more or less as designed, they didn’t work anything like the way were intended to work. Enormous amounts of human effort and ingenuity were required to keep accounting, management information, sales and distributions systems functioning at their previous productivity.

Many a CEO, or even a CIO, would be shocked to discover, were they to inquire (or encourage their subordinates to discover), that some of their employees are manually entering data (from two quarters back) into one system from printouts produced by another. Or that some 20 people buried in the customer service department do nothing, all day, but correct errors created when salespeople (after a half day’s training) enter orders into a system so complicated and cumbersome that it takes weeks to train the people in customer service and accounts receivable delegated to picking up the pieces to use it properly. Or that out in the warehouse the complicated wireless system (which took years, not months, to really get working and cost four times what was budgeted) is randomly on the fritz, and stock must be picked manually several hours a day.

During the high-flying decade of the 1990s, CEOs sold each other such systems — they “made it happen.”

But the people who attempted to install and maintain such systems shrugged their shoulders, did the best they could, put each disaster and disappointment on their résumé as product experience, and moved on to the next job. And the rank and file worked double time to make it work.

In some cases the results were truly spectacular: the frequent inability of the newest, most brightly waxed order-fulfillment systems (installed without concern for cost by the best and brightest system integrators at burgeoning dot-coms) to get products onto the dock or shipped to the correct address, or to have them contain the right contents when they actually arrived, is one example.

The more common phenomenon was the company that stumbled through two, three or even four “systems” in the ’90s — declaring victory after each and moving on to the next system as each cadre of information systems management moved on to the next organization. From what I observed over a decade of selling and implementing such “solutions,” such frustrations were typical.

The big picture is that some individual projects succeed, the occasional company does an effective (that is, productivity-raising) job of implementing such technologies, and some sorts of business activities (purchasing and inventory management, for example) respond well to such “improvement” — but that on average, enormous amounts of time, money and corporate temper are wasted on attempts that subvert attention to more important business issues.

Every investor who reads the newspaper understands in principle that most businesses supplying such “solutions” are in a deep recession right now.

What I believe is not so generally understood is that — as their business customers take a long, hard look at the results of efforts to implement such solutions over the last decade — the claims of vendors are going to be subjected to much more sober evaluation.

So where does this leave McNealy?

I am no longer close enough to the business to know where Sun’s products rank against the competition.

But the Scott McNealys of the world, considered generically, have for at least a decade thrived as heads of a fool’s paradise, installing regimes of benign neglect in which ignorance and self-delusion regarding the quality of their products has often gone hand in hand with the inflation of earnings via accounting chicanery.

At the moment getting a handle on both sorts of corporate self-deception is not only “in the shareholders’ interest”; it’s arguably also the most important function a CEO can perform for the stockholders.

McNealy, it appears, sees it differently. He told the Times that “many of the executives he talked with are equally concerned about the trend toward what they regarded as ill-considered regulation and a rising anti-business attitude. But few of them have said so publicly.”

“My fellow CEOs are rolling over, paws-up, on this,” McNealy lamented to the reporter. “And I think that is a mistake.”

He can probably, out there on the road, sell that to many of his fellow CEOs.

I wonder if he can sell it to his investors.

Michael Thomas is a writer.

More Related Stories

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 11
  • Close
  • Fullscreen
  • Thumbnails

    Ten spectacular graphic novels from 2014

    Beautiful Darkness by Fabien Vehlmann & Kerascoët
    Kerascoët's lovely, delicate pen-and-watercolor art -- all intricate botanicals, big eyes and flowing hair -- gives this fairy story a deceptively pretty finish. You find out quickly, however, that these are the heartless and heedless fairies of folk legend, not the sentimental sprites beloved by the Victorians and Disney fans. A host of tiny hominid creatures must learn to survive in the forest after fleeing their former home -- a little girl who lies dead in the woods. The main character, Aurora, tries to organize the group into a community, but most of her cohort is too capricious, lazy and selfish to participate for long. There's no real moral to this story, which is refreshing in itself, beyond the perpetual lessons that life is hard and you have to be careful whom you trust. Never has ugly truth been given a prettier face.

    Ten spectacular graphic novels from 2014

    Climate Changed: A Personal Journey Through the Science by Philippe Squarzoni
    Squarzoni is a French cartoonist who makes nonfiction graphic novels about contemporary issues and politics. While finishing up a book about France under Jacques Chirac, he realized that when it came to environmental policy, he didn't know what he was talking about. "Climate Changed" is the result of his efforts to understand what has been happening to the planet, a striking combination of memoir and data that ruminates on a notoriously elusive, difficult and even imponderable subject. Panels of talking heads dispensing information (or Squarzoni discussing the issues with his partner) are juxtaposed with detailed and meticulous yet lyrical scenes from the author's childhood, the countryside where he takes a holiday and a visit to New York. He uses his own unreachable past as a way to grasp the imminent transformation of the Earth. The result is both enlightening and unexpectedly moving.

    Ten spectacular graphic novels from 2014

    Here by Richard McGuire
    A six-page version of this innovative work by a regular contributor to the New Yorker first appeared in RAW magazine 25 years ago. Each two-page spread depicts a single place, sometimes occupied by a corner of a room, over the course of 4 billion years. The oldest image is a blur of pink and purple gases; others depict hazmat-suited explorers from 300 years in the future. Inset images show the changing decor and inhabitants of the house throughout its existence: family photos, quarrels, kids in Halloween costumes, a woman reading a book, a cat walking across the floor. The cumulative effect is serene and ravishing, an intimation of the immensity of time and the wonder embodied in the humblest things.

    Ten spectacular graphic novels from 2014

    Kill My Mother by Jules Feiffer
    The legendary Pulitzer Prize-winning cartoonist delivers his debut graphic novel at 85, a deliriously over-the-top blend of classic movie noir and melodrama that roams from chiaroscuro Bay City to Hollywood to a USO gig in the Pacific theater of World War II. There's a burnt-out drunk of a private eye, but the story is soon commandeered by a multigenerational collection of ferocious women, including a mysterious chanteuse who never speaks, a radio comedy writer who makes a childhood friend the butt of a hit series and a ruthless dame intent on making her whiny coward of a husband into a star. There are disguises, musical numbers and plenty of gunfights, but the drawing is the main attraction. Nobody convey's bodies in motion more thrillingly than Feiffer, whether they're dancing, running or duking it out. The kid has promise.

    Ten spectacular graphic novels from 2014

    The Motherless Oven by Rob Davis
    This is a weird one, but in the nervy surreal way that word-playful novels like "A Clockwork Orange" or "Ulysses" are weird. The main character, a teenage schoolboy named Scarper Lee, lives in a world where it rains knives and people make their own parents, contraptions that can be anything from a tiny figurine stashable in a pocket to biomorphic boiler-like entities that seem to have escaped from Dr. Seuss' nightmares. Their homes are crammed with gadgets they call gods and instead of TV they watch a hulu-hoop-size wheel of repeating images that changes with the day of the week. They also know their own "death day," and Scarper's is coming up fast. Maybe that's why he runs off with the new girl at school, a real troublemaker, and the obscurely dysfunctional Castro, whose mother is a cageful of talking parakeets. A solid towline of teenage angst holds this manically inventive vision together, and proves that some graphic novels can rival the text-only kind at their own game.

    Ten spectacular graphic novels from 2014

    NOBROW 9: It's Oh So Quiet
    For each issue, the anthology magazine put out by this adventurous U.K.-based publisher of independent graphic design, illustration and comics gives 45 artists a four-color palette and a theme. In the ninth issue, the theme is silence, and the results are magnificent and full of surprises. The comics, each told in images only, range from atmospheric to trippy to jokey to melancholy to epic to creepy. But the two-page illustrations are even more powerful, even if it's not always easy to see how they pertain to the overall concept of silence. Well, except perhaps for the fact that so many of them left me utterly dumbstruck with visual delight.

    Ten spectacular graphic novels from 2014

    Over Easy by Mimi Pond
    When Pond was a broke art student in the 1970s, she took a job at a neighborhood breakfast spot in Oakland, a place with good food, splendid coffee and an endlessly entertaining crew of short-order cooks, waitresses, dishwashers and regular customers. This graphic memoir, influenced by the work of Pond's friend, Alison Bechdel, captures the funky ethos of the time, when hippies, punks and disco aficionados mingled in a Bay Area at the height of its eccentricity. The staff of the Imperial Cafe were forever swapping wisecracks and hopping in and out of each other's beds, which makes them more or less like every restaurant team in history. There's an intoxicating esprit de corps to a well-run everyday joint like the Imperial Cafe, and never has the delight in being part of it been more winningly portrayed.

    Ten spectacular graphic novels from 2014

    The Shadow Hero by Gene Luen Yang and Sonny Liew
    You don't have to be a superhero fan to be utterly charmed by Yang and Liew's revival of a little-known character created in the 1940s by the cartoonist Chu Hing. This version of the Green Turtle, however, is rich in characterization, comedy and luscious period detail from the Chinatown of "San Incendio" (a ringer for San Francisco). Hank, son of a mild-mannered grocer, would like to follow in his father's footsteps, but his restless mother (the book's best character and drawn with masterful nuance by Liew) has other ideas after her thrilling encounter with a superhero. Yang's story effortlessly folds pathos into humor without stooping to either slapstick or cheap "darkness." This is that rare tribute that far surpasses the thing it celebrates.

    Ten spectacular graphic novels from 2014

    Shoplifter by Michael Cho
    Corinna Park, former English major, works, unhappily, in a Toronto advertising agency. When the dissatisfaction of the past five years begins to oppress her, she lets off steam by pilfering magazines from a local convenience store. Cho's moody character study is as much about city life as it is about Corinna. He depicts her falling asleep in front of the TV in her condo, brooding on the subway, roaming the crowded streets after a budding romance goes awry. Like a great short story, this is a simple tale of a young woman figuring out how to get her life back, but if feels as if it contains so much of contemporary existence -- its comforts, its loneliness, its self-deceptions -- suspended in wintery amber.

    Ten spectacular graphic novels from 2014

    Through the Woods by Emily Carroll
    This collection of archetypal horror, fairy and ghost stories, all about young girls, comes lushly decked in Carroll's inky black, snowy white and blood-scarlet art. A young bride hears her predecessor's bones singing from under the floorboards, two friends make the mistake of pretending to summon the spirits of the dead, a family of orphaned siblings disappears one by one into the winter nights. Carroll's color-saturated images can be jagged, ornate and gruesome, but she also knows how to chill with absence, shadows and a single staring eye. Literary readers who cherish the work of Kelly Link or the late Angela Carter's collection, "The Bloody Chamber," will adore the violent beauty on these pages.

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>