Comments on: Adam Smith and the American corporation

By: Donald A. Coffin

Donald A. Coffin — Thu, 10 Jan 2008 23:05:51 +0000

One thing worth remembering is that the corporation fits poorly within Smith's view of the world. It basically didn't exist when he wrote, and he would, I think, have seen the corporation as a bureaucratic institution designed to undercut market forces through rent-seeking behavior. So the failure of the corporation to act like a Smithian agent would come as no surprise to him, or to those of us who have read a lot of what he wrote.

Having said that, I think Grant has nailed some very important things. And Bruce Fryer's three envelopes encapsulate a large chunk of corporate behavior.

By: Bruce Fryer

Bruce Fryer — Thu, 10 Jan 2008 18:41:33 +0000

Don't remember who told me this story, but it seems appropriate: The outgoing CEO meets the new CEO and tells her: "In your desk drawer there are three envelopes. Each time you hit a crisis, open one envelope and do what it says". Within three months she hits a major crisis. And opens the first envelope. It says "Blame your predecessor". She does and gets through the crisis. A year passes and another crisis hits. Envelope number 2 says "Reorganize". She does and puts another crisis behind her. Approaching 2 years another big crisis hits. The third envelope starts off "Get three envelopes……"

By: srp

srp — Wed, 09 Jan 2008 21:31:44 +0000

The problem here is the assumption that the corporation is a mutable "box of bees" relative to a "stable" C-suite. That doesn't seem right--the inertial properties of large organizations are cliched for a reason. (Much of that inertia is a good thing, by the way, depending on circumstances.)

If the observations Grant is making are accurate and generalizable, then the model we should look at is one of relatively stable modules (corporations, business units, C-suite teams along with their external networks) being recombined. Each recombination causes these modules to be altered to a greater or lesser degree as they absorb experiences, knowledge, traumas, etc. from one another. Then a new recombination occurs and the altered modules hook up with new partners, and the process repeats.

So CMO Jill brings her retinue to XYZ Corp., tries to implement changes at XYZ and has some impact (some of it possibly unintended). As a result of wrestling with XYZ and its problems, Jill learns some things (some of it perhaps erroneous) and perhaps adds or subtracts from her personal network. (There may also be some transfer of knowledge/connections/beliefs between the CMO-module and the other C-suite modules.) Then the two modules detach and reattach with new partners, and the cycle starts again.

Has a kind of wildlife documentary feel to it. There's hooking up of heterogeneous organisms, as with sexual reproduction, but there is no child. Instead, we get the equivalent of horizontal gene transfer, as with bacteria. So this story is a bit of a hybrid with respect to biological analogies.

By: Peter

Peter — Wed, 09 Jan 2008 15:02:56 +0000

On churn in the c-suite, I am reminded of Dilbert's "Bungee Boss", which can be seen near the bottom of this interview with Scott Adams (Dilbert creator):

http://cagle.msnbc.com/hogan/interviews/adams/home.asp

By: jkh

jkh — Wed, 09 Jan 2008 14:23:59 +0000

sorry, grant, could not read it all carefully.

quick response to this one here:

"The thing that impresses me as a result of this research is the possibility that the Scottish idea might be for some corporate purposes ill advised."

not for 'corporate purposes' in the narrow sense - but for 'market purposes' i.o.w. 'consumer purposes' i.o.w. 'experience'

consumers are sick and tired of the anonymity of markets and the sad merchandise bureaucrats can produce. - adam smith and f.w. taylor are the enemy of the affluent consumer - and therefore - to a good and painful extend they are becoming the enemy of the 21st century corporation. - it is the enemy within. - hard to fight, i wish you good luck.

By: botogol

botogol — Wed, 09 Jan 2008 07:43:44 +0000

"The real locus of governance and continuity is the c-suiter, that itinerant man or woman, traveling from corporation to corporation"

Grant, I think that is bang on-the-money.

One of the implications in this c-churn is the division it creates between the senior level staffers (the managers just beneath the C-Suite) who typically have been, and hope to be, at the corporation for the long-term, and their new c-suiter bosses who have the 20 month horizon.

This manifests itself in many ways but most particularly the need for the C-Suite to introduce *change* (corporations rarely hire a new C-* with a brief to maintain the status quo), which can be at odds with the imperatives that the staffers see.

I think that the corporate environment is now such that amongst the staffers - a different set skills are now selected for, and are necessary to succeed. For instance: skills do to with ability to swiftly buy into 'new' ideas, even if sometimes they may seem strangely familiar (C-Suiters don't have time to understand what happened before)

We are at war with Eurasia..we have always been at war with Eurasia...