MBAs
There is a small skirmish building in the outside-inside world of Business Schools - - with the external showing a small and unlikely advantage at the outset of this tit-for-tat. On the oneside is the finely tuned machine that is the MBA system, primed to send thousands of graduates in to the American workforce every year with expectations, which are often realized, of easily accessible higher-paying jobs that require the financial acumen built in to a MBA degree. On the other side is a group of bandit-like challengers who have noticed a few holes in the seemingly without error armor of the MBA community, and they have fired a few shots to see if anything could make the community take notice, and potentially even change. Though there have been murmerings about the issue, it has not truly become a public brew until the very recent article in the May 2005 issue of Harvard Business Review made the challenge official: MBA programs are nearly pure academic affairs, without any substance from the business community. Considering the amount of work and time that has gone in to attracting business leaders to the Boards of Trustees, and the establishment of Business Councils, this was sure to be seen with some contempt by the community. However, there was a deeper underlying issue that might be of deeper concern to the MBA community, and that is the actual production from graduates as they enter the workforce. Are they relevant? It is easy to take shots at an institution that has long been the stuffiest of all stuffy institutions, or at least at the higher levels, an elite status that has nearly guaranteed returns for graduates of those institutions. Now as the leadership reigns begin to be turned over to the MBAers of this generation (35-50), the question posed by the external analysis is that will the current graduates be able to supplement the new leadership and are their leadership positions justified. The answer to all of these questions may be No. What a thought, that the bedrock of American business - - the institutionalization process itself - - is flawed. Well, it didn't take long for the community to come back with a response, and even though it was couched in a traditional release, it was certainly a forward defense mechanism, designed to put to rest the idea that MBA programs are ineffective. (
http://www.gmac.org/NR/rdonlyres/8E5C2CDB-38D5-4845-A83C-7D3F99EE1694/0/GlobalMBAGraduateSurveyPressRelease.pdf)
After reading the GMAC's press release on their web-site it became clear to me that the lines were drawn and a fight was on over the future of American business. There are many graduate business and management programs throughout the country, and it is growing more likely that these graduates will permeate non-Fortune 500 companies and non-financial institutions. Are American businesses ready, are the graduates ready? I will reserve my opinion on this matter until more is done to prove the case, but I found the HBR article a very compelling argument, and would like to read more on the external point of view. As is the case in many ways, it is a choice between the old and new. Often times we are seduced in to believing the case that the old maintains what has been successful, and that the new should be feared for all of the good would go away. It is difficult to accept change. It undercuts tradition, ritual, and sometimes even sustainability. However, this argument is best left for areas of society that have long established their mantra to be predictability and consistency. Business may be one of those, but business is also mainly about growth, as well. Only MBA graduates can make this issue a cause of concern upon their return to the working world in a new, more responsible role.
GRR
As I struggle to get going on this Friday before the long weekend, I am thinking about of all things, the future of Grand Rapids business. It is a well oiled topic as this community thrives on its business acument, and when the going is down, the region is down even more. When things go brightly, then the residents seem to feel that a little more than most. This is certainly applicable to every other economic region, but it holds uniquely true for this area because of the inherent knowledge of the community. There is not a major professional sport on this side of the state, and this is a family town (less so than before, but still predominantly a place to raise kids), so the topics of conversation may tend toward theater or music, but still when business is discussed, generally most people are on the same page, and can express a point of view that is understood by a group of people. Let's take the most clear example of this - - which is SCS. Only in the past six months has anyone wanted to talk about the plight of this business, mainly due to its stature in the community and its importance both symbolically and literally. Not to mention the trickle down impact its business has. The resulting pain of letting go of thousands of employees is still being absorbed in to the area, though for certain some have left for other opportunities. What GRR residents talk about is the negative impact that this has had on the area business climate, not inspecting what the Finance Committee has to say about the competitiveness of the firm now. What the residents fail to recognize is that it has made for a stronger, more "stable" company, and this will be felt for years to come. This will make for a stronger and more stable economic region and will build back a Chamber of Commerce that is desparate for some direction. What is becoming clearer by the year is that the move toward biomedical sciences will be a major determinant of the region's vitality, and the partnership between VAI and SCS will be a model for how this can impact the overall competitiveness of the GRR business community. With time, both organizations will develop an expertise that will be useful to spread beyond the area's borders and take their message nationally. This is the type of collaboration that needs to be the model for how the business community sustains itself through joint projects, that lead to alliances. GRR has a long history of reinventing while maintaining some base of continuity. This is the time for the biosciences community to take the leadership in building the new while working with the manufacturing base to generate a continuous base of innovation.
Biotech
Moving on from the Enterprise Computing world, a world in which I have been living in lately is the Biotech market. If all you were to read was the basics from the media, one would assume that this is a deeply troubled industry, from Vioxx to VC-less funding. This is not so. The Pharmaceuticals are in deep trouble if you want to find an industry with $20+ Billion in profits, due to their lack of competitiveness of R&D spending, but the Biotechs are a good place to put money. Why so? There are many of them and they have found how to specialize in markets that they have expertise. Only certain large companies can stay strong through generations of market change (I think of Amway and Pfizer), and this is because they all like to get nice and big on fat patent profits. Soon those patents become the lifeblood for eveything, and 17 years certainly seems like a long time. In the course of today's Bioscience, it is something of an extended timeframe, but patents are still coming due. This makes the ability to count on fat profits somewhat untenable for the near future for some of the most successful companies. What Biotech brings is the diversity of offerings, and the network of relationships throughout the industry, and a sustainable R&D pipeline by nature of the speciailization. This may seem counter-intuitive, and it is true there will be many, many Biotechs that will not get their products to market because they won't get them through the FDA toll-gate. But the ones that do get through and leverage success in to future successes have just as good a chance at revolutionizing the delivery of medicine as any Pharma or other delivery model for health care. Only 10% of all health care spending is spent on prescription medicines, with much room to grow. If one is looking for an area akin to the go-go internet days but with actual merit, the Biotechs are as good as any, and that is what every state economy could use, a dose of Biotech medicine.
SOA
With all of the hoopla over SOA's, you would think we would be replacing app. servers. Not so says Marc Fleury, and wherever his opinion counts, you would think others would listen. For he does own the most lucrative software franchise on the planet today. Sure he'll get commoditized, but won't they all? Standards add value not diminish value, though BEAS has tried to prove otherwise. Once the standard-bearer their pre-emptive (of SUNW) move to create JWS backfired as a perfect storm hit them, and removed their potential for greatness. Now they are another Siebel waiting to be bought. What's more valuable today WebLogic or JBoss skills? As we digress...SOA's are another word for JAX, and even though JBI would like to extend the integration capabilities of app. servers to include JMS and JCA, what's the point - - you have baked in J2EE 1.4 capabilities, just teach the legions how to do remote calls to EJBs and voila, you have web services. Ok, ok, I see that in the world of proprietary structures such simlicity is not going to sell well in to corporate IT, they need solutions, they need "engines" that can handle the traffic, and perform well under volume, and manage remote data services, and on and on...What is needed, therefore, is a reference architecture from the customer point of view, not the vendor point of view, that says what they would like to accomplish via an SOA. This would be incredibly more complicated and more revealing, and may just push the vendors to think more simply. Doesn't baking in JCA extensions seem like a tight net that will be hard to extract from in the future - - we would see that from Ford's supply chain point of view. Or Boeing. Or Steelcase. The point being that the real complexity with J2EE is not in the specification for development, but in the implementation of integration. Maybe JBI solves this, maybe it just adds another layer, I trust Mr. Bauhaus on this matter, but wonder if all avenues are being explored. Such as JAX. As for the other end of the SOA curve, there is the front-end MSFT developers, who may turn out to have a natural advantage if MSFT has the resources to build literally everything. That includes the rules engines, the vertical solutions, the pre-built components, and on and on. That is why Java has such an advantage, because when you don't have to count on vendors to supply everything, you have an incentivized business model on what to build and for what purposes. With MSFT, you may have some logic to build, but beware that it may be something supplied by central command. Never forget Hailstorm. My good friend is a MSFT developer and has created logic that would make any Java developer proud, if they would move beyond their VB prejudice, and accept the interoperable story of web services. (Damn, I sound like McNealy.) As we look around the world at integration, is it not the manufacturers who have the greatest need with the most complex supply chain, and what other services are needed beyond integration - - how about risk analysis. Seems like once you can solve for risk, you can solve a lot more problems. In the universe of SOA's anything is relevant, and that makes everything necessarily compatible. Is JBI an extension of a standard platform built around Java-interoperability. Or is JAX a solution for .Net integration. Or are they both useful. Lets have some debate for the benefit of both kinds of customers.
SUNW
To all the developers of the world who work away at the problems of the day, wondering what does it take to change the prevailing system of incremental movement toward end goals of interoperability and modularity, I submit that the solution lies with SUNW. Not because of Solaris, but because of Sun's spplication server business, which should be one in the same, and with the support of Java, would become the dominant platform for web services. The reasons for this are, as John Doerr puts it, 100% political. IBM cannot solve this issue on its own for it is not a technology company, even though all of their patents do their best to obscure the fact of their reliance on antiquated forms, if not functions. I give them immense credit for San Francisco, and maybe this lives on in Global Services, but today their product strategy is one growing blob of stuff, without differentiation on who uses what. They are a 2010 company not a 2020 company. Microsoft will not be the answer because it can only reach so far in to the data center, with or without BizTalk or however it is being packaged. BEA is dead. Oracle is the opposite of modular. And JBoss is cute, though effective. Only SUNW has the reach to go in to the data center and come out with modularity. Their app. server business is now the most complete, though they have no portal story and have yet to establish a JAX integration story, which is the key. For all of the developers thinking of what to do next, my suggestion is to convince management of a side-project that would interface an EJB with JAX-RPC. SUNW AS8.1 EE has the fail-over capability for this transaction, and with it comes the fulfillment of a long-standing dream to make the Java platform productized. Take a look at this, and think about what a combined app. server/Solaris management console would mean to Linux. Red Hat has thought about this too, as it bought the dregs of the Netscape server business for change. This will give them LDAP and security but not Java. This would have to come in the form of an acquisition of an app. server. Who would that be? Presumably, SUNW could squeeze JBoss enough to force them in to a sell-out to Red Hat, though that may be counter-productive to Marc's ambitions. I believe he has made clear his belief that there is only one true open source community. Intel has a tough enough fight that it won't buy BEAS, but Oracle might. Red Hat should get in a take-over fight to grab BEA but won't have the resources to pull it off. That leaves a very strong position for SUNW to work within the enterprise. All of this utility, distributed management, and openSolaris talk is tactical. If SUNW wanted to be true to its innovator claims, and technology company status, it would begin to create the all encompassing OS today. It will take three years to get it right, but it would be well appreciated in increments. Only this option - - the linking of Java with Hardware via Solaris - - has the potential to bring SUNW back from the brink. Sun's app. server business, long the joke of the Java-philes community is about to become the savior of the well earned SUNW installed base, and finally push the market of Java web services to the forefront.
NYC
Ahhh, it's good not to be living in Manhattan right about now. Not exactly the hotbed of business dynamism. The only start-ups seem to be flowers and delis, though those are nice. I spent much of my time while wandering through Lower/Downtown thinking about what almost was. I remember being in the WTC in Feb of '01 and then seeing the difference in Mnhtn. in Feb '02, and not much has changed. We still have this box-sized void where destruction was not limited to people, planes, and buildings. It is very easy to say that the economy was over-spent, and was burning out, but as my old friend says, its better to burn out than to fade away. I also believed the .com thing was ridiculous, but it was so because it diverted funds from real business, and made consumer-oriented college ideas seem o.k. because of pedigree not because of value proposition. For those in the enterprise software market in 1999-'02, we knew that there simply was not enough money to throw at the problems. Today, the scene is even worse with all of the money tied up in Chuck Phillips and Steve Ballmer's hands, and not a scent of innovation abounds. Consolidation and proprietary platforms dominate, in a market where only expansion and standards bring solutions. What can be done? Well the most unlikely of collaborations between MSFT and SUNW are proving to be the only two creators, in an industry of destroyers. It all started with a proprietary move by a certain Java vendor (BEA), that opened the door for a start-up (JBoss) that will probably change the category landscape over the next ten years. The aptly named Wall Street on Java (as opposed to Java on Wall St.) may no longer be in existence (maybe it is somewhere), but the energy lives on in the form of this start-up. The solution will come in the form of applications, and not these ERP suites, but rather the composite apps. long proposed by modular componentry. There are a few out there, but not enough. Soon the VCs will see that as Biotech has proven, the large software vendors (see the Pharma industry) will be a vital source of intellectual capital to sustain the needed advances toward interoperability. Look for the day the start-up goes public as an indication that money is starting to flow. Until then, remain in the trenches.
Day 2
Good morning, it's Friday, and I have a few deadlines that I would prefer to avoid for an hour. It's actually something that is not mine, but became mine via a series of sly phone calls and e-mails, and all of a sudden someone's urgent matter has been transferred to me without any pretense of a build-up of time. In short, I made an amateur mistake. The news on T.V. is US Airways and America West. Too bad United fell victim to pre-9/11 posturing on anti-trust issues and could not close that deal, there must be something behind that. And as I prepare to fly commercially today, I too think about the state of the airlines and how something so lucrative could make so little money. Kind of like hardware, which is why I chose to write today about the biggest news of the year in the software industry. No, not PSFT acquisition. That is a Chuck Phillips financial move, not a real strategic move (what a coup picking up that guy). Not until ORCL picks up BEAS does anything rival what MSFT and SUNW pulled off this week. I don't pretend to care much about single sign-on as I do not run a corporate data center, for my single sign-on better be my gmail log-in in short time. But considering the implication on SUNW's strategy, I think it is worth noting what this accomplished. For one, it validates the entire acquisition of NSCP's server business by SUNW. The real jewel of course was LDAP, and though MSFT won't support that standard, SUNW has now achieved market acceptance of their moves in to enterprise software beyond specifications. For another, it opens up the world of web services. Nothing happened when IBM and MSFT first introduced the web services standards because no one could agree which company was more likely to introduce proprietary extensions, so as opposed to two closed systems creating an open, SUNW is bringing MSFT in to the world of open. MSFT is merely keeping SUNW alive. One small step toward Java/.Net integration, and one giant move toward the software zenith of which neither SUNW or MSFT will be the major beneficiary. Rather, it will be a string of new companies that work within the old company's model. Here, in 2005 we applaud the move that will yield benefits approximately 2010 and beyond (Giga, please add 5-7 to your projections). It may even make SUNW's utility model and MSFT's Longhorn ambitions lucrative enough to maintain momentum, as long as they can stay focused. Who will be the single biggest guide to this initiative, well, it's Gates, himself. Only he has the pull to make it happen, not even Scott can move anything that big. So as we battle in the trenches, remember there is some non-altruistic moves that have unintended consequences that reveal opportunities for future visions that will ultimately change industry as we know it.
Initial
This is the first post in an analysis of the industries of interest. First off will be the Computer industry, or as Cnet calls it the Enterprise Hardware/Software industry. From there I may try and post about industries closer to home. To me, it seems that business is still running a little timid right now, and that the many new opportunities presented from the impact of global markets being opened in both directions, that the new opps. outweigh the potential losses (jobs, standards, security, privacy, wages, volume, specialty, etc.., etc..). In early 1990's terminology, the fear of the "giant sucking sound" is just a tactic for those who like things the way they are. "Some men dream of what is and asky why, I dream of what never was and ask Why Not." The impact of India for high-touch, and China for high-volume is notable, and is a potential business opportunity for many, but the threat to U.S. economy is way overblown. And business has only themselves to blame for the harsh rhetoric coming out of the workers, for they have fostered a climate of fear of the unknown. My look at this is that the endless (literally) possibilities for investment are being defeated by the equally endless chances that risk will lead to failure. That is business. You have to spend money to make money. You have to invest to profit. And you have to have the courage to face the possibility of failure, and compute your risk quotient and attack. Some in the computer industry view this as a M&A activity (read the software industry), but it is also about investing in new projects, and spending on R&D. Look at Biosciences. It costs ~ $1.4B to bring a drug to market. It's not the Pharmaceutical companies that are bearing all this cost, it is the Biotechs who have CFOs that have never played with $1B before. Do they shrink in the face of risk of failure, no they diversify, and share costs among the industry. Of all the industries going right now, Biosciences has the best model of inter-cooperation of assets, where a home run/blockbuster does not go to one company, but then again the failure does not all go to one company either. As a wise, old business man once said to me, it is better to have 10% of something than 100% of nothing. Remember that as you build your businesses, choose your partners scrupulously, and go on the attack. Whether you are a regional bank, a manufacturer, or a start-up, there is only one way to do business, and that is to grow. Out.
