Monday, June 20, 2011

If your BS detector isn't going off, you need to check your battery

When it comes to politics and journalism, the people at Talking Points Memo are about the best bullshit detectors you'll find. When it comes to the world of business, however, thye seem to fare no better than the typical New York Times reporter.

Take, for example, their positive review of this Economist piece on IBM's hundredth birthday. Here's the key observation from the Economist:

IBM’s secret is that it is built around an idea that transcends any particular product or technology. Its strategy is to package technology for use by businesses. At first this meant making punch-card tabulators, but IBM moved on to magnetic-tape systems, mainframes, PCs, and most recently services and consulting. Building a company around an idea, rather than a specific technology, makes it easier to adapt when industry “platform shifts” occur.

True, IBM’s longevity is also due, in part, to dumb luck. It almost came unstuck early on because its bosses were hesitant to abandon punch cards. And it had a near-death experience in 1993 before Lou Gerstner realised that the best way to package technology for use by businesses was to focus on services. An elegant organising idea is no use if a company cannot come up with good products or services, or if it has clueless bosses. But on the basis of this simple formula—that a company should focus on an idea, rather than a technology—which of today’s young tech giants look best placed to live to 100?
The article, which goes on to argue that Apple, Amazon and Facebook live up to this while Dell, Cisco and Microsoft do not, is a nearly perfect example of perhaps the most popular genre of business writing, the secret of success story.

Here's the template:

1. Come up with a positive-sounding platitude like "successful businesses are obsessed with quality" or "a company should focus on an idea, rather than a technology";

2. Make a short list of companies that are currently hot. You may also choose to make a list of not-hot companies for the purpose of contrast. It is not necessary for the hot companies actually to be more successful;

3. Claim that your platitude explains the success or failure of these companies. This will usually entail stepping over some rather deep holes. For example, the Economist explains IBM's 100 year run with an insight* the company's management supposedly had in 1993. (If you have the nagging feeling that you've heard this basic argument before, you're probably right).

In real life, it's next to impossible to find a secret-to-success that is both widely applicable and pretty. This isn't to say that you can't learn something useful by studying successful companies, but those lessons tend to be complicated and difficult to apply in other settings. When you do find one that is simple and general, it's usual something like 'you can overcharge customers if you keep your pricing opaque.'

Somehow, though, "you can fool some of the people enough of the time" doesn't have the inspirational quality for a good business slogan.

* If at all possible, work a visionary CEO's brilliant insight into the story somewhere.

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