Thanks to everyone who wrote in response to last week’s missive about the downfall of former WorldCom CEO Bernie Ebbers. It’s clear the community is finding little solace or joy in the jury’s decision.
The bitterest tears shed over graves are for words left unsaid and deeds left undone.Harriet Beecher Stowe
Dear Vorticians,
Thanks to everyone who wrote in response to last week’s missive about the downfall of former WorldCom CEO Bernie Ebbers. It’s clear the community is finding little solace or joy in the jury’s decision.
Vortician Shel Israel, who pens the Conferenza conference reports (http://www.conferenza.com), sent along these thoughts and a valid criticism of my story. “John, superb spotlight on Bernie Ebbers. Somehow, looking at his face on the front of the New York Times this morning, I couldn’t help but notice that he still looks like a wise and trustworthy elder statesman.
“I couldn’t help but think of a scene from both the book and movie ‘Elmer Gantry,’ and I’m quoting inaccurately from memory: ‘The devil won’t have horns and a pitchfork when he comes forth. He’ll be a well-dressed man, with courtly manners, and he’ll smile and call you friend. But he’ll sell you Hellfire in a bottle and it will ruin your life and take your soul away.’ Bernie could play the role perfectly.
“I do take issue with you on Martha Stewart. She didn’t go into the slammer for a $51,000 insider trade. She went to the slammer for lying about it and showing a blatant lack of remorse.”
Agreed on Martha Stewart, and my analogy comparing her sentence to Ebbers’ potential penalty was perhaps an overly glib attempt to make a point. Prosecutors for both Stewart and Ebbers were clearly intending to make public examples of these high-profile CEOs and Martha made the mistake of testing their resolve and resources.
Vortician Bill McLaughlin called my piece “a great epilogue to a tragic story,” for which I blush, but I think The Wall Street Journal provided a better one this week. In an excellent page 1 story by reporter Susan Pulliam, we learn how former WorldCom controller David Myers rationalized his decision to aid in the carrier’s massive fraud, and what his life has been like since that fateful day he first put ethics aside at the urging of former CFO Scott Sullivan. The gist of that rationalization was that WorldCom was in a temporary fix financially and cooking the books was just a temporary fix until the ship was righted. But, one thing led to another and, as a philosopher once said: “Little sins are pioneers of hell.”
It’s difficult to feel sorry for Myers, but to examine the impact of this debacle on his family and community gives one a more personal understanding of the lives ruined by it.
While I am in the mode of sharing reader feedback, and in the hopes of lightening up the discussion, let me offer a couple of letters from readers on our recent topic of the conundrum of commoditization and the value/value-add dilemma.
Vortician Tim Kraskey wrote: “John, two leaders who get it the best are John Chambers and Bill Gates. Both are visionaries. They stay in touch with customer needs and desires. Both can paint a picture of where the company and its customers need to go. They also have very good control of their boards.
“Those who do not are Symantec, Siebel, etc…. Try to find someone to talk to ever at Symantec. You can’t. If you do, they are in India and can’t help you anyway. You can’t find even a corporate number to call to ask for the CEO. They live in a vacuum.
“I also learned in my many years of selling that people react to emotions and vision. While you’re trying to keep the daily tactical revenues (sales) coming in, the prospects/customers want to hear where you are going so they can plan and anticipate the future with you. They like to be told the ‘Great Vision.’ But in the high-tech industry, we have all too many nerds and not enough leaders with the passion and vision to lead.
“Most tech start-ups come out of some engineering school and are founded by engineers. They focus purely on the technology. But somewhere down the road that has to change to a broader vision beyond the initial invention. This is where the leaders come in. But we have too few.”
Vortician Peter Manca wrote: “John, I think you are right on the mark with regards to the ‘Paradox of Commoditization.’ This is a very disruptive time in the computer industry, as new technologies evolve and innovation rages while, at the same time, there is a bigger push than ever for commoditization and utility-like models.
“While I agree with the premise of ‘value’ and ‘value-add,’ I don’t think it’s possible to clearly tag a company one or the other. There are, of course, special cases like Dell who are clearly in the value camp, though you could claim that they are also value-add in how they manufacture, sell and distribute their (and others’) products.
“Unlike others, the computing industry is not ready to declare victory on a commodity model. Clearly some components are being commoditized over time, but the rapid pace of innovation and ever-changing customer demand (not to mention the lack of standards) make this a difficult game. For the time being, the companies that leverage commodities and add the most unique value will be the market leaders. Commodities are really about pricing and standards in conflict with value-add, which is all about increased functionality and uniqueness. The companies that can combine the strengths of both will be the new giants.
“So, who’s winning and who’s at risk? Too fun a question not to play… Dell, SAP, Oracle, Intel, Microsoft and IBM are clear winners in the value/value add game, though you can pick them apart and find places where they’re also on the risk side of the ledger. (Is IBM really a value-add player in the xSeries platform?) Sun and HP are clearly at risk. Both are in the nether land between commodity and value-add and both have huge anchors in their legacy products to drag along with them going forward. Neither has embraced the changes necessary to take the jump back to the leader category.
“Another interesting one to watch is EMC’s VMWare. They’ve had a nice run as the leader in server virtualization technology, but competitors are coming out of the woodwork and gaining fast, which will put tremendous pressure on their pricing. Open source technologies like Xen, in addition to processor assists like Vanderpool (a.k.a. VT), will effectively turn virtualization software into a commodity market, at least from a pricing perspective, and force EMC/VMWare to add value in different areas.
“The bottom line is that this battle will rage on for many years, as we are far away from a complete stack of commodity components. Moreover, it’s important to note that innovation will never cease in this industry. In fact, today’s innovation is tomorrow’s commodity. As a result, companies must continue to innovate or risk the fate of Sun and HP. Today, as always, it’s the ability to successfully and originally combine commodity and value-add that will win in the end.”
Thanks everyone for your great feedback. I always welcome more comments to mailto:jgallant@vortex.net. Bye for now.
