THE ENTERPRISE
---Blame it on the Fed Chairman (The dog ate my homework.)
Well, it's time for Wall Street to go through its spasms of ups and downs worrying each time Fed Chairman Ben Bernanke opens his mouth--or doesn't open his mouth--or makes a face, good or bad. In other words, he's at fault no matter what he does. Of course there will be some inflation people. Look at the info below on commodity prices: Copper (its used in all those cute electronic gizmos we all have), Oil (and of course it is used in fuel for cars, electricity generation and to create feed stocks for plastics) and Paper (the boxes everything comes in, the newspaper no one reads, but get printed by the millions every day)...all three have risen in cost for over 30 consecutive months. Bernanke just inherited the smooth Greenspan's legacy of perhaps being to easy, too long, and if Ben is too tough for too long, he could actually be the bad guy that he is being accused of. Let's hope he understands all this...we don't need a Fed caused recession (which was what the one in 2001 was).
---The definition of inflation
Inflation is when you must pay more money for the same or lesser value. When commodities, usually based on things we dig out of the earth or plant and then harvest, go up in cost because the demand outstrips the supply--the result is inflation. DUH. The Fed doesn't cause inflation directly. It can (sort of) cause inflation indirectly by running the US government printing presses and creating more money, thus reducing the relative value of all the money that's out there now--but that's a different matter. Actually, the Fed can't even really stop inflation directly either. The Fed can be sort of a wet blanket by setting higher interest rates which eventually will (or may) dampen demand by raising the cost of borrowing to companies and individuals, and thus (may) give supply a bit of a chance to catch up. But the world is much more complex than that, isn't it? And inflation that takes hold for too long, often can only be reined in by a recessionary shock that depresses demand. That's unfortunate, but true.
---Complexity--a big topic--and growing
By now you know I am in the midst of writing a book on complexity and its effects on businesses. I was reading the other day and it dawned on me that although we all decided the dot-com and tel-com bubbles burst and so forth, the growth and complexity of the Internet is greater than ever. I won't go into all the research citations, but based on a chart in FORTUNE last month, the number of high-speed Net connections has grown about 1500% in the last 5 years, from 5 million to 75 million, the amount of time of Internet use has nearly doubled, e-commerce sales have grown by 250% with the growth actually accelerating, not slowing, and the Internet is the new, new thing in big-time advertising.
I'd say that just added a healthy dose of complexity to everyone's lives. Yet our days still have only 24 hours, and we need a few hours for sleep. We can only focus our attention on so many things, and digest so much information. That means the big question is: What in the hell should we pay attention to out of all that clutter? I don't know all the answers--I just know that this is an important question for which we need to determine some answers. This issue of how to deal with growing complexity, how to eliminate the unnecessary part of it and capitalize on the useful part--well, that's a big part of what the book I am writing right now covers. Stay tuned.
---Microsoft and Ray Ozzie
A year ago, I made a big deal in THE ENTERPRISE about Microsoft snagging Ray Ozzie and his company Groove. I said getting Ray Ozzie to join Microsoft was one of the biggest coups of Bill Gates recent career. The May 1, 2006 edition of FORTUNE features Ozzie's new role--a huge one--in an article entitled "Microsoft's New Brain." I don't want to belabor all the content in the article, you can find it on-line and read it if you choose to. There are a few key points that are worth belaboring. First of all, it characterizes Ozzie as "outside-in" focused, which is exactly what innovative leaders must be to get inside the heads of their company's customers. Next, it points out how approachable he is, which means he gets input from all kinds of sources that Bill Gates has become to famous and too imposing to access (although he use to do that--it is the problem of being "The Richest Man in the World.")
Finally, I want to re-emphasize the concept of my nearly 10 yr. old book, THE SHAPE SHIFTERS--Continuous Change for Competitive Advantage. Bill Gates wrote his momentous letter in 1995 on "The Internet Tidal Wave" that signalled a huge shape-shift inside Microsoft to embrace the Web. (R.I.P. Netscape.) Now Ray Ozzie and Gates are doing it again. "The Internet Services Disruption" is the title of this most recent memo. It signals that Microsoft will be putting its brain power, led by Ray Ozzie and Bill Gates (a potent duo) and using its huge cash hoard ($35 Billlion+/- a few bucks) and its prodigious earning power (over $3 billion/quarter) to drive a new "shape-shift" in the tech world.
You know I think Apple is neat and exciting . Everyone swears that Google is the new big thing. Yahoo is also hot, And EBay may be coolest of all. But Microsoft is HUGE, powerful, smart and pervasive...and I wouldn't bet against it once it put its prodigious resources to work in the right direction. After all, a company that has its software entrenched in space on 95+% of the PC/Mac desktops is a force to be reckoned with
Recognizing change and capitalizing on it is a big deal. Doing it in a way that doesn't explode into still more complexity (one of the drawbacks to open-source software based entities) is also a big deal. Watch this unfold. It will take another year. You read about it here.
Best, John
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