Friday, December 26, 1997 at 9:35:00 AM Pacific

Phil Hood on Statesmanship

I've been emailing with Phil Hood of the Alliance For Converging Technologies, phood@aimnet.com, on statesmanship in technology companies. I thought he was onto something, so I asked him to explain.

Phil Hood on Statesmanship

I think HP and Intel are good examples of firms that take a longer view, Intel more so.

Intel has invested over $500M in startups, just to seed the market with applications that use lots of processing power. The key point here is that even though Intel wants to make money with these investments, the company does not want to take over the applications market. They are looking for win/win. That is why developers are less fearful of Intel, even though its monopoly is bigger than Microsoft's.

HP is a very close friend of Microsoft but it is looking out over the landscape and trying to make the maximum number of partnerships that are win/win situations whether it is with ecommerce partners, digital imaging partners, etc. Again, the effort is to push the value propostion forward for an entire subset of the industry, not to threaten the other members of your ecosystem.

Key point: Usually, statesman like conduct is typical of older firms. Look at Motorola. They put PowerPC cores in a bunch of cars from Ford, Chevy and others. This means that up to four years before a model comes out, they are partnering with the car companies. Motorola has very strict rules about information sharing internally, so Ford does not have to worry about Motorola telling Chevy what it is up to. That kind of trust is built up over a long period of time in which your deeds fit your words.

There is an evolution in each human life and each corporate life. A business goes through stages. At first the entrepreneur is concerned with personal survival. As the company grows the leader becomes concerned with company survival and the survival of individual employees. When a company becomes large it must be concerned with the survival of its industry and the infrastructure on which it depends. (Big trucking firms had better care about the state of the highway system, for example.) Very mature firms and very mature leaders allow their vision to embrace all of society in a very positive way. Humans, being what they are, we probably get very few people who fully embrace this idea, but people like Walter Wriston or Henry Ford (a car for everyman!) got it.

There are some good articles and books out now that study the values that allow corporations to thrive over time. There are fewer than 50 corporations that are 150 years old. Two are more than 500 years old, one in Japan, one in Switzerland. Most corporations commit suicide at an age that would be considered unnaturally young for a person to die--about thirty years (think Apple).

The values that help corporations survive to old age include respect for employees above all else, financial conservatism (so long, leveraged buyouts), and a willingness to listen to customers and the world outside so that you can change your business focus as the world changes. Think of firms you admire and most of them do that stuff. I would put IBM, HP and Microsoft in that category.

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