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17 September 2010


At a previous employer we actually did entrust marketing to people who had an interest, but no expertise, in the field. Not surprisingly, the results were haphazard and amateurish.

I'm afraid we're fighting the 40-year misconception that a good manager can manage any business. I agree with your tax allocation ideas Bill, but in one case it's too late. Daniel Akerson, no doubt a smart and experienced executive, seems to be running GM because everyone else was busy the day they needed a CEO.

Perhaps your expecting too much out of the American capitalist.

We Americans have always been great innovators, builders and thinkers. It’s our heritage. Suppose it’s the turn of the century, (1900). I’m living in the United States. I sell pens and pencils. And I have an idea for a new kind of ink pen. My thinking goes something like this.

Where can I find the materials at the least cost? How and where should I make these pens? I want to make them for the least cost possible. How do I distribute my new pens? How much money will I make?

So now it’s 2010. You have an idea for a new product. And you still have that same style of American capitalistic thinking. Now you come to the second question, how and where can I make these items for the least cost. In 2010 the answer to this second question will probably not be, let’s make them in the US.

Fortune Magazine had an interesting article on the J&J debacle. Apparently, they moved responsibility for this product line into the consumer products division, which immediately proceeded to integrate its manufacturing operations with those of its other product lines, even though the work was pretty different. It should have been obvious from first principles that this was unlikely to have a happy ending: even without manufacturing experience, an executive with a sound sense of organizational design would have been very very cautious about doing something like this.

An old business friend was fond of the expression "Synergy costs money." It certainly did in this case.

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