Encore

Last week an interesting news piece hit the news, but did not make a significant impact. The story was about Michael Dell returning as a CEO for Dell Inc. The company, his “child” which grew to be one of the most successful computer hardware sellers in the USA, if not in the world is struggling now. Dell’s vision and skills are supposed to be the answer.

In my opinion, he might just succeed, but I do not find the question “will he make it or not?” the most interesting aspect of the story. For me it is about another founder coming back to the business he/she created and trying to make a turnaround.

Steve Jobs of Apple, Charles Schwab of Charles Schwab Corp. are just two of the examples of how a founder can make a difference when coming back. Actually, Jobs practically save the company, revitalized it and allowed to achieve new heights. After Bill Gates stepped of at Microsoft, what followed was a turbulent time for the software giant, with greater competition on the account of Linux and tons of anti-monopolistic law suits. This resulted in a drop in stock price after 2000 (See: http://mwprices.ft.com/custom/ft2-com/html-quotechartnews.asp?symb=msft&vsc_appId=ts&ftsite=FTCOM&searchtype=equity&searchOption=equity ), which in turn resulted in Mr. Gates running Microsoft actively again.

Can it be a start of a nation-wide trend? The Wall Street Journal informs there have been 65 such “encores” in USA biggest 1500 companies in the last dozen of years (More on this story: http://online.wsj.com/article/SB117063556472497775.html ). Of course, not every such return is a stunning success, but most of the time you only hear about those that are.

I feel there might be something to it – the rules: “no one knows this company better than the founder”, and “if you want to have something done right, do it yourself” could very well apply…

When will they learn?

Business people are not very well perceived by the general public when it comes to judging about their professional integrity. The common perception is that they take advantage of the information asymmetry and abuse the privileged position that they have over the external stakeholders. Events such as the Enron and WorldCom scandals seem to support this judgment.

In my opinion, the common view of the business people is biased by those few who break the rules and abuse the trust and harm the interests of their own clients/shareholders for personal financial gain. That does not change the fact that this minority gives a whole wide profession a bad name.

Countless courses in business ethics, which are by now offered at virtually every business school in the country and various publications address that issue. Government regulations are designed to eliminate the possibility of frauds and unethical behavior. Courts prosecute those suspected of unlawful behavior.

Does it mean that unethical behavior can be completely rooted out from the world of business professionals? Last weeks news reports conclude just the contrary.

Legal authorities in the U.S. investigate the back-dating case of Apple Inc options, as it seems that the computer industry giant may be in some trouble. The issue is that options were backdated, which changed their value, this was supposed to be approved on a special board meeting... that never took place. (More on that case: http://online.wsj.com/article/SB116856838800274709-search.html?KEYWORDS=apple+&COLLECTION=wsjie/6month ). The news about the investigation hurt the Apple stock price, offsetting part of the rise reported after the company announced the introduction of iPhone.

In a different case, Europe's largest engineering company, Siemens, ran in trouble as its the former CFO and No. 2 in the corporate hierarchy was named a suspect in the on-going German police investigation of a bribery case, amounting to at least half a billion dollar (more on that: http://online.wsj.com/article/SB116861598934275269-search.html?KEYWORDS=siemens&COLLECTION=wsjie/6month ).

Even though only a marginal proportion of business professional engages such unlawful practices as the ones named above, their actions influence the way the whole sector is perceived. The funniest thing about it is that usually people who commit such crimes are caught and prosecuted - it is just to hard to destroy all the data pointing to them as culprits. Still, it happens over and over again, hurting individuals, companies and whole professions. When will they finally learn it?

Steve Jobs does it again

The founder of Apple Computer, Steve Jobs is a very well known figure in the high-tech industry, and the whole business world. His life story is pretty inspirational – he founded an extremely successful computer company back in the 1980’s, and a couple of years after parting ways with it, he was brought back at the helm, and turned the struggling business into a cash cow. He has achieved even more – Mac computers were made hip again, and iPod became a part of the popular culture.

In the last couple of days, Jobs and Apple got a lot of media attention again. News of the iPhone electrified the technology and business world, bringing Apple stock prices to an impressive high.

The iPhone follows the trend present in the mobile technologies sector in the last couple of years – more and more integrated features. “The device, priced up to $599 in addition to a two-year cellular service contract, allows users to download and play iTunes music, browse the Web, send email and make calls. Equipped with a wide screen and a two-megapixel camera it can also link wirelessly to music headsets, stereo systems and Wi-Fi networks.” (From: the Wall Street Journal online, by LI YUAN and PUI-WING TAM, http://online.wsj.com/article/SB116836172312771508-search.html?KEYWORDS=Apple+Storms+Cellphone+Field&COLLECTION=wsjie/6month ).

The above named characteristics are not really something revolutionary; other cell phone manufacturers have already produced phones with similar qualities. The key to Apples potential success is not being innovative in this case. It rather is being better than the innovators and offering an appealing design, as it was in the case of the iPod. Most commentaries that I have read, agree that this project will probably be successful, especially that Apple should have a reliable distribution channel in Cingular Wireless.

One thing that is mostly overlooked by the media is the totally different mindset presented by Jobs – it is not Apple Computers Inc anymore, it is just Apple Inc, which underlines the company’s focus that is not just limited to computers, but it is rather moving away from the image of a computer company.

Jobs seems to be very confident, or even cheeky – he scheduled the Mac World Expo at the same time as the Consumer Electronics Show, and actually managed to grab most of the media attention! The iPhone has chances of becoming a phenomenon such as the iPod, which means the future might be looking bright for Mr. Jobs and Apple, and pretty bleak for it competitors.