The Demise of Modern Day Dinosaurs

For This Century’s Leaders, Building Trust Trumps Lining Pockets

As their species became extinct, dinosaurs were probably not aware of their own impending doom. They certainly could never have known how their demise ultimately provided the fuel for human industrialization and Earthly dominance. Over the course of the last few weeks, a hat-trick of magazine articles has led me to believe that we could very well be witnessing the final days of some marketplace dinosaurs. Unlike their prehistoric counterparts, today’s modern day dinosaurs are run by savvy business people who must be painfully aware of their demise. Our economy is at a cross-road, and as Bonnie Tyler once sang, we’re “holding out for a hero.” Instead of donning their capes and coming to our rescue, these industry behemoths seem to be consumed with self preservation. They desperately cling to the remaining vestiges of their past supremacy; despite the fact that their passing could very well be the salvation of the American way of life.

The July/August issue of Fast Company, features an article by Anya Kamenetz, “Beyond the Grid: Why small-scale, local power—the microgrid—could be the answer to our energy crisis. And why the big utilities are fighting it with all they’ve got.” As she so aptly explains, “If we can leverage public money to empower customers to both cut energy use and make their own green power, why should anyone but shareholders care if utilities are relegated to a background role? Industries evolve, they shrink, sometimes they die.” For each economic and environmental benefit of localized solar and wind-energy programs, Ms. Kamenetz reveals the steps “fossil fuel-ivores” are taking to maintain their control over our energy supplies and their profits. A representative of the Edison Electric Institute, lobbyist for the utility industry, very pointedly stated that they would not support efforts that shrink their business. They are determined to uphold the status quo which was established by Thomas Edison—large centralized plants distributing power across a vast network.  Are we sure Edison, one of the greatest inventors of all time, would champion the status quo over innovation? It’s a good thing other industries don’t subscribe to that point of view. Otherwise, businesses would still be run on mainframes housed in huge data centers and none of us would be using smart phones or laptops. 

The Economist (June 6-12, 2009) features an article about another turn of the 20th Century creature facing a similar leadership challenge as the utilities. The difference is that the US auto industry already has a few key players on the endangered species list. The magazine’s cover has a picture of a T-Rex made up of car parts and the headline reads “Detroitosaurus Wrecks: The car industry after GM.” According to the article “A Giant Falls,” GM’s recent bankruptcy is the result of almost a century of near-sighted management decisions including decentralized control, an expensive workforce (current and retired), lack of response to Japanese competition, and an unwillingness to accept the fact that not since 1969 has bigger been better when it comes to cars. The article concludes, “When GM emerges from bankruptcy, it will have shed some of its burdens, but the damage done by decades of mismanagement and union intransigence will still weigh heavily.”

Our economic future is being hamstrung by business leaders and politicians with too much invested in slow-moving industry giants. Our lumbering is giving the rest of the nimble world the opportunity to zoom past us. The next generation of leaders, many of whom have already arrived on the scene, have to figure how our entrenched economic and industrial infrastructure can actually “leap frog” over itself. In order to accomplish this seemingly insurmountable task, this generation of leaders will have to be more interested in serving the greater good than lining shareholder pockets. Although, I’d like to think the two do not have to be mutually exclusive. A group of 400 recent MBA graduates would agree with me. In the same issue of the The Economist there is a shorter piece titled “Forswearing Greed: A Hippocratic Oath for Managers.” This article discusses the pros, cons, and implications of an oath taken by graduates from Harvard Business School. These students promised to do such things as “serve the greater good” and “manage my enterprise in good faith, guarding against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.”* Back in the 90’s, in a strategy class at the University of Chicago’s Graduate School of Business (now the Booth School of Business), Professor Howard Haas told us that a common cause for an organization’s failure is the arrogance of its leaders. Based on the MBA Oath, I’d say the new-era captains of industry are starting the leapfrogging by foregoing the cloak of hubris in exchange for the transparency of humility.

* If you hold an MBA, you can sign the oath at http://mbaoath.org. I’m #1251 on the list.