International -- Readers Report
Learning to Operate in a Climate of Global Scrutiny (int'l edition)
The questioning of corporate power and the role of business in society is not just a U.S. phenomenon ("Too much corporate power?" Cover Story, Sept. 11).
Corporations of many nationalities operating in many different markets are at the sharp end of changing expectations from consumers, employees, and government.
Campaigns have been aimed at Petrobras of Brazil for allegedly causing pollution, at De Beers of South Africa for supposed dealing in "conflict diamonds," at Broken Hill Mining of Australia for causing environmental degradation in Papua New Guinea, and at the Royal Bank of Scotland for allegedly supporting the homophobic religious right.
Here is not the place to enter into a debate about the rights and wrongs of each case. But the truth is that companies are having to learn how to operate in a climate of scrutiny, with activists using a combination of communications and media skills that up to now have been the preserve of corporations.
How are companies responding? First, they're soul-searching. Second, they're in dialogue with stakeholders to understand their concerns and explore ways to maximize the positive contribution and minimize the negative impact of business operations. Third, they're implementing new business techniques that provide transparent continual assessment of their impact on communities, often with independent verification. Fourth, they're entering into a myriad of partnerships and strategic alliances with nongovernmental organizations to work for common goals.
Director, The Americas
Prince of Wales
Business Leaders Forum
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Be Careful Not to Outsource Your Core Competency (int'l edition)
Regarding "Management by Web" (The 21st Century Corporation, Cover Story, Aug. 21-28): The current hype of building "virtual corporations" makes identifying, strengthening, and preserving one's core competency more important than ever. Indeed, as companies are trying to become "virtual," they may ironically put themselves in danger of losing their core competencies in the process.
We know that a core competency is simply something a company does better than any of its competitors. Yet 21st century corporations that are trying to outsource many of their activities--from manufacturing, logistics, and back office to even research and development--may be unintentionally letting go of that "something" they do better than anyone else.
Look at Cisco Systems Inc., famous for designing and developing networking equipment but which recently outsourced much of its new-product development to startups it has acquired.
What's Cisco's core competency again? The company is now just a rich company that spends its way to new-product development while losing its core competency in its own product-development capability.
A reminder for Cisco: Lots of other deep-pocketed players can quickly become your next competitors by imitating your "buy-the-startups" strategy.
The point for managers to remember is that core competency resulted from the linkage of the combined skills and activities performed at different locations in a company's value chain.
By trying to create a virtual corporation by outsourcing most activities, your company may be in danger of turning a "virtual corporation" into a vulnerable "bubble corporation" waiting to burst.
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