Great post. Strategy is dead. Imagine if Countrywide had made it a goal to LOSE share in the past year. Imagine if a large public builder had made a firm-changing sale of land holdings. Imagine if a major bank had used retained earnings to build reserves rather than buy back shares. The fact that NONE did means that managements didn’t see it as their job: “You pay us to be banks/builders/lenders,” they would argue, “not economists.” So they were operational care-takers, and not risk-taking owner/managers of cyclical assets.

Around forty years ago Bruce Henderson started up BCG and his clients were hungry for advice on positional advantage. Today his firm would likely fail in its first year.

He didn’t invest in anything he didn’t understand.

A Wall Street analyst was criticizing WB a couple of years ago because he wasn’t beating the Street. How can you beat a rigged game? You can’t.

-A-

“(Post-Soviet Russian business enterprises) drove Western management consultants mad, with their endless kindergartens, retirement homes, laundries, and free clinics. These weren’t part of their core competency, you see. They needed to divest and to streamline their operations. The Western management gurus overlooked the most important thing: the core competency of these enterprises lay in their ability to survive economic collapse.”

Intel, and other competitors, must pay for genuine capital costs. M$ is more or less printing money and can’t figure out how to invest it. That says they don’t have certain qualities needed for the long term.

That’s an important aspect, and one often neglected. You might enjoy this article which discusses some related issues.

By the time a process is modelled to the extent that a computer can coordinate, monitor and control it, the process no longer has a human dimension. I’m not waving my hands here. I am specifically saying that the genius of two or more human brains mulling over a problem is that the result can be something quite new under the sun and is based on the life experiences of the participants bringing to light new and heretofore unconsidered solutions. These fragile but sometimes very creative ideas would not fit in any pre-existing procedural model – especially the brittle and canned varieties mediated by computers.

But even more disturbing is the fact that genetically we are still hunter gatherers who are best served individually by existing in small tribal units that derive and extend from the family unit. It’s not paradise but it’s certainly a far cry from working at McDonalds.

The slice and dice approach you chronicle above is the logical extreme of a system whose money muscled proponents have gone totally mad with hubris and golf.

The rich and powerful tend to trust computers far more than each other – and for good reason. The irony is that what they end up trusting is a half-baked cake of fuzzy notions produced by profit oriented consultants and software houses. The complexity of the systems precludes a “horse-sense” understanding. Their digital nature creates a crystalline structure that can appear rock solid but can fracture with the tap of a crow’s beak.

And so on and so on. We’re screwed.

And, by the way, the faux, so-called ‘balanced scorecard’ is just another form of the same wolf in sheep’s clothing.

If we are to see sustainable and real shareholder value, we must first end shareholder value fundamentalism.