Archive for December, 2009

Rollerball and the Public Option

I’m a sci-fi movie fan, and “Rollerball” is a favorite of mine. Mind you, I’m not talking about the disposable 2002 retread, but instead the original 1975 classic with James Caan and John Houseman, in which an oligarch of giga-businesses have done away with archaic traditional governments and now run the world, well, like a business. To maintain their employee citizens’ contented complacency, the corporate regents have provided a modern bread-and-circuses in the form of Rollerball, a violent fusion of roller derby and basketball. Rollerball starts as an action flick, but it quickly peels away deeper layers, revealing the corporations’ evil mass social management agenda. Rollerball’s opening music, Bach’s Toccata and Fugue, sets the incongruous tone, intertwining levitas and gravitas as we watch the stage set, literally, for the movie’s first rock ‘em sock ‘em Rollerball match.

The oligarch seems pretty scary in Rollerball, invisibly pulling the strings that control the commoners’ visible universe. But it’s not the notion of businesses running the world that I find most frightening. What really scares me is the fact that those businesses don’t have any competition. What history has shown us countless times is that when companies coalesce into monopolies, wringing out competition along the way, their priorities pivot away from creativity and innovation, twisting instead toward entrenchment and status quo.

Take health care reform, for example. Despite the fact that a clear majority of Americans want a public option, there is none in the Senate bill passed this week. Why? Because the industry doesn’t want competition. Insurance companies have spent a fantastic amount of money excising competition from their world. There’s no way competitors are going to be permitted back into the industry’s zany idea of a free market economy. Apparently competition, even that from an organization as uninspired, wasteful, bureaucratic, and inefficient as our federal government must look like a sleek rocket ship from the future in the eyes of Flintstone-era insurance industry execs.

Those executives don’t have a lot of incentive to rock the boat. The captains of the top three companies in this particular industry average over $15 million a year in total compensation and their shareholders are perfectly content with the status quo. There’s no real competition within the oligarch, so life is just about perfect. As a businessperson, the only thing I would note (besides the little detail that their business model is unconscionable), is that you don’t need to pay someone $15 million a year to maintain the status quo. For that matter, it shouldn’t require a full time job. Heck, I’d be willing to do it in my spare time for under a million.

What should you expect from a CEO that hauls in $15 million a year? Inspiration. You should expect a company to create innovative goods and services that people really need and want. Actually, for that kind of money, you need to go way beyond simple innovation. You need to provide brilliantly creative offerings that people love. I don’t often hear “love” used in customers’ vocabulary used to describe their health insurance experience. I do hear other four-letter words, though.

As a businessperson, I don’t have a problem with businesses earning a reasonable profit in exchange for the investment they make to bring quality products and services to market. As maddening as are their apparatchik bureaucracy and sphincter-like cheapness, that’s not what troubles me the most about the health insurance industry. What really disturbs me is the nature of their business model. At its core lays a fundamental conflict of interest between the needs of the customer and the needs of the company. It’s one thing when that conflict involves balancing customer demands for, say, better cell phone coverage, against the money required to make that coverage happen. It’s an entirely different thing when the conflict involves balancing corporate financial objectives against a human misery quotient. My bias for capitalism notwithstanding, I think that businesses that trade in human lives should not be left up to the free market. The irony is that an unfree market is precisely what we have in our 400 billion dollar Rollerball insurance industry, with that industry spending hundreds of millions of dollars to keep it that way. Bizarrely enough, their only real competitor is their customer, the American taxpayer, who has made not one, but multiple Herculean attempts at landmark, groundbreaking, game-changing legislation over decades to force an industry to do nothing more than what all businesses should do: give customers what they want.

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Oui Wii

I am a latecomer to the world of Wii, my appetite for video games dying with Atari’s passing many years ago. For some reason, if the game’s champions and villains aren’t primitive low-res insects, monsters, or spaceships, they have no appeal to me.

So I was more than a little surprised when a box of Wii showed up at our door several weeks ago. Apparently, a neighbor had hooked my wife on Wii Fit. I set it up and she started Wii-ing like a teenager. It wasn’t long before she convinced me to give it a try.

I have to admit, I was impressed. Wii Fit sized me up immediately, gauging my weight and body mass index the moment I set foot on the Wii Balance Board. I set up a user profile and sampled the Yoga, strength training, and slalom skiing for fun. My praise for Wii notwithstanding, I had a nagging concern that Wii knew just a little too much about me. Among other things, it knew my height, weight, BMI, and the fact that I preferred the female virtual trainer over the male.

As much as I enjoyed my first Wii session, I procrastinated my follow-up. A couple weeks after my first and only Wii workout, my wife mentioned that Wii had been asking about me.

“What?” I exclaimed.

“Yes — Wii asked where you were” my wife replied.

I was astonished. Wii inquiring about my whereabouts seemed like some scary Twilight Zone episode — the kind that would keep you up all night with the covers pulled over your head for extra protection.

My wife continued: “yeah, Wii asked me how you looked too.”

“Seriously?” Now I was convinced she was joking.

“I’m serious! It wanted to know if you looked fit, heavy, etcetera,” she replied.

My wife thought it was funny. I found it disturbing. I considered unplugging Wii, but I instantly flashed on the Zone episode where Telly Savales tries to off the evil “Talky Tina” doll — with fatal consequences for Kojak.

It wasn’t sufficient that Wii had invaded my privacy. That night, it invaded my dreams. In my nightmare, my wife approached me, clearly concerned:

Wife: “Wii asked me to give you a message.”

Mii: “Yes?”

Wife: “Wii says for me to tell you that it only wants what is best for you…that and it wants to borrow the car and your credit card for the weekend.”

Mii: “What?”

Wife: “It says it wants to check out the new Cirque du Soleil show in Vegas.”

Mii: “How am I supposed to workout?”

Wife: “It says it will be staying at the Bellagio under the name ‘D. Moriarty’ — you can workout there.”

Mii: “Absolutely not! First it’s shows on the Strip. Next thing you know we’ll have to mortgage the house to cover Wii’s gambling debts. We have to set boundaries.”

Wife: (looking scared) “Honey, I think we should give Wii what it wants.”

I looked into my wife’s eyes and realized we were in serious trouble.

The moment I handed over my keys and Amex to Wii, I awoke from my nightmare. As if visited by some weird 21st century Dickens ghost, I was delighted to find Wii precisely where I’d left it, and not carousing the Strip. Having realized the error of my ways, I promised to honor Wii Fit in my heart (and abs), and try to keep it all the year. Ever since, my wife and I have both exercised faithfully and are in the best shape of our lives. Wii is very pleased with our progress and I am happy to report that the three of us are living happily together. I have nothing but praise for Wii and I encourage everyone to buy at least one (though Wii says that three or four would be better).

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Coffee Klatch

coffee_cupDrive the length and breadth of Silicon Valley, and you’ll see lots of office buildings, homes to the biggest names in technology. Some are fantastic campuses, like the Googleplex. Some are garden variety leased office space. So what do they actually manufacture in these hi-tech HQs?

Coffee.

Bold, medium roast, espresso, latte, caf, de-caf, you name it. Silicon Valley makes really good coffee. But do they make anything else?

Well sure, they make software and design hardware, but in the 21st century, do you really need office buildings to do that? What is truly gained by requiring employees to devote an average of 2 hours each day to commute to a central location? Is the cost in opportunity, rent, and the associated expenses of maintaining an office offset by a boost in productivity and revenue that makes it all worthwhile?

No. There is compelling data that suggests the opposite, that traditional offices are far more expensive and less productive than their alternative: virtual officing. Yet, in the 21st century, businesses nonetheless cling to 19th century office practices. That businesses are slow to adopt new technology is not in itself unusual. Over time, the adoption of advancements like the telephone, voice mail, fax, email, the internet, software-as-a-service, virtual meetings, voice-over-IP telephony, web 2.0, social networking, viral marketing, etc, have been impeded by the previous generation’s management best practices. In the particular case of virtual officing, there is a strong visceral force at work against it – managers are simply uncomfortable with it and are willing to pay a very steep price to keep their bricks & mortar.

Nevertheless, the sober realities of this economy are forcing many businesses to consider creative options to keep the lights on and the doors open – even if keeping the doors open requires closing the doors. Virtual office service Officebroker.com reported a 41% increase in virtual office inquires in June 2009 as compared with the previous year. These businesses are finding that gains in productivity and opportunity cost are as great as 200% over their traditional counterparts, enabling them to not only weather the downturn, but prosper as well.

In a 2006 pilot project, the Arizona Health Care Cost Containment System (AHCCCS) sent 4 employees home 4 days a week to gauge the potential benefits of virtual officing. The results were astonishing. The AHCCCS found that the number of claims processed by their virtual employees grew from an average of 2,101 claims medically reviewed per month to a seven month average of 4,700 claims medically reviewed per month! The authors of the report acknowledged how fantastic these gains might appear: “These numbers may seem incredible, but private sector firms like AT&T have reported increases in productivity of 75%!”

Additionally, the AHCCCS found that by offering telecommuting services to these four subjects, it saved each individual an average of $7,000 per year in vehicle costs. It also found substantial quantifiable benefit to the community as well – a total savings of $15,764.83 from commute-associated costs, such as traffic services, roadway land value, roadway costs, and crash damages. Finally, though not specifically addressed in the study, in can be reasonably assumed that the project yielded a compelling green dividend in the form of reduced CO2 emissions.

Given the potentially spectacular gains in productivity and cost savings, why aren’t captains of industry abandoning their corporate coffee clutches with greater, well, abandon?

Though virtual officing offers a relatively cheap and easy way to realize extraordinary efficiency and productivity gains, it is often dismissed due to management’s visceral discomfort with the notion of a company without walls and visible people. Managers don’t like it but, in my experience, they can rarely backup their feelings with rationale. At the top of the list of management excuses is that virtual employees can’t be supervised. This begs the question: “why would you want to hire employees that require supervision?”

Duh.

Though many companies are being driven to virtual officing by today’s tough economy, many believe the trend toward virtual officing will persist beyond the great recession.

One of these is j2 Global Communications’ CEO Hemi Zucker, who has presided over the company’s year over year growth in the outsourced fax, voice and email services categories, such as eFax.

Mr. Zucker summed it up this way: “businesses that have seized on technology advances have demonstrated a decisive advantage over their traditional competitors.”

Perhaps General George Patton said it best when he declared “Fixed fortifications are monuments to the stupidity of man.” Though his words were intended more for the Maginot Line than the Googleplex, they are still relevant over 65 years later, as there has never been a time when the when economic necessity and the tremendous capacity of virtual technology have had greater convergence. Those who choose to surrender their forts of industry today may well prove tomorrow’s corporate titans.


Note: this article is also available on San Francisco Chronicle’s “City Brights”

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