WHO’S A BETTER PRESIDENT? OBAMA OR BILL CLINTON?

I hate that first Friday of every quarter, when I have to meet three of my school friends for dinner. We’ve met almost regularly since the past twenty years (yes, that’s how long ago I passed out of school... somehow). But over years, as much uncivil, raucous and impressively fat my three loudmouthed friends have become, have I become more docile, quieter and thinner. We’re the oddest Hangover combination; and restaurants that have been graced by our benign presence in the past, shiver at hosting us again... I keep asking myself, why do I keep going? And here I was again with them, a couple of hours into another Friday’s dinner, caught in a completely dunce of an argument about who has been the better US president till date – Bill Clinton (their choice) or Obama (my choice)?

To cut them all to size, I broke down my argument intellectually, and told them that a brilliant President/ CEO (of a country or a company) as per global research needs to have five outstanding necessary characteristics and how Obama had all of them:

Outstanding Characteristic #1: Passion: In a classy 2005 HBS paper, Dr. Jonanthan Byrnes (who also teaches at MIT), after an exhaustive international research, identified “essential characteristics” of transformational leaders. The top one was “capacity for passion!” Describing it as the “fire in the belly,” Dr. Byrnes says exceptional leaders are simply “people who leave their footprints in their areas of passion!”

I told my friends how one look at Obama speaking either after his win or even, say, recently in Cairo, was enough to prove how passionate a person he is. My friends retorted how even Bill Clinton’s State of the Union address to massive crowds proved his passion. In fact, the US economy had the most positive feel because of his speeches only. Sensing a tied point, I moved on.

Outstanding Characteristic #2: Dynamism: I argued that simply passion is not enough, but dynamism, both mentally and physically, is also a complementary requirement. In a May 2009 HBR paper titled ‘Those Poor CEOs...,’ Melissa Raffoni proves how the top characteristic of “The best, most successful CEO” groups is that “they’re made up of... dynamic CEOs”. In the book ‘The Ghosn Factor: 24 Lessons from the World’s Most Dynamic CEO’, Miguel Rivas-Micoud shows that Carlos Ghosn – CEO of two companies (Japanese Nissan and European Renault) – travels 150,000 miles on an average annually, or 411 miles/day! He’s half a week in Japan and half in Europe, every week without fail.

And that, I argued, is Obama’s forte, what with his travelling to various continents – Africa, Europe, Asia – within the first year of his getting elected. But then, I had to accept, in the most authoritative study of ‘Presidential Travels’ since 1953, the US National Tax Payers’ Union proclaims Bill Clinton is America’s ‘Best Travelled President’. I had to get to the next point...

Outstanding Characteristic #3: Authoritative: Yale University’s Prof. Samuel Huntington’s paper Political Order in Changing Societies says, “Authoritarian regimes are more capable of rational, consistent, and responsible decision making...” Prof. John R. Oneal of the University of Alabama, shows that “(shareholders) rates of return have been greater under authoritarian regimes.”

There is no doubt that Obama is authoritarian! When Obama wishes things done, he passes executive orders! From appointing different genders/ races in his cabinet to threatening truant countries despite opening up talks with them, Obama means business. Could Clinton ever do that? My friends remind me that not only did Clinton appoint Madeline Albright, the first woman secretary of the state in US history, but also actually declared war on Iraq (on 16th December 1998, as it refused to allow UN inspectors to inspect its various chemical plants). Hmm, they had a point... and I didn’t want to lose! So I gave them my best point.

Outstanding Characteristic #4: Driven by gut feel and emotions: The Burson Marsteller CEO Survey, 2006, shows how “no effective CEO is driven solely by numbers.” The survey further proves that 71.4% of high-revenue-company CEOs believe that “intuition and gut feeling” are very influential in guiding their decision making!

I showed how Obama doesn’t just go by numbers, but emotionally decides on the cuff too. His response against the police to the recent arrest of a Harvard professor proves it and he’s loved the world over for it. My friends corrected me that on one hand, Obama is not loved that much in Asia, and on the other, he looks completely non-emotional and military-like as compared to, say, Bill Clinton, who was and is loved like mad the world over – even in countries at complete war with US – and was one of the few presidents who cried when he got elected, and never felt ashamed of it. I was losing the battle.

Outstanding Characteristic #5: Multi-tasking: I rambled off how a dynamic CEO has to be a master multi-tasker! And none the better than Obama, who not only manages to host dinners, sign executive orders, travel, give speeches, but also manages to meet up school kids, replies to many emails himself, and most importantly, regularly exercises and keeps a fit body. Could Bill Clinton ever manage to do anything else while signing his executive orders? At this point, I saw my friends breaking up into uncontrollable laughter, giving each other high-fivers and almost toppling over. Before I could ask them the reason, one of them managed a few words through the howling episode, and said, “Dude, you’ve never heard of Ms. Lewinsky, have you?”

Damn it!!! I should have known they’d bring it up! Couldn’t the world look beyond personal indiscretions? Damn their laughs! Damn the Lewinsky factor!! I had had it with the dinner... It was useless arguing with this bunch, ever! And as usual, the whole restaurant was staring at us, what with the three garbling giants lying on the floor guffawing their guts off. It was a wonder they didn’t choke on something, given the tones they’d stuffed in during the dinner... Geez, I’m sure you all must be wondering why in heavens do I keep going back to having dinner with the Tyrannosaurus bunch. Hmm, I know, it’s a paradox, I keep asking that myself. I’ve known them for thirty years of my life now; and over the years, they’ve kind of become very close to me. I know that they look like aliens, they behave like aliens, but they really mean no harm and come in peace. Yeah, I hate them (sigh...), but I love them too...for in their life, there’re not many people they have as friends, except me... Guys, they ain’t heavy, they’re my brothers...

THE FIVE [HR] HABITS OF HIGHLY LOUSY CEOs©®

The last time I wrote my trademark ‘Lousy CEO’ dummies guide almost a year and a half back, I was strangely inundated with requests for a reprisal from my handful of‘ friends’. Sensing how my ‘loving ones’ were simply trying to stoke a similarity between my habits and those lousy CEO habits I’d written about (I have to admit, there does sometimes seem to be a remarkably frightening similarity...), I’d chosen to give their caring requests a sweet by. But as many bridges have already been blown on the river Kwai, I decided to finally present the second in the inimitable ‘Highly Lousy CEO©®’ series, focusing on the world’s worst CEOs and their equally (dis)regarded HR habits!

Lousy Habit #1: Believing old is the new gold!: Lousy CEOs passionately believe that the older they get, the better they become. Outstanding CEOs don’t, and realize that with age, they will lose their effectiveness! The Spencer Stuart CEO Survey report (November 2008, ‘Route to the Top’) shows how not only the median age of S&P 500 CEOs recorded in 2008 was lower than those recorded in the past six years, but also that in the past 28 years, the percentage of CEOs in the list who are either 49 years or below has increased by a smashing 29%! Compared to 53% of CEOs who were aged 60 years or above in 1980 in the S&P 100, today only 23% are.

Lousy Habit #2: Never say die...till you’re dead!: Lousy CEOs are infatuated with the hypothesis that they personally cannot ever be replaced. Outstanding CEOs commit themselves to succession planning. A remarkable 2009 Booz Allen report statistically proves how the count of planned successions (as a percentage of total successions) has increased over the past years. HBS wrote in 2006 (In Search of Excellence: In CEO Succession) how “merely announcing who your next CEO will be, can move (up) the market value of your company by 15% or more...”

Lousy Habit #3: Always recruit an outsider for a CEO!: Even if a lousy CEO buys the succession planning argument, he would almost always choose an external candidate over an internal candidate as his replacement. Outstanding CEOs always choose internal candidates. The 2009 report from Booz Allen titled Stability in the Storm proves – after evaluating 2,500 leading global companies – how even during times of downturn, 76% MNCs rely on internal CEO candidates to steer the company to safety. They state in another report (The Perils of Good Governance), “The outsider who comes in to whip a company into shape is most likely to get a thrashing.”

Lousy Habit #4: To hell with loyalty!: Lousy CEOs believe that if they don’t keep jumping jobs every few years, they’ll be perceived as being out of fashion. Outstanding CEOs almost never leave their companies during a lifetime. In a research I quote often, Forbes proves how a mind numbing 81% CEOs of America’s top 100 corporations have never changed their jobs (or have changed at best only one) throughout their lives! A monumentally similar 75% CEOs of leading non-US corporations have spent more than 35 years or more with the same company they lead.

Lousy Habit #5: Multi-tasking is for sissies; specialization is the future! The Institute for Innovation and Improvement profiled the legendary Bill Gates and reported that “Gates is the original multi-tasking man...” In fact, the ambidextrous Gates’ belief in multi-tasking is so supreme that “once, Gates hung a map of Africa in his garage, so he could have something to occupy his mind for the precious seconds spent turning on the engine of his Porsche.” Multi-taskers today are not only more educated than non-multi-taskers (78% more), but also are better paid (in general, a whopping 200% more) as they lead to more productivity (Dr.Gibbs in a Chicago Graduate School of Business co-authored paper). Lousy CEOs specialize; excellent CEOs multi-task!

With these words, I end this ‘lousy’ editorial! Man, these guys have started giving me too much varied work... Phew, I need a new focused job! But how the hell will they ever fi nd anybody who can do my job? Who cares... Hey, what’s this lousy slip doing on my table... and why’s it coloured a silly pink?...

Google Chrome OS: Opening a vein in Redmond

I need to study it some more, but here's my first take on Google's Chrome OS announcement (link). I think what they’re really saying is:

"We want to bleed Microsoft to death, and we've decided that the best way to do that is give away equivalents to their products. By creating a free OS for netbooks (the only part of the PC market that's really growing) we hope to force Microsoft into a Clayton Christensen-style dilemma. It can either cut the price of Windows in order to compete with us, or it can gradually surrender OS share.

"By using Chrome to set a standard for web applications, we also help to make the Windows APIs less relevant. So even if Microsoft manages to hold share in PCs, its OS franchise becomes less and less meaningful over time."

That helps to explain why Google would be pushing both Chrome and Android at the same time. If you're really serious about running a logical OS program in its own right, you'd try to rationalize those two things. But if your top priority is to commoditize Microsoft, then you don't mind pushing out a couple of overlapping initiatives. The more free options, the more pain caused.

The next question we should all ask is whether Chrome-based netbooks will take off. I'm skeptical, especially in the near term. Most people buy netbooks to run PC applications. Linux already failed in the netbook market because it can't run PC apps, and Chrome OS won't run PC applications either.

But in the meantime, Google can put more price pressure on Microsoft, and maybe that's the real point.

Two videos for mobile app developers

Just a quick note to let you know about a couple of informational resources for mobile developers.

--Motorola is starting the online publicity for its upcoming Android-based smartphones. They did a brief interview with me, asking how mobile app developers can distribute their software (link).

--Elia Freedman of Infinity Softworks did a great presentation on his experiences selling through the iPhone App Store, and the lessons he has learned. It’s well worth watching the video here.

It's best to watch both of these, and think about them, before you develop your mobile app.

THE DUMMIES GUIDE TO GLOBALIZATION!

It was almost as if I was waiting for that day. The cacophonic kids of my block are one intemperate, raucous and uncivil bunch belonging to the we’ve-just-now-entered-double digit- age variety. But I somehow kind of really like the cheeky brat lot of fifth and sixth graders. Thus it was, when one day while returning from work, I chanced upon the truants discussing how that day, one of their teachers at school had told them how globalization had worked for... I froze in my tracks, and didn’t even let them finish the statement when I literally jumped into them! Like I said, it was almost as if all my pent-up emotions were just waiting for that that moment to happen, as for ages, I had known ‘the’ answer!

Well, my first question is, is globalization really necessary for companies? This one’s actually a no-brainer. The noted neo-IT 2006 study titled ‘Globalization and the Impact on Shareholder Value and Revenues’, which used the Fortune 500 and S&P 500 companies as their research base, dramatically proved how companies that globalize “create more value for shareholders than companies that don’t globalize!” The year 2006 Accenture report, ‘Expanding Markets: Innovation and Globalization’ added that “the best performers [globally] were 83% globalized, while the average performers were only 18% globalized,” – which brings us to my second question.

Is India globalized? One of the most outstanding reports released by AT Kearney and Carnegie Endowment titled, The Globalization Index 2007, after analytically ranking countries around the world on multitudes of parameters like political engagement, FDI, technology, personal contact and economic integration, puts India at a lowly rank of ‘second from last’ (ahead of just Iran!). So much for our claims of being globalised! Jordan, Estonia, Tanzania, Senegal, Nigeria, Kenya, Botswana, Uganda, Ghana and many more are ranked above India. In 2002, the same report (Globalisation Index), based on the same parameters, had ranked India seventh from last! In other words, with each passing year, we have actually regressed when it comes to going global.

This brings up my third question – how many recognized, valued globalised product/service brands does India have? The answer is not two or one, but zero. Most recently, MilwardBrown released its much awaited Most Valuable Global Brands 2009 rankings. Out of ten Asian brands which fought their way into the rankings, 6 names were from Japan and 4 were from China! Zero from India. A similar tale is repeated in the most respected Interbrand/BusinessWeek’s Survey of top brands for 2008, where amongst 8 Asian brands, none are of Indian origin! What a shame!

Bringing us to my fourth and last question – isn’t India supposed to be the top globalised country when it comes to technology adoption? As per the 2008 report by World Economic Forum, titled, The Global Information Technology Report 2008, India is ranked a lowly 50 on ‘readiness to adopt technology’, much behind countries like Barbadoas, Slovak Republic, Latvia, Tunisia, Chile, Lithuania, Estonia and others. The February 2009 report by Nokia-Siemens, titled Connectivity Report 2009, proves how India Inc. stands battered at the 6th last position on the global rankings in terms of technology adoption by companies.

In straight terms, India stands shamefully last on almost all parameters of globalization... I was out of breath when I stopped bleating to the fi ve foot gang on the wretched global performance of India. A few moments of silence passed, when I realised that they were all staring at me, predictably stunned. I knew I had made a path breaking impact... till one of them spoke, “Mama [they call me that; it means Uncle, colloquially], guess you’re working too much. Not that we understood even a word of what you said, but all I had said was that our sports teacher told us today how globalization has worked for Indian wrestlers, as they get desi Indian food outside the country too... Mama, chill down...” Food?! Wrestlers?!? What was I thinking!! While slinking away totally embarrassed, I got my fi nal learning on the topic – globalization never works, not even with Indian kids!

Symbian: Evolving toward open

It's fascinating to watch the evolution as Symbian remakes itself from a traditional OS company into an open-source foundation. They've made enormous organizational changes (most of the management team is new), but the biggest change of all seems to be in mindset. A nonprofit foundation has a very different set of motivations and priorities than an OS corporation does. I get the feeling that the Symbian folks are still figuring out what that means. It's an interesting case study, but also a good example for companies looking to work with open source.

Symbian recently held a dinner with developers and bloggers in Silicon Valley, and I got to see some of those differences in action.

The first difference was the dinner itself. About six months ago, Symbian and Nokia held a conference and blogger dinner in San Francisco (link). It was interesting but pretty standard -- a day of presentations, followed by dinner at a large, long table at which Symbian and Nokia employees talked to us about what they're doing and how excited they are. The emphasis was on them informing us.

The recent dinner was structured very differently. The attendees were mostly developers rather than bloggers, and we were seated at smaller, circular tables that made conversation easier. They talked about their plans at the start, but most of the evening was devoted to asking our opinions, and they had a note-taker at each table. This had the effect of not just collecting feedback from us, but forcing us to notice that they were listening. That's important to any company, but it is critical to a nonprofit foundation that relies on others to do its OS programming. And it's essential for a company like Symbian, which has been ignored by most Silicon Valley developers.

So that's the first lesson about open source. The task of marketing is no longer to convince people how smart you are, it's to convince people how wonderful you are to work with. Instead of you as a performer and developers as the audience, the situation is flipped -- the developers are the center of attention and you're their most ardent fan.

It's an interesting contrast to Apple's relationship with developers, isn't it? It'll be fun to see how this evolves over time.

Here are my notes on the subjects Symbian discussed with us, along with some comments from me:


It takes time

Symbian said its goal is to have a lot of developers on the platform and making money, but that can't be achieved in three months. "In three years time," is what I wrote in my notes. That is simultaneously very honest and a little scary. It's honest because a foundation with its limited resources, working through phone companies with 24 month release cycles, simply can't make anything happen quickly. It's scary because competitors like Apple and RIM have so much momentum, and can act quickly. Still, in the current overused catchphrase of sports broadcasting, is what it is. An open-source company, based on trust, simply cannot afford to risk that trust by hyping or overpromising.

Speaking of Apple and RIM, Symbian made clear that it considers its adversary to be single-company ecosystems like Apple, RIM, and Microsoft. I didn't think to ask if Nokia's Ovi fits in that category, but that probably wouldn't have been a polite question anyway. Symbian also took some swipes at Google, citing the "lock in" deals they have supposedly made with some operators.

You get the feeling that Symbian is intensely annoyed by Google. It's one thing for a mobile phone newcomer like Apple to create a successful device; it's quite another for an Internet company to step into the OS business and take away Motorola as a Symbian licensee. I think one of Symbian's arguments against Android is going to be that Symbian is more properly and thoroughly open.

The question is whether anyone cares about that. Although the details of open source governance are intensely important to the community of free software advocates, I think that for most developers and handset companies the only "open" that they care about translates as, "open to me making a lot of money without someone else getting in the way." Thus the success of the Apple Store, even though Apple is one of the most proprietary companies in computing. Symbian's measure of success with developers will be whether it can help them get rich -- and I think the company knows that.


Licensees and devices

One step in helping developers make money is to get more devices with Symbian OS on them. Symbian said phones are coming from Chinese network equipment conglomerates Huawei and ZTE. They also said non- phone devices are in the works.

Licensees will be especially important if Nokia, as rumored, creates a line of phones based on its Maemo Linux platform. Lately some industry people I trust have talked about those phones as a sure thing rather than speculation, and analyst Richard Windsor is predicting big challenges for Symbian as a result:

"It seems that the clock is ticking for Symbian as technological limitations could lead to it being replaced in some high-end devices.... I suspect that the reality is that Symbian is not good enough for some of the functionality Nokia has planned over the medium term leaving Nokia with no choice but to move on."
Source: Richard Windsor, Industry Specialist, Nomura Securities

David Wood at Symbian responded that people should view Maemo as just Nokia's insurance in case something goes wrong with Symbian (link). But the point remains that Nokia is Symbian's main backer today. That is a strength, but also a big vulnerability. If Symbian wants developers to invest in it, I think it needs to demonstrate the ability to attract a more diverse set of strong supporters.


App Store envy

Another way to help developers is to, well, help them directly. Symbian said it's planning something tentatively called "Symbian Arena," in which it will select 100 Symbian applications to be featured in the application stores on Symbian phones. Symbian will promote the applications and perform other functions equivalent to a book publisher, including possibly giving the app author an advance on royalties.

The first five applications will be chosen by July, and featured on at least three Symbian smartphones (the Nokia N97, and phones from Samsung and Sony Ericsson).

The most interesting aspect of the program is that Symbian said its goal is to take no cut at all from app revenue for its services. Obviously that means the program can't scale to thousands of applications -- Symbian can't afford it. They said they'd like to evolve it into a much broader program in which they would provide publishing services for thousands of apps at cost. My guess is they could push the revenue cut down to well under 10% in that case, compared to the 30% Apple takes today.

It isn't clear to me if Symbian will produce the applications store itself, or work through others, or both. If it works through other stores, those stores might take a revenue cut of their own. But still, from a developer point of view it's nice to see an OS vendor trying to lower the cost of business for creating apps.

It's been interesting to see how many of the Palm Pre reviews this week have said that the iPhone application base is the main reason to prefer an iPhone over a Pre. I'm not sure how much purchase influence apps actually have -- at Palm, we had ten times the applications of Pocket PC, but they didn't seem to do anything for our sales. (On the other hand, Palm never had the wisdom and courage to advertise its apps base the way Apple has.)

--"Compared to the iPhone, the real missing pieces are those thousands of applications available on the App Store." Wired
--"Developer courting still seems like an area where Palm needs work. They've got a great OS to work with, but they have yet to really extend a hand to a wide selection of developers or help explain how working in webOS will be beneficial to their business. The platform is nothing without the support of creative and active partners." Engadget
--"The Pre's biggest disadvantage is its app store, the App Catalog. At launch, it has only about a dozen apps, compared with over 40,000 for the iPhone, and thousands each for the G1 and the modern BlackBerry models....It is thoughtfully designed, works well and could give the iPhone and BlackBerry strong competition -- but only if it fixes its app store and can attract third-party developers." Walt Mossberg

Anyway, if applications are the new competitive frontier between smart phones, mobile OS vendors should be competing to see who can do the most to improve life for developers. This is another area where Symbian's motives, as a foundation, differ from a traditional OS company. If you're trying to make money from an OS, harvesting some revenue from developers make sense. But as a nonprofit foundation, draining the revenue streams from your competitors is one of your best competitive weapons. Symbian has little reason to try to make a profit from developers, and a lot of reasons not to.


Driving Web standards

That idea came up again when we talked about web applications for mobile. As I've said before, I think the most valuable thing that could happen for mobile developers would be the creation of a universal runtime layer for mobile web apps -- software that would let them write an app once, host it online, and run it unmodified on any mobile OS. No commercial OS companies want to support that because it would commoditize their businesses and drain their revenues. But if Symbian's primary weapon is to remove revenue from other OS companies, a universal Web runtime might be the best way to do it. I asked them about this, and they said they're planning to use web standards in the OS "like Pre," and said they're interested in supporting universal web runtimes.

I'm intensely interested in seeing how the runtime situation develops. I think Symbian and Google are the only major mobile players with an interest in making it work, and Google so far hasn't been an effective leader in that space. I think Symbian might be able to pull it off, and become a major player in the rise of the metaplatform. But it'll take an active effort by them, such as choosing a runtime, building it into every copy Symbian OS, and making it available for other platforms. Passive endorsement of something is not enough to make a difference.


Other tidbits

Symbian said it's going to "radically simplify" the Symbian Signed app certification program, which may be very welcome news to developers, depending on the details. Many developers today complain bitterly about the cost and inconvenience of the signing program, and unless it's fixed it'll outweigh any of the benefits from Symbian Arena.

The QT software layer that Nokia bought as part of its Trolltech acquisition will be built into Symbian OS in the second half of 2010. I had been wondering if it would be an option or a standard part of the OS; apparently it'll be a standard.

Symbian plans to bring its developer conference to San Francisco in 2010, after which it will rotate to various locations around the world. This is part of an effort to increase Symbian's visibility in the US market. The company is creating a large office here, including two members of its exec staff. That makes sense for recruiting web developers, but it will be hard for the company to have a big impact in the US unless it gets a licensee who can market effectively here. In that vein, it must have been frustrating for everyone involved when Nokia announced the shipment of the N97 and it came in a distant third in coverage in the US (after the Palm Pre and the iPhone rumors).


What it all means

There are a lot of things that could kill the Symbian experiment:
--Nokia could decommit from the OS (or just waver long enough that developers lose faith).
--Symbian licensees could fail to produce interesting devices that keep pace with Apples, RIMs, and Palms of the world.
--Android could eat up all the attention of open source developers, leaving Symbian to wither technologically.
--The market might evolve faster than a foundation yoked to handset companies can adjust.

But still the Symbian foundation is worth watching. It has a different set of goals than every other mobile OS company out there, goals that potentially can align more closely with the interests of third party developers. It's still up to Symbian to deliver on that potential, but the company has an opportunity to challenge the mobile market in ways that it couldn't as a traditional company.

-----

Prof. Joel West of San Jose State was also at the Symbian meeting and posted some interesting comments about it. You can read them here.

Full disclosure: My employer, Rubicon Consulting, did a consulting project for Symbian a year ago. None of the analysis conducted in that project was used in this post. We currently have no ongoing, or planned, business relationship with Symbian.

CHOOSE FAST! ONE FRIEND OR MANY FRIENDS?

The argument dates back to a dinner I was having at a restaurant last week with three of my Austin Power school friends (yes, we all have a combined IQ that just about beats a tubelight’s... when it’s switched off), who were complaining rancidly that whenever we ate out, I always ordered the same old dish time and again. “Man, why’re you so against ordering different dishes? Look at the wide range we’ve ordered,” they all argued. When I tried to throw them off by mumbling something complicated about how core is better than diversified, they all pounced on me clearly highly irritated, and the grouchiest one of them threw me a choker, “If you’re so much in love with the stupid concept of sticking to your so-called ‘core’ dish, choose dude, which friend amongst us do you want? And choose fast...”

Cornered, my life flashed in front of me... Alright, not my life, but at least a few research reports I had read up a few days back on whether focusing on core businesses is more profitable for companies or having diversified streams of operations. Prof. Gert Bruche of The Berlin School of Economics destroyed the happiness of the core lovers when he proved in his working paper titled, Corporate Strategy, Relatedness and Diversification, that diversify ed companies “display a better performance” than single business companies. Another sparkling report by an erstwhile core proponent, McKinsey & Co, titled, Beyond focus: Diversifying for growth, proves how over a period of a decade, the market value CAGR of diversified companies stood 126% higher than of focused companies. There’s more. The report further clarifies how on one hand, while “the focused group tallied an average annual excess Total Returns to Shareholders of 8%,” the “diversified group notched up 13% annual excess TRS and higher median EPS growth…”

Then follows the pumped-up and charged to the core, ‘anticore’ study by Profs. A. M. Pandya & N. V. Rao of Northeastern Illinois University titled, Diversification and Firm Performance: An empirical evaluation, which proves how, “Diversified firms show better performance compared to undiversified firms on both risk and return dimensions. Diversification can improve debt capacity, reduce the chances of bankruptcy by going into new product/ markets, and improve asset deployment and profitability. Diversified firms pool unsystematic risk and reduce the variability of operating cash flow…” Even the iconic Professor Michael E. Porter of Harvard Business School argues in his almost revolutionary book, Competitive Advantage: Creating and Sustaining Superior Performance, “Resource sharing and competence transfers enable the ‘diversified firm’ either to reduce overall operating costs in one or more of its divisions, and/or to better differentiate the products of one or more divisions resulting in a price premium.”

The argument against core focus entities doesn’t change, even when we talk about the Fortune #1 company ExxonMobil. In his paper titled, Risking Shareholder Value, well-acclaimed consultant Mark Mansley of Claros Consulting, while analyzing the oil giant, proclaims and proves definitively, “ExxonMobil has the potential to transform the company into a total energy business, increasing global market share, through [vertical] diversification!” Another sparkling paper titled, Can Diversification Create Value?, by Prof. Tomas Jandik of Sam Walton College of Business, University of Arkansas and A. K. Makhija, Fisher College of Business, Ohio University, proves how for diversified firms, “this ‘failure’ to focus has been rewarded with higher firm values. Diversification can create value by opening up new investment opportunities...” The most celebrated Professor Belen Villalonga of Harvard Business School proves in his paper titled, Diversification: Discount or Premium? that diversify ed firms “trade at a significant average premium relative to comparable portfolios of single business firms.” Slapping worshippers of single business philosophy harder, he finally sums it all in one short line, “I find diversification as a premium!” Further good news to shareholders of diversifying firms comes from the Boston Consulting Group which, while mocking all praises about ‘core competence’, proves in its report titled, Managing for Value: How The World’s Top Diversified Companies Produce Superior Shareholder Returns, how during the years 1996-2005, not only did the majority of diversified companies resoundingly beat the stock market average by hugely significant margins, but also that a majority of the core focused corporations (almost 60% of them) were not even able to beat the average shareholder returns provided by diversified companies. The typical nail in the core coffin is the conclusive remark that, “There is no statistical correlation between ‘focus’ and shareholder value. The more businesses a company has, the greater the flexibility it has to reinvent itself and sustain growth.”

Even demergers ostensibly attempted by companies to focus on core businesses have ended up destroying shareholder value. BCG in its report titled, Conglomerates Report 2002: Breakups Are Not The Only Solution, it proves statistically how 70% of such break-ups to focus on lesser number of businesses in the past ten years, either “destroyed” or “did not create value”! Contrary to narrowing down multibusiness focus, diversifying mergers in the past 55 years have continued to deliver superior returns as compared to single-business deals, as proven in the landmark paper by Professor Mehmet Engin Akbulut and John G. Matsusaka, Marshall School of Business, University of Southern California, a report that analysed 3,667 mergers in the past 55 years.

But research be damned! With many highly annoyed restaurant guests starting to stare, I still had three massively slighted friends who were spewing fi re in front of me ready to put me on the stake, asking me to choose just one of them, and that too during a dinner where I was supposed to foot the huge bill. Cornered, I did the most intelligent thing – I apologized to my friends and accepted my mistake that diversification was better than core. With all the three gluttons guffawing away to glory in the most atrocious manner at their victory, I did the next most intelligent thing. I loudly asked the waiter to get four ‘diversified’ bills instead of one ‘core’ bill. I paid up my quarter part of the bill, wished my friends a loving goodnight, got up and walked away home... to my sweetest ‘core’ wife... Well, that sets me thinking, would one core wife be better or many diversified wives?... Hmm, not in this life honey, not in this life... Sigh...