Wednesday, July 18, 2007

Guy asks What Were They Thinking?

Guy Kawasaki interviews Jeffrey Pfeffer about his new book, What Were They Thinking?. Snippets from Pfeffer's answer to why companies do stupid things, and on keys to global competitiveness:
First, they ignore feedback effects. There has recently been a lot of interest, and apparent surprise, that programmers in India now cost a lot and their wages have been rising rapidly. Did people forget supply and demand? ... Second, companies often ignore the interdependence or connections between actions in one part and those in another. So, even as some departments are trying to cut the costs of benefits, others are worried about recruiting and retaining enough qualified people... Third, many companies presume that incentives are the answer to everything, and have a very mechanistic model of human behavior.
The data on [global competitiveness] are clear — companies choose to locate their R & D facilities on the basis of the availability of talent. This is more important than tax abatements and certainly much more important than rates of pay. If location was determined by cost, Silicon Valley would be empty.

Pfeffer's advice on incentives: Be careful what you pay for — you might just get it.

Last year, Katherine Meyer's WSJ article of the same name detailed some astounding web inventions. "The Internet spawned so many weird gizmos and bad business ideas that mocking dot-com duds became something of a sport in the post-bubble era. But some ideas still stand out for pure silliness. These are products and services that attracted lots of publicity -- and, in some cases, millions of dollars in funding -- before folding."

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