“So much for ruthless profitability”
By Herb Drill
Those who cannot remember the past are doomed to repeat it.
George Santayana, author and poet
History, despite its wrenching pain, cannot be unlived, but if faced with courage, need not be lived again.
On the Pulse of Morning
Maya Angelou - author, poet, humanist
In the 1980s, there was a flurry of securities litigation focusing on corporate officer/director liability resulting from alleged corporate malfeasance, or outright fraud.
A wise corporate officer and/or director would mark those years and learn.
What do we have today? We have Enron, Tyco, Parmalat, Adelphia Communications, WorldCom, Arthur Anderson, et al.
“There is still time,” pronounced the sign in the closing scene of the symbolic movie, On the Beach. Maybe there is, if these corporate moguls – or mongrels? – harken to what’s written in Silver Lake Publishing’s first history book. To state it’s “unconventional” is understatement. Author Steven Levi’s
Use History Like a Tool: An Unconventional Guide to Reading the Past and Managing the Future" ($19.95, paperback, 298 pages, ISBN: 1-56343-774-0) isn ’t exactly Levi’s version of History for Dummies. There’s no limit to how much the reader should already know and understand. Even for history buffs, the conclusions on using history like a tool in every-day situations is still sage advice and an aide to personal improvement – particularly in the business world.
Levi picks historical events and goes beyond history book capsules year-by-year. He analyzes what events and circumstances converged to make each event possible at that time. To wit: Henry Ford didn't invent the automobile - others did before him; but Ford acted when all other factors were in place to make his business decision a success.
The people at Halliburton Co. might find it interesting that the last days of March saw world events which pointed to an historical trend in the making: the Organization of Petroleum Exporting Countries (OPEC) announced a plan to restrict already-tight world oil supplies. Unlike other recent efforts, this plan looked like it might work. Higher oil prices were only one factor in the surge in retail gasoline prices which marked early 2004.
Another factor was a cold winter in much of the U.S. kept petroleum refineries turning out heating oil, so gasoline inventory was already low. A high-profile refinery fire in Texas had a larger-than-ordinary effect on market prices. On March 31, OPEC stated it would cut crude oil production by 4%. OPEC’s plan was a blow to the Bush administration, which had been arguing against the cuts. Iraqi insurgents killed four American civilian contractors in a grenade attack in the central-Iraqi town of Fallujah. That news alone wasn’t surprising, but the behavior of some local residents was.One group pulled charred bodies from two burning vehicles and hung them from a Euphrates River bridge; another dragged at least one of the bodies through the streets and beat it with sticks. The White House condemned the attacks as the actions of people “trying to prevent democracy from moving forward.”
In his book, Levi explains how seemingly unrelated events like an OPEC price hike and animalistic violence in occupied Iraq can be related. Levi emphasizes the study of what he calls “history is motion.” That means looking for the cause-and-effect strings - which may not follow physical or chronological boundaries - which propel people and events.
What string was emerging in late March? The instability in Iraq was one major reason for a general move toward speculation in the oil marketplace. Investors were betting their money on rising commodity prices, especially rising oil prices, which, encouraged oil producers to turn out as much product as they could. Through most of the 1980s and 1990s, OPEC wasn’t able to enforce its production quotas on members. Cartel members were producing less oil than they wanted; the thought of shutting down even more pumps didn’t have much appeal. Non-OPEC oil producers like Mexico and Russia had taken up the slack when OPEC tried to cut back on supply. With oil at $35 a barrel, non-OPEC producers already were pumping as fast as they could. With productivity near maximum during uncertainty and speculation, OPEC’s plans to cut back seemed like a better idea.
In the past, oil traders took OPEC threats to cut production with a grain of sand. With member countries dependant on oil revenues, cheating is a constant fact of cartel life. The limits of physical production capacity are imposing a more powerful cap than any formal OPEC agreement. The decision to cut back seemed profitably ruthless.
What’s profitable today can seem absurdly wasteful in tomorrow’s economic and political hindsight. According to Levi: “From an historical perspective, profit is fleeting. Companies come and go; so do empires.
Businesses are notorious for making a profit today, leaving consequences for tomorrow. Historically, those people, companies and nations that exchange short-term gain for long-term prosperity usually end up losing both.”
Levi recommends readers look beyond the quick profit motive and toward the more subtle connections. He contends there are fundamental historical reasons for such thinking: “Any organization without dynamic leadership will find its own internal speed determined by required output. If you offer computer parts, you might assume shipments each day would depend on orders arriving. This isn’t always the case; instead, the department’s speed in packaging is going to be set by the lowest possible standard, which `everyone’ can meet. OPEC in early 2004 was just such a leaderless department, stumbling…even if it occasionally stumbled into higher prices.
So much for ruthless profitability.”
Levi argues that risk aversion leads to inactivity; this inactivity is a “major historical factor.” Book chapters include: Movement vs. Motion; Laws of Movement; Laws of Non-Movement; Signs of Ossification; Myths and History, and the Power of the Individual.
Steven Levi is the author of half a dozen books on education, culture, history, and management. He has been an instructor at several West Coast colleges and now he lives in Anchorage, AK, where he develops education programs for the U.S. Government. 1-888-663-3091 PDT or e-mail publicity@silverlakepub.com.