Connected: 24 Hours in the Global Economy

Altman, Daniel

3.11

76 ratings by Goodreads

9781400154296: Connected: 24 Hours in the Global Economy

ISBN 10: 1400154294 ISBN 13: 9781400154296

Publisher: Tantor Audio, 2007

What if you could look behind the headlines of the global economy to see how it really worked? Instead of listening to pundits, politicians, and protestors, you could see firsthand how everyone from migrant workers to central bank governors lived their lives. Then you could decide for yourself where the big trends were heading.

Now you can. Connected: 24 Hours in the Global Economy isn't another polemic for or against globalization. Daniel Altman takes you on a whirlwind journey through more than a dozen cities, gathering points of view from moguls, ministers, and the men and women on the street. At each stop, you'll hear how the world's workers played their parts in the events of a single day. Starting with their stories, related in their own words, you'll take on pressing questions in new ways: Can poor countries become rich too quickly? Can corruption ever be a good thing? Do companies need crises in order to stay competitive? What determines the global economic pecking order? Most important, you'll learn how the billions of decisions made by individuals can and do change the future.

Connected: 24 Hours in the Global Economy is part travel guide, part owner's manual—an absorbing, accessible, and essential road map for every citizen of the global economy in the twenty-first century.

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About the Author:

Daniel Altman has written for The Economist and the New York Times and is now a columnist for the International Herald Tribune.

Chapter One“ERICSSON AND NAPSTER TO UNVEIL ONLINE MUSIC SERVICE” WHEN DOES WORKING TOGETHER REALLY WORK?A scratched-up old train pulls in to the small station at Helenelund, just a few stops from the center of Stockholm. Outside the station, a road leads through a leafy working-class suburb. It passes under a low-slung highway, and there, across a two-way street, is a six-story cement building with the word “Ericsson” on the side. Next to it is another one, this one faced in brick. Behind them are two more. And there, off in the distance, the name of one of the world’s biggest builders of telephone networks is visible again.Six thousand miles away, at the wrong end of Los Angeles’s trendy Melrose Avenue, a plain office block lies unmarked except for a white sign that bears an abstract image of a cat wearing headphones. A couple of blocks down the street, a heavy metal band is scorching its way through a set in a studio that used to be someone’s house. These two buildings are the headquarters of Napster, a former file-sharing service that is now an online music store listed on the stock market.On the face of it, the two businesses make one of the oddest couples in the corporate world. One company is a pillar of its nation’s corporate identity, a leader in design and manufacturing for over a century. The other is an upstart that began life as an illegal network of tech junkies and only recently became a respectable brand. Ericsson has more than fifty thousand employees in 140 countries. Napster has a couple hundred, most of them located in those two largely anonymous buildings on the edge of Beverly Hills. Yet in the global economy, the age-old telecommunications giant and the cutting-edge music retailer had no trouble finding each other.For some time, Ericsson has been helping the operators of mobile phone networks to sell music to their customers, says Svante Holm, Ericsson’s sales manager for applications and content. Some of them want to slap their own name on the services, but others think that there’s a better way.“A lot of them say, we are not a music store, that’s not our core competence,” Holm says, speaking—how else?—from his mobile phone on a train somewhere in Europe. Instead, these operators want to piggyback on an established brand in the music world. Though it’s less than ten years old, Napster may hold the answer.“We looked at the different brands in the industry, and we saw that their brand was recognized more than anybody else for legal and illegal downloads,” Holm recounts. “We actually called them up,” he says. “We flew over to L.A. and met their president and their business development team. That was the first meeting, really, and then it all went from there.”In this case, Muhammad was not expecting a visit from the mountain.“We were like, ‘Wow, that’s a very interesting opportunity. I didn’t even think about partnering with you in this way,’ ” says Larry Linietsky, Napster’s senior vice president for worldwide business development. “And then over time, we began to understand what they were doing.” Where Ericsson had a technical platform looking for a brand, he explains, Napster had a brand looking for as many platforms as possible.It took six months of negotiation, but Ericsson and Napster came up with an online music service that would deliver songs to mobile phones and personal computers interchangeably. “The timing was perfect,” Linietsky says. “There’s nothing else like it out there today.”This time, working together really worked; Ericsson’s corporate customers wanted online music for their mobile phone networks, and Napster was glad to supply it—along with its hot brand name. But that’s not always how it goes. The road to corporate hell can be paved with extremely good intentions.Companies link up for reasons ranging from the idealistic to the downright venal, and they do it in several different ways. The most minor can be sharing technologies, as American and Japa-nese car manufacturers have done for decades. After that, there are several steps up the ladder to a complete merger, which can take the form of anything from two companies joining together under an all-new banner to a hostile takeover followed by layoffs and liquidation.The most successful linkups are usually built on a combination of comforting similarities and useful differences. Though that notion seems fairly obvious now, it wasn’t always so.In the 1960s, ambitious executives like James Ling of LTV and Harold Geneen of ITT constructed gargantuan conglomerates made up of dozens or even hundreds of often unrelated businesses. The rationale was to insulate investors against the ups and downs in any one industry by diversifying across several sectors. The reality was disappointing; with little in common, the component businesses were often hampered rather than helped by coming under unified management. In addition, executives sometimes used profitable businesses to subsidize those that were failing instead of simply letting them die. Their priority, it seemed, was not to make a profit for investors but to keep their own empires intact. Still, within a few decades, almost all of the conglomerates had crumbled or dissolved.These days you can usually find a strategic reason for a merger announcement, even if it’s not immediately obvious. An apt case study comes from eBay’s acquisitions. In July 2002, the leading Internet auction site bought PayPal, a Web-based system for buying and selling products, for $1.5 billion. At that time, eBay had its own payment system, called Billpoint, but PayPal’s was more popular. PayPal’s technology, like Billpoint’s, could be combined with eBay’s existing auction platform. By bringing on PayPal—with its well-developed payment infrastructure and its valuable brand name—the company would provide a streamlined, immediately familiar tool for buyers and sellers alike.Then, in September 2005, eBay offered $2.6 billion—with up to $1.5 billion more in performance-based bonuses—for Skype, one of the pioneers in voice-over-Internet telephony. Why did an Internet auction site need a telephone service? The reason wasn’t obvious right away, but there certainly was one. Several companies with big online platforms, like Yahoo!, Google, and Micro-soft, were getting into the voice-over-Internet business. If, one day, they decided to offer auction services, then they’d also have an added feature—voice—that eBay lacked. Nobody knew whether customers would want to talk along with their auctions... but they might. With a voice partner in place, eBay wouldn’t have to worry about getting caught in an unfair fight later on.Even mergers that make sense on paper can run into trouble because of personal and cultural factors. In 1997, when Morgan Stanley, one of Wall Street’s top investment banks, merged with Dean Witter, a similarly big name from the world of financial brokerages, it was the latest in a string of mergers bringing these two seemingly complementary types of businesses together. Yet the corporate cultures were jarringly different—a hierarchical, bread-and-butter retail brokerage firm versus a sparkling hothouse for financial wizards—and their respective leaders were intent on hanging on to power. They were so intent, in fact, that they touched off an eight-year battle over the future of the company. The infighting didn’t end until Philip J. Purcell, the Dean Witter man who had been leading the merged company, resigned in June 2005. His replacement, installed by rebels on the board of directors, was John Mack, the former Morgan Stanley president who was passed over for the top job eight years earlier.And those two companies were both based in the United States. When Daimler-Benz and Chrysler got together in 1998, the results were even messier. Daimler-Benz was a classic German conglomerate, backed by big banks and with its fingers in a variety of transport industries ranging from heavy trucks to airplane engines. Its name meant solidity and permanence, if not the cutting edge of technology. Chrysler was a down-the-line car company that had set a new standard for efficiency in the costly design process during the early 1990s but was shackled by a history of financial problems. In the past, its emphasis had been more on innovation than on long-lasting quality.At first it seemed as though the merged companies had little interest in cooperating, even in the tried-and-true format of basing their vehicles on similar chassis. The new company’s problems were amplified by several lawsuits related to the merger. But the main problem was figuring out which corporate model to adopt: that of Chrysler, striving to retain a lean-and-mean focus on building cars, or Daimler-Benz, a giant that relied on its workers’ loyalty and its reputation for quality.In 2000, amid calls for the resignation of the company’s chief executive, a well-known investors’ rights advocate said, “It may be better to have a miserable end rather than endless misery.” As the economy slumped in 2001, a downturn in the global car market made the company appear even more bulky and uncompetitive, a product of empire building by power-hungry managers. It took five years for the chief executive, J�rgen Schrempp, to resign, a decision that raised the company’s share price by 9 percent in a day, and other senior management from the German side soon followed. In the meantime, the economy had picked up, and the merger looked like it could finally work.For both Morgan Stanley Dean Witter and DaimlerChrysler, part of the problem was the idea that the marriages would be those of corporate equals. When two businesses of similar size get together, it’s not always obvious who should take control or whose culture should dominate. It may seem, in hindsight, that both merged companies made the wrong choice. The real failure, however, may have been ...

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