A few tidbits from the last couple of weeks in the Intangible Economy:
From our friends at Circuit City — remember, the company who decided that it was a good strategy to sack the most experienced workers — came this pre-Christmas story (Circuit City’s Shares Tumble After Loss Widens – washingtonpost.com):
Circuit City laid off 3,400 workers in March to replace them with lower-paid new hires. This week, it announced the approval of millions of dollars in cash incentives to retain its top talent after the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each, and senior vice presidents could get $600,000, provided they stay with the company until 2011, according to a filing with the Securities and Exchange Commission.
At least some folks on Wall Street understood — according to the Post “The bonuses didn’t sit well with Merrill Lynch analyst Danielle Fox, who questioned whether Circuit City should instead focus on incentives for the people who sell its products in stores.”
Moral of the story (from Circuit City’s point of view): Executive VPs good; real workers bad. Not!
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More on the Internet gambling offset. In an earlier posting, I noted that the US has settled its Internet gambling trade dispute with Canada and the EU with “concessions” in warehousing services, technical testing services, research and development services and postal services. Just before Christmas cam word that the WTO has awarded the original complainant, Antigua, concessions in IPR. According to the International Herald Tribune:
In an unusual ruling Friday at the World Trade Organization, the tiny Caribbean nation of Antigua won the right to violate copyright protections on goods like films and music from the United States – worth up to $21 million – as part of a dispute between the two countries over online gambling.
The award comes after a WTO decision that Washington had wrongly blocked online gaming operators on the island from the American market at the same time it permitted online wagering on horse racing.
Antigua and Barbuda had claimed annual damages of $3.44 billion. That makes the relatively small amount awarded Friday, $21 million, something of a setback for Antigua, which had been struggling to preserve its booming gambling industry. The United States had claimed that its behavior had caused only $500,000 damage to the Antiguan economy.
Yet the ruling is significant in that it grants a rare form of compensation: the right of one country, in this case, Antigua, to violate intellectual property laws of another – the United States – by allowing them to distribute copies of American music, movie and software products, among other items.
Does this mean that Antigua will become the free music, movie and software haven? Will tourists flock to the beaches to pick up “legal” bootlegged copies of new movies? Unclear. Here is what USTR – Statement on Internet Gambling says:
The United States is concerned, however, that the Arbitrator agreed with Antigua’s request to suspend WTO concessions not just with respect to services, but also with respect to intellectual property rights (IPR). Any authorization pursuant to the award would be strictly limited to Antigua; every other WTO Member remains obliged to protect U.S. IPR under WTO rules, including enforcement against any IPR-infringing goods. Moreover, even with respect to Antigua, it would establish a harmful precedent for a WTO Member to affirmatively authorize what would otherwise be considered acts of piracy, counterfeiting, or other forms of IPR infringement. Furthermore, to do so would undermine Antigua’s claimed intentions of becoming a leader in legitimate electronic commerce, and would severely discourage foreign investment in the Antiguan economy.
So, this one is far from over. But it does set the precedent that IPR is not an ironclad right. It is a government granted right. And like any other government granted right, it can be granted or withdrawn as the government sees fit. It this case, the WTO recognizes IPR as just another trade law. Interesting.
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Finally, there is this recent story in Business Week summarizing The State of Innovation:
This year, surveys from three leading consultancies—Boston Consulting Group, McKinsey & Company, and Booz Allen Hamilton—show innovation remains a high priority for most corporate leaders around the world. There’s consensus across industries that innovation is a key growth driver. Unfortunately, the surveys also reflect a broad belief that most companies don’t have the leadership, systems, or tools to successfully and consistently innovate.
The story is a good highlight of the three reports (many of which have been mentioned in this blog) — and worth the read. The conclusions are not uplifting, however. Innovation is in danger of becoming a buzzword (see the latest IBM “Innovation Man” ads that play on this trend). Every CEO spouts the same rhetoric. But it is unclear that they understand beyond the rhetoric. And with a looming economic slowdown, we will see how many are willing to put their money (and other resources) behind the words. When business slows, innovation can come to the fore as a means of moving ahead (especially when resistance to change maybe lower). Or, it can be the first “extraneous” expense to be cut. We will see which mindset actually rules.
Such is the challenge facing the I-Cubed Economy in 2008. Happy New Year.