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Rating: 
Summary: Superb description and analysis--a must-read
Review: Changing Fortunes makes a solidly researched, reasoned, and documented case that large economic institutions-manufacturing corporation in this case-have a skewed bell-shaped curve of evolution. Each curve emerges almost unnoticed out of the debris of a fading economic institution-frontier agriculture in the case of the medieval Church, religion in the case of the Enlightenment, and piecework in the case of manufacturing. It rises rapidly to previously unimaginable heights of power and prestige (as peas in a pod, cathedrals and high rises are separated only by centuries), and then begins a long decline that never quite ends in demise (Christmas and Easter are relics of paganism, not the progency of a new religion). The reasons for the decline are varied and many, but several threads seem ever present: selfish interest replaces collective interest (American politics), accountability shifts from external to internal (American business), the network effect grows too inwardly dependent (Japan), and the life support of the whole thing-the everyday Joes and Joannes-feel more and more betrayed as they watch corruption replace commonweal. The shabby little personal deals these days between CEOs and Congressmen reminds one of the commerce in Church offices during the 14th through 16th centuries, which led to unprecedented levels of disproportion between principle and practice. The book Silent Theft by William Bollinger comes to many of these same conclusions from the commonweal-holder's point of view. Changing Fortunes documents its case very well. It is so lucidly written that typically leaden case studies are polished into brilliance by blunt, often witty assessments of corporate goofs. No softening the blow with genial dollops of well-wishing comes from this trio. And of goofs, boy are there some dandies. The sequence of awful decisions that took Xerox from poster-child of TQM (Total Quality Management) revolution of the 1980s to the blunderer of 2000 that shredded both their billing system and customer loyalty makes one chortle, but behind management's arrogant imbecilities are unemployment lines. The book is a goldmine of facts. Between 1982 and 1992 the number of U.S. business consultants went from 30,000 to 81,000 (if you can't do it, teach it). In 1998 102,171 MBAs graduated from American universities (enough to populate a medium-size city, and wouldn't that be a dull place). Such statistics hint at the explosion in business information and expertise now revolutionising U.S. corporate life. Yet how many bright young things lust for life at a widget factory? The authors cite many examples of manufacturing sector decline, but in the end the example they don't cite is the most telling of all: employment in the manufacturing sector is at its lowest point since 1961, and out-of-work statistics have risen every month for the last 27. Somebody's hurting, and it's not the guys at the top. Now recall that every seismic shift in thinking in the West since Rome has happened because the Joes and Joannes have become ill-served to the point where they no longer believe what they are told. Changing Fortunes certainly has its virtues. For one, its procedure is sound. The authors examine the Fortune 100 lists from the turn of the 20th century up till today. They find a scowly mask behind the veil with the smile: American industrial companies may be turning out more products than ever, and many of them may have healthy balance sheets, but their relative importance in the economy is inexorably declining in favor of firms based on technology, finance, and services. Classic Schumpeter creative destruction. Wonderful, until you realize that corruption is far easier in a service economy than in a manufacturing one. Enron, WorldCom, and the Wall Street analysts didn't manufacture a thing. For another, the authors' analysis is impressive. The companies they study are household names-General Motors, Xerox, Merck, Kodak. It's not hard to relate to those. These companies have survived some bad shakes-the 1974 oil price shocks, the rise of an information economy that sucks up the best brains, a compliant but aging workforce, and globalization that hurts as much at home as it does abroad. In search of lifebuoys corporations spent 13 years trying to convert to TQM, six years to soak up Business Process Re-engineering, and three years to embrace network technology. The first two had inward effects: management got better. IT, on the other hand, made for better informed and therefore more footloose customers. Despite all these stopgaps, the decline continues. In addition to its analytic interest, Changing Fortunes is a formidable resource of interpretive history. One detects the hands of dozens of grad students busily scrabbling together the raw material. The authors' main point-that industrial companies are on the way out-has a flaw, however: It is very US-centric. Offshore, manufacturing is still an extremely important engine of global wealth. Asia and Latin America set the pace in steel, cars, computers, televisions, and so on. If the authors had examined the top 100 global corporations instead of the Fortune 100, quite different conclusions might have turned up. One is that globalization has brought sovereign nations to grovel for the blessings of corporations the same way corporations grovel for the blessing of consumers. The ultimate penalty for the regressive thinking that congealed over the great corporations analyzed in Changing Fortunes is the inspiration it gives to the tiny little lumps on the next bell curve-the inspiration to respond to a brick wall by walking around it.
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