Letters

June 1 1998 by Chief Executive


POWER TO THE PEOPLE

To the Editor:

Robert Falconi’s article on ESOPs (CE: April 1997) was very insightful. For the past decade, I have found ESOPs a handy leveraging tool for hard asset, poor service companies. They allow the biggest expense item, compensation, to be leveraged as if it were an asset. The tax-deductible component provides lenders the extra margin of security needed to gain comfort from a largely unsecured loan.

Bob Hughes

Director

The Trinity Group

Houston, TX

WHO’S NOT INNOVATIVE?!

To the Editor:

Michael Porter’s recent address to CEOs (“The Great Innovation Debate,” CE: April 1998) on the topic of innovation-or lack thereof, as he seemed to be saying-appears to me to be academia attempting to affect business when they should really just leave business alone. It’s really a non-issue.

We’re certainly being innovative and creative. What is coming out of the U. S. now in terms of innovation is leading the world. You only have to look at the Internet to understand our leadership position. We’ve taken what was essentially a dormant technology that existed only for the defense department and grew it to the point where it’s now changing the way the world does business. That critical evolution was driven by American innovation, not academia.

Look at a company like GE. The innovation coming out of that company is outstanding, and should be a model for industry, and for the world. A big part of that is owed to the fact that Jack Welch encourages his managers to take risks, to be creative. Look at AT&T versus Ameritech. AT&T managers are risk-adverse whereas Ameritech encourages managers to take risks-and the product of this policy is a very innovative company. Risk-taking is essential for innovation. Of course, the risk can’t be cavalier; it has to be carefully calculated. And that’s something U.S. business is quite good at.

The ideas put forth by Mr. Porter are being created for the purpose of having an issue for discussion. But the empirical evidence supports that American business is leading the world in innovation. We don’t need academia to remind us of this fact. We know that. And clearly the market and industry competition-not academia—will drive us to sustain our leadership innovation.

Sam Cassetta

Chairman and Chief Executive

Smartphone Communications, Inc.

Stamford, CT

To the Editor:

Michael Porter’s talk addressed a critical issue, but only touched the surface of the topic of innovation. Personally, I believe growth and renewal through innovation will be the corporate topic for the coming decade. My experience at SRI indicates that we are still learning to deal with rapidly shrinking product life cycles, increasingly complex technology, and larger interrelated systems. New strategies and approaches are needed, including specific strategies designed to capture targeted portions of larger complex value-added chains.

SRI has been a challenging and rewarding experience; the most enjoyable portion of the last four years has been the time I devoted to technology commercialization. D

William P. Sommers

President and Chief Executive

SRI International

Menlo Park, CA