Should Companies Be Worrying About Saving the Planet or Saving Themselves

When running a company (like a household or a country), it’s important to distinguish between must-haves and nice-to-haves. The latter includes a lot of charitable activities, work in the community, parties, little morale-building perks, as well as many other things that help a firm with its image in the community or to attract good people.

When times gets tight for a company, or for an industry (think dot-com crash), or even the whole economy (i.e., now), a lot of nice-to-haves necessarily go out the window. So when one of my students who works at Cisco (CSCO) told me Friday that they cut out Red Bull to save money — complete with a memo explaining the cost-benefit analysis — we both agreed it made a lot of sense.

Certainly if times are supposed to be tight at a company, but instead it’s business as usual on spending, then employees will justifiably wonder how serious management is about tightening up and focusing on the job at hand.

This came to mind when reading this morning’s Merc:

Sun executives argue engineers must help larger society, not just business
By Brandon Bailey
Mercury News

Engineering isn't just engineering anymore. In the 21st century, according to an upcoming book by two senior engineers at Sun Microsystems (JAVA), members of their profession must confront issues of environmental sustainability, intellectual property, economics and their own responsibilities as citizens of a global community.

"Citizen Engineer" was co-written by Greg Papadopoulos and David Douglas, both electrical engineers and computer scientists who are, respectively, chief technology officer and chief sustainability officer for Sun. Papadopoulos is responsible for Sun's research and development efforts, while Douglas coordinates environmental programs and heads the company's cloud computing and developer platforms division.

The book is part primer and part argument. The authors say they wrote it for engineering students, professors and working engineers who, in Papadopolous' words, "have that idea that maybe they need to think more about what they're doing."

I realize that the book would have been written months or even a year or more ago, but still it suggests an utter lack of urgency for a company that’s in

serious trouble

and has been

struggling for years.

I don’t blame the executives for wanting to pursue their pet projects, but I question the management that allowed (if not encouraged) this effort when the company is in a life-or-death crisis. If every employee, from top to bottom, does not have a single-minded focus on growing revenues, cutting costs and finding a way back to sustained profitability, then the company needs new leadership.

Sun just got two new directors nominated by angry investors, but Therese Poletti

argues

a more drastic solution is needed:

SAN FRANCISCO -- It's time for the board of directors at Sun Microsystems Inc. to wake up and smell the coffee.

Instead of adding two new independent directors to deal with the apparent downward spiral of the company's business, the board should look at replacing Sun's chief executive, Jonathan Schwartz, who got them into much of the mess in the first place.
...
Wall Street has put pressure on the company to cut costs more drastically and investors are impatient. Since Schwartz took over, the board authorized a 1-to-4 reverse stock split in November 2007. Its shares closed at $5.14 before the split took effect. After the split, its shares traded at $20.51. On Wednesday, its shares closed at $3.89, down more than 80%.

Sun announced another big round of 5,000 to 6,000 jobs last month, but some investors think they should do more. The company also took a big impairment charge for its $4.1 billion acquisition in 2005 of StorageTek, meaning the company is no longer worth what Sun paid.

"At this point the graveyard watch should be more aligned on how long Jonathan Schwartz keeps his job and how long Sun stays independent," added [analyst Charles] King.

Comments

[patio:]

If the media wasn't in the tank for the "man-made global warming' scam, the whole saving the planet nonsense would be over. Conserve energy, get the US off foreign oil to the degree posssible, don't pollute, all well and good.
But algores ridiculous CO2 is a pollutant, and global temps are going straight up, ( this bloated idiot got an Oscar and a Nobel prize?- we truly are idiots ourselves ) insanity is over. 10 years of cooling, and nada in the mainstream media.

2008 Dec 22 07:51 AM

[carey_jim:]

The government has a similar role to play in the economy as referees in a football game.

We don't tell football players to go out and be nice to the opposition, to make sure they don't break any bones or necks.

Over time, referees and fans have settled on rules that make the game of football interesting without causing major injuries and death to the players (or fans!)

We as a people (our government) must put business rules in place that are intended to make business non-lethal for the planet, society, workers and customers and it shouldn't be a matter of telling individual CEOs to try to do it out of the kindness of their hearts.

Businessmen need to play their respective games to win, but the government (we the people) need to provide the rules of the game (AND enforce the rules.)

2008 Dec 22 01:40 PM

[User 324407:]

Sure, let’s forget everything that matters except profits, profits, profits. When the planet is no longer livable, who will care how much profit Such & Such, Inc. made getting there? Man(kind) does not live by dollars alone.

West illustrates the short-term tunnel vision thinking that has unfortunately become so prevalent in our society.

2008 Dec 22 04:47 PM

[Rampant_Rumor:]

Mr. West hits upon an important concern for Sun employees and investors. As the 10,000's of layed off and otherwise departed ex-Sun employees and 10,000's of suffering Sun investors fully understand, Sun's current "management" does not know how to run a profitable and growing business. As a result, Sun has destroyed or severely impaired the lives of many employees and investors. So talk by Sun executives about saving the planet are seriously misguided.

Except thru acquired revenue (StorageTek principally), Sun has not grown topline revenue in over EIGHT YEARS! And profits have been fleeting and primarily due to RIF's, facility closings, and Microsoft lawsuit derived payments. So User 324407's comment regarding "Profits. Profits. Profits" simply does not apply to Sun.

Likewise, poster Patio's diatribe regarding global warming is off base as well. Even if global warming were not an issue (the vast majority of legitimate scientists - including Nobel laureats - have concluded it is), companies buildng large data centers spend exhorbitant amounts of money on energy for powering and cooling computers, storage and associated IT equipment. So being "green" is laudable under all circumstances even disregarding the concerns over climate change.

Finally, the statement in the article "The company also took a big impairment charge for its $4.1 billion acquisition in 2005 of StorageTek, meaning the company is no longer worth what Sun paid." is factually wrong and just misses the point. Sun's net cost for STK was about $3 billion since STK had over $1 billion in cash/cash equivalents. And while it is true that STK is now worth less than Sun paid (name a deal over the past 5 years where that isnt' true) the more disturbing fact for investors and employees alike is that ALL OF SUN is now valued (market cap = $2.82B) at less than what Sun paid for JUST STK. This speaks to the incompetence and mismanagement that the Sun BoD has allowed to continue under the pitiful direction of Jonathan Schwartz.

Given that Sun is ostensibly run as a for-profit business, Sun's BoD must place the highest priority on achieving profitability and growth within established regulatory frameworks. Period.

2008 Dec 25 02:35 AM