The disappearance of the big conglomerates and their large research laboratories marks the current Age of Pennywise, Poundfoolish…

In the age of shareholder value and pennywise, poundfoolish corporate behaviour…, the disappearance of the so-called ACME companies and their large laboratories for fundamental and targeted research will have a negative influence on human development. Many of their inventions in the fifties and sixties of last century colour our daily lives in the 21st Century. Now that those laboratories have gone foregood under pressure of spoilt shareholders, there will probably be an “invention gap” in the second half of this century.

ACME (i.e. A(merican) Company Manufacturing Everything) was the universal all-purpose company from the Looney Tunes cartoons that supplied eternal anti-heroes like Elmer Fudd and Wile E. Coyote with an endless flow of fireworks and explosives, building material, electronics and whatever you could think of, to help them catch their drawn adversaries: you name it, they got it.

In real life, there were also a number of such ACME companies in the last Century: ITT, AT&T, General Electric, Siemens, Philips, Hitachi and Sony were companies that sold almost everything electronic and non-electronic to the whole world. Their products ranged from airplane motors to computers, telephones, batteries, cassette tapes, generators, trains, CD players and draglines.

Almost all these large companies had large laboratories where not only targeted, but also fundamental physical and chemical research was done. All this research led to countless inventions and new developments. The unbelieveable standard of life in the 21st Century would not have been possible without the efforts and achievements of these laboratories of these and other multinational companies.

However, as of the Nineties of last century, the urge for higher profits and elevated shareholder value forced many multinational companies to abolish their big laboratories, as they were “not efficient enough, not visible in the short-term annual results and much too expensive to be maintained”.

This happened to Philips that largely abandoned their worldfamous NatLab in the Nineties and Zeroes: initially under pressure of a threatening bankruptcy, a.o. as a result of the excessive expenditure of the laboratory and a series of costly flops and blunders that squandered the company's profits. Later as the consequence of a series of cutbacks by subsequent CEO's. 

It also happened to many other companies, like for instance AkzoNobel that sold their top-notch pharmacy branch Organon.

Fashionable expression like focus (i.e. focussing on one or two successful core activities while abandoning the other, less important or profitable activities of the companies) and shareholder value (i.e. maximization of the profit and dividend payments towards the shareholders) got hold of the boardrooms of the large companies, driven by  aggressive, gung ho shareholders. 

These shareholders made the executives focus on the (easy) short term profits and revenues, instead of on the long-term where the harder to get, but really interesting profits and revenues lie.

A few weeks ago, the Dutch, Nobelprize-winning professor Ben Feringa spoke about this phenomenon in Davos, while pondering about the start of his career at the Shell Laboratories in The Netherlands.

He noted with sadness that many of the large corporate laboratories had been closed in the meantime, “as companies had shifted their interest towards the short term”. Even the research centres of large universities had often been victimized by the omnipresent desire for targeted research and short-term gains, under pressure of the government and the corporate principals of such research. Budgets for fundamental research have been cut on behalf of targeted research.

Feringa argued that fundamental research pays off, even if the results of such research seem to be disappointing or even totally useless in the short term. 

According to him the latter does not mean that it is wasted money, as intermediate results may give imput to new and more successful research or to new applications of used techniques and methods.

In Davos, Feringa stated that almost everything in for instance nowadays’ iPhones had been invented in such research laboratories during the Fourties, Fifties and Sixties of last century: LCD screens, transistors and many other electronic components that are now part of numerous high-tech electronic devices. 

What companies have forgotten, according to Feringa, is that it sometimes takes more than half a century to turn the fruits of fundamental research into viable products that can be brought to the market.

It is 2018 now: when we apply Feringa’s logic to the present day, it means that the fundamental research and the inventions being done today would create the solutions and commercial products of 2050 and much, much later.

The fact that such fundamental research is NOT performed anymore these days (i.e. to a much lesser degree than in the Fifties – Eighties of the last century), could mean that the large companies will probably run on empty in the end. 

They simply miss the fundamental research, innovative solutions and inventions that they all require in order to develop new, groundbreaking products in the future. You could call this the ultimate form of Pennywise, Poundfoolish: taking a rain check on the future by saving money today. 

And so, as a matter of fact, we are all living in the Age of Pennywise, Poundfoolish. Of course, you could argue that Elon Musk of Tesla has fired a Tesla car into outer space, using one of his own innovative rockets – the Falcon Heavy rocket – as a proof of his own innovative force.  

Isn’t that exciting?!

But please explain me then how much Musk’s rocket technology differs from the groundbreaking Saturn 5 Rocket that Freiherr Wernher von Braun developed and built in the Fifties and Sixties of last century. I think you will know the answer. 

The only great difference between the Saturn and Musk’s Falcon Heavy rocket is the fact that parts of the latter could land on earth again, thus reducing the costs of a launch considerably. However, when this is the only technological breakthrough in fifty years of rocket science since the Apollo launches, than it is quite disappointing, isn’t it?!

And it is the same with the self-driving car. The (computer and telematica) technology behind it is both innovative and exciting, but the majority of the foundations for it has been invented in the sixties and seventies of the previous century.

This proves that good inventions go a long way, but also take a long time to turn into something profitable. When the fundamental research – leading to such inventions – is not performed anymore, the innovation might stop eventually. 

And to make things worse: virtually the only companies that ARE heavily investing in (fundamental) research are information-driven companies, like Amazon, Facebook, Uber, AirBnB, Google and Apple. Companies that mainly sell and exploit information and customer data, but hardly sell tangible products (i.e. except for Apple of course). 

The research of these companies is probably mainly aimed at slicing up the human mind in order to see what makes us all tick. The results of this research will make people more sensitive for the products and services of these companies, as well as for the targeted adverts of (now) Facebook and Google. I dare to state that such research will make us all more addicted to usage of information technology and social media in general; something that does not make us more happy per sé.

In other words: this is not the group of companies that would take us to the stars in another galaxy; rather the contrary, I would say!

The disappearance of the large laboratories is a symptom of a much bigger problem in the Age of Pennywise, Poundfoolish. Another important symptom is the slow, but definitive disappearance of the large conglomerates like Philips, Sony, Siemens and General Electric.

Even though the companies and their names remain on the market (mostly), they have often changed beyond recognization. Many of their former subsidiaries and divisions have been sold or turned into independent companies, under pressure of modern executive managers and aggressive shareholders.

In case of Philips, the Dutch multinational electronics company, this has happened to for instant the divisions Lighting (now Philips Lighting which has an independent quotation and is cut loose from the mother company), semiconductors (now NXP), lithographic semiconductor technology (split into ASML and ASMI) and televisions/flat screens (sold to the Chinese TP Vision).

This de facto split up of the former Dutch ACME company Philips is very much regretted by former CEO Jan “Hurricane Gilbert” Timmer. 

Timmer was responsible for the largest rescue operation in the history of Philips, in which 45,000 people lost their job, but his efforts kept the company afloat and made it turn back to prosperity. 

Due to his past, Jan Timmer is an unsuspected, but nevertheless influential advocate of the large conglomerates that Philips once was and a very important one.

In spite of his high age of 86 years, Hurricane Gilbert still has a sharp vision on the current multinational companies that are much more monolithic than their peers in the last century, as the following snippets of an interview of Jan Timmer with Het Financieele Dagblad prove:  

The most important reason for Timmer to write his book discloses itself at the end of it. There he starts a ‘personal quest’ to find the causes for the massive shrinkage of the multinational. From a conglomerate that is active in the production of telephones, computers, lighting, semiconductors and chip machines, Philips turned into a producer of medical equipment alone. Especially the executive move to abandon the origin of the company – the Light division – was the reason for Timmer to express his thoughts on paper.

“In Africa I saw how large South-African companies were organized. They were set up as conglomerates, in which the separate parts had a quotation at the stock exchange. The mother company kept the majority of the shares, but the subsidiaries had an independent management team and an own Profits & Losses account. Such a set up had been my ultimate goal for Philips, instead of the large firesale that took place during the last decades.”

“Should Philips have kept a majority share in Lighting?”

“Yeah. With Philips as majority shareholder, Lighting would have been better protected. Otherwise it becomes a bitesize chunk. That is the biggest drawback and risk of mono companies [i.e. companies with one single range of products – EL]. You can’t warrant continuity with that.

After I left the mindset took a wrong turn. At the beginning of this century the company came in the grasp of American ‘corporate fashions’ like focus and share buybacks. After the sale of Polygram Philips was financially healthy again and thus the company should have made plans for the future. 

We sold Semiconductors in 2006. But then what?! We should have made a blueprint for what to do with the money. Unfortunately, I don’t have the idea that there was a plan. All that focussing that Philips did only makes a company vulnerable.”.

I agree so much with what Jan Timmer stated in that interview. Roughly three years ago, I expressed similar doubts in Philips’ current strategy in one of my articles:

Philips was an opaque company with an opaque geographical structure, opaque profit centres, an opaque production and marketing structure, opaque cash flows and opaque profits. There were just simply too many products, too many plants, too many departments, too many geographical profit centres and too many management layers and managers, leading to numerous ‘islands in the stream’ doing their own things, irrespective of what the executive management wanted.

But yet, it always seemed to work after all…

That is, until the company fell in the hands of a series of managers with less passion for engineering than for shareholder value, short-term economics and commercial management.

After a few extremely expensive inventions and developments went awry, because they were ill-thought through, poorly marketed, superfluous or simply too far ahead of their time, the subsequent CEO’s have torn the company slowly, but surely apart.

Factory after factory in The Netherlands and other Western European countries has been shut down, while the production moved to the Eastern European and Asian low wage countries. The head-office left its century-old roots in the city of its founders Eindhoven, in exchange for a new establishment in the more ‘mondain’ Amsterdam, which was close to international airport Schiphol.

And the number of subsidiaries, production lines and business units of Philips that were either merged with other companies through joint ventures, have been turned into independent companies or have been sold to other companies, has been long and growing: ASML, NXP, Polygram, Whirlpool, UPC and LG Philips LCD to name only a few.

After yet another strategic turnaround in the past decade, that should change the company into a leading developer of healthcare equipment, the company existed only of three main divisions: Consumer Lifestyle, Healthcare and Lighting. And since last year, Philips Lighting is also tagged with a “For Sale” sign.

This was definitely a shock for the avid endorsers of Philips, as Lighting was the oldest branch of the company. On top of that, during the last, very turbulent decades it has often been the last straw for the company to clutch at, when all else failed. The lighting branch has traditionally been a very stable cash cow over the years and Philips did more than its share of inventions, on their way towards effective and extremely energy-efficient lighting solutions.

The only thing that we all can do is hoping that the classic conglomerate companies, that have been responsible for so many inventions and so many cool products, can wrestle themselves loose from these disturbing trends of 'focusing' and  ‘shareholder value’, in order to get away from the Age of Pennywise, Poundfoolish.

There should be a future for innovative conglomerates that think about their long-term interests, their personnel and their customers, rather than thinking about the immediate needs of their shareholders alone.

And there should be a future too for the large physical and chemical laboratories that brought the world so many scientific breakthroughs and cool inventions. 

The human race is now more than ever dependent on that, in the age of climate change and global heating, leading to worse global droughts and higher sea levels than ever.

“You have to believe in us, because we say so! We are benevolent companies, that keep a keen eye on your interests, even if you can’t control us!”. Welcome in the Information Black Hole of Google and Facebook

What goes around, comes around!

A few days ago, my dear, hardworking neighbour Anita approached me. She was crying and at the brink of mental exhaustion.

Anita was a woman, who was struck hard when her husband divorced from her more than ten years ago. He left her behind with three (just) teenage children to care for, with no job and seemingly a grim future full of heartship ahead.

But when the going got tough, the tough kept going: Anita started an online company in sports lingerie, which she built into a success, due to excellent quality lingerie, working days of 15+ hours and a customerfriendliness that was second to none.

However, one year ago Google changed “the rules” regarding SEO (i.e. Search Engine Optimization). Her previously reliable website, that served her well and generated many satisfied customers, was suddenly obsolete meaning that she did not end high enough in the search results anymore. And everybody with a mom-and-pop online store knows what that means: no ranking means no customers!

She was forced to redesign her whole website to the tune of tens of thousands of Euro’s. And a lion share of this money was consumed by consultants for new and improved SEO, in order to get the good ranking back that would bring her new customers.

Already then she was complaining that the expenses for the new website were eating a large chunk off her annual sales. But when she would not have done it, she would have been out of business soon. Not due to failing quality of her products or dissatisfied customers, but for online invisibility, as no-one cares about the third page of the search results.

And then came last Friday, with our small meeting on the street… 

Anita bursted into tears when we talked: she was still struggling with the new website and due to the continuing problems with SEO on her website, she had missed 40% in sales in one single month. A disaster… 

She would like to take a break, as she had worked so hard for such a long time, but she couldn’t do so, as there were so many things to do every day.

And Anita was bothered by the enormous influence that Google had on her company. Not only by changing the rules for SEO, forcing her to make vast investments, but also by putting the results of its own affiliated webshops in the top of the search results. Just because they can…

Personally, I have always wondered about Google and the products and services that it delivers:

• Why are so many people – including yours truly – willing to offer free content on Blogger, turning it into a huge success and source of income for Google?
• And why do none of the vast revenues coming from Blogger flow back towards their unpaid bloggers, except for income generated by the Adwords ads?
• Why can Google charge so many bills for clicks to their advertizers, while I as a blogger got hardly any clicks in the time when I still had ads on my site? And that in spite of the fact that I wrote new, original content on a day-to-day basis (in those days)?!
• Of course, I did not write clickbait and as a blogger I probably made every mistake in the 'successful writer’s book', which has cost me a lot of potential clicks. But still, where do all the clicks go and who gets them?! Am I just to suspicious about this and is everything fair and square?!
• And last, but not least: Who controls Google as a near monopolist in the online advert business and checks if they indeed do what they promise to do to their countless corporate customers?!

The answer to the last question is that probably nobody and no company can ever check and control Google, except for Google itself. In other words: it is their Information Black Hole and every online writer, webshop, news media outlet and online storechain is trapped in it!

When – in the days before online –  normal persons and (SME) companies put an advert in a newspaper, they always got a free copy as proof that the advert indeed existed and was displayed according to the preliminary agreed conditions and formats.

The same was true for radio or TV commercials. These commercials were aired on radio or TV and every company could check itself if its commercial was broadcasted correctly and at the right time.

But with Google?

“Yes, we targeted your online advert to your target groups. We did that exactly as you wanted. You can’t check that, unless you belong to your own target group. Only then you can see your own adverts. That is the way we work!

You simply must believe us, because we say so! We are benevolent companies, that keep a keen eye on your interests, even if you can’t control us… at all! So please pay us our money and don’t bother to investigate things further. We are totally honest and the fact that we manage all the data at places and times invisible for you, does not say you can’t trust us”. 

Or something like that…

Even if you do feel confident about the trustworthiness and reliability of Google – which I use at this very moment, I admit – you must agree that near-monopoly positions seldomly lead to better quality, better service, more customerfriendliness and more confidence among its customers. Especially when such companies are hiding between walls of unapproachability and meaninglessness for the average Joe Sixpack, when it comes to their goals, targets and business model.

Sometimes companies are simply too big to NOT fail in the end and Google may very well be one of them!

And then there is the elephant in the room. A company that is so influential and so opaque in structure and modus operandi via its news feeds, pushed messages distribution and search possibilities, that even the company itself can hardly crack its own code: Facebook!

I always had a love/hate relation with Facebook: I loved to hate it very much, because of its mainly dull content (“I have boring friends, y’know”), the overflow of pictures and videos of shiny, happy and successful people having a ball every day and the manipulative way the news and messages from my friends were put (or not put) in my timeline.

I want to choose my news and interesting information myself and I don’t want my news and interesting information to choose me! 

That is why I stick to my online newspapers (at least six per day) and my mostly Dutch and British news outlet websites.

After a few years in which I looked at Facebook very seldomly, but still got a more and more uncomfortable feeling from the company, I abandoned Facebook roughly two years ago. Since then I am careful to not be lured into another subscription, out of curiosity for certain information. Do I miss a lot of stuff? Probably, but it was worth it.

Yesterday I read an utterly disturbing and interesting article in The Atlantic, about the influence of Facebook on the last United States Presidential Elections. It was an absolute must-read and a reading hour very well spent. He are a few interesting snippets of this article:

The Trump campaign was working to suppress “idealistic white liberals, young women, and African Americans,” and they’d be doing it with targeted, “dark” Facebook ads. These ads are only visible to the buyer, the ad recipients, and Facebook. No one who hasn’t been targeted by then can see them. How was anyone supposed to know what was going on, when the key campaign terrain was literally invisible to outside observers?

[…]

But the point isn’t that a Republican beat a Democrat. The point is that the very roots of the electoral system—the news people see, the events they think happened, the information they digest—had been destabilized.

In the middle of the summer of the election, the former Facebook ad-targeting product manager, Antonio García Martínez, released an autobiography called Chaos Monkeys. He called his colleagues “chaos monkeys,” messing with industry after industry in their company-creating fervor. “The question for society,” he wrote, “is whether it can survive these entrepreneurial chaos monkeys intact, and at what human cost.” This is the real epitaph of the election.

The information systems that people use to process news have been rerouted through Facebook, and in the process, mostly broken and hidden from view. It wasn’t just liberal bias that kept the media from putting everything together. Much of the hundreds of millions of dollars that was spent during the election cycle came in the form of “dark ads.”

The truth is that while many reporters knew some things that were going on on Facebook, no one knew everything that was going on on Facebook, not even Facebook. And so, during the most significant shift in the technology of politics since the television, the first draft of history is filled with undecipherable whorls and empty pages. Meanwhile, the 2018 midterms loom.

The first red and bold text is to these eyes the million dollar question. A question that is just as applicable to Google with its own targeted ads, as it is to Facebook.

How can people know what is going on within the data warehouses of Facebook and Google, if nobody has control over the data flows that these companies process? And what about the protection of democracy and the truth in (Western) countries, when so much (deceptive) information is hidden and distributed below the radar to anonymous people that nobody knows?!

That brings us to the second red and bold tekst: will societies survive the way Facebook collects and distributes news, ads and (dis)information to unknown people and at what human cost will that be?!

Personally, I don’t care so much about the sheer fact that Russia and Russian agents have meddled into the US public opinion with (fake) news and targeted ads and, as such, have influenced the outcome of the American elections. 

What goes around, comes around!

It is hardly a secret that the United States via CIA, DEA, NSA and the whole alphabet soup of American secret services have meddled in countless elections in Latin America, Middle America, the Far East and Middle East and even Europe. 

And when the elections did not yield the preferred candidate after all, a small revolution was easily organized in the Fifties and Sixties of last century; especially in Latin America and the Middle East. All-in the name of the American defence against communism, aka the Domino Theory! 

So dear Americans: please stop with the whining and the crocodile tears about the interference of Russian President Vladimir Vladimirovich Putin into your presidential elections with your own ICT companies and simply cut your losses!

What was worrisome about the United States presidential elections, however, is the fact that a conspicuously deranged and dangerously narcissistic president like Donald Trump has been elected from it, due to both the alleged Russian disinformation campaign surrounding the elections and the extraordinary influence on the average, religious and conservative Joe Sixpack, that the alt-right site Breitbart had acquired via Facebook.

Of course the Americans have the legal right to choose their next president at will, even though people outside the United States would rather see that differently sometimes. 

Nevertheless, the fact that people have been (negatively) influenced and mis-/disinformed at such a scale is very dangerous. As if Pandora's Box has been opened. And it happened in a way that was totally invisible and out of grasp for other people and/or the authorities, due to Facebook's extremely targeted adverts and tailormade news, that are not disclosed to the general public. That's what makes this so bad.

When presidential candidates turn their opponents into black sheep by spreading blatant lies or disinformation in a public debate or publicly broadcasted commercials (e.g. think about the slanderous “Swift Boat Veterans for Truth (SBVT)” group from the George Bush Jr. campaign), the opponents can publicly react and debunk such stories. In the worst case, they can go to court with a complaint for slander or libel done by their opponent.

However, when such influencing all takes place under “a cloak of invisibility ”, directly into the minds of common people sitting behind their computers and doing their stuff on Facebook, it can turn into an uncontrollable and dangerous phenomenon. The Russians and Steve Bannon’s Breitbart discovered that already during the Donald Trump campaign, just like a bunch of Macedonian kids (see the aforementioned articles).

Who will be next to pull the same tricks? Xi Jinping? Kim Jung Un? Ayatollah Khamenei? Benjamin Netanyahu? Or one of Saudi Arabia’s ethically backwarded kings or princes?! It’s your pick!

As that is the main risk that Facebook, and the filter bubble they created, form: that people become influenced and ‘brainwashed’ to a point of no return. 

Nobody and nothing can influence their opinions with different news and different opinions anymore, simply due to these people being out of reach, living in their Facebook filter bubble.

It is like a hamburger lover who is forced to eat at McDonalds every single day, because all other restaurants are closed for him. He may still like it after a while, but in the end it might kill him.

That is the same with the filter bubble that Facebook introduced: when people don’t hear news and opinions anymore that counter (and even might throw over) their own opinions and dogma’s, they become brainwashed by their own truths and opinions in the end and stop thinking for themselves at all. In the end they become sheep, all listening to and obeying their demagogue leaders and opinion makers.

Hence the story of the German people in the time before and during the Second World War. These people were not all per sé bad or murderous (i.e. most weren’t in fact), but they all lived in their own filter bubble, presented to them by Adolf Hitler and Joseph Goebbels and their utterly demagogue speeches and radio news. They all thought to fight for a good cause, as it was the only cause they had heard of.

It is a ‘blessing in disguise’ that Facebook at this moment is “only” hunting for your money via personalized ads and personalized services, as well as for all(!) your personal data and your deepest secrets, via your likes, your click and reading behaviour, the news feed that you like and via their sophisticated, deterministic software.

And it is a blessing in disguise too that Mark Zuckerberg – even though slightly creepy and robotic in his behaviour – is not a bad person (at least not now).

But we all should fear the day that Facebook ends up in the hands of people with less noble motives (i.e. like the Chinese or Russian goverment(?) or mob groups from all over the world). Then the massive stockpile of very personal information, coming from more than one billion people, might very well turn itself against us and threaten us in our very existence.

That is the reason that Facebook (and also Google) should perhaps been split up, like ITT and the Bell company in earlier years. And that for the simple reason that there is now too much information and too much power in only a few hands.

Competitors have only the slightest chance to survive the purchase and competitive power of Facebook and Google unharmed; when there is a new market, these companies will inevitably take it over. 

The fact that the global information and advertisement market is almost solely in these two hands and that Google and Facebook control the distribution of nearly all the ad money in the world(!), is eventually killing for the old ‘dead tree’ media, in their role as defenders of democracy and society of last resort.

And when there are no independent and unfiltered media anymore for the people of the world, all the truths and topical knowledge in the world will be sucked up into the Information Black Hole of Facebook and Google, to be distributed at their will.

And besides that: think about the small mom & pop webshops like the one of my neighbour Anita. All these webstores feel that their future is in the choking hands of the information supergiants Facebook and Google.

Think about that, when you entrust all your secrets to Facebook and Google...