Corporate transparency

Dave Long dl@silcom.com
Tue, 08 Jan 2002 10:46:15 -0800


>                                           Problems (for innovators)
> *primarily* occur when DISCREDIT or COPY succeed. 

Problems for innovators primarily
occur when LAUGH succeeds.

> DISCREDIT and BUY are unnecessary in a world with enforced transparency,
> and COPY becomes trivial --- therefore innovators have no incentives.

Why would BUY be unnecessary, or
COPY be trivial?  Transparentland
dominant players will still laugh *
at the innovators.  Some of those
innovators will still succeed, at
which point COPY and DISCREDIT are
only viable if they have not had
enough success to be established
as a new dominant player.  BUY,
on the other hand, even works for
that outcome -- at a higher price.

In both worlds, trade secrets are
not that important to innovators'
success; COPY becomes nontrivial
with entrenchment, not obscurity.

(YANAB&US was meant to mean that
secrets may be duplicated (nonU)
although not revealed.  Y != jb)

> I disagree with your conclusion, though.  DISCREDIT/COPY/BUY (or, in
> transparentland, just COPY) is a valid "investment" (i.e., strategy) for
> dominant player P --- and even for P's shareholders, since this strategy is
> maximally preserving of market share --> revenue streams to which share
> value is presumably tied in the face of challenge from disruptive
> technologies.

In a world where shareholders were
limited to owning but one stock at
a time, I would be able to agree,
however:

A valid strategy for P is usually a 
a valid strategy for P shareholders,
but strategies which are optimal for
P alone can be quite sub-optimal for
P shareholders.

In a transparent world, the optimal
strategy for the shareholders (who
can own P, Q, and R) may be that P
sticks to its knitting, which would
encourage innovation at Q & R.

Perhaps it is better to disagree
here (and hence on the main point
as well), as I recall you arguing
that Mr. Dell, even as an officer
of Dell, should be free to pursue
his own interests before those of
his shareholders.

-Dave

------------

* "you want to draw to an inside
straight?  don't you realize we
have the aces?"  (sometimes, the
card comes up)

"you're going to let that shrimp
challenge me?  has he even got a
shield bearer?"  (sometimes, the
sling shot hits between the eyes)

"you want to sail *which* way
to reach the indies?  just how
big do you think the earth is,
anyway?" (sometimes, the extra
continents are well situated)

Bertrand Russell points out a
problem with inductive belief:
the rooster says, "you think
the man might take advantage
of me?  haven't you seen that
every morning he comes out to
feed me?" (sometimes, The Man
wrings his neck instead)