UBIQUITY: Tell us a little about yourself and about William Dunk Partners.
DUNK: I had been a graduate student in economic and urban history, and when I had to go to work for a living I took a job with a firm called "Corporate Annual Reports." I seem to have a knack for business so I eventually headed up the company. We'd interview the principal executives of America's largest companies and would write and design their annuals for them. That was my B-school education by accident and it was a wonderful experience. We often worked with several corporations in a single industry, such as banks, mining companies, a half-dozen chemical companies, a whole bevy of consumer product companies, and so on. After you interview the principal executives of several companies in the same industry year after year, you pretty much begin to know where they're hurting and where they're feeling good and how they think about things. It gives you a CEO-point-of-view. That's as good a business education as one can get anywhere. One-on-ones with executives under fire.
UBIQUITY: When did you start your present company and how has it changed since then?
DUNK: I started it in 1982, having moved from the four charming brownstones on 31st Street in New York City that housed Corporate Annual Reports to the 40th floor of a skyscraper near Grand Central. Suddenly I went from 75 people and a virtual beehive to just me, a bunch of boxes, and a telephone. In fact, when my first associate joined the company, he immediately added a fancy telephone system. Since I'd been used to dealing with some of America's and the world's largest cap companies, I decided to change the focus to very small companies for a change of pace. I had intimate connections with a lot of people in Silicon Valley, including some of the boutique investment banking houses, and so it became rather easy for me to pick up high-tech clients and help them in the investor relations area.
My clients now are about 98-percent chief executives, and the clientele ranges from the largest companies in the world to companies that have no revenues. There's no particular industry concentration: I have Chinese companies that are in light industry, and I have pharmaceutical companies, and telecom companies, investment advisors, and everything you want to imagine. We have one very interesting mortgage company which is trying to turn its industry on end. The mortgage field is riddled with excess services and costs which penalize the consumer and our economy.
My clients are from North America, Europe and Asia. Sadly, I don't have clients in Africa, and I haven't had clients in South America except a few in Mexico. The main thing that's changed over time is that ceo's started coming to me for strategic advice, so our core activity is to advise the chap who runs the company. We're typically hired by companies that are stuck on a plateau and suffering from complacency, but they know they want to get up the next mountain. The trick for us is to get our clientele to stop doing the urge and to start doing the important.
UBIQUITY: Well, you cover quite a bit of territory. DUNK: That's right. I'm glad they like to talk on the telephone, because I'm an old guy with children who are still young, so I like to be home with them. If we and our clients are going to really seize opportunity, we have to talk with them when they are in the thick of battle. Quite often, we go at it while they are on the drive home in their cars.
UBIQUITY: Where are your principal offices?
DUNK: I started this firm in New York City. I have an office there, and for a few years I moved to Dallas, so I have an office there, and because I've moved up to Chapel Hill, I have an office here. Because I do so much work on the West coast I should really open an office there, but I just share an office out there, in San Francisco.
UBIQUITY: How many people do you have? DUNK: The last time I looked it was 17, many of whom work in a contract status. They're either on payroll or if they're off payroll I account for virtually all of their income. I am trying hard not to get up to the high headcounts I had in the previous company where I eventually only had time to solve employee problems. We all prefer to spend 90% of our time on clients.
UBIQUITY: Do you rely much on technology to run your organization?
DUNK: Technology keeps happening to me, is the best way to put it. We're pretty virtual, but it's all by accident, not something that was particularly intended; in fact it was sometimes resisted.
I am the original Luddite. For instance, I had as a client one of the pioneer firms in video conferencing technology, yet I didn't participate in a video conference until one time the top managers in San Jose couldn't come to New York and I had a lot of investors that we thought should meet with them, so we went up to the the Seagram's building if I remember correctly anyway some building right there between Park and Lex. We did a video conference and immediately invented some of the rules of distance conferencing. But, as you can see, I backed into video conferencing which is a darn helpful technology.
Its secret, as you know, is that the transmission system does not resend static parts of a picture, leading to cheaper, compressed transmission. Avoiding repetition. I wish conference participants would take a cue from that and stop interminably repeating themselves. For this reason the best conferences have a deft moderator.
UBIQUITY: Talk about a typical technology client. What would you do? How would that work?
DUNK: I don't know how typical it is, but one small-tech client I'm working with has maybe $300,000 or $400,000 worth of revenues and is vastly unprofitable, and they're introducing some technologies in the biotech space. A wealthy investor from the West Coast who had put his own capital into the company asked me to get involved with them, so I went and visited with the CEO and asked, "Who's important that I should talk to around here?" I worked my way through the CFO and the guys that head a couple of their units, and their chief technologist. Although they're vastly unprofitable, they have a technology that's eventually going to take root in the marketplace, so their problem is that for quite a while they're going to need a continuous stream of financing. It's a problem that comes up often, particularly with the most interesting new technology companies. They need to have a CFO who can really do the job of securing the money.
UBIQUITY: So what were the hardcore issues you worked on?
DUNK: To begin with, the company had to get energy behind its main opportunity. Because of its software talents, it had become hugely unfocused. Under its roof, in addition to its cutting edge products, it had a hodgepodge of things such as a sports promotion effort, printing services, a web portal, etc. The proverbial kitchen sink. This confused the living daylights out of potential investors, and it muddled up everybody in the company-from top to bottom.
UBIQUITY: So what did you do?
DUNK: We got them to submerge all the two-bit stuff and to present a high-tech, future market face to the world. Now they are focused on what they can do that will radically alter some facets of the consumer marketplace. With this, they can pinpoint what they do about investors, partners, customers, etc.
UBIQUITY: What was issue two?
DUNK: They knew they needed a strategic alliance but they were focused on absolutely the wrong kind of partner. They lighted on a slow-moving Fortune 500 company who, or so they thought, had marketing clout where they needed it. Tech start ups have the same supply side mentality as the Chinese and Koreans: "We will build it and then we want to forget about it and just let you sell a lot of it." However, the partners they really need are in Europe and are not primarily marketers in the channels they think they want to reach. This is the only way that they will achieve the 35 to 40% compound growth rates they should be achieving. The best partners are very unlikely candidates.
UBIQUITY: What do you mean by that?
DUNK: A good example of how to get it right is Amgen. The founder George Rathmann got in bed early with Kirin, then Japan's number one beer company. With 50% market share at the time in Japan, it was not allowed to grow more in its home market. To Amgen it contributed scale-up fermentation production technology as well as a slug of capital.
UBIQUITY: So did you get these guys to go overseas?
DUNK: Not yet.
UBIQUITY: Why is that?
DUNK: Sometimes things just have to play themselves out. Companies get idée fixes which they obsess about and have to suicidally pursue. Only when they sink low enough, can they get themselves on a new path.
UBIQUITY: So, a few failures will give them a little humility?
DUNK: Well, I'm not sure it'll give them humility, but it will eventually make them shift gear. Trial and error upon error.
UBIQUITY: OK, that was a smaller company; talk now about a larger company.
DUNK: Lately I've been much taken by a large scale utility project orchestrated by one of our colleagues in Germany. Most of all, because it fits in with our current strategy for our own firm which consists of drilling down to get at high-leverage collaboration. That's how we make our living these days-teaching and doing mega-value collaboration.
UBIQUITY: So what did you do for the utility?
DUNK: In a word, we took out $54 million of costs while upgrading their generating system's reliability and consistency.
UBIQUITY: How did you do that?
DUNK: We've partnered with some major technology and industry companies who have devised the software and invested in the real-time system that monitors large-scale installations such as nuke and conventional power plants. Of course, such monitoring grids throw off heaps of data. What we bring to the party is a process for getting at the Waldo or finding the needle in the haystack. So we boil down the data and get to the bone.
UBIQUITY: In other words, you provide bottom-line interpretation.
DUNK: Right. Since Pearl Harbor in 1942, Americans always seems to have the critical intelligence somewhere but our communications systems simply cannot act on it. Likewise, with 9/11 or Katrina. Our distributed intelligence nodes know what's up, but the data bits don't beat a path to the brain.
UBIQUITY: What in your view is the most important thing that your clients need to be working on?
DUNK: The issue is collaboration, and the ability to apply ideas to different applications. What we observe is that all the very brightest ideas in the world are coming from smaller nations since the end of the Cold War. That means that if you are a big economy, you have a need to strike up relationships in the most unlikely places. You cannot buy up enough things to stay truly current, so you just have to work freely with people all over the globe.
UBIQUITY: Can you give us an example of a country everyone must dance with?
DUNK: Finland. I'll give two examples of its tremendous importance. One is Nokia. Who would have ever thought that Finland would produce the number one mobile phone maker in the world? It's not a case of a wholly new-invented enterprise. Nokia was at one time a forest products company. When companies change like that they commonly have to sell off all their other assets and get quickly refocused on the new business, but Nokia has gradually evolved into what it is today. Take a look, too, at Fiskars, the ergonomic orange scissors company, which some Dutch merchants started out as a blast furnace company in 1649. Nokia and Fiskars remind us that it's in the Finnish character for a buggy whip company to be able to turn into a leading tech or design company. They prove that anything can come out of anywhere.
UBIQUITY: Are you saying that Finland uniquely is a high innovation country?
DUNK: Well, we find that they have an unbelievable ability to apply ideas that are flying around in the stratosphere, waiting to be harnessed by down-to-earth men. We suspect this has something to do with the nation's unique place in design which has produced architects like Saarinen, clothing producers such as Marimeko, a host of beautiful glass designers, wonderful sparingly wrought furniture, etc.
Its ability to tap into foreign ideas probably has something to do with the multilingual make up of the population. They speak Finnish and Swedish. Up north we found a lot of German speakers, stemming from pre World War days when Germany was a key trading partner. There's English as well in Helsinki. And, due to the heavy hand of the Soviets, they can handle Russian, though they are glad the Russian Bear is now off their backs. Only the Dutch seem to have as much language ability as the Finns whose own language seems to have complex roots in central Europe.
Because Scandanavia in general is such a fertile idea pasture and because of the laws of comparative advantage, one is well served incidentally to introduce new products there first.
UBIQUITY: And there's a connection in this to the idea of collaboration.
DUNK: Absolutely. Let me give you a broader Finnish example. In the public health sector, this country has cut into its heart disease and cancer rates over the last 20 years in gigantic ways. We are talking about 20% and better improvements, all stemming from very aggressive public health tactics. The ideas for all of this were imported from Minnesota.
Way back in the '50s there was a Public Health professor named Ancel Keys at the University of Minnesota who went to the gods of the heart world and said, "Gee, if we could change our diet, get exercise, and cut down on smoking, we could vastly alter our heart disease rates," but all those leading lights had no time for him. All the sainted heart experts just didn't want to entertain his insights, even after he presented the results of a multi-country study. The U.S. and lots of other nations didn't put the findings to work; the only country that got it was Finland. And you'll find that kind of out-of-the-way smarts in several obscure countries has given birth to a number of technology developments.
My point is that if you look hard enough at Nokia you'll find that a lot of the stuff there was actually invented in other places, but that they applied it better and faster. The opportunity now for the U.S. is to become a much better idea importer, since it is already pouring its intellectual property out to Europe and Asia.
UBIQUITY: So application is king?
DUNK: Application, but also robustness and relevance. The other way we're vastly different in the new century is that we're full of systems that are not robust and not dealing with what people need. We refer you to an article on our website called "Systems on the Edge of a Nervous Breakdown." Your mobile phone is a wonderful example of a less than rugged system. If you live in Indiana, it is cheaper to call home from Germany than it is to call in from the East Coast. Your phone has too many functions you don't need, breaks too easily, experiences endless dropped calls, and has an unreadable face that is hard to operate. This is typical of systems that are over-designed and under-built.
Other than that, our cellular service is wonderful.
UBIQUITY: What's an example of irrelevant systems?
DUNK: A sparkling example would be our national electric grid. We know enough about it to know that it's not very robust, but there's also a sense of irrelevance in that when the grid was patched together we were still in a world where the provider of your electricity was usually next door to you, whereas now we transport electricity over huge distances and the grid ain't built for that! The irrelevance is that the systems are not only fragile and not robust, but they're just not built for what's happened to the world over the last 100 years. By the same token, it's reasonable to predict another huge blackout.
UBIQUITY: What can be done? And how does collaboration fit into the picture?
DUNK: What I'm saying is that there's not a piece of infrastructure in our country that's not in trouble and maybe not a piece of global infrastructure that's not in trouble. Whether you're talking software or systems, or talking about our educational system, or whatever, the sad truth is there's no entity that's big enough and wise enough to solve any of these infrastructure problems. In order to get enough intelligence and enough resources together to deal with these kinds of things and to accomplish the level of change that's required, what's needed, in our view, is massively parallel collaboration.
UBIQUITY: Are there some key elements in making collaboration happen?
DUNK: Yes, and they're very important. When I'm working on alliances or joint ventures I always get fresh evidence that we're just not equipped to collaborate: we're better equipped to compete. What commonly happens is that the chief executives will proclaim, "We're going to do this and we're going to make it work!" and make other kinds of brave promises. But then if you get down into the ranks you'll find that a typical reaction is likely to be, "What's our side getting out of this?" rather than what all of us are getting out of this. At the moment of truth, the soldiers get terribly parochial and mindlessly competitive.
So I think the beginning point in developing collaboration is to adopt what we will call a magnetic attitude where we bind to the other guy. Yes, I know that's a little touchy-feely, but nonetheless one of the real keys in this game is to get different heads together. To make the kind of massive changes we need to make and rebuild infrastructure, it's crucial to create collaborators, yet (to exaggerate a bit) competition is now part and parcel of our DNA. At least in the advanced, developed nations, competitive behavior is so imprinted that it can be very, very hard to get collaborative behavior.
To change the mindset, we have to find little ways of activating the logical drive of the 'left' brain and the 'intuitive' capacity or the 'right' brain. When you test for behaviors in large samples from various business audiences, you will find that both logic and intuition get short shrift. But they're the brain functions that get people to get out of smokestacks, and jump over walls. Incidentally, you will see on our website that we spend a fair amount of time studying brain development which we track in a section called Brain Stem.
UBIQUITY: Let's consider a specific attempt at collaboration and alliance. What did you think about the merger of Hewlett-Packard and Compaq?
DUNK: Years ago, when I was doing some work with the R&D people at HP, the HP executive I was working with, who was a top dog, admitted: "You know, we've had the impression around here that we're king of the mountain, and that was certainly true in instrumentation, where we really knew what was going on. But then we got into the computing world and we didn't know what was going on at all. Instead of being ninety percent of the market, we were three percent of the market ... and yet we still acted the same way. We knew too much or thought we did to creatively use people from the outside." As wonderful a company as it was, I don't know if it ever fully overcame that cultural problem which amounted to arrogance. Many American companies have the same problem today, not recognizing they are just ripples in the world pond
Today we're three percent of the global game and we'd better pay attention to what everybody else is doing. HP did not even capture the best of Compaq, and Compaq's ceo left the fold right after the ink had dried on the merger.
UBIQUITY: Assuming a desire to collaborate, what are some of the obstacles standing in the very way?
DUNK: A person who's described them very well is Blake Ives, a very interesting University of Houston computer scientist who's now focused heavily on personal systems and who's identified a number of different types of problems of collaboration. One concern is that when an employee moves these days whether the move is within the company or to another company he or she carries away an organizer or a laptop, and there's deep concern in each company that you are walking away with the store. No matter how benign, you're moving a knowledge pod, you're taking part of the knowledge factory with you. So companies and countries see their intellectual property walking out the door. This gives the lawyers a field day and enlarges the anti-risk paranoia that is hobbling business today. It is fair to say that the legal beagles are a major impediment to growth, transparency, globalization, and a host of processes that are vital to the survival of the corporation.
On the other hand, I, and national policy makers, want you to be as knowledgeable a unit as possible. I'd make the point that for companies to survive in the information age someone has to figure out how we more systematically build personal systems designed for secure collaboration and worker mobility. We must completely wrap our workers in knowledge clothing. Collaboration is crucial, so fostering it and protecting it is job number one. What we are seeing here is that the fundamental unit in a knowledge economy is one person and his laptop. The corporation is no longer our fundamental economic value creation unit, and it must worry as much about creating turbocharged-workers as it worries about security. Microsoft has made security its top issue: the nimble will focus on agile, informed workers.
UBIQUITY: What kind of corporate strategy would take advantage of the revised model you are presenting here?
DUNK: Changing from tight coupling to loose coupling. John Hagel and John Seely Brown recently wrote an article in CIO magazine called "The Joy of Flex,"in which they say: "Loose coupling makes it easier to improvise without worrying about disruptions elsewhere in the system." Most systems tend to be tightly coupled or hard-wired for cost-savings reasons that have even been exacerbated by the cost-shaving mentalities at work in most company suites, but the trouble is that it's really hard to go on to the next system. Now we have to change our systems every day. We tend to be locked in to what we have. Worse than that, the problem isn't just the systems are hardwired, it's that they are severely flawed: they're weak, fragile, and irrelevant, as I suggested earlier. The 'Flex' article is important, because it suggests that if we are to have a collaborative environment in which we not only get knowledge from different points but integrate it into systems, then we need to move from tightly coupled systems to ones that are loosely coupled.
UBIQUITY: And how could that move be made?
DUNK: By relying more on things like distributed intelligence, and biological models, and quantum thinking. Just the other day I was looking at something that made the point that a person has at least two brains. Besides the brain in one's head, there's also a brain in the gut that controls the digestive system and so forth. It's a fairly serious brain. I suspect that we're going to turn out to have more semi-brains, when we look at the body even more thoroughly, and we're going to conclude that the human system is the right model for man-made systems, because of the human system's qualities of durability, ruggedness, and resistance to attack. What collaboration is about is distributed intelligence, and I think that systems and governments and companies are all in such a degree of gridlock now that we desperately need to have broad-based intelligence coming into play everywhere.
UBIQUITY: Give us an example.
DUNK: A good example would be the healthcare system, which is in terrible trouble in the United States. But one of the hopeful things being developed is shared medical decision making, where you, as a patient, have a place at the table, and you and your doctor together reach a decision about what your medical course will be. A company that does that to the nines is Health Dialog in Boston, which can send you videos and give you online access as well as access to information in other forms. Then you can bring an informed discussion to the table, when you're talking with your doc, and weigh together which medical route you're going to go down. And that's quite a changed model for medical decision-making and amounts to collaborative decision making. And that's exactly what our company wants to help other companies understand: how to collaborate and what collaborations they should they be working on.
UBIQUITY: Let's end with a very short list of links you'd like people to explore to find out more about the main topics we talked about today. The first, of course, will be the site for William Dunk Partners, www.globalprovince.com/williamdunkpartners.htm. Care to suggest a few others?
DUNK: Other sites I'd encourage people to visit include: Our whole Global Province www.globalprovince.com; "All Those Unfamiliar Places," November 2004, Harvard Business Review Online; Society for Information Management www.simnet.org, Advanced Practices Council paper on far-flung teams; Association for Strategic Alliance Professionals www.strategic-alliances.org/; and "The Future of Work in a Changing Society," http://aurora.icaap.org/archive/handy.html
UBIQUITY: Thank you for an interesting discussion.
DUNK: Thank you. I trust that this means at least for now we won't be facing the ultimate existential predicament which is, "Tomorrow has been cancelled due to lack of interest."