Tuesday, August 29, 2006

Apple's Dilemma

No, no, this post has nothing to do with the burning of Apple Computers in Japan as reported in this WSJ story.

I am talking about Apple Daily, one of the most popular local paper here in Hong Kong.

From what I know the circulation of the paper has dropped in recent years (which paper hasn't?), and the paper has tried very hard to reinvent itself in order to lift sales.

The current management seems to think that the right way to reengineer the company and make it more innovative is to move people around (similar to the job rotation practice found in Japanese manufacturers like Toyota) and to get rid of those who are resistance to change (or considered to be old-fashion whatever that means). On top of that, you get a dose of authoritative management as well with the boss himself involving in most of the day-to-day operations. Should that be the way forward?

The short answer is: Nobody knows at this moment. Eventually market test will provide us with the answer.

But from an economic point of view, one can offer two observations:

1) Unless a culture of constant innovation is instilled into the operating routines of the organization when it is first created/composed, it is dubious that simply by moving people around internally, getting rid of some old staff and recruiting new ones will help transform an organization which lacks the "innovative genes/routines" into a more innovative one.

2) The heavy involvement of the boss in daily operations reminds me of central planning...how can one person presumably has all the relevant knowledge to make all those necessary decisions? The boss at Apple Daily is supposedly a follower of F. Hayek. How come he seems to forget the main lessons that are found in one of Hayek's monumental pieces "The Use of Knowledge in Society"?

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