THE CORPORATE ANNUAL REPORT:

An Artifact of the Age of Agile Competition


AN ESSAY FROM THE POSTMODERN PROGRAMME AT SIXTH AVENUE
Poor old Sinclair Lewis, satirical creator of the quintessential booster, George Babbit. Poor old H.L. Mencken, mocker of the American "booboisie," those fatuous philistines hooked on the pursuit of material goods.

Lewis and Mencken thought there was a better dispensation for those who got beyond blind worship of the THINGS produced by competitive enterprise. With all their modish "smartness," they believed in something nobler than the productions of an economic machine. They spoke for the high modern belief in beauty. Their smart-aleck style combined with their sense of something grand to keynote the high modernism of the first half of the twentieth century.

Pity them if they returned to postmodern America. They would find that the layered world of their imagining disappeared. They would find that beauty, that higher layer of meaning, became another raw material for a new economic machine. They would marvel or weep that that machine was more efficient and far-flung than anything they could have dreamt in their day. They would find that it could make almost anything for anyone almost anywhere in the world. They would see that "anything" could be almost nothing at all compared to the coal and steel of the old days. Ultimately it could even commodify itself.

In frustration, Mencken would be reduced to expostulating to Lewis, "Buncombe, Red!"

Lewis and Mencken would be in the world of the postmodern corporation. Here they would find a species of organization not born in their lifetime. They would find companies operating in a setting that would have bewildered the denizens of their Gopher Prairie or Baltimore.

If they were lucky, they would come across a book by Steven L. Goldman, Roger N. Nagel, and Kenneth Preiss. It would not restore their sense of a higher or better order of things beyond the competitive arena of business. It would, however, help them understand the conditions into which they had blundered.

In Agile Competitors and Virtual Organizations, Goldman and colleagues describe the environment and the characteristics of the corporation as it has adapted to the conditions of postmodernity. The postmodern environment as they see it causes persistent uncertainty through rapid and constant change. This environment is global: the boundaries of provincial American cities, of America itself, dissolved. Fast communications through electronic technology tie the environment together; they shrink time and space to a degree unimagined by Lewis and Mencken when alive.

In the continuous state of change and uncertainty in postmodernity, corporations, say the Goldman team, have changed. They no longer are hierarchical, self-contained entities. They do not make standardized products for a mass market. Instead, they are agile competitors. They are in the business of selling customized solutions to customers, not just products. They embrace the ubiquity of information technology and operate with a global perspective.

Their constant purpose is to devote their "core competencies" to the enriching of customers. They do not strive to stand alone. Instead, they create virtual organizations with other companies, even with their competitors. They do that whenever they see a market to be won and served. Cooperation is their "first-choice" strategy to enhance competitiveness. They create a marriage of convenience between their core competencies and those of their partners. When the market declines, they collapse the virtual organization created expressly to meet it.

The agile postmodern corporations are flattened organizations awash throughout in information and driven by the entrepreneurial spirit. They are multiple, flexible, strategic, receptive to change, diffused in authority. They always put market first and always are opportunistically searching for new ways to build stockholder value.

Agile postmodern corporations leverage the impact of their people and know that information is a form of power. They value people who think like owners. They encourage innovation, initiative, all in the interest of enriching customers.

"Lucky customers!" Mencken might guffaw to Lewis sarcastically.

"Lucky stockholders!" Lewis might retort.

If they saw the full-color annual reports that the global postmodern corporations send out to stockholders, they might briefly pause in their sarcasm. There in their fullness they would find the sparkling artifacts of postmodern capitalism.

The annual report to stockholders of course exists legally to give the financial status of the company in approved accounting form. But the financials are stored at the back of the book, unglossy and uncolored. The front of the book, by contrast, is glossy, colorful, and less tethered by acceptable accounting practices.

Imagine Lewis and Mencken arranging a set of such reports from publicly traded companies on a desk like an assemblage of archaeological artifacts. The assemblage would give them a vivid reflection of the postmodern corporation depicted by Goldman and colleagues.

It would confirm Goldman's assertion that the "agile/virtual" corporate model is not a theory but an empirical finding of fact in the field. By trial and error, companies found their way to "agility" because they learned that failing to adapt to the conditions of postmodernity would lead to extinction. (Indeed, we can easily name corporate dinosaurs that ignored the call of natural selection. Yes, Virginia, there once was a Pennsylvania Railroad.) The behavior patterns of the successful postmodern company trace themselves vividly through their annual report front section.

Take Safeguard Scientifics, Inc., for example. It emerged out of an old low-tech business systems company in 1981. In postmodernity, that date is ancient; it shows that Pete Musser, Chairman and CEO, saw the environment changing at an early stage and adapted. The spotlight is shining on Safeguard, as Pete says in the 1995 annual report. The company's remarkable success derives from its unbridled commitment to life in "a culture that encourages initiative, inventiveness and calculated risk-taking." Like many companies in this culture, Safeguard conflates form and content: it operates quickly and globally because of the ubiquity of information technology; and its special area for business investment is "technology-driven growth companies."

The intensity of postmodern style, remarked on cogently by Fredric Jameson, characterizes the appearance and the prose of Safeguard's annual report. The cover frames a bright red icon of plugs that seem to energize a cosmos in a container; the container hovers high above a gridded plane where people walk, almost all of them alone, hither and yon. Like many annual reports, Safeguard's announces the message right there on the cover, sharply etched in italics on the creamy border surrounding the icon: "seamlessly connecting talented people, entrepreneurial spirit and new technology." Each word rings the bell of postmodernist agility.

One other example: the 1995 annual report of Coherent Communications Systems Corporation. Safeguard invested in Coherent, nurtured it, and then took it public in 1994. The annual report tells the success story up front, on the cover: "1995 record sales up 44% from 1994. Net income nearly doubled over 1994." The gloss and graphics of the Coherent report rival those of Safeguard. But it sticks a little closer to the substance of its electronic products by depicting one on the cover--"Coherent 0050-8025A ICS1774 9511." This nondescript, black object on an electronic board is dramatically draped in the colors of eight rolled national flags. The single word "growth" peers through the flags--message enough!

If Lewis and Mencken were to doubt Goldman's description of the agile corporation, the Coherent report would confront them with a persuasive artifact. It is a textbook expression of a corporation operating successfully in a postmodern environment.

Lewis and Mencken would get a paradigmatic corporate story in a six-page presentation, each page with a two-inch color border. The colors range through blue, purple, red, orange, and green, and, again, blue.

Here is a selection of citations from the report that illustrate the agile corporation described by Goldman and colleagues:

"Fine," Lewis might comment to Mencken. "But WHAT are these hustlers selling?"

He would be justified in asking, for the product, relative to a steam engine or a hay bailer, is certainly nondescript to the naked eye. Coherent is selling solutions to customers through the sale of their customized products. Their products are mainly in those little black boxes wired together with other electronic gidgets. They cancel noise on phone connections, enhance speech on wireless and digital networks, cancel echoes, and facilitate electronic conferencing.

Truth is, Coherent makes things that help create the virtual world of electronic information technology. This is a world the high modernists would not know. The serious business of business in global capitalism is to a considerable extent the gossamer reality of cyberspace.

--To which Mencken might well again say, "Buncombe!"

But then, he would not be a stockholder. We who are stockholders read the Coherent and Safeguard annual reports with a good deal more respect.

What, then, of the layer of beauty to which our high modern minds pointed? We refer that theoretical issue to another inquiry at another time. One thing can be said, though. If beauty offers a possible solution to the needs of a new market, a postmodern corporation could agilely modify it as a customized solution for a special cohort of customers. It could surely find a partner with a core competency in beauty enhancement. That would lead to the commodification of beauty; but what a small price to pay for the benefit of customer and shareholder enrichment.

Such a thought would surely drive the shades of Lewis and Mencken back to the Elysian fields, or Hades, as the case may be. A stiff drink for Lewis and a good cigar for Mencken would surely help them get over their nightmarish exploration of the artifacts of the postmodern corporate world.


24 April 1996; updated 25 April 1996
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