Thursday, June 5, 2008

The Corporate Culture, eBay as Ivory Tower

A few days ago I wrote about American corporate culture, the curious "I am invincible" attitude adopted by the rich and powerful, which includes big business. We will do it because we want to and we are too big for you to stop us. The process starts with bending the law just a little bit, when this is not noticed the law gets bent a bit more. After a while it is "What law?". One example would be our current government which decided that the USA is not bound by the Geneva Conventions, based on the opinion of one lawyer. Another example might be Microsoft which is still fighting regulatory issues in the EU.

How does eBay Inc fit into this culture of corporate turpitude?

eBay Inc AG (which includes PayPal) is a corporate octopus spawned from one man's personal website, run by squads of MBAs and lawyers whos periodic arrogant utterances are swiftly and expertly buffed and glossed with pretty varnish by a team of public relations specialists. Nothing unusual in that.

eBay has reached the point in corporate development where it believes its own propaganda.

eBay's CEO John Donohoe is a disciple of Harvard Business School Prof. Clayton Christiansen's theory of disruptive innovation. Innovation is not to be confused with creativity. Creativity is what Pierre Omidyar exhibited when he founded eBay. Innovation has been defined as as

the successful implementation of creative ideas within an organization

What does disruptive innovation have to do with eBay?

Good question. The whole theory is upper level academic economics material. "New market disruption" occurs when a product fits a new or emerging market segment that is not being served by existing incumbents in the industry. It looks like this is where John Donohoe is pointing eBay.

The stumbling blocks would appear to be that the emerging market segment he is aiming at, buyers who want a fixed price item are
(a) not particularly emergent, they have been around for a while, and
(b) already being well served through Google Search and Amazon.

The third stumbling block is that eBay is 'cheap'; all the risk is always assumed by the vendors.

Remember the less than successful eBay Express concept?

eBay Express never got out of a stuttering crawl because the basic concept, designed by theorists, was flawed. Participating sellers would loose what little protection they had on the core site because the concept ran contrary to PayPal standard TOS; while buyers wanted the express service with bells on, combined shipping, discounts etc. The concept could not compete with Amazon Prime which is heavily subsidized at considerable cost by Amazon. eBay expected the subsidies to be borne by the sellers.

John Donohoe in his ivory tower knows he is infinitely superior to a bunch of flea market sellers. However, even the upper class and their dogs are not invulnerable to fleas. Some fleas even understand the concept of network effect and we wonder if eBay is past critical mass and has reached saturation point.

The indicators are that eBay thinks it has established a monopoly.

In cases in which the relevant communication protocols or interfaces are closed standards the network effect can give the company controlling those standards monopoly power.

It is now proceeding with the ethnic cleansing of certain classes of sellers, closing down all outside links to exert even more control of the chosen few, and preparing to become even more dictatorial. Auntie May would probably say "Pride comes before a fall"

What do you think?

Y'all come back and PLEASE be sure to click VICTORIOUSLY on any interesting advertising links in the sidebar!

1 comment:

Anonymous said...

Auntie May sounds like a smart woman. eBay needs to look at what has happened to some other companies like Cold Stone.

Cold Stone had a great concept but upper echelons began esconsing themselves in their ivory towers; treating their franchisees like dirt. It quickly became apparent that CS corporate regarded some franchisees as "good" and others as "bad". Coincidentally, the "good" franchisees owned high volume stores.

CS also began a purge and soon found out that their favorites were more than willing to turn on them. eBay will soon discover the same.

What a shame that eBay will learn this lesson the hard way. I think they would have found that many of the people they spurned probably would have stood up for them and had in the past. I know I did, however, no more!

Anony Mouse