Is business war? It is in the world of post-industrial, post-state conflict.
Battles between the corporate allies of nation-states and the transnational tribes and gangs of black globalization are at the core of this century's epochal war.
Meet the Competition
Jeffrey Ake, the CEO of Equipment Express, has become a poster-boy for this conflict. His visit to Iraq -- to manage his company's water and cooking oil bottling operation -- placed him squarely the cross-hairs of his guerrilla competitors.
The problem is that these new competitors don't play by the Queensbury Rules of American business.
The CEO as an Objective of War
CEO kidnapping isn't new. It is common practice in Brazil, Mexico, etc. The difference in Iraq is the motive. In Iraq, it isn't purely financial gain. It is being used as a way to unravel the fledgeling Iraqi government.
Here's why. America's second largest ally in Iraq isn't the UK. Not even close. Corporations like Halliburton provide almost as many trigger pullers and engineers as the US Army. They are the battalions of foot soldiers in Thomas Barnett's sys-admin force -- connecting Iraq to the US and the world.
This role converts CEOs into generals/colonels in the US globalization machine (leaders of new entrants in the rapidly expanding long tail of warfare). They are now legitimate and highly prized targets.
The Corporate Systempunkt
The corporation is a particularly bad organization for warfare. It is much too centralized. The institution of the CEO is a particular weakness (a systempunkt in global guerrilla lingo). The CEO's network centrality makes him/her a single point of failure for the entire corporate organism. Here are some of the ways this damage can flow through a company:
- Psychological trauma. We've already seen the results of this trauma at work on corporate decision making in Iraq. Ongoing assaults on corporate employees have caused numerous corporate withdrawals (over a large number of nationalities, which implies that corporate behavior in this regard is relatively universal). Assaults on CEOs ups the psychological ante: it pierces the flimsy veil between corporate behavior and the personal security of senior executives. The result is a greater level of risk adverse behavior within the target company and companies on the edge of involvement.
- Financial trauma. The departure of the CEO from a public company can create substantial market volatility in the company's stock (see this Fed study for more) for up to two years after the event. NOTE: This volatility offers the incentive of rapid financial gains to guerillas with the foreknowledge of attacks through leveraged investments in options and derivatives -- remember, in this crazy new world micro-finance and warfare are closely connected.
- Organizational trauma. The financial trauma (see above) is symptomatic of the organizational chaos a company goes through when a CEO rapidly departs. The pyramidal organizational networks of most corporations demonstrate a major vulnerability to the loss of its central decision maker. This is particularly true in a small entrepreneurial company like Equipment Express. Even after a new CEO is selected, he/she can be relied upon to change strategic plans, roil the ranks of senior management, and generally slow down decision making in the short-term.
What's Next?
Frankly, a CEO is an excellent strategic target as well as a tactical target. As a rule of thumb, I would consider all CEOs that reside/work within a nation-state at war with non-state guerrillas at risk. Under almost all measures of this new method of warfare, CEOs are better targets than government or military officials.
Remember, in this flat world, it is easy to pull up a CEO's name, address, credit history, and even a satellite photo of his/her home from a Cyber Cafe in Peshawar.
John blogs... "Frankly, a CEO is an excellent strategic target. "
Yes, look at this web page: http://www.orgnet.com/decisions.html
From Figure 1 we see that a hierarchy is just a hub-and-spoke network... remove the center hub and the network fragments maximally.
From Figure 2 we see that removal of the hub may not be as bad as imagined... but a key node is gone nonetheless and the emergent shape of the organization is different. Organizations are not like Legos, you cannot easily replace the missing brick.
The reports I saw about the masss of deaths at a feeding station in Iraq a few months ago led me to believe that the incident was exacerbated by the policies of the private contractor, a Halliburton subsidiary, which felt that it was easier to pack groups of soldiers into the place and keep them there to eat rather than comply with existing military policy of dispersing personnel as quickly as possible so as not to provide targets.
Here's an analysis from issue #12 of _Outlaw Nation_ , a DC Vertigo comic, published in August 2001. On page 14, the villain gives this speech:
"Gloves [one of the villain's agents] did good work in WW3, trashing all those piss-ant countries for democracy, fun and profit. Heh! Nothing that boy liked better than to shit in a peasant's well and then sell him Coca Cola.
"But a one-trick pony like him just couldn't make the evolutionary jump from cold warrior to new world orderly. He blamed me when the collapse of socialism didn't roll out the absolute state of America called for in the grand design..
"But the finance bombs of world war 4 make all the established conspiracies redundant."
"World war 4...?" the hero asks.
"Global capital's viral assault on the nation state. Don't tell me a smart kid like you hasn't noticed?"
John: is it possible that the one-man risk then is too high and corporations should start decentralizing CEO power again?
This isn't suprising at all. What I find interesting is that this phenomenon conicides with the privitization of military and security forces. If corporations are percieved as allies of the state, then wouldn't it make sense for those that supply services to states at war to provide their own security forces as well? It is out of the question to see a corporation execute para-military operations in the future considering that large untapped markets exist in the unstable, non-intergrating gap? It may not as far out as it seems. The bigger question looming over all this is what happens to the legitimacy of the state's monopoly on force?
This is the second post that I've seen referring to private security companies as the 'second largest' force/ally in Iraq.
This is true only in numerical terms. Without air support, etc from the US, how long would these groups last in Iraq? My guess is about a fortnight before they effectively ceased to exist.
A good example would be the fate of the triads and other private forces at the hands of the japanese after the fall of Nanking. A fearsome reputation and thousands of small arms held by groups motivated almost entirely by money are no match for a properly organised and ideologically motivated foe. Imagine Blackwater security and the rest trying to defeat the British army in Iraq? Size isn't everything.
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