The Weakest Link
Gross, Daniel, Newsweek
Byline: Daniel Gross
Why industries should band together.
Remember that imported English television game show from a few years ago? The host would dismiss the unfortunate slob who failed to guess the answer to some obscure bit of trivia with a withering sneer: "You are the weakest link."
The Weakest Link was a zero-sum game in which the demise of one contestant enhanced the status and earnings of the survivors. Business has generally followed that ethos. The failure of a rival is an opportunity to pick up market share. After Circuit City went down, Best Buy thrived. When Toyota's Prius was recalled, consumers didn't stop buying cars. They just bought more Fords.
Upon glimpsing a rival foundering, executives think first about how they might take advantage, and last about whether they should toss a life preserver. But three recent examples show that's not always the best strategy. In each, the failure to band together to help the weakest link has had a negative impact on the entire industry.
At first blush, the corporate reaction to the oil spill in the Gulf of Mexico seemed to be collective irresponsibility. One would think that everybody worth his weight in petrodollars would recognize the ability of a single event to set back the entire industry by decades. The 1969 Santa Barbara oil spill queered the prospects of prospecting for oil off the coast of California for 41 years--and counting. And a Democratic president had just come out for expanding offshore drilling, over the howls of his environmentalist base. Given this, I would have expected the global oil industry to run in with equipment and expertise to clean up a spill. Sure, British Petroleum first downplayed the size of the spill, which started on April 20, and then said Transocean, which owned the rig, was responsible for cleaning up the mess. Yes, Shell offered up its training facility in Robert, La., to BP as a command center, and Exxon helped transport booms. But the broader industry generally remained mum--concerned about liability and competitive issues. Effectively, the industry outsourced the cleanup to BP, a company with a dodgy safety history that seems to be taking a public-relations lesson from Goldman Sachs. The CEOs should have formed a human boom to stop the slick. …