Is business war? It is in the world of post-industrial, post-state conflict.
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.
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.