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  Shane Greenstein
  Diamonds are forever, computers are not

Faculty Bookshelf: Diamonds are Forever, Computers are Not
Anthology offers Kellogg professor's eclectic take on technology

By Rebecca Lindell

Like any other professor, Shane Greenstein spends a lot of time thinking about his favorite research topics.

For Greenstein, the Elinor and Wendell Hobbs Distinguished Professor of Management and Strategy, that includes the rollicking world of high-tech markets and the often-curious ways consumers react in an environment of constant change.

Some of his insights evolve into papers that find their way into academic journals. Many do not.

Rather than allow those notions to evaporate into the realm of lost ideas, Greenstein has discovered another format for his musings. For the past 10 years, he has contributed to Micro magazine, writing about issues that range from technological convergence to the Microsoft antitrust trial to the Internet boom and bust.

Now collected in an anthology titled, Diamonds Are Forever, Computers Are Not: Economic and Strategic Management in Computing Markets (Imperial College Press), the essays offer Greenstein's unique perspective on the economics of technology.

"It's very different from my academic writing," says Greenstein, the current chair of the Kellogg School Management & Strategy Department. "Many of these are topics you can't put into an academic journal, but I felt they are useful for students and managers, so they ought to get out there."

Several of the essays were inspired by Kellogg classroom discussions, where students would raise deceptively simple questions such as, "Why did the Internet bubble burst?" Recognizing that the topic warranted a deeper explanation, Greenstein drafted an essay, "Explaining Booms, Busts and Errors," dissecting the bad assumptions underlying the high-tech stock market crash in 2000.

Other essays, such as, "Uncertainty, Prediction and the Unexpected" and "Forecasting Commercial Change," were also written in part to address students' concerns.

"I've gotten much more interested in subjects like managing a firm in the face of uncertainty, because our students are telling us that this is what they're facing," Greenstein says. "I learn a lot from them about what's missing in the existing literature."

Readers expecting a sober academic tone in Diamonds will have to look elsewhere. The essays are driven by Greenstein's ironic observations as he explores the economics and management of computing markets.

In the title essay, Greenstein discusses the rapid pace of obsolescence in the personal computer industry. Regardless of how recently the last innovation was introduced, he notes, consumers still seem willing to pay the price of a diamond ring for a new PC.

"If the budget is tight, it is a choice between marital bliss and a new computer," he writes.

In his essay, "Bill, Act Like a Mensch!", Greenstein urges Microsoft Chairman Bill Gates to revamp both his personality and his corporate culture for the good of the PC industry.

"Please do not take offense, Bill, but nobody has ever said you or your company possesses uncommon wisdom, warmth or character," Greenstein writes. "And, yet, to be fair, you seem capable. Moreover, the PC industry will be in deep trouble if you do not acquire some of these qualities. That should at least motivate you to try."

The Kellogg professor wrote the article during the 1999 Microsoft antitrust trial after receiving a note from a senior Microsoft manager who, Greenstein says, "sincerely could not understand why his firm was being subjected to scrutiny."

Greenstein, who had been commenting publicly on the case, thought the tongue-in-cheek essay could help the government and the company to understand each other's point of view. His chief contention: that Gates and Microsoft needed to be less confrontational and more sensitive to political realities.

"I don't know if they read the essay, and I never did hear back from the guy after I wrote it," Greenstein says. "But the funny thing is that whether they read it or not, Microsoft has since done a lot of the things suggested in the article."

Greenstein's book is available in the Kellogg School Emporium.

©2002 Kellogg School of Management, Northwestern University