The article (print version) is titled "Green is for Sissies."
It's interesting for students of management (like me) for two reasons. First, it gives a nice account of Exxon's "corporate culture" (and take Fin 6250 if you want to know what I think about that...) and promote-from-within policy.
Second, the article quotes some who are critical of ExxonMobil for not investing more in alternative energy.
While I do think we (as a society) need to find cleaner ways to produce energy, I think it's not obvious we should be expecting ExxonMobil to lead us there.
There's ample evidence that it's difficult for firms to invest in products that destroy their own markets. Go read Clayton Christensen's book "The Innovator's Dilemma" for more on this.
From society's point of view, investments in alternative energy should be made by whoever is going to make the best investments. If that's not ExxonMobil, then let's not bash them for not investing. Instead, let's tell them to be the best hydrocarbon company they can be, and hope that they distribute their profits to shareholders, who can then invest those funds elsewhere. And if the returns for investing in alternative energy are high, that's exactly where ExxonMobil's profits will flow, through reinvestments made by the the firm's shareholders.
(And please don't read this as an endorsement of everything ExxonMobil has done.... I'm saying ONLY that perhaps we should perhaps not expect them to be best able to invest in new technologies).
Anyway it seems like ExxonMobil is doing exactly this --- trying to be efficient in producing hydrocarbons, and then returning profits to shareholders for reinvestments.
The key to getting better energy technology is to make sure the returns to investing in alternative energy are high. And how do we do this? Tax carbon.
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Have you read "Hot, Flat, and Crowded"? Thomas Friedman proposes a floor on oil prices. With the price of oil swaying in just 52 weeks from a low $55 to a high $147 (and just now back to $60, it makes it very difficult for investors to know what the "price trigger" is for alternative fuel investments.
I have not read it (yet), but Friedman has been writing this in his NYT columns for years. He's one of the better (I think) popular press writers on economics.
Taxes and price floors would have similar effects on alternative energy investments.
I just read an interesting article in Fortune written by Alex Taylor III titled GM and Me which can be found here.
I think, the article hints at what you have suggested, namely that perhaps just as Exxon may not be the best at coming up with the next friendly fuel, perhaps GM with its “insular, self-absorbed culture” may not be the best at coming up with any innovative approaches to vehicle making any time soon.
I found Mr. Taylor’s final paragraph interesting, “If Washington wants to bail out GM, it’s fine with me… taxpayer money has been spent for worse purposes. But you have to wonder whether… GM is up to the job… As painful as bankruptcy may be, it would give GM the leverage it needs to redo its labor contracts and dealer franchise agreements, downsize the company, recruit new management, and position itself for an economic upturn in 2010…”
Of course, 2010 is fast approaching. Scott is there any company that has managed a turn around in one year?
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