Our new column will be an ongoing look at organizational growth in order to see if there is any similarity between how The Peter Principle as presented in Dr. Laurence Peter’s book with the same name described how Every employee tens to rise to his level of Incompetence and our own BIG is BAD theory that might apply to organizations growing to a size that almost guarantees failure.
Think about how, as a generalization, most companies focus on the “How do we get bigger” with the mindset that such automatically translates to Better. Perhaps it is an outgrowth of the Bigger is Better thought process we saw in the 1960’s and 1970’s. Bigger computer centers were better. Then we figured out how all that could fit in a box rather than a building. We also thought that Bigger car’s were better as evidenced by some of the largest tailfins imaginable. If it came from Texas, then the biggest state it was better. And I won’t even talk about body parts!
Probably the example of all time is Enron a great company in its early years that through wild unbridled growth simply got out of control to the point of where management didn’t even care about right or wrong. Just become the biggest and tell everyone you were the best!
How about the Big three automakers? Each year sell more cars to feed the old dinosaur. Don’t plan for what the market will need. Don’t sell what people will buy. Just keep pumping out more and more of what makes a profit for management. Keep making bigger numbers so that the shareholders will believe we are the best.
And talk about housing. Another market so insulated from real world conditions. You have a reasonably successful business building reasonable homes in a region of the country. Let’s apply the new theory of growth to our business. We will span out to a dozen new regional markets and build three times as many homes as before. In order to do that we will help finance anybody with a heartbeat. Sell them the stars and the moon. And in the meantime rather than build a corporate nest egg for the future we will pull tons of money out of the business and pay key management millions in dollars in compensation. Hey, they deserve it because they made bigger numbers. Now they go beg for a government subsidy.
And what about all those big box hardware stores. Same model. Start out with a manageable business employing construction experts that can help our customers. Then get bigger and bigger. In the process cut out most of the professional help, keep the store as clean as my dirty garage, reduce the variety of products, open one of twenty cash registers and then give the guy in charge a $200 million dollar payoff for making big numbers that don’t work. Let’s calculate how that $200 million could have paid the salary of some 6,000 people for the next year. Big didn’t work here either.
And finally need we talk about banking? The worlds biggest banks with the worlds smartest bankers pumped the bubble beyond what the imagination could dream. So big, so strong, so smart that simple people and even government regulators couldn’t even comprehend what was happening. They made The Notorious B.I.G. look small! So what do we have? A total collapse, lack of accountability, a taxpayer bailout and dismissed executives selling their homes to spouses for the price of an expensive waste basket to avoid the man.
My local baker didn’t do all of the crap. He’s pretty darn smart looking back at what happened. He’s small in size but big in performance. And so is my local hardware store. Been there for half a century or more. Always helpful with great service and unbelievable supply. Some people go there when they know the Big guys won’t have that particular item. I go there all the time to just to give him more business so that he can remain BIG in our little neighborhood.
Think about how, as a generalization, most companies focus on the “How do we get bigger” with the mindset that such automatically translates to Better. Perhaps it is an outgrowth of the Bigger is Better thought process we saw in the 1960’s and 1970’s. Bigger computer centers were better. Then we figured out how all that could fit in a box rather than a building. We also thought that Bigger car’s were better as evidenced by some of the largest tailfins imaginable. If it came from Texas, then the biggest state it was better. And I won’t even talk about body parts!
Probably the example of all time is Enron a great company in its early years that through wild unbridled growth simply got out of control to the point of where management didn’t even care about right or wrong. Just become the biggest and tell everyone you were the best!
How about the Big three automakers? Each year sell more cars to feed the old dinosaur. Don’t plan for what the market will need. Don’t sell what people will buy. Just keep pumping out more and more of what makes a profit for management. Keep making bigger numbers so that the shareholders will believe we are the best.
And talk about housing. Another market so insulated from real world conditions. You have a reasonably successful business building reasonable homes in a region of the country. Let’s apply the new theory of growth to our business. We will span out to a dozen new regional markets and build three times as many homes as before. In order to do that we will help finance anybody with a heartbeat. Sell them the stars and the moon. And in the meantime rather than build a corporate nest egg for the future we will pull tons of money out of the business and pay key management millions in dollars in compensation. Hey, they deserve it because they made bigger numbers. Now they go beg for a government subsidy.
And what about all those big box hardware stores. Same model. Start out with a manageable business employing construction experts that can help our customers. Then get bigger and bigger. In the process cut out most of the professional help, keep the store as clean as my dirty garage, reduce the variety of products, open one of twenty cash registers and then give the guy in charge a $200 million dollar payoff for making big numbers that don’t work. Let’s calculate how that $200 million could have paid the salary of some 6,000 people for the next year. Big didn’t work here either.
And finally need we talk about banking? The worlds biggest banks with the worlds smartest bankers pumped the bubble beyond what the imagination could dream. So big, so strong, so smart that simple people and even government regulators couldn’t even comprehend what was happening. They made The Notorious B.I.G. look small! So what do we have? A total collapse, lack of accountability, a taxpayer bailout and dismissed executives selling their homes to spouses for the price of an expensive waste basket to avoid the man.
My local baker didn’t do all of the crap. He’s pretty darn smart looking back at what happened. He’s small in size but big in performance. And so is my local hardware store. Been there for half a century or more. Always helpful with great service and unbelievable supply. Some people go there when they know the Big guys won’t have that particular item. I go there all the time to just to give him more business so that he can remain BIG in our little neighborhood.
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