Comments

Steve Martin - "... let's get small ... really small ..."

Posted by sean at September 21, 2006 11:11 AM

Tomasko's key point is that size is the wrong goal. Lots of folks seem to want to write about smaller companies these days. The interview mentions "Small Mart" and there's Bo Burlingham's book, "Small Giants."

In some ways this is nothing new. Bill Gore and, now, Ricardo Semler, tout the importance of keeping working units below about 250 people. That didn't stop either one of them from heading up organizations that were much larger than that in total, but where plant and business unit size was limited by choice.

There are psychologists that tell us that the limit of groups where we can know everyone is tied to the size of the neocortex. For humans it works out to around 150. And the military has kept the core functional fighting unit, the company, at around the same size (200 or so) across ages and cultures.

But size is only part of the overall issue. There's also the public/private dichotomy. Public companies have to pay attention to things that private companies don't. You can argue that it's the price they pay for capital, but being a top exec in a public company is qualitatively different than being a top exec in a privately-held one.

Those two factors, small/large and public/private could explain why many companies lose their mojo when they go public. There's rapid growth that's hard to assimilate at the same time as the challenges change.

Posted by Wally Bock at September 21, 2006 11:50 AM

There are big corporations that act small with decentralized management and small companies that act large with senior management trying to control every decision. Typically the bureaucracy grows exponentially with the size of the organization and it is seldom for the better. Then, it is usually the bureaucracy that goes first when the cost cutters come in to wring the profit out of the top line.

That being said, in companies big and small, it has been my experience that the most effective change agents in companies of any size are small empowered, enthusiastic groups that are isolated from the politics of the organization until they are ready to launch their program, Companies can act small when they need to.

I found these excerpts to be the most interesting in the interview with Bob. Referring to an earlier blog here on fostering innovation, large groups tend to foster fear (protect my ground) and small groups can foster comaraderie and positive emotions (let's show them what we can do).

"Among the things we've learned from the research is that when you do get caught in negative emotions, when you get caught in fear and in anger, which is something that seems to drive a lot of corporate behavior, you end up narrowing your vision. This is just the way your mind is wired to work. You develop tunnel vision. You lose peripheral vision. You lose your sense of creativity. You tend to act and react just in the short term. You tend to be kind of disagreeable and not very friendly.

Whereas people that are caught up in positive emotions, they trigger a whole different set of wiring and chemicals being released. Your mind operates very, very differently in a positive mindset than in a negative mindset. You're much more expansive. You're much more open to new thoughts. You don't feel the need to reject them and defend yourself. You're much more able to connect ideas."

Posted by Tom Feeheley at September 21, 2006 12:44 PM

Wally & Tom - interesting. Love the part about "neocortex" and "emotions" since some feel Sad, Anger, Disgust, Fear, Surprise, Joy are primary emotions "hardwired into our cavepeople brains" - once served a role - now [negative ones] almost always inappropriate AND cause for sub-optimal performance.

1st 4 are negative, Surprise neutral, Joy positive - therefore wise TO exercise to stay in a Joy-Happy-Lovemark state to MANAGE affairs optimally.

http://www.reflectivehappiness.com/ "London Times" article here a MUST read - right column of website!

Posted by sean at September 21, 2006 3:04 PM

Wally Bock is right on that there is nothing new in BIGGER ISN'T ALWAYS BETTER's critique of bigness. Peter Drucker made some great arguments against the quest for size over a quarter of a century ago.

For me, the interesting question is: why in the face of all this accumulated wisdom - especially regarding the downside of growth through merger and synergy - do business leaders keep doing it?

And, maybe an even more important question, is there an alternative? Does growth always have to mean bulking up?

Posted by Bob Tomasko at September 21, 2006 5:10 PM

Dear Cathy:

Very interesting.

During the development of new theories about Management, a lot of new concepts appear.

This create a lot of confusion on Managers.

One of this concepts was "The real goal of a company". Most companies misunderstood it and believe that the companies that are bigger and bigger are the once that are better.

Mistake!

A company main goal is to serve and to obtain a Return On Invested Capital better every year. (ROIC not ROI!).

And must obtain a ROIC bigger than the competition.

With best regards buy brand viagra in canada

Juan Miguel Robles Vargas
General Manager
DEISA
Guadalajara, Mexico

Posted by Juan Miguel Robles at September 21, 2006 6:28 PM

Bob says: 'For me, the interesting question is: why in the face of all this accumulated wisdom - especially regarding the downside of growth through merger and synergy - do business leaders keep doing it?

I think there are two reasons, both connected to personal glory. Reason 1: mergers are a quick way to make the company bigger which we all know is the goal for lots of companies. Reason 2: You, the CEO, can achieve growth through merger without actually having to be responsible for organic growth performance for several years. You can always claim that you're still "absorbing the acquisition."

On a slightly related note, it will be interesting to see how Jeff Immelt does at GE in his quest for organic growth.

Posted by Wally Bock at September 25, 2006 4:12 PM

Wally says business leaders keep merging because it generates quick bigness which is the goal for lots of companies. Sadly, I agree. When I wrote "Bigger Isn't Always Better" I realized the arguments I was making were a bit like pushing water up hill. But I've also been pleased by the executives and a few investment bankers have responded positively to the alternatives layed out in the book, and told me they had happily left the bigness treadmill. There's hope.

Posted by Bob Tomasko at September 28, 2006 9:03 AM