dispatches from the new world of work

Thoughts: Duh

"The frugal times forced [British Air] to focus on being profitable rather than big." —Economist, 04.28.07

Other Related/Recent:

"Despite a decade of banking mergers, there is no evidence that big banks are any more efficient or profitable than their smaller rivals."—Financial Times, on possible Barclays-ABN Amro merger (subscription required)

"When it comes to asking the stock market whether bigger banks are better, the current answer is a resounding 'no.'"—Citigroup analysis, 2006

Dick Kovacevich, Wells Fargo: "You don't get better by being bigger. You get worse."

NB: Saving grace, per TP, is that Royal Bank of Scotland counteroffer will likely result in breaking up ABN Amro.

#1: Duh.
#2: So why do we keep doing the same stupid stuff over and over and over?

Tom Peters posted this on 05/02/07.

Comments

I've been thinking about growth for the sake of growth for some time,
and I've written about my thoughts several times (
http://facilitatedsystems.com/weblog/2006/03/more-on-growth.html ,
http://facilitatedsystems.com/weblog/2006/06/s-curves-growth-and-discerning-your.html
). In fact, topics on growth made three of my top ten most popular
postings (#2, #3, and #6) of 2006 (
http://facilitatedsystems.com/weblog/2006/12/top-postings-of-2006.html
). Most recently, John O'Leary helped me think further through what
this all might mean (
http://facilitatedsystems.com/weblog/2007/04/does-sustainability-in-business-mean.html
).

So I'm glad you posted this, Tom, for you help confirm that I'm not
necessarily off base with my thinking. Your comments seem related to a recent
posting from Chris Nel
(
http://www.tompeters.com/entries.php?rss=1&note=http://www.tompeters.com/blogs/main/009659.php
).

Posted by Bill Harris at May 2, 2007 9:36 AM

Because the people who champion the idea benefit from it in a massive (Â£/$) way!

Posted by Stuart Jones at May 2, 2007 1:01 PM

You yourself once wrote that companies can't shrink their way to greatness. So the question is what's the right kind of growth? Presumably the urge to merge and acquire is because firms can't figure out how to sell their way to success. Conseuently, they fake short-term earnings growth with M&A and share buybacks and the like. The problem is, as I just wrote in a post about exactly this issue - http://www.small-big.com/2007/04/built_to_shrink.html - the larger an organisation gets these days, the harder and more expensive it becomes to coordinate people working together. The future is much lighter-weight, central controls and radically increased emphasis on de-centralised, network-based operations. The alternative: multinationals will buckle under the weight of their own top-heavy bureaucratic loads.

Posted by Andy Hobsbawm at May 3, 2007 2:18 AM

We keep doing it because it means tremendously big bucks for the executives of the merging companies (and their investment banker budies), and it pads their egos as well. Afterall, they are working toward their very own life size cutout as well.

Posted by Nick McCormick at May 3, 2007 11:35 AM