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Thursday, March 15, 2020

Maybe size DOES matter?

Are today’s huge corporations handicapped by sheer size in becoming civilized workplaces?


I am always delighted to receive comments on postings and they are almost always interesting, insightful, and even profound. What’s more, they frequently provoke me into thinking more about some issue that I foolishly imagine that I have exhausted.

A comment on yesterday’s posting about W. L. Gore’s achievement in being voted—for the fourth year in a row —the best company in Great Britain to work for made me think more about the possibility that their excellence is due in part to their size. Gore is quite a small company (about 450 people). Maybe size is a key element in making a workplace that is civilized and fun? Maybe large organizations cannot produce the kind of workplace that would win competitions of this kind?

Here’s what I wrote in my response to that helpful comment:
. . . the key point, for me, is that they [Gore] dare to be different, stick to their way of doing things, and don’t accept all the conventional crap about not being able to combine a profitable business model with a culture that people truly enjoy being part of.

I am convinced that it’s quite possible for businesses of any size to make huge improvements in their corporate cultures, and still be successful in financial terms. In fact, the happier their people are, the lower the turnover, and the more relaxed and creative the minds behind business decisions, large and small, the greater that success is likely to be.

All it takes is three things that are, sadly, in very short supply in most top management ranks: the courage to be different, the imagination to see fresh possibilities, and the fortitude to ignore the inevitable carping and stick to what you believe is right.
As I see it, there is a handicap affecting large corporation: it’s the fear of taking a risk. Most lack the courage to act in ways that are different from the norm. But the reason isn’t solely their fault. Gore is a private company; they have no external shareholders—no mutual funds, financial institutions, or hedge funds—breathing down their neck, demanding profits at the expense of everything else.

Shareholders bear a very heavy responsibility for the pressure they put on corporations to avoid risk, maximize short-term profits, and generally toe the conventional, macho line on employment.

Shareholders bear a very heavy responsibility for the pressure they put on corporations to avoid risk, maximize short-term profits, and generally toe the conventional, macho line on employment. I’m not saying that executives and directors are innocent parties, pressured by evil shareholders. Far from it. They join in happily enough, looking to approval from these same shareholders to justify the vast rewards they vote for themselves.

It’s a symbiotic relationship: shareholders see corporations merely as sources of profits from dividends and capital gains (the bigger the better). They have no interest in how such profits are made, so long as executive action doesn’t become so gross as to jeopardize future gains. And the executives then see the shareholders as their “bosses,” the ones who can increase their rewards . . . or take them away. Neither side wants to even considered putting this happy flow of money at risk by trying anything new.

Most executives seemed to me to be very ordinary people, lucky to have made it to extraordinary positions, and more than a little bewildered at what to do next.

Courage, imagination, and fortitude: all are qualities most top leaders would instantly claim for their own. Sadly, their actions all to often prove that none of these fine attributes apply to them. They cravenly cling to convention, terrified of shareholder disapproval.

I’ve met many top executives. If I’m being honest, very few of them impressed me. Most executives seemed to me to be very ordinary people, lucky to have made it to extraordinary positions, and more than a little bewildered at what to do next. They lack the imagination to educate their own shareholders in the benefits they could provide by doing things differently. And they lack the fortitude to support those who do try something different, the minute that any criticism arises from the conservative-minded.

Can they change? We can all change. All it takes is realizing the need and making the effort.



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3 Comments:

holly said...

Hi Carmine!

Thanks for writing a post about this. I really like your ideas.

I think size in it of itself brings about problems a bit unrelated to shareholders. One thing is that it just takes longer to do things and make decisions. There is also more at risk when you have a large company (large company = many customers)

I do think that breaking corps down into further autonomous groups can be healthy, but as you point out it's up to the senior leadership to give that ownership and freedom. One company that I see doing this is Yahoo and their
Brickhouse initiative
(a group that acts like a startup within a larger org) we'll see how it goes.

P.S. Disclaimer: I do not work at Yahoo ;)

12:38 PM  
Carmine Coyote said...

Thanks for your comment, Holly. I really appreciate it.

Yep! Size does bring added problems of timing and co-ordination, but I'm sure that they can be overcome.

I actually think some of the risks are less with a bigger business. For a small operation, one customer might represent as much as 50% of their income. If a change ticks that customer off, you're in real trouble! A huge corporation has tens of thousands of customers, sure. But no one (or even ten or 100) of them has that great an impact on the bottom line.

It all comes down to the willingness of top executives to do what is right, not simply what is convenient.

Keep reading, my friend.

1:01 PM  
holly said...

Ah very interesting when you say risks are less because you are right, but I think those in leadership think risk are big: since there are more people and more customers, changes that they make are affect a lot of people and therefore the risks are big. ;)

Keep the ideas rolling... I will keep reading ;)

5:49 PM  

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