Big is Broken

I’ve seen a lot of blogs lately asking “Is _____ Broken?” You fill in the blank; The Free Market, Venture Capital, X Business.

I’m here to tell you that none of those are broken. What is broken is Big. Big, VC firms, Big Business, Big Market Funds, Big Real Estate. I would also take it step further and say that it’s not just big things, but traditional things.

It used to be that big companies (big anything) had an advantage at being big because they could optimize processes and realize all the additional profits. Now small companies can do the same thing.

I think the goal should be for everything to go small. That doesn’t mean that big corporations are going to go away. They just need to get even more dispersed. The business groups will be smaller and the companies will get smaller.

In order to do this successfully I think they’ll need to focus on transparency and enabling (and trusting) your employees and managers to act on behalf of the company.

Of course I also happen to think that Social Media in the Enterprise is a great way to enable this for both big and small companies.

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  • We have entered the age of industry that war entered during the Vietnam war. Although during the Revolutionary war, was one the first times that we truely began to practice "guerrilla" warfare, it wasn't till we were beaten at our own game in Vietnam that we truely gave up the mob mentality of fighting. Sure when fighting on our homeland against Brittan we hid in the trees, but we still thought that the bigger our gang the better at every battle. I hate to compare capitalism to war, but it is a fair analogy. When american commerce began guerrilla tactics in advertising, business plans, startups, etc. We saw the death of the monopolies of the early industrial age. But the companies that overthrew them were not the Davids that everyone proclaimed them to be. They were more like Goliath's little brother. They succeeded in grasping one fine point of economics, specialization, they didn't have to be the biggest to be the best. Over the last bit commerce has focused, and is continuing to focus more on, diversification. To be spread out so that they can capitalize on whatever is hot in this trendy economy. But like the platoons became in Vietnam they need to be small, agile, strong, and exact. They need to be diverse and specialized. It would be hard to go to war w/o a snipper, or heavy artilary. Or if you are sending in your navy seal, they need to be able to do it all. As much as I wish I was James Bond ever since I was a kid, we can't all be 007s. There aren't that many of them out there.

    Big may be broken because of simple diminishing returns. It true that big can be beaten easily by a few guerrillas. But w/o the Godfather will all of the children be able to feed themselves. Not all small businesses will survive. To make another analogy, we shouldn't necessarily be the bear of the forest, but we shouldn't abandon the hive. Bees have an intricately networked system, they are a dependent team. Depending on how you see it, they may be big because they are many, but they are small in size. To be an entrepreneur doesn't mean that you have to be alone, that you can't get help, or help those around you.

    So I guess I've just really repeated what you've said tac. I think that small decisive teams will be crucial. But I think that the network and assets that companies or groups provide will still be necessary.
  • Cool thots... a few quick comments before I get back to my Big deadline!

    Big real estate looks like it's going to take a dive, too: http://bit.ly/35o3dZ

    Wal-Marts and McDonalds' to the contrary, I think you're agreeing with Peter Drucker:
    "Suppliers, and especially manufacturers, have market power because they have information about a product or a service that the customer does not and cannot have, and does not need if he can trust the brand. This explains the profitability of brands."

    Gladwell agrees, too, in a great essay on bigness in wars: http://bit.ly/Fn5qM
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