Misunderstanding bigness | Seth’s Blog

IBM spent a fortune fighting calls for them to be broken up. So did AT&T and Microsoft.

In all three cases, there’s plenty of evidence that they would have been better off if they had simply broken themselves up. Microsoft is still recovering and IBM never will.

One computer company, one phone company, one software company, one search engine… It doesn’t last.

If these companies had intentionally divided up, customers would benefit, so would shareholders and most of the leadership of each organization. Perhaps a few dozen people had a lot at stake in maintaining a mythical sort of scale, and they wasted time and money trying to maintain it.

The company is more than just the few people who run it. And the benefits the organization creates extend beyond the people in the C suite.

In the short run, enforced dominance can offer rewards, both financial and related to ego, mostly to senior management.

But the short run is fairly short, and the resilience, productivity and utility that come from agility and serving customers and employees more effectively is worth the transition.

The very thing that enabled these companies to succeed disappears once they seek to obtain bigness at any cost. MBAs take over, and the focus that led to success disappears.

Buying a big publishing company like Simon and Schuster wasn’t the smart way for a giant publishing company like Penguin to succeed. They’d be better off dividing into agile silos that can focus on the work that needs to be done.

Google’s a monopoly, and has been for years. As a result, they’ve made decisions that weren’t informed by what was best for their users or team members, and they’ve missed countless opportunities to create value, simply because they were prioritizing something else.

The same is true for the local business that has enough scale to act like a bully. A restaurant or real estate broker or distributor that tries to corner the market ends up spending time cornering, not serving, the market.

Adversarial interoperability creates productivity and value. And having a smaller part of a more vibrant market is far better than dominating a moribund one.

August 7, 2024