Too Big To Fail or Too Big To Succeed?

by Ken Vincent, Featured Contributor

WE HAVE HEARD a lot of chatter in recent years about companies being too big to fail. I’m not sure I buy into that line of thinking, but it did get me to wondering if there was another side to that coin.

If a company can in fact be too big to fail, can it also be too big to succeed? So, I did a bit of research and was pretty shocked at what I found.

Feast or FamineIt has long been known that volume covers a lot of mistakes in businesses. If you do enough in revenue it not only covers the costs of errors, but also minimizes the need to ferret out and correct bad practices and costly mistakes. That is what I found in the very large companies.

Even the layers of management become burdensome. Just getting information passed from the top to the bottom or conversely upward becomes costly, time consuming, and makes it nearly impossible to avoid the message not getting altered or totally garbled in the process.

Multiple union contracts and hundreds of other contracts become extremely expensive to negotiate, monitor, and comply with.

Just filling a vacancy in a supervisory job takes weeks. The job has to be posted for some defined period of time and in multiple physical and departmental locations, even multiple countries sometimes. In the interim the job is vacant, covered to some degree by others doubling up creating problems in their normal work arena.

The bureaucracies and politics that evolve in these very large entities are awesome, almost rivaling government. Cover your back side becomes the norm, as revealed in the recent GM recall debacle.

The massive problems only come to light when sales levels drop, profits turn into red ink, and the you know what hits the fan. Then some fool says that the company is too big to fail and looks for some way to bail out the inefficient company.

What do you think? Can companies be too big to fail? If so, can they also become to big to succeed?


Ken Vincent
Ken Vincent
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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  1. Great article! Companies, like individuals fail every day. To stop failing is to stop doing, but that’s really too elementary. You’re right about the volume factor. Small companies don’t have the ‘luxury’ of the cover up. I think of the volume like layers of smog. It just gets thicker and thicker and until it burns away and the layers are pealed back we have no idea what’s really underneath. Too big to fail? Being big allows the company to fail in more ways before the it’s exposed. What matters is what the organization does after the failure and cause is revealed.