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.
It 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?