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Bigger is better?

July 21, 2009

A few years ago when I was new in the workforce, somebody lent me a book entitled The Power of Thinking Big. Or something like that, I can’t remember exactly.

The idea behind the book was simple. Big guys always win so to be a winner, you have to think big, talk big and act big, even if you are not so big in real life.

This was about how to win corporate wars where its all about making big impressions according to the author.

He’s not alone. Ask anyone about what they thought was a successful business. Chances are they’d point to a big company. Life’s like that too. You and your friends dream of a big house, big car, big stomach (prosperity). All the traditional icons of a happy successful life.

So do you agree that bigger is better?

If you do, then let me ask you a question. Why is it that the animals running around today aren’t as big as T-Rex? The dinos that did survive all shrunk to the size of cats and chickens, like how the modern-day turkey was once a dinosaur. So I’m sorry to say, nature seems to have other ideas about size. Small is in, BIG is out. I dunno why. Maybe its easier to escape predators or more efficient or something?

What about corporate evolution? Other than mining companies and factories, how many can you find that have thousands of employees these days? Very few, and they are downsizing every year. Some go for human substitutes like robotics, some (like Chrysler) have gone kablooey, and most have reorganized into smaller nimble units where innovative horizons are shorter but more intense. Just think how many weeks it will be  before you’ll see the next new Nokia phone.

So modern companies are finding themselves focusing on smaller and more specialized areas with faster product turnarounds. They outsource the boring stuff like engineering, accounting, even HR to outside parties. Just like the dinosaurs, instead of getting bigger, they are getting smaller.

But isn’t there any advantage to being big? Surely to claim you have 100 locations and 20,000 employees worldwide would count for something?

Yes, being a big global brand has its advantages. You are known to more people and if you do it right, more people buy your stuff. You have greater stamina. Competitors find it harder to take you down. Not impossible. Just harder.

So why is the market dominated by many S or M sized companies rather than a half dozen XXXL sized companies?

Because size, while being a strength, is also a weakness. Big companies are slow to react to fast-changing markets. They cannot turn fast corners like smaller competitors can. Their inner workings are fine tuned to deliver on stability not chaos. They expect the market to adapt to them and not the other way round. And one mistake can drive them to their knees like the product recalls of cars to tires to steam cleaners.

So as people crave for big this and that, things are quietly organizing themselves in the opposite direction. GM, AIG and Citibank showed how the bigger they are, the harder they fall. Even the days of big autos like Jeep and Hummer are gone. Big don’t look very sexy these days.

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5 Comments leave one →
  1. July 21, 2009 2:32 pm

    yeah you are right ..

    i don’t like pamela anderson already , i prefer paris hilton :p

    But Paris isn’t a MILF which is your preference right? 😀

  2. July 21, 2009 7:41 pm

    @gapnap, i don like Paris. bit too small. and i don like Pamela, …er..bit too scary

    anyway, back to topic. actually this is exactly the same topic i used to discuss wf a friend of mine. i said that small is the new big, but she disagreed. she said at one point, the company has to grow. i said, not necessarily. if the company is achieving its objectives, there’s no need to grow. if there’s really a need, then start another arm or subsi. certain things, when they become too common, will lose its value. grow big = produce more = more common.

    also, big means slow. too many policies n processes to help keep the company intact. good in a way, but bad in many ways esp during times like this when a change can happen anytime. tat’s why for some sales dept, the way it works can b very different from how the entire organization works. one deals with a lot of changes, while the other are not used to changes.

    but a smart big org can always do well – Apple for example (ok, i’m starting to be a big Apple fan). they still innovate n react to changes quicker than MS. Google is another good example. I believe if they can manage things well and react fast enough to changes, they will be very successful.

    mmm…big can also mean u will eat up ur competitors…like the T-rex of the ancient time. The T-rex we see now is Oracle. 😛

    Uhhh.. Paris looks like a wax robot to me. Scary. 😀

    Yup Apple, Google and a few others are still big but if you keep track their year to year numbers, you might find their headcount shrinking, slowly but surely. With automation, outsourcing and new business models, less is more now.

    The evolution of the corporation is something that fascinates me because of its similarity to Darwinian evolution.

  3. July 21, 2009 9:49 pm

    Some things have to be big to survive. The automotive companies have what they call <a href=http://www.authorstream.com/Presentation/Cajetano-48528-Economies-Scale-Case-study-Auto-Industry-Global-Review-Exports-Imports-of-sc-Education-ppt-powerpoint/. I’d think they fall because they failed to adapt to change and they failed to control their budget. They didn’t count on the bubble bursting in their face.

    Hi LC, I’m not sure why your post went to the spam bin but I rescued it. 🙂

    Yes, every business has a break even point and large-cap businesses like manufacturing (which includes autos) has higher BEPs than most. So they have to push out volume which usually means more plant and headcount. Robotics and outsourcing to the extended supply chain have helped reduce some of the heads. Talk about failing to adapt to change and runaway cost, I think General Motors will be a case study on how NOT run an auto business for decades to come.

  4. July 22, 2009 12:13 am

    The bigger the desire, the lesser the contentment will be. ^_^

    Yes, absolutely. The more discontent one can sow, the more desire hence profit (in $) one can reap. 🙂

  5. tinytapir permalink
    October 2, 2009 6:57 pm

    funny, i just read a book about the beauty of smaller companies.

    IMHO, there are many reasons why big is usually not better in the corporate world, but most of it boils down to one thing – the nature of humans.

    The immediate effect of going big is often one thing – bargaining power. Better wholesale prices. But even that is changing.

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