4 ms·

The offerings of humongous multinational conglomerations are not coherent. You could generate stories of this type all day, because the offerings of the likes o

The offerings of humongous multinational conglomerations are not coherent. You could generate stories of this type all day, because the offerings of the likes of Nestle, GE, J&J, P&G, Coca-Cola, et. al. are the results of the efforts of hundreds of thousands of employees (for each conglomerate) subdivided into thousands of business units [read sub-companies], each with its own goals, challenges, and many existing within markets that are essentially disjoint from those of other business units under the same parent company. This sort of story is pure narrative fallacy, because there is no person at Nestle that decided to exacerbate diabetes and then sell diabetes drugs to profit on the other end. Outside of that person existing, there's no story here. If you take away the conflation of a conglomeration with an entity of coherent offerings the premise crumbles.

revelation 10y ago
Of course there are whole divisions at Nestle dedicated exclusively to determining a cohesive path and synergies for "the whole of it". Nestle is highly vertically integrated. It is not at all this loose, random aggregate of business units you're trying to construct here. Does it rise to the level of exacerbating diabetes and then selling diabetes drugs? Of course not. Are there people very aware of the "irony" in selling what is a main cause for T2 diabetes? Hell yeah.
chimeracoder 10y ago
> This sort of story is pure narrative fallacy My favorite of these are the articles which criticize health insurers who invest in things like tobacco products. The point of insurance is to manage risk. Tobacco is indisputably linked to expensive health consequences down the line, so if there is an increase in tobacco consumption, that would generate more claims for health insurers down the line. Capturing some portion of the tobacco industry's profits in this case is an example of smoothing that risk[0]. Health insurers do a lot of really scummy and unethical things, but this is not an example of one. [0] Of course, that assumes that health insurance is meant to act like insurance, which it by and large is not - health insurance is no longer about insurance at all. That, of course, is a separate matter altogether).
- hammock 10y ago
  Sugary snacks and diabetes pills are complementary goods though, magnifying risk not managing it. So your example is kind of unrelated.
- throwaway049 10y ago
  It may also be that someone who dies early from smoking related disease would otherwise have gone on to cost the insurer even more in treatment for some other longer term problem. I am speculating, but I would imagine insurers have analysed this.
anigbrowl 10y ago
On one level I agree with you, but the whole point of a corporate structure is to give a collective effort the legal identity of an individual so that administrative efficiency and profit can be maximized. It's no coincidence that virtually every stock-based corporation has a strictly hierarchical governance structure culminating in the office of a chief executive, notwithstanding the existence of boards and presidents. these chief executives are paid staggering amounts of money in return for managing the wealth and activities of the corporation productively. Yet when we find examples of a large corporation creating a vicious circle with easily observable negative externalities, suddenly a corporation is a diffuse network of different products and market actors which is impossible to control, manage, or monitor, and whose activities must not be interfered with at the behest of regulators or the public itself, lest some intangible market equilibrium be disturbed. It seems to me that this is an example of investors wishing to have their cake and eat it. Either they want the potential of high profits driven by a singular business vision...and which incurs responsibility for outcomes commensurate with the degree of executive authority available to the management, or they want a maximally free market of atomistic competition that is not subject to the whims of trusts, conglomerates and so on. Society cannot afford both options.
- shawn-furyan 10y ago
  I agree that there is a tremendous amount of dissonance in the ideas that executives deserve massive compensation and that they don't have much control over such gargantuan organizations. The way I resolve this dissonance is by not buying into the idea that corporate executives as a class are worth their extreme compensation packages. Humans seem to have a soft spot for narrativization, and it's easiest to pin a narrative on the chief of an organization. But it's my belief, and I think the evidence doesn't contradict it, that these narratives usually have little to do with the causes of changes in organizational fortunes, particularly in the case of conglomerates. "But Steve Jobs!"... Well, few CEOs are Steve Jobs. None, actually...
- ArkyBeagle 10y ago
  But these things exist because people put money into 401k accounts, IRAs, and buy other "funds". That makes one sort of instrumentation of that corporation work in a certain, sort of negative-externality-prone way. That cross ( as in cross product ) the information-attenuating nature of hierarchy explains a lot. As a corollary of Brian Kernigan's "debugging is twice as hard as writing programs", it should be clear that regulation is even harder - possibly many orders of magnitude harder - than steering a massive conglomerate. I don't know how you design a ... non-atomistic corporation - a corporation that depends on governance principles other than those which align with Liberal atomism. If I read the literature right, atomism is sort of an inevitable consequence of Liberalism - as Hendrix said, "I'm the one that has to die when it's my time to die." How do we handle the problem of agency? And I'm really skeptical of "holism" in general these days. It does not notch easily onto rigorous and empirical methods, and looks somewhat like a backdoor for collectivism. I dunno - maybe collectivism has matured but I'm quite skeptical of it.
exclusiv 10y ago
You make some good points and it may not be a nefarious overall strategy to push sugar and then sell turn around and sell diabetes pills. They pushed sugary foods first so this is more of a hedge if anything. It's a story though. A brand is a promise kept. What is Nestle's promise if they continue to expand in this manner? It's confusing and consumers don't like to get squeezed at both ends. Maybe they'll eventually transition over to a "a scientifically driven nutrition, health, and wellness company" as mentioned in the article, but that's a massive branding challenge for a 100 yr old company.
bane 10y ago
I don't disagree with you at all that there's probably not a scheming executive trying to maliciously mine and sell the spice of Arrakis, but it might be instructive to understand why large conglomerates like this might end up in such a position simply as a matter of emergent behavior.

revelation 10y ago

Of course there are whole divisions at Nestle dedicated exclusively to determining a cohesive path and synergies for "the whole of it". Nestle is highly vertically integrated. It is not at all this loose, random aggregate of business units you're trying to construct here. Does it rise to the level of exacerbating diabetes and then selling diabetes drugs? Of course not. Are there people very aware of the "irony" in selling what is a main cause for T2 diabetes? Hell yeah.

chimeracoder 10y ago

> This sort of story is pure narrative fallacy My favorite of these are the articles which criticize health insurers who invest in things like tobacco products. The point of insurance is to manage risk. Tobacco is indisputably linked to expensive health consequences down the line, so if there is an increase in tobacco consumption, that would generate more claims for health insurers down the line. Capturing some portion of the tobacco industry's profits in this case is an example of smoothing that risk[0]. Health insurers do a lot of really scummy and unethical things, but this is not an example of one. [0] Of course, that assumes that health insurance is meant to act like insurance, which it by and large is not - health insurance is no longer about insurance at all. That, of course, is a separate matter altogether).

hammock 10y ago
Sugary snacks and diabetes pills are complementary goods though, magnifying risk not managing it. So your example is kind of unrelated.
throwaway049 10y ago
It may also be that someone who dies early from smoking related disease would otherwise have gone on to cost the insurer even more in treatment for some other longer term problem. I am speculating, but I would imagine insurers have analysed this.

anigbrowl 10y ago

On one level I agree with you, but the whole point of a corporate structure is to give a collective effort the legal identity of an individual so that administrative efficiency and profit can be maximized. It's no coincidence that virtually every stock-based corporation has a strictly hierarchical governance structure culminating in the office of a chief executive, notwithstanding the existence of boards and presidents. these chief executives are paid staggering amounts of money in return for managing the wealth and activities of the corporation productively. Yet when we find examples of a large corporation creating a vicious circle with easily observable negative externalities, suddenly a corporation is a diffuse network of different products and market actors which is impossible to control, manage, or monitor, and whose activities must not be interfered with at the behest of regulators or the public itself, lest some intangible market equilibrium be disturbed. It seems to me that this is an example of investors wishing to have their cake and eat it. Either they want the potential of high profits driven by a singular business vision...and which incurs responsibility for outcomes commensurate with the degree of executive authority available to the management, or they want a maximally free market of atomistic competition that is not subject to the whims of trusts, conglomerates and so on. Society cannot afford both options.

shawn-furyan 10y ago
I agree that there is a tremendous amount of dissonance in the ideas that executives deserve massive compensation and that they don't have much control over such gargantuan organizations. The way I resolve this dissonance is by not buying into the idea that corporate executives as a class are worth their extreme compensation packages. Humans seem to have a soft spot for narrativization, and it's easiest to pin a narrative on the chief of an organization. But it's my belief, and I think the evidence doesn't contradict it, that these narratives usually have little to do with the causes of changes in organizational fortunes, particularly in the case of conglomerates. "But Steve Jobs!"... Well, few CEOs are Steve Jobs. None, actually...
ArkyBeagle 10y ago
But these things exist because people put money into 401k accounts, IRAs, and buy other "funds". That makes one sort of instrumentation of that corporation work in a certain, sort of negative-externality-prone way. That cross ( as in cross product ) the information-attenuating nature of hierarchy explains a lot. As a corollary of Brian Kernigan's "debugging is twice as hard as writing programs", it should be clear that regulation is even harder - possibly many orders of magnitude harder - than steering a massive conglomerate. I don't know how you design a ... non-atomistic corporation - a corporation that depends on governance principles other than those which align with Liberal atomism. If I read the literature right, atomism is sort of an inevitable consequence of Liberalism - as Hendrix said, "I'm the one that has to die when it's my time to die." How do we handle the problem of agency? And I'm really skeptical of "holism" in general these days. It does not notch easily onto rigorous and empirical methods, and looks somewhat like a backdoor for collectivism. I dunno - maybe collectivism has matured but I'm quite skeptical of it.

exclusiv 10y ago

You make some good points and it may not be a nefarious overall strategy to push sugar and then sell turn around and sell diabetes pills. They pushed sugary foods first so this is more of a hedge if anything. It's a story though. A brand is a promise kept. What is Nestle's promise if they continue to expand in this manner? It's confusing and consumers don't like to get squeezed at both ends. Maybe they'll eventually transition over to a "a scientifically driven nutrition, health, and wellness company" as mentioned in the article, but that's a massive branding challenge for a 100 yr old company.

bane 10y ago

I don't disagree with you at all that there's probably not a scheming executive trying to maliciously mine and sell the spice of Arrakis, but it might be instructive to understand why large conglomerates like this might end up in such a position simply as a matter of emergent behavior.