3 ms·
The lifetime of a large company depends usually on the way it manages their wealth, it does not depend on one or two "smart ideas, or well defined markets". So
by JPLeRouzic 9y ago
The lifetime of a large company depends usually on the way it manages their wealth, it does not depend on one or two "smart ideas, or well defined markets". So IMO both should have a long life (like Ford). But the life time of a company that relies on only a few markets, is much shorter (~20 years). Complexity is inherent to long life.
To give more context: Truly huge companies like Google or Facebook are actually conglomerates of thousands of informal tiny companies, that often are their main competition. Look for example to the large number of projects that Google created or companies it bought and then closed two years later. Each time there was people behind those projects, for them it was a huge stress when their project was dropped. This way to manage companies, helps their board to control competition by internalizing it.
Think "The Soul of a New Machine" by Tracy Kidder on steroids.
- PaulHoule 9y agoAre they really diversified though?
- JPLeRouzic 9y agoBy "they" do you mean the board or the company as seen by accounting documents? Google revenues can be viewed in several ways, in one of them it is not diversified at all as in 2016, 71% of their revenues came from Googles sites. In another interpretation, they are very diversified, as this 71% revenue stream comes from a set of diverse sources. In yet another interpretation they are quite diversified as the USA provides quite half of their revenues. Accounting could tell very different stories with the same numbers. For the board, if the revenues are steadily increasing it shows they understand their world, which is not a trivial thing at all. It is basically the difference between strategy and post mortem analysis. One is easier to do than the other.