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I feel like the decision to do this is based on an outdated idea about how to do business effectively. Take car makers. It used to be that the winners were outs

by audunw 5y ago

I feel like the decision to do this is based on an outdated idea about how to do business effectively. Take car makers. It used to be that the winners were outsourcing everything except their core competence (engines and assembling/marketing vehicles). But these days it seems like vertical integrated companies are the winners, with Tesla being a good example in the car industry. I think politicians that have pushed for this was inspired heavily by all this out-sourcing happening at the end of the previous century. It's not that vertical integration is good everywhere. But neither is avoiding vertical integration. You have to use your brain and look at what's beneficial in a given market. And train operation strikes me as a place where vertical integration is essential to long term success and efficiency. If it was actually a free market, I'm sure that it'd converge to a few vertically integrated companies with monopolies in large geographic areas. I'd also argue that government owned corporations have become better at operating efficiently. Business has almost become a science. You're not as reliant on brute force through competition. And when government corporations are more expensive, it's usually just because they treat their employees better.

jabl 5y ago
The 'vertical integration vs. outsourcing' seems to be largely a fashion thing. When giant vertically integrated conglomerates are the status quo, you have the self-appointed thought leaders writing business books and speaking at expensive dinners arguing for outsourcing and focusing on core competences. Then as the tides turn and 'outsource everything' becomes the norm, the next generation of self-appointed business thought leaders argue for vertical integration. ¯\_(ツ)_/¯
- GekkePrutser 5y ago
  I see the same in our company. Every few years we have a leadership shuffle, which then cascades as the new leaders replace all the layers underneath them in the months afterwards. Once things become stable, a new leader is hired and the whole things starts again. All the new management hires will then want to put their own stamp on things which means doing things differently than before. So we've been going back and forth between different paradigms. Sometimes within months! We seem to be going back between role-based teams ("we have too many silo's, we need to join all technologies of a role in a team!!") to technology-based teams ("we have too little focus, we need to focus on all responsibilities for one technology per team!!"). Literally several times we've made this switch over the last years, back and forth. It just feels like each new hire just has to change it just to be seen to be doing something by their bosses. No newly hired manager every wants to leave things the same even though they are working just fine. The thing is that we are very versatile. We can deal with the drawbacks of each model. We collaborate even though we're not in the same team. We can't work properly with all this ongoing reorganisation though. It's like the chair is being pulled out from under us for no reason.

by audunw 5y ago

jabl 5y ago

The 'vertical integration vs. outsourcing' seems to be largely a fashion thing. When giant vertically integrated conglomerates are the status quo, you have the self-appointed thought leaders writing business books and speaking at expensive dinners arguing for outsourcing and focusing on core competences. Then as the tides turn and 'outsource everything' becomes the norm, the next generation of self-appointed business thought leaders argue for vertical integration. ¯\_(ツ)_/¯

GekkePrutser 5y ago
I see the same in our company. Every few years we have a leadership shuffle, which then cascades as the new leaders replace all the layers underneath them in the months afterwards. Once things become stable, a new leader is hired and the whole things starts again. All the new management hires will then want to put their own stamp on things which means doing things differently than before. So we've been going back and forth between different paradigms. Sometimes within months! We seem to be going back between role-based teams ("we have too many silo's, we need to join all technologies of a role in a team!!") to technology-based teams ("we have too little focus, we need to focus on all responsibilities for one technology per team!!"). Literally several times we've made this switch over the last years, back and forth. It just feels like each new hire just has to change it just to be seen to be doing something by their bosses. No newly hired manager every wants to leave things the same even though they are working just fine. The thing is that we are very versatile. We can deal with the drawbacks of each model. We collaborate even though we're not in the same team. We can't work properly with all this ongoing reorganisation though. It's like the chair is being pulled out from under us for no reason.