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Good points. Will you agree that businesses die due to unprofitability? And what causes unprofitability in a firm? One might answer a whole slew of reasons, suc
by achillesheels 5y ago
Good points. Will you agree that businesses die due to unprofitability? And what causes unprofitability in a firm? One might answer a whole slew of reasons, such as profit erosions, but it is mostly due to lack of innovation; at least at the rate in which business cycles naturally move external to the business firm. It is the decaying rate of sales growth, then, which seems tautological, but what underlies the inability for firms such as IBM to continue to grow?
I recognize it takes four years for McDonalds to add a new product to their global supply chain. That is a symptom of scale which the administration therein attempts to streamline. In the likes of $KO, I would wager there is less complexity in the internal administration of manufacturing a beverage which has not changed in recipe in a century, and which takes nearly the same amount of time to launch diet coke. The good manufacturing practices, in other words, have not changed nor do they need to as KO continues to grow in market share globally for beverages.
Meanwhile, business computing has simply exploded since 2010 yet IBM's revenue has shrunk ~30%. Are you to suggest it is not the personnel that are responsible for its tepid business development in response to a market which moves fast and breaks things? That maybe the preservation of the internal cohesiveness of the organization as intrinsically valuable kills companies in the presence of new market environments which the organization is motivated to be responsive at the risk of termination? I advise reading The Innovator's Dilemma to corroborate my assumption.
- danielmarkbruce 5y ago> but what underlies the inability for firms such as IBM to continue to grow? I think you've answered your own question with the examples you gave. Alive companies: Environment hasn't changed much. Dead/hobbled companies: Significant change in the environment around creating the product/service or distributing the product/service (or a substitute) which upended the competitive dynamic. 100s of companies try to take advantage of the new dynamic and the existing companies might win, but are just another 1 in the 100's who are vying to win the new game.
- achillesheels 5y agoI think you are abstracting the personnel too much from your analysis. Clearly Apple, for example, persists and thrives in a world with such dynamism. The difference is one of talent, and the internal organization therein.
- bastijn 5y agoApple is a company that has rigeous processes and hierarchies. It also operates efficiently. So we are back to the start, both company types can thrive or die. Indeed, it is the brilliant leaders (at any level of the organization) that bring excellence. In one organization that may be knowing what to hack or where to take a shortcut, in another it may be knowing how to escalate things through the organization to push through an idea. The processes keep the train on track and on schedule, the escalation path is to still have a way to change tracks in time. The first takes a protective manager, the second a leader that knows when to ignore the rules. You cannot only have the protective managers but you also cannot change tracks every other day. Hence the enterprise.
- achillesheels 5y agoIs the enterprise necessary to be manned?
- danielmarkbruce 5y agoThey were 1 in 100 in a new (gigantic) game - smart phones. Sometimes an existing company will win. They happened to have a good set of people with the right skillset for the new game (phones basically became mini computers) so maybe it was really 1 in 5, but it wasn't a sure thing they would win in the new game. And I'll bet $1 they won't win in the next new game and everyone will lament what happened to the $3 trillion company who couldn't innovate.
- achillesheels 5y agoThey created the game.