August 17, 2015 by Liberty
There is a false narrative that runs rampant around the world today. It can be seen in many different forms but one of it’s most common forms is in the discussion of big business. Big businesses are often given a bit of a mythical power in discussions about them. Big corporations are made out to be invincible. In the mainstream, this invincibility comes in the form of a monopoly over a market. In more specialized areas, this invincibility comes in the form of control over the politicians. While monopolies and control over politicians matter, that doesn’t equal anything even close to invincibility. (I’ve actually poorly explained some things in the past that help perpetuate that illusion.)
Big corporations are built with the same materials as small corporations. Rich people are built of the same flesh and bones of poor people. Powerful organization are built with the same materials as small organizations. These similar materials mean that they suffer from very similar flaws. Often, those flaws only get exaggerated by size.
Big may have certain advantages but it also comes with it’s own set of flaws. Just looking at the history of corporations in America will show a rather dismal perspective for virtually every company that’s ever come into existence. Big companies regularly fail.
Frailty of Size
This is the aspect of size that virtually no one addresses when discussing their illusions about monopolies or political control. As a corporation grows bigger and bigger these flaws become more and more pronounced in the structure of the organization. That is a constant force driving the growth of the company lower and lower.
There is a common rule in venture capital investing. Do not invest in a company that relies on one man. If the leader to a company is a particularly charismatic, intelligent, and/or otherwise badass man or woman, be suspicious. The idea exists to point out a few potential hiccups the organization could face in the future.
The first problem is that the one company leader could die (or leave or get disabled or…) If this happens, the organization will suddenly lose a huge amount of it’s potential. It’s suddenly not such a good investment. This is a problem for small one man/woman organizations seeking growth but it helps represent an even bigger problem for large organizations.
The strength of an organization is supposed to be in the strength of its system. A company isn’t a good investment (but could still be extraordinarily successful) unless it has a system that can hire more good employees. It needs the ability to grow bigger and bigger without hiring idiots that could bring the company down.
Small companies can have very harsh hiring standards. The owner may personally interview every single candidate going for a job at these organizations. Their systems aren’t forgiving of small flaws in candidates (partially because they have worse legal departments.) When you have only a hundred employees or less, this isn’t all that difficult.
Big companies, when they’re hiring thousands and thousands of employees, cannot hire in the same way a small organization can. Big companies can’t afford to not hire certain quotas of employees. They have “well-trained” human resource departments that hire employees by a different set of standards than the previous managers that could do the hiring. (They also are more careful to not look like they’re breaking any laws.) The number of employees required goes up while the number of potential quality candidates goes down. Even at a low error rate, big companies end up taking on a ton of dead weight and can’t eliminate it.
Big organizations are forced to get slower with size. The more employees an organization hires, the more difficult it becomes for them to change anything. Training thousands of employees, updating thousands of manuals, updating millions of dollars worth of equipment, and working on such a massive scale in general is a slow process. It could take months for a change just to get through the board of directors of a major corporation. After that the legal and accounting aspects could take months. After that it could take months to implement the changes. All of this adds up to an inevitably slow process.
Small organizations don’t have many people to please. Small organizations have fewer investors. They have fewer employees to train. They have less equipment to buy. All of these things add up to being able to offer the average customer a better deal on their product than a major corporation.
Of course, bigger corporations are slower for another important reason. They’re significantly more leveraged into their current business model. Technology can make hundreds of millions of dollars of equipment obsolete overnight. Big companies need to eat that cost. Small organizations don’t even have to worry about that big a cost because they don’t even have hundreds of millions of dollars of equipment (and don’t even have the option to replace them if they do. Suddenly they may get cheap access to more of that equipment and just change their strategy.)
Small organizations can easily take advantage of this by strategically updating only when it gives their organization a competitive advantage. While the big company may still be paying hundreds of millions of dollars worth of debt, the small company could be pulling in a healthy profit from the new technology.
These problems aren’t always deadly to an organization but they are forces constantly driving the profits lower and lower. Eventually, this makes corporations more and more frail.
The story of David and Goliath would be a whole lot less impressive if it went a little differently. Imagine David comes up to Goliath with a sword. David swings the sword and misses. Goliath bites David’s head off and throws his body on a heap of other men. Seconds later, another David shows up with a can of bug spray. David sprays Goliath but Goliath just flicks the second David onto the pile of other men killing him. Eventually, after another hundred Davids get killed, a David with a sling shows up and we have the story we’re all familiar with. Suddenly, it’s not all that surprising Goliath eventually got killed. Give a million men a one in a million shot and Goliath is bound to die.
This is kind of like how free market competition works. Hundreds of organizations are trying different things to try and take down the big organizations. Most organizations will not have a major impact but it only takes one lucky (or smart) organization to completely upend the big companies business model.
Then again, imagine Goliath getting surrounded by hundreds of David’s at one time. That’s more like the free market.
What The World Shows
The world is complex. Narrative is simple. That’s the reason I’m going to give for the following problems. Whether that reason is accurate or not, I feel like it’s the most interesting.
Movies, television, and virtually every source on the internet touts the power of Goliaths. In movies big corporations try to take over the world. Among liberals and libertarians you might see people screaming about corporations controlling government. Among conservatives you might hear about the liberal media corporations control over the media. (Among fast food employees you might hear stories about corporate employees acting kind of like the head elf in Rudolph The Rednose Reindeer.)
All of this is implying a power exists that’s somehow unfair to the world around it. While the word invincible rarely comes up, people tend to assume this power is almost impossible to overcome. It requires extraordinary resources to fight. In a more tricky to explain note: you will probably see libertarians complaining about government’s same power. Government is just another form of Goliath.
David and Goliath is an easy to understand story. (Not necessarily in it’s original religious context but in its more secular versions.) It fits well along the typical hero’s journey. It tends to focus on only a few perspectives. The world does not fit so cleanly to a narrative. Quite frankly, if a story is being told it’s a virtual guarantee that you’re not getting a clear representation of reality.
Imagine you spent 30 years of your life growing a major corporation. You stayed up late. You skipped your children’s baseball games. You gave your life to build that corporation. You were motivated by a drive to keep the good men and women you hired in their jobs. You turned your dream into a reality. It’s now a powerhouse in the industry. Now… after leveraging your company to buy new equipment, you find out that the new equipment is virtually worthless. The Goliath you built is going to die. Thousands of good people are going to be out of a job.
There is not much of a hero’s journey in that story.
The Real Title To This Article
I intentionally titled this article wrong. It was in hopes to help drive you harder into the point I want to make with this article. If it feels a little like I drove you into a wall then it’s because I meant to. It’s to make a point.
Goliaths are not just flesh and bone.
Goliaths Are Flesh And Bone
We like to think of the world in terms of villains and heroes but anyone that can be completely sure of their heroism or villainy is likely a bit ignorant of the truth. The most evil people in history may be responsible for the most good in history. Everyone that makes a huge impact on the world (or most) think they’re the hero in the story.
Genghis Khan’s reign of terror killing more of a percentage of the population than anyone in history is sometimes credited for advancing society through education and security. While in general I assume government’s do more harm than good, I try to keep in mind that I’m not all that bright. (No that’s not being humble. That’s being human.) The fact that it’s debatable whether or not killing a huge percentage of the population was a good thing is f**king scary. (I sure as hell wouldn’t accept that argument for a plan today but perhaps that’s my empathy getting in the way. Accepting it happened once in the past doesn’t mean it would happen with anyone else’s attempt.)
Many people turn themselves into heroes but even more people like to turn their enemies into monsters. While you may not be a superhero, government (or corporations or neonazis or Russians or Canadians, those wily b*****ds) are super villians. That leaves you, by default, a relatively good dude.
Governments, corporations, and organizations are just congregations of people. People are just flesh and bones. We are not heroes or villains, the story is too complex to be given such a simple narrative. Our brains are designed to tell us those stories. Writers are trained to tell those stories but they’re just stories.
I don’t expect you to stop framing things in this way. You’re just flesh and bones too. I still frame things this way. The point is to understand your mistakes in hindsight and try not to make costly ones in foresight. Whenever you’re about to put a significant moral claim on a monster or a hero, you might want to consider the possibility that you might be making this more simple than it is.
We are all significantly less powerful than we think we are. We know the fragility of power because we live out that fragility of power everyday. (Everyday a person gets smarter they just feel more clueless.) At times we refuse to see it but we all know it’s there. It’s something that scares the hell out of us all.
One stone can bring anyone down.
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