Is the myth of the “critical size” close to its end ? The concept of enterprise always comes with the concept of “growth”. Growth of the turnover, but also growth of its size. Today’s big companies count tens or hundreds thousand employees. But, at a time when performance is not only about the net force obtained by adding up hands but about the ability to make brains interact together, does critical size become a weakness ?
Today, some voices are rising to say :
– current efficiency issues are caused by inappropriate size. That’s because enterprises are not as good as making people interact as they were at adding up hands 30 years ago, that they were forced to find on financial markets the growth they could not get at the operational level.
– once companies have reached a certain size, their impact on economy can be dramatic and their failure could cause a systemic threat to the whole system.
In short, we’re shiftting from a context where size was reassuring to a context when it may mean incontrolability and risk.
Can we think that a constellation of partners would be more efficient that the current mastodonts ? That businesses should lose weight and organize a their value chain with external partners ? An extreme application of value chain 2.0 ? Anyway, we still don’t know how Coase’s theorem will apply to our new born knowledge economy. No one knows what future will look like but it’s not irrelevant to think that value chain socialization will bring a new form of enterprise, more designed to hunt in packs than for solitary tracking because of their lack of agility. Or, maybe, some cleaver CEOs will manage to makeÂ make elephants dance..
Weeks ago I attended a conference about the necessary solidarity between large and small businesses at MEDEF. Everybody agreed on one point : large and small businesses are the components of one only chain and when the ones weaken, the others are at risk. Even if I was disappointed because the debate turned more about large businesse’s mistakes that lead to the current crisis rather than “how to work together”, some points were significant.
– according to national cultures, the large / small business relationship is very different. At the time when french companies cut their expenses and delay their orders, putting their subcontractors at risk, japanese businesses do their best to give contracts to their contractors. According to them, a company that weaken its ecocystem by cutting its expenses is in a risky situation because of its weakened ecosystem. In France, large companies are ask to protect themselves even if it means the death of many SMBs.
– there is a hudge gap between CxO’s discourses, that at think are sincere, and what managers actually do. A matter of paradoxical injunction that has to be fixed quickly it they want to stay credible.
– Everybody agreed on the responsability of purchasing departments to such an extent that many people said that if the current crisis was caused by financial depts, the next one will be caused by purchasing depts. The way they consider and treat their small constractors is a true disease for many SM B’s health. For lots of SMBs, contracting and working for a large business is a risky and exhausting effort that often threaten their finances.
While many of us only see in the ecosystem economy the consequences of a distributed business model inspired by web 2.0, we can still wonder if it’s not also about a sanitary logic that aims at protecting a globalized economy from the wrongdoing and clumsiness of the monsters it generated.
So what ? To big too fail ? Too big to succeed ? To big not to harm ? Or to big not to be responsible ?
Anyway, that’s all our economic surrounding that may be reshaped in the upcoming decades.
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