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31 August 2009 • 7:00 am

Size Matters – But is Bigger Always Better?

Economist illustration by by Jon Berkerly

Economist illustration by by Jon Berkerly

The cover story in the U.S. edition of this week’s Economist proclaims that “Big is Back” – that the era in which large companies were on the defensive and the small company model was ascendant is coming to an end. And it is true that big companies have had their share of challenges over the past several years. The U.S. telephone monopoly AT&T was broken up in a court-ordered divestiture in the 1980s. Giants such as Enron, MCI, and Arthur Anderson fell prey to management misbehavior, and formerly powerful financial behemoths such as Merrill Lynch, Bear Stearns, Countrywide Home Finance, and Northern Rock were victims of the implosion of the past few years, and General Motors and Chrysler are meek shadows of their former selves. In an interesting and telling statistic, the Economist asserts that the share of GDP produced by big industrial companies fell from 36% in 1974 to 17% in 1998.

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27 June 2009 • 12:29 pm

Economist: U.S. Health Care Reform is ‘Going to Hurt’

Today’s brief (some might say lazy) Saturday post points you to a concise piece in The Economist, an esteemed publication I admire for the quality of its writing, if not always for it’s political views.

What distinguishes The Economist’s writing from all of the noise and posturing is both its incisiveness and its moderation. Their introductory piece is a worthwhile five-minute read that summarizes the key issues without getting bogged down in rhetoric. And their Photo-shopped picture of Barack Obama might make you smile.

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8 June 2009 • 11:36 am

The Motivating Power of Measurement

Practitioners and fans of the balanced scorecard concept understand that measurement has the power to motivate behavior. The great challenge in driving change in any organization isn’t just to change the culture, but to change the behavior of individuals and groups inside the organization. Performance measurement doesn’t just tell us how well we’re doing at achieving a desired outcome, the very process of measurement and communication of measure results actually changes behavior.

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5 June 2009 • 8:03 pm

Economist: GM was ‘Disastrously Inflexible’

I want to share with you the opening lines of the lead story in tomorrow’s Economist. With no punches pulled, the issue’s cover story disects the decline and bankruptcy of GM, once the most powerful corporation in the world. The tale of GM is a sad but effective illustration of the deadly combination of long-term avoidance of change and institutionalized support of the status quo, in this case by the U.S. goverment. The article is a very worthwhile read for those engaged in strategic planning. Your comments are welcome below.

The decline and fall of General Motors

Detroitosaurus wrecks

The lessons for America and the car industry from the biggest industrial collapse ever

The demise of GM had been expected for so long that when it finally died there was barely a whimper. Wall Street was unmoved. Congress did not draw breath. America shrugged. Yet the indifference with which the news was received should not obscure its importance. A company which once sold half the cars in America, employed in its various guises as many people as the combined populations of Nevada and Delaware and was regarded as a model for managers all over the world has just gone under; and its collapse holds important lessons about management, about government and about the future of the car industry.

GM’s architect, Alfred Sloan, never had Henry Ford’s entrepreneurial or technical genius, but he had organisation. He designed his company around the needs of his customers (“a car for every purse and purpose”). The divisional structure he created in the 1920s, with professional managers reporting to a head office through strict financial monitoring, was adopted by other titans of American business, such as GE, Dupont and IBM before the model spread across the rich world.

Although this model was brilliantly designed for domination, when the environment changed it proved disastrously inflexible…