big is so often bad... why?

[miriam_e]

During a conversation the other day it was mentioned that a particular beverage was really good... until the makers were taken over by a giant corporation and the quality went down. It started me wondering, why does that happen so often? Many times in the past I've had the experience of finding something wonderful and enjoying it until the giant corporations find it too, buy it, and then the quality drops through the floor.

Why is that? You'd think it would work the other way, right? Bigger corporations have more resources and could make really good stuff into really great stuff. So why does it almost always go the wrong direction? I say "almost always" because I'm sure there must be cases where giant corporations have improved something by swallowing it up... however, honestly, I can't think of a single example. Doesn't that strike you as odd? It certainly puzzles me.

Is there some natural dynamic at work which makes this inevitable? Is it because businesses operate under dictatorial principles? Like a dictatorship, businesses run in a strict hierarchy. You don't elect your boss and he isn't accountable to you. There is nothing remotely like equality. You do what you are told, try to please your "superiors", and hope not to get fired. I've had bosses who became friends and jobs I've enjoyed, but there was still never any confusion about who held the power. Such unequal relationships in wider society nearly always end up corrupting those with the power. Is it surprising that it would tend to work that way in business too?

Is it possible for business to come out of the feudal age and use democracy?

You're probably thinking that this is ridiculous, that businesses would be unworkable without a clear chain of command, and that running one where even the cleaner got a vote in how things worked would invite disaster. But this is exactly what people thought during feudal times. They believed that society would fall apart if people had a say in the running of the country, that it would lead to utter chaos and make society unworkable. But in reality it lifted society to a whole new level of operation, even with the minimal democracy we have. Yes, it brought chaos instead of the strict order where everybody knew their place, but it was a good chaos, where people grew and developed new technologies, cultures, and and realms of knowledge at a pace never seen before.

Could it be that democracy and openness in business could fix its worst aspects and make capitalism a new force for good?

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Okay, having got that off my chest I'll try to finish chapter 17 today. Got more work done on it yesterday.

Comments

Just IMHO

[hestia.livejournal.com]

My anthropology classes suggest that it has a lot to do with the alienation that people feel from the projects of their labours. It doesn't help that managers, executives and bean counters have nothing to do with the end product either. The further up the hierarchy a decision maker goes the more abstract the decision making becomes, making it less and less real. It takes more and more imagination to envision the outcome of decisions, but imagination is not necessarily a talent that is "naturally selected" for promotion.

[greylock.livejournal.com]

Cost-cutting = increased profits.

Re: Just IMHO

[miriam-e.livejournal.com]

I think you've hit the nail on the head. And how do you re-connect them with what they produce? Making the workplace more open and more democratic might just do that.

Post-war Japanese factories took a big step in that direction by giving all workers a chance to participate in decisions. Even cleaners could suggest improvements. This gave workers a real sense of power and connected them with their work. Japan didn't go far enough and their system remains rigidly authoritarian, but even the small changes they made caused them to become the most powerful economic force on the planet until the monetary collapse beginning in South Asia (in Thailand I think, where a bunch of Western billionaires bought up currency, artificially raising the value, then sold it at great profit, destroying its value). That unravelled much of Japan's gains. But in spite of that this tiny country is still a massive economic power that rivals countries with far greater resources.

Imagine what could happen if we removed worker alienation and connected all workers with the products of their labour.

[belegdel.livejournal.com]

Corollary to Greylock's comment, quality costs more.

Is there a natural dynamic at work? Only if you consider capitalism natural.
Cheaper to buy an established product and milk it for it's value than to build up your own.
Hestia's comment about alienation is also on the mark, I think. The difference between a passion and a "strategic business direction" is immeasurable.

I often dream of a democratic business. In the end I think that since businesses are about money, and money is the primary tool of power, and true democracy steals power from the powerful, odds are strongly against it.
Then again, revolutions are not unheard of :)

I've heard in the news once or twice about the occasional company that was run in an open and democratic fashion. Sadly it appears we only hear about them at their demise :(

[miriam-e.livejournal.com]

This is one of those things that I love. I am fascinated by things that look to be one thing but are actually another. Cost-cutting is a short-term way to make the books look better, but it rarely seems to work in the longer term. I can understand the desire to make a workplace more efficient, but generally cost-cutting means firing workers on the floor, increasing the workload of those that remain, while enlarging the wages of the managers. That's actually incredibly inefficient.

I think you are absolutely right that cost-cutting is a potent cause of the decline in quality when a smaller company is swallowed up by a larger one. But why would companies so regularly choose what is fairly clearly a mistaken direction?

A company buys up a successful product that works in the marketplace and is well liked by consumers... and then they break it. It all seems very odd and wasteful. Surely they would make more money from happy consumers satisfied with great products.

Of course not long ago we used to have cars and washing machines and refrigerators that were engineered to last decades, but we've somehow been sold the idea that it's normal to have to buy those things again every six or seven years. The corporations blind us to what's good for us and they have happy consumers as well as selling twice as many crappy products.

[miriam-e.livejournal.com]

True, quality generally costs more, but if it returns more too then it is worth it. I listened to a talk by a businessman recently who kept being advised by his accountants every time they had financial problems, to cut back, but he always pulled the company out of its woes by spending more and investing in better quality. It seemed obvious to him.
http://sic.conversationsnetwork.org/shows/detail3184.html

That is an interesting point about democracy stealing power from the powerful. I hope the potential gains of an open working society are great enough to win out.

I am delighted to learn that some people have tried open, democratic business principles, but am saddened to hear that they've mostly died. I can only wonder if they dabbled at openness, but ultimately were benign dictatorships. Then again, they may simply have been run by people like me, who have no financial nous at all.

Big so often bad....

[(Anonymous)]

When you are a small business you rely on a quality product or service and good customer relations for your very survival.

When you get *really* big you can forget this!

(A leaders' power comes from those who supported him or her; this is the source of power - it is entrusted to a leader by others. But those who have been in power too long can come to think that they *deserve* it, or that the power they have is somehow theirs 'by right.' The result is predictable.)

Cheers, MFG.

Re: Big so often bad....

[miriam-e.livejournal.com]

Very true far too often. :(

The thing about leaders is even crazier in Australia where we vote leaders out. We rarely ever vote leaders in. Yet each new incoming polly thinks we love him. God! They are such a disgustingly deluded bunch.