Too Dumb for Success? Print E-mail
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Written by Peter Bigelow   
Friday, 29 June 2012 16:25

Global gurus, Wall Street big shots, and big-company CEOs: Stop fearing failure and start focusing on success.

Listening to the news, the one phrase I am tired of hearing is “too big to fail.” I don’t remember hearing this term bandied about prior to the 2008 subprime/financial industry meltdown. Since then, however, it has become a fixture, and no longer exclusively in the context of banking and finance.

What really frosts me is that my life experience has shown that rarely is anything too big to fail. More often than not, the bigger the organization, the better term to apply would be “too stupid to succeed.” And examples of this can be found right in our own industry.

It wasn’t long ago that merger mania hit the printed circuit board and EMS sectors. The late 1990s were chock-full of mergers, acquisitions, “roll-ups” and “strategic alliances.” Investment bankers would attend industry events and pontificate on how only the largest companies would succeed. The implied message was that through size and volume a company could become “too big to fail.” The big guys would flock to those meetings to get “face time” with the investment bankers, seeking to gain the capital needed to go on the prowl. Likewise, the small guys would flock to the meeting to convince the larger companies and investment bankers they were ready to harvest the value of their years of hard work.

Heady times. As it turned out, there was just one little problem: Most of those companies that were too big to fail did, in fact, fail! And not only did they fail, but they were the first ones out! One could argue they were victims of unprecedented times for our industry, but there is ample evidence that growth for growth’s sake proved they were just too stupid to succeed.

Size does not equal security. Being big does not mean being immune to failure. In fact, some of the largest companies in any industry fail simply because they become too large to maneuver as agilely as they once did. A large organization requires different management skills than does a smaller, more entrepreneurial business, and if those skills are not in place, everyone ends up taking their eye off the ball, increasing the probability of failure.

Experience shows that sometimes the Davids can indeed thrive, while the Goliaths flounder. While companies of all sizes have failed during the past decade and a half, a higher percentage of the smaller companies have found ways to thrive, despite not being “too big to fail.” They have stayed committed to their core customer base. They have been agile and “niched” in areas of growth or profitability. They have spent their investment dollars on technology and capability, not on acquiring more capacity than they need (or can afford). Ditto for banks – smaller institutions seem to be doing far better than the top tier – and OEM customers, which again seem more interested in investing in themselves than in acquiring competitors just to get bigger.

Even on the global scene I find it intriguing how obsessed the media and Wall Street are with those who are “too big to fail.” What to me is most intriguing is that the news that they report or follow doesn’t even support the concept. For example, while economic data coming from the US as well as other larger countries appear to be reasonably okay, the world markets are being roiled by, of all countries, Greece. It has been a millennium since the Greek economy was considered big relative to the global scale. Today, in fact, it is one of the most insignificant economies in terms of measurements like GNP and virtually every other indicator – and yet Greece, the David of countries, is successfully holding the Goliath, aka the global markets, hostage, as worries persist over the economic fate of an anything but too-big-to-fail country. Maybe instead of obsessing about any country or company being too big to fail, the world seers should be concerned about what might happen if too many of the little guys fail.

That said, I fear our industry seems to be again entering a period where M&A are in vogue. Some of the big guys – companies that had suffered in the past when they tried to scale up – seem to think now is the time to merge with “strategically complementary” companies. While I wish them well, I hope they are not just trying to grow for growth’s sake and joining the ranks of the too stupid to succeed. And, if the growing noise from pundits and business gurus is correct, the entire electronics supply chain may be looking straight into a fast-approaching paradigm shift, as globalization matures and data security concerns grow – a redistribution of where product is designed and built. While change means opportunity, it all too often provides an excuse to bulk up, so an organization is too big to fail when the existing paradigm falters.

Which brings me back to why I am really tired of hearing about too big to fail. The concept seems an about-face from why one goes into business in the first place. I have never known anyone who has wanted to be too big – or small – to fail! We go into business to succeed: Shouldn’t that be what we focus on? Large or small, and regardless of industry, companies throughout the world need to focus not on defensive moves to (hopefully) prevent failure, but on their customers, technologies and keeping their financial house in order. Maybe we should also remind those we know in government, banking and our customers that it’s not about size; it’s about success.

Peter Bigelow is president and CEO of IMI (imipcb.com); This e-mail address is being protected from spambots. You need JavaScript enabled to view it . His column appears monthly.

Last Updated on Friday, 29 June 2012 19:07
 

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