Bigger isn’t always better for business

Kai Ryssdal Feb 25, 2008
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Bigger isn’t always better for business

Kai Ryssdal Feb 25, 2008
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TEXT OF COMMENTARY

KAI RYSSDAL: Clearly, “undervalued” is the word companies use when they don’t like a takeover bid. It’s what Yahoo said about Microsoft’s offer, and it’s what video game publisher Take 2 Interactive said today about a $2 billion query from Electronic Arts. The timing’s important here. Take 2’s set to release the latest version of its blockbuster Grand Theft Auto franchise in a couple of weeks, so maybe it’s holding out for more cash on the barrelhead.

Management guru Charles Handy wonders why American companies are so concerned with size in the first place.


CHARLES HANDY: Americans think big. This has helped make them the most powerful nation on Earth, but bigger is not always better, either for our bodies or, I suggest, for our organizations. If I were to visit a symphony orchestra and ask them about their growth plans for the future, how would they respond? They would talk about their plans to extend their repertoire and to bring their work to new audiences, not about increasing the number of violinists. The same holds true for a school or a hospital. Once they get to the appropriate size, they strive to be better not bigger.

Why should it be different for business? Why does almost every business that I know seek to grow in size, year after year, in fact, as if there were no limit? Why can’t they be content with doing more with less? I ask because large organizations are not usually, or even often, nice places in which to spend the best part of our lives. Humans are most comfortable in clusters of 10 to 12, family-sized groups. Put them in armies of hundreds and thousands and they cease to be individuals, but only human resources, just numbers in jobs. Humanity too easily yields place to bureaucracy.

An executive in the project I am working on at the Drucker School in Claremont, California calls the business he created a “bonsai” organization, after those small Japanese trees. These trees need to be trimmed and reshaped, but they don’t grow beyond their ordained size. So it is, he says with his organization, and if you really have to be bigger, then maybe the challenge is to create woods of bonsai trees. This way, the economies of scale and the personal ambitions of our leaders won’t run up against the constraints of human nature, because if we aren’t careful, organizations can become the prisons for our souls.

KAI RYSSDAL: Charles Handy is a visiting scholar at the Drucker School of Management and the Drucker Institute at Claremont Graduate University. His latest book is called “Myself and Other More Important Matters.”

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