Schlagwort-Archive: Growth

The effect of single headedness

Companies that cross the Dunbar number of 150 employees should find ways to spread their leadership across several shoulders to escape single headedness. As long as you can are below this limit, those involved are at eye level – everybody knows everybody; member opinions and suggestions are considered; flat hierarchies and short paths enable agility. Multiple top decision-makers are more likely to create a confusing mess and a lack of settings rather than a clear direction. However, with thousands of employees, one-person leadership becomes a bottleneck. Corporate icons such as Steve Jobs, Bill Gates, Elon Musk, Larry Ellison, Jeff Bezos, have above all a marketing value. They cannot take care of everything, nor are they able to guarantee the coherence of their decisions. Besides, not only their workforces but also the network of affiliated partners depends on their mood. Not to forget the shareholder that buy and sell their shares depending on public statements. Jeff Bezos, for example, has pointed to the natural life span of a company of 30+ years, to derive from it the end of Amazon that is approaching that magic limit.

In doing so, Amazon is continuously opening up new business fields (e.g., any kind of media, platforms for third-party providers, Web Services), whose viability should be safe as long as we have the WWW. But even such big owners are not free of the faith in fate. A conscious look in the mirror could bring their weaknesses to light.

  • The missed transition from growth to viability
    Amazon has proven that growth pays off in the long run. In almost thirty years, the increased revenues have been used to expand the company. Since 2017 alone, sales have quadrupled to nearly US$12 billion. However, Jeff Bezos seems to have knowledge that shows him limitations; otherwise, he would not be singing the swan song. Although this is not so much about the end of Amazon, but the end of growth. As a single-minded decision-maker, he has the opportunity to lead his company into longevity by switching from growth to viability. Growth serves shareholders. Viability serves the customers, who, in return, provide the company with income. If the customers are not disappointed, they will stay loyal and hardly switch to a competitor. Disappointment occurs when the deliveries are faulty, or others provide better offers.
    Keywords of viability are a demand-oriented variety of action, pleasant customer experience, self-organized workforce, sustainable business models, Win-Win supplier relationships, and consistent value practice.
  • Inability to meet his social obligations
    Globalization has fueled the business models of the Internet. However, companies like Amazon are using the lack of a world order to evade social responsibility. For-profit interests, revenues are channeled in such a way that they avoid any taxes. National politicians bear a considerable share of the blame for this, as they fail to set short-term barriers to such attempts or even create actively tax havens to attract companies. Understandably, companies make use of these offers – it is only immoral and not illegal. However, in the long term, they do themselves harm, when people boycott this business practice, at the latest when other providers offer similar deliverables and behave more responsibly.
    Keywords of social responsibility are Corporate Social Responsibility (CSR), Psychological Safety, Psychosocial Safety Climate, Compliance.
  • Lack of imagination about the future
    The adherence to a particular way of running the business is due to the current workload and the usual routine, as well as often to the lack of imagination of the single-headed leader. Presage the end of a business is not a wise prospect but a sign of a lack of vision. Consumption via the Internet has virtualized the business world forever – at least as long as there is electricity and the Internet. Shops are now webshops. Marketplaces are now platforms. Technical discussions are now online forums. The reach of business spans the globe – even if some webshops continue to address a LOCAL, SINGLE LANGUAGE market (a clear sign of the beginning of the end). The question must be now: How will the virtual shopping street evolve? What can I do to stay ahead? What are the critical influences? These questions overwhelm a single-headed leader. It requires certain people (employees and managers), who are willing to experiment, to try out as many things as possible, and to bring viable ideas to market.
    Keywords of the imagination are Learning organization, Design thinking, Experimentation, Hackathon, FabLab, Business exercise, Lateral thinking.
  • Inner resignation of the driving force at the top
    The greatest threat comes from one-headedness is the dependence on the daily mood of the icon. In extreme cases, morale can slip away for a long time, which then leads to clumsy and defeatist utterances. As a result, the mood is intensified by a persistent vicious circle that leads to rampant instability. The ability to fulfill a timely leadership transfer that strengthens the company in the long term is the icon’s final primary task. At the same time, the handover offers the chance to overcome the one-headedness. Bill Gates has missed this opportunity, as he did not turn Microsoft into a common, but by passing on the baton, he has underlined the previous. Jeff Bezos has the chance to turn his global consumer network into a public marketplace that puts customers first, not shareholders. However, with his swan song on Amazon, he has instead shown that in his imagination, he has already reached the plateau, and that from now on, things will go downhill. This inner denunciation is fatal.
    Keywords of self-management are Self-image, Mindset, Self-understanding, Expectations, Strategy, Vision, Intention.

Bottom line: Everyone talks about agility, holacracy, and networks – however, the management levels exclude themselves from these discourses. Teamwork is crucial, especially at the level of the leaders. To hang by the silken thread of a “genius” is one of the most significant risks for all companies with more than 150 employees. Examples can be found in small and medium-sized companies as well as in the GAFAs (Google, Amazon, Facebook, Apple). Our example is Amazon, which fails to make the transition from growth to viability, which fails to meet its social obligations, offers no vision for the future, and is led by a mind with apparent self-doubt. The way out is a management team with equal partners who complement each other. This avoids the effects of one-headedness.

Boundless growth – nothing more than a sales argument

The only thing that seems to grow endlessly in the universe so far is the universe itself. And counterintuitively, it expands faster and faster. It could take longer than the Earth exists to reach the maximum, if it could at all. Otherwise everything follows the course of becoming and perishing. Everything comes into being, matures, has an effect for a certain time, and then disintegrates until it has disappeared. Let’s think of a balloon that gets bigger and bigger when we inflate it. The rubber is stretched with increasing effort. The pressure in the balloon is rising. If we do not stop adding air, we reach its maximum and with an additional waft, it inevitably bursts. The lifespan of people is too short in order to observe all lifecycles. But even without the ability to fully follow it, we observe origins and dissolutions in both small and large dimensions. Nothing provides an indication that it could grow boundlessly.

Nevertheless, banks and financial specialists sell their products with the argument that today’s growth in supply is a sure indication that they are a safe investment – after historic collapses since the tulip crisis in the 17th century or the global economic crisis of 1929 or the bailout of the banks in 2008. Although the factors that speak against it are obvious.

  • Growth needs energy from outside
    A closed system is not able to grow (see here) – within the energy remains constant. As the growing stock index, questions arise, where the required momentum and energy come from and who suffers the loss of energy. If you look at the past economic successes, you always find victims – South America, due to the conquistadors; Asia, due to European colonies. Nobody has anything to give away and banks and insurance companies need a lot of energy to keep their administration running. The example of the banks shows us where the energy comes from. A German bank no longer pays interest and demands a raised fee of four to eight Euros for paper transfers.
  • Capacity limits
    If the capacity limits were previously determined by the work performance of the employees, the digitized businesses are limited by the performance of the technology and the activatable attention of the customers. Which computing power and bandwidth are available? How fast can robots process physical things? How autonomous do artificial intelligences act? How to be noticed by the customers? How do you motivate them to buy? Speculative trades with stocks and bonds reach their limits, when they collapse despite their lack of substance – today they already account for a multiple of the real economy.
  • Boiled Frog Syndrome
    The difficulty with growth arises, when it happens unnoticed. The Boiled Frog Syndrome provides a plausible metaphor for this. A frog blunders into a pot full of water, which is slowly heated on a stove. He does not notice the increase in temperature, since the temperature change takes place in small steps. First 40, then 50, 60, 70, 80 degrees and the frog happily paddles around in the pot. At 90 degrees, he’s surprised because something is strange. 100 degrees, the water is boiling. The frog notices the evil, but is no longer able to save himself. The step-by-step disaster is only noticed, when it is too late. The same applies to growth, until it collapses. There is no hope that there will be no collapse – except: aprés moi le deluge (after me the deluge).
  • The turkey problem
    The unpredictability is illustrated by Nassim Taleb in the book The Black Swan using the example of a turkey. A turkey lives in a cage. Every day at the same time a flap opens, a hand appears and throws food into it. The turkey learns that every time someone tampers with the hook, the feeding takes place. He gets used to it and approaches the flap daily at a certain time, hoping to be fed. That’s how it goes every day until the fourth Wednesday in November, the day before Thanksgiving. This day radically changes the turkey’s life. Anyone who has inflated a balloon until it bursts is familiar to the surprise, when the balloon bursts unexpectedly with a loud bang.

Is it ethically justifiable to recommend stocks with an indication of a few years of growth, just because nothing has happened so far? Why doesn’t our common sense tell us that this growth rhetoric is wrong? Just a few names to remember: Nixdorf, Mannesmann, Karstadt, Lehman Brothers, American Airlines, ENRON. Since everybody is the master of its accounts and decides for himself whether to engage in a gamble of growth. However, it would be desirable that the general public would not have to step in again in the next crash. Or that disappointed investors try to socialize their losses afterwards. Even if the client investor wanted to buy profit, no loss, the protection of the customer’s interest in a game is absurd – part of the game is losing. They get what they paid for.

Bottom line: It is difficult to understand that our perception of growth is so poorly developed. And it may be that this is a natural weakness of living beings, who want to protect themselves in the long run and therefore build up stockpiles. But it is condemnable that people profit from this weakness. That is why we should take every opportunity to realize that there is no growth without boundaries. Therefore, no one should afterwards be compensated for lost profits. In the end, these transactions serve only to immediate commissions to financial and insurance brokers, who live on false promises. Boundless growth is nothing more than a sales argument for the good of the broker.