This Focused Performance Weblog started life as a "business management blog" containing links and commentary related primarily to organizational effectiveness with a "Theory of Constraints" perspective, but is in the process of evolving towards primary content on interactive and mobile marketing. Think of it as about Focusing marketing messages for enhanced Performance. If you are on an archive page, current postings are found here.
...there is no reason to believe that these 500 globally dominant companies can expect to increase revenues considerably in the future at all. Consumer debt is already at record levels, the little guys have already been squeezed out by the oligopolies, and spending on new products is simply replacing spending on older, obsolete ones.
How do you increase profits if revenues are flat? You cut costs. Material costs have already dropped in recent years, so the principal way you cut costs today is by reducing the cost of labour. That means offshoring, outsourcing, getting rid of the union, firing older workers to bring in cheaper younger ones, and lowering product and service quality. All of that means laying off and under-employing domestic workers, creating unemployment and underemployment. This of course becomes a vicious cycle, since this further reduces consumer spending power and forces yet more 'productivity' improvements (offshoring and layoffs) to keep profits rising, the 'Wal-Mart Dilemma'.
Eventually you crash into a wall: At some point there are simply no further 'productivity' improvements to be had, even if you 'win' the treacherous Race to the Bottom. Then what? Then you realize that a reasonable P/E ratio for the S&P 500 is 10 to 15 (which is what it always was until a generation ago), not 30. After you've lost your job to 'productivity' cuts, and after you've been forced to buy stuff from Wal-Mart made and serviced by the third world people that took your job away, then you lose half or two thirds or more of your pension as stock markets tank.
Of course, one way to avoid the outcomes described in Dave's rant is to search out real innovation for new markets and continually deliver it quickly. (Project Management comes in here.)
Another is to stop relying on the success of the S&P dinosaurs and instead on the supply capabilities of the demand side. Yesterday, Doc wrote...
The demand side has enormous power now — far more than was even imaginable at the height of the Industrial Age, or even as recently as ten years ago. That power grows out of its connectedness, out of its ability to inform itself.
The demand side now has the power to supply itself. That's the lesson of Linux, of "open source" everything, of peer-to-peer, of independent creators in everything from music to software, of the shift in media power from the few to the many, from the peerage of Big Network Powers to the peer-to-peerage of everybody with something worthwhile to contribute to the connected whole, whether it's a piece of music, a piece of code, an opinion, an observation, or a few bucks for a candidate. These developments are not opposed to business or government, but rather support both by providing more choices to the supply and the demand sides of marketplaces.
Again, AND logic.
"AND logic." I love it. "AND logic" is the basis of much of the ability to bust assumptions about how things have to be. The reason we've had to rely on large organizations is partly on the economies of scale necessary for the gathering of information (research), for collaboration (design and delivery), and for the dissemination of information (marketing). I have to wonder to what extent we can really attack those assumptions, given today's technology. Even in the realm of physical goods...there was an intriguing piece on NPR over the weekend about efforts to grow local networks of food producers to wean us off of our belief that strawberries in the Northeast US in January are a good thing. The possibilities boggle the mind.
But that's only my opinion, I could be wrong.
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