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Why all corporations eventually die

post #1 of 15
Thread Starter 
‎"Most companies start out probably with some of that buzz. But the data indicates that at about 50 employees to a hundred that buzz starts to stop. A company that was more multi dimensional, more evolved, becomes uni dimensional. It closes down. Indeed, if you go to General Motors or you go to American Airlines or you go to Goldman Sachs, you don't see crazy people. Crazy people are fired. Well, to speak of crazy people, is taking the extreme. But maverick people are often fired. It's not surprising to learn that when manufacturing companies are on a down turn, they decrease research and development, and in fact in some cases, do actually get rid of it, thinking this is "oh, we can get that back in two years we'll be back on track."

Well, this kind of thinking kills them. This is part of the killing, and this is part of the change from superlinear to sublinear, namely companies allow themselves to be dominated by bureaucracy and administration over creativity and innovation, and unfortunately, it's necessary. You cannot run a company without administrative. Someone has got to take care of the taxes and the bills and the cleaning the floors and the maintenance of the building and all the rest of that stuff. You need it. And the question is, “can you do it without it dominating the company?” The data suggests that you can't. The question is, as a scientist, can we take these ideas and do what we did in biology, at least based on networks and other ideas, and put this into a quantitative, mathematizable, predictive theory, so that we can understand the birth and death of companies, how that stimulates the economy? How it's related to cities? How does it affect global sustainability and have a predictive framework for an idealized system."- Geoffrey West
We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

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We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

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post #2 of 15

So what's with all the recent pointless doom and gloom?

post #3 of 15
Thread Starter 
I'm actually enormously optimistic about innovation especially with new risk taking enterpeneurs. I only love Apple because of their innovation, but their current trajectory is unsustainable.
We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

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We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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post #4 of 15

As is yours.  And all of ours.  See, we are all made with built-in self-destruct mechanisms.  

 

So what's the point of all the bashing?  Just trying to make yourself feel better despite the odds?

 

Cyclic is cyclic.  Apple nearly died, the resurgence is likely to last longer because the memory of that period of stagnancy is still in the corporate consciousness.  Companies that don't bloom again and revive out of the stagnancy are the ones that eventually go away.  IBM made it, SUN didn't. XEROX made it, Yahoo won't. Target made it, maybe MS won't the jury is still out on them long term.  

 

So maybe less of the depressing judgmental psycho-analyzing stuff will make the board a slightly nicer place to hang out. 

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post #5 of 15
Thread Starter 
Quote:
Originally Posted by Hiro View Post

As is yours.  And all of ours.  See, we are all made with built-in self-destruct mechanisms.  

So what's the point of all the bashing?  Just trying to make yourself feel better despite the odds?

Cyclic is cyclic.  Apple nearly died, the resurgence is likely to last longer because the memory of that period of stagnancy is still in the corporate consciousness.  Companies that don't bloom again and revive out of the stagnancy are the ones that eventually go away.  IBM made it, SUN didn't. XEROX made it, Yahoo won't. Target made it, maybe MS won't the jury is still out on them long term.  

So maybe less of the depressing judgmental psycho-analyzing stuff will make the board a slightly nicer place to hang out. 

Thanks for the love bump Hiro, but really your assumptions are laughable.

Please, do yourself an intellectual favor anD watch this http://www.youtube.com/watch?v=XyCY6mjWOPc&feature=youtube_gdata_player

Your brain will thank you later :-)
We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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post #6 of 15

Not so impressive.  He's a typical arrogant physicist thinking the world is governed by mathematics rather than simply that we can use mathematics and statistics to see some past patterns.  He also self contradicts several times munging his sigmoidal and exponential curves and makes too many mathematically dangerous generalizations.  

 

I agree with sigmoidal growth, what he fails to note is that each sigmoidal spurt can be stacked (like he incorrectly showed with exponentials -- they should have been sigmoids) and if you stack in a timely manner the sigmoids provide super-linear growth with a built in ability to tail off without catastrophic crash.  His data is also pathetically small in scope, starting in 1950.  There are a lot of companies on this planet that are over 200 years old and do not fit any of his patterns at all.  They chose to stay on a particular sigmoid curve and ride the asymptote, but yet they never died.

 

So if you want to look for inspiration, I suggest you lear a lot more math and statistics so you can easily spot the charlatans who impress with cherry-picked data and custom built scaling.  Also learn there are two basic kinds of physicists:  those who understand physics and are looking for an even deeper understanding of that, and those who think they know or can explain everything because everything is just applied physics.  Avoid that second group, especially because they forgot physics is just applied math.  

 

Gotta love XKCD, he cuts right to the chase, and no I'm not a mathematician.

 

physicists.png   purity.png

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post #7 of 15
Thread Starter 
Hiro,

While I do think it's a good idea to 'attempt' to understand complicated systems I do admit those the little cartoons you posted are awesome.
Edited by Commodification - 5/6/12 at 7:49pm
We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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post #8 of 15

Yeah, the problem isn't in attempting to understand complex systems by starting with simplified versions.  The problem is when someone says I'm a physicist and I understand them and that they are governed by simple laws of physics no matter what.  That's when we go from helpful straight to the cartoon on the left...

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post #9 of 15
Thread Starter 
This short clip on 'Thinking Cities' by West is good as well @ http://www.youtube.com/watch?v=nFY694_eJXY&feature=youtube_gdata_player
We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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post #10 of 15

He would make a good Gandalf.  He's also looking so hard at the trees he missed the forest.  

 

Almost all the city items he cites are things that take area, geometric area.  Well to double the area you only have to increase the side dimensions by 1.414 (sqrt 2), or in the way chip designers think of it, reduce the side length to .7 of what it was before (~(~ sqrt 2)/2 ) which is just the same problem upside down.    If he realized that ratio as the basic area law that it is he would be unhappy with his 85% costs of doubling because they are actual super-linear (.85 > .7), not the sub-linear (.85 < 1.0) he cites.

 

All that said, he is an engaging speaker in an informal setting.

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post #11 of 15
Thread Starter 
Even Gandalf knows you don't hug trees in the 'thinking' Fangorn forest. I do believe West is right that there needs to be more study done on the sustainability of cities since there is plenty we do not know abot them yet they are growing exponentially.
Edited by Commodification - 5/11/12 at 12:33am
We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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We become what we behold. We shape our tools and then our tools shape us.- Marshall McLuhan

Join 'The New Middle Class Movement' @ http://www.facebook.com/pages/The-Ne...45269528896164
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post #12 of 15

It is true that all corporations (on Earth) will eventually die, only because this planet's life is not infinite. When the sun blinks out eventually, the corporations on it will die with it. But that doesn't mean that by the time that happens that mankind won't have found other habitable planets, where those (once Earth based) corporations will be able to take up business.

 

More to the here & now... the life span of a corporation is not predetermined. Corporations, unlike the people who found them, are "immortal". At some point, they may be dissolved for various reasons. And businesses fail for various reasons. But those that can successfully change with the times can go on (theoretically) forever.

 

When I was in business school, we briefly studied what was supposedly the oldest corporation in the world: Stora Kopparberg Mining Company in Sweden. As I recall, it received its corporate charter some time in the early 1300's. I don't remember very much about it now, but it survived and prospered because it changed its business model and product offerings over the ages to meet the times. Whether it's Apple, GM or AT&T we're talking about, they ALL have to change with the times in order to survive, if not prosper.
 

If two people always agree, then one of them is redundant.
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If two people always agree, then one of them is redundant.
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post #13 of 15
Quote:
Originally Posted by Jag_Warrior View Post
When I was in business school, we briefly studied what was supposedly the oldest corporation in the world: Stora Kopparberg Mining Company in Sweden. As I recall, it received its corporate charter some time in the early 1300's. I don't remember very much about it now, but it survived and prospered because it changed its business model and product offerings over the ages to meet the times. Whether it's Apple, GM or AT&T we're talking about, they ALL have to change with the times in order to survive, if not prosper.

 

There was a Japanese company founded in the early 800s that just went under a few years ago, I think.

 

They went under because of idiot management, not because the company was ever actually going to die. Its market still exists, and it could easily be brought back right now.

post #14 of 15

Book. "Tribal Leadership". Read it, blow your mind. Corporations will not die. But "Stage 3" corporations will be "churning" through 2012-2050. "Stage 4" and "Stage 5" business "tribes" are the solution.
 

post #15 of 15
Quote:
Originally Posted by Tallest Skil View Post

There was a Japanese company founded in the early 800s that just went under a few years ago, I think.

 

They went under because of idiot management, not because the company was ever actually going to die. Its market still exists, and it could easily be brought back right now.

 

Bingo. See post above. Nothing guarantees whether a tribe can move up or down through the stages except members of the tribe and the impact of a possible tribal leader.

 

Look at England - once the pinnacle of civilisation with an empire that stretched the ends of the earth. Like the Mayans and Romans before them, they too are now in decline.

 

Eg. News Corp stuff in the UK - even the investigation/enquiries are not about "What can we do for the betterment of the UK" but instead "I'm going to get them back however we want".

 

The US is not "as bad" because of lots of diversification and natural pool of, and encouragement of, talent. But it will take a superb visionary leader to return it to its heyday.

 

(China is not the "West"s challenge, its the West itself)

 

...And of course Greece, from spark of civilisation to corrupt and defunct country...

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