Dirty Harry said, “A man”s got to know his limitations…”
It is true, too, for corporations. Toyota was known as a maker of the best cars. Not the biggest maker of cars. There were no lemons, no recalls. Everything fit tightly and worked properly. But, rather than stick to what they knew worked for them, they took on a GM-style mantle to grow and grow. And look what it got them.
Look at our banks. They were not content to be just banks, make nice profits and support their communities. They got rid of the sensible Glass-Steagall Act so they could make and sell all kinds of junky paper, and grow, grow, grow. They”ve come close to ruining our economy while we bail them out with the public”s money.
Remember Enron? Everyone knows how they grew and grew and grew, and imploded (part greed and part shenanigans).
These examples suggest that there are some optimum sizes for well-run, profitable businesses. Many corporation CEOs say the stock market drives them to grow and grow, or die. And many do die (or are takeover victims) and they and take innocents with them to the graveyard.
It may be true that some businesses are “too big to fail.” They”re also too big to manage well. Yes, a business has got to know its limitations.
Don K. Moeller
Kelseyville
