One of the features of the failure of the banking system, autos and media is size.
Failing Banks are over concentrated and over-leveraged. Big holding companies and 40 times gearing seems to be a size that cannot be sustained. The Canadian banking model of not allowing holding companies and a maximum leverage of 10 seem to have some resilience. Size?
How did the "Big 3" seem unable to do the right thing? I wonder is the very size of the "Big" three made them sclerotic and so bureaucratized that they could not have the nimbleness to cope with change?
Why is media failing? Yes the media the landscape has changed in terms of the web, the economy and advertising. BUT have not vast holding companies also weakened titles by draining cash flow to pay back holding company debt like CanWest in Canada or the Tribune. Is this in reality the factor that has made real change impossible?
What if your paper had been owned by a local owner like the Baltimore Sun used to owned by the Black (Not Conrad) family for 3 generations? What if radio and TV Stations were in a real network and not in serfdom to the "Networks"? What if Opel was still German owned? What if Chevy was Chevy?
Size matters. We have heard about too big to fail - well in reality it is clear that too big is to fail!
Why is this? I think that the reason is that the full power of bureaucracy seems to scale up in a non linear way with size - making good intelligence and good coping impossible. Also it is the vast holding company that makes the only area of focus being cash flow, the cause of the shift away from meeting the true needs of the enterprise.
It also turns unions into "Guilds" - self serving organizations that suck value out of the enterprise without any care for the long term health of all jobs. They have this power because of the concentration of management.
I think that we can see the reason why vast organizations become by design only self serving. Super size in an enterprise makes the focus only ONE thing - cash flow.
For to have super size means that there has to be a massive capital investment and hence gearing and debt. This debt service imperative and keeping the unions from shutting them down is what then forces the enterprise to eat itself.
So, Newsrooms get killed to pay for the plant and the unions. Response to the car markets' real needs gets killed to service cash flow and the demands of a union with too much leverage. Programming gets killed and replaced with reality shows because of the need to pay for the plant and the unions. Media cannot get to the new world of the web because they cannot make the ROI in the new yet and the union will not allow any change.
In nature, there is a natural limit to the size of any one unit. We seem to have forgotten that.
So what to do? There is another way to get scale that is responsive. That is the network. The real network as in Nature or the web itself.
Scan all of the areas of our life where the enterprise now works against us and you will see the same thing. Education - Healthcare - Government - Food.
Food is a good example of both the problem and a way out. Our super large farms are also failing for all the same reasons as any large entity that then has to focus only on cash flow. So the food and the food making processes become a health threat.
But a network of very small and intensive micro farms will offer scale and a focus on sustainability and health. Health is a product of a scaled netwrok of the small.
So surely this is the nature of the Great Disruption that confronts us?
All these vast bureaucracies work against us as people. They cannot help themselves - it is the nature of being a vast bureaucracy.
The direction that we should all start to work for is to find the networked alternative.
