Job loss as a chance for agility · 4. March 2008

I don’t know whether to call it fatuity or lack of interest. Recently, news of big players with evenmoreso big profits announce laying off thousands of workers. Listening to all the media comments I yet again have to realize, that thinking one step further is a not too common principle anymore. Focussing on your core business is a sound and reasonable principle. But these companies are admitting something completely different.

Imagine you are heading a highly profitable company. And you decide to give up one of your product families.

• You have 1000 highly skilled people working in those departments which have been knowing your company dynamics and organizational expertise for years
• You have 1000 people sitting there who are quite easy to motivate simply by telling them, that instead of firing them you dug up a completely new innovative business idea which you want them to work on.
• Given your profits you have quite some funds to invest working on new and innovative products.
• Recruiting new people and getting them to performance in your organization takes time. Time you can rarely afford which makes recruiting one of the most difficult problems in modern organizations.

Given this, would you still go on firing your people, unless you really do not have any clue about which new business ideas to invest in?

This is, in my humble opinion, what these companies really do admit: That they do not have a clue what to do. They have grown to enterprise size, thus overcoming their own agility and exchanging them for motivational clumsiness. Yet there is a chance.

On a big scale, skilled people will not continue sitting on the road. All it needs is a business idea, skills, startup capital, motivation, and a little bit of luck. The big chance I see is that these people are free. Free from the chains of clumsy enterprise dynamics. Free to form new organizations of smaller size, which can drive their business ideas in an agile way. And maybe, in the end, these new projects will help create a new middle class, which is primarily based on middle-sized businesses.

Our society, and capitalism as it turns out to evolve, has a dire need to move back from enterprise level to small and medium-sized businesses. It will not only bring back the necessary competition, and thus decentralization of capital, but also the necessary agility, which has always been on the opposite side of establishment.

Maybe it is only fair, that enterprises who openly admit “although we have a ton of money to invest, we do not know what to do with 1000 people”, not to be able to continue participating in their productivity. In the end, demand will not decrease from big enterprises laying off 1000 people, and on a larger scale, this demand will have to be satisifed, therefore products or services will have to be provided, and thus the emploment opportunity is not lost. It just resides somewhere else. Maybe at a place which is more modern.

From a shareholder perspective, laying off 1000 people might on short term lower costs and thus increase profit. But from an investors perspective, I find it way more critical if an enterprise openly admits, although it knows how to maximize profits it doesn’t really have a clue what to invest the profits in to provide for long term business opportunities, and thus has outgrown itself. Even more so, if it is willing to sacrifice its dearly paid entrepreneurial expertise in terms of human capital on behalf of this cluelessness.