Friday, December 2, 2011

Why Big Companies Die

I found truth in this article by Peggy Noonan. She makes two basic points. One is from Steve Jobs:
[Jobs] has a theory about “why decline happens” at great companies: “The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesman, because they’re the ones who can move the needle on revenues.” So salesmen are put in charge, and product engineers and designers feel demoted: Their efforts are no longer at the white-hot center of the company’s daily life. They “turn off.”
Noonan adds "accountants and the money men" to Jobs' theory:
...[they] search the firm high and low to find new and ingenious ways to cut costs or even eliminate paying taxes. The activities of these people further dispirit the creators, the product engineers and designers, and also crimp the firm’s ability to add value to its customers. But because the accountants appear to be adding to the firm’s short-term profitability, as a class they are also celebrated and well-rewarded, even as their activities systematically kill the firm’s future.
When the people that do the work aren't valued, then the products suffer, and what is a company without it's products? It's why I think Agile Scrum is such an effective software development process; by pushing decisions down to the lowest possible level, you let people who are actually informed about the subjects (the "boots on the ground") make informed decisions rather than choosing directions based on executive summaries or spreadsheets. While you have to be careful to keep the focus on the customer (don't let the Inmates Run the Asylum), Jobs demonstrated that keeping a company's focus on adding customer value - another goal of Agile Scrum - is a path to continued success.

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