America’s Mindless Love Affair with Bigness

Tom Peters

I’m fed up! “Two-bit labs can’t make megabuck materials,” proclaims BusinessWeek‘s July 29 lead editorial. Materials science is undergoing a revolution, we’re told. And Business Week characteristically insists that we should, ho-hum, copy the Japanese model, get organized and subsidize most any American outfit that’s interested, as long as it’s a giant. That same issue featured the Chemical Bank-Manufacturers Hanover merger. Put the two slugabeds together, we learn, and, by golly, you’ll have “No.2 in the U.S.” (behind sickly Citicorp)— “but just a distant also-ran globally.” An “also-ran”? By what measure? Since when is $135 billion in assets too small to be effective? And who sez big is better in banking anyway? BusinessWeek, that’s who. (Don’t be put off by performance figures that demonstrate the opposite.)

Meanwhile: The National Management Association anointed GE Chairman Jack Welch “CEO of the Year.” (NMA also seems to grovel at the altar of B-I-G. Former GM chief whiz Roger Smith bagged their 1986 honors.) The association’s tribute tells us that Welch discovered ears—using these virgin instruments has become a holy writ labeled “Work-out” at the giant firm. Translation: GE’s know-it-all managers are being commanded, by Jove, to listen to employees. Read the clippings and you’d think that GE and Welch invented listening in 1990. (By coincidence, the New York Times Magazine ran a July 28 cover article on ABC, CBS, and GE subsidiary NBC. Welch’s NBC came in for special derision because its managers, uh, pay no attention to their employees. Will the real Jack Welch stand up?)

But let’s take another tack and look at bigness’s role in the industries that will most effect our long-term economic health—information and biotechnology. In “Biotech Firms Tackle the Giants” (Fortune, August 12), writer Gene Bylinsky provides a breath of relief from gargantua worship.

“Although Japan has announced its intention to become a world leader in biotechnology,” he says, “it is hopelessly behind.” Hooray! Merck and Johnson & Johnson saved the day, eh? Well, not exactly. Our winners are a pack of unknowns—Amgen, Genzyme, Immunex, Xoma, and Centocor, among others. The U.S. aces, which “the Japanese lack,” Bylinsky reports, include “top scientists willing to help start pioneering new companies and venture capitalists ready to back them.” And one of those aces, ImmuLogic Pharmaceutical CEO Richard Bagley, a SmithKline and Squibb veteran, says of our pharmaceutical giants, “It isn’t clear that just because they’re big they’re going to survive.”

The Harvard Business Review, addicted to big itself, provides a fresh perspective on the information sector in the July–August 1991 issue. In “The Computerless Computer Company,” industry guru Andy Rappaport and his colleague Shmuel Halevi offer an upbeat view of the American high-tech scene. Our weak spots (e.g., optoelectronic components, displays) are generally less significant parts of the information sector. Our strengths, including dominance in software and database systems, are home to tomorrow’s action. And what’s the source of those commanding strengths? By and large it’s companies, like those biotech firms, whose names you don’t know, led by people you’ve never heard of, often headquartered in towns you’ve never visited. Hey, even Microsoft’s Bill Gates couldn’t get a rise out of the NMA’s CEO-of-the-Year hunters—maybe Redmond, Wash., wasn’t on their map.

In both key industries, incidentally, the survival strategy frantically pursued by almost all the behemoths, such as IBM, is to cobble together temporary alliances with an ever-shifting array of guess what? Clever smallish and middle-sized firms.

I hold scant hope for the Chemical-Manny Hanny merger (it’s no leap forward for U.S. financial-service competitiveness); but I am, oddly enough, a big fan of GE’s Welch. While his Work-out is hardly news, I admire his tough-mindedness in shredding bureaucracy and hacking bloated central staffs in the 1980s. If CEO glory hinged on a match race between Welch and, say, IBM’s John Akers, Welch would win going away.

But Welch vs. Akers is not the point. A USA Today reporter asked my choice for that NMA award. Beats me—but I know there’s no shortage of candidates. Try Rick Cohen, CEO of the fast-growing grocery distribution company, C&S Grocers of Brattleboro, Vermont. “Who’s he?” you ask. Your loss that you don’t know, I say. He’s one of hundreds of progressive, unsung chiefs who, among other things, had been intensively listening to workers long before the idea flickered onto Welch’s screen.

I also take a real shine to Walter Goldmann’s firm, Goldmann Produktion. The German chemical concern knows what it’s about, spends almost recklessly on research and development, and boasts a stunning 50 percent worldwide market share—producing 10,000 varieties of top-of-the-line candle pigments. Started in 1971, Goldmann’s payroll numbers 11 folks. Yes, e-l-e-v-e-n. Want to know why Germany’s export prowess far exceeds Japan’s? A jillion firms like Walter Goldmann’s contribute lots more than stodgy Siemens and beleaguered Daimler-Benz.

Three cheers for Walter Goldmann, for the gangs at Xoma and Genzyme. And, yes, two hearty cheers for GE’s Mr. Welch. It’s just that I fret at our eternal spotlight on the giants, at government policies dangerously tilted their way—and at mindless “two-bit labs can’t make megabuck materials” editorials.