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Small could still be beautiful

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Silicon Valley, land of innovation

In my previous posting, I was talking about the social economy as an alternative. Of course, to face such complex problem, there is not only one solution, but different ways of alternatives. If I am coming back to this subject, it is because when some indicators are showing that the recession seems to be over, other consequences of the economical crisis are still there, to prompt us to stay moderately optimistic ….or pessimistic. That is what we could see in the news these last days.

Few days ago, there were around seven hundred people losing their job in the Brussels region. A major media distributor felt in bankruptcy and around four hundred people will lose their job. Another pharmaceutical group announced a new restructuring process, by cutting one hundred and seventy jobs. A press group, facing to a decrease of advertising revenues announced also a job cutting of seventy six employees. These tree companies were obliged to axe jobs for different reasons. There are circumstances where we have no choice to cut jobs in order to ensure the company continuity.

Regarding this problematic, I would like to talk about the axed jobs as consequences of merging and acquisitions processes. We can hear very often companies explaining that they acquired other companies or merged with other companies because there are synergies and complementarities between activities. In my mind it should mean that the combination of different activities should provide new opportunities and generate more revenues. It makes sense for small companies who have similar or complementary activities but which can not reach a critical size in their market. But for bigger companies, like international groups, it appears that most of the time, the purpose of such operation is often a financial goal. Most of the time, after such operations, it follows a restructuring wave and a lot of jobs are axed. As already mentioned in other postings, how can this economy survive, when the principle seems to be “do more with less people”? If people are losing their purchasing power, how can we sustain a growing economy? Are merges and acquisitions always necessary to ensure a business? Some years ago, a Belgian fashion designer, Olivier Strelli decided to expand his activities in Japan. After some problems of unfair concurrency and piracy, he decided to stop his activities in this country. Finally, such decisions did not have a negative impact on his business.

It is not forbidden to believe that our economy needs to move to a SME economy, where there is more flexibility in terms of organization, in term of creativity and innovation. I was reading recently in a book written by Philippe Buschini (*) about Personal Branding, a sentence of Nathan Rosenberg saying that “The innovation appears often outside of the existing organizations, partly because the winning organizations are staying in the status quo and are resisting to the ideas which could affect then”. A lot of new high valued activities were created by start up companies, with high potential of development. Let us think for example to the IT industry.

But the interesting point is that in the actual environment, where things becomes more and more complex, these small companies needs to get high value advices and services but on a temporary or part time basis. This could be a real opportunity for other companies and people, to create not only commercial and technical relations, but real business partnerships. This kind of services are already existing, with the field of interim management or project consulting, but we could also consider that people could become partners in several companies, and participate of the development processes for each of then. People would work as freelance, which is still seen as more risky than an employee position, but the advantage could be to gain more experiences by working on different projects and in this way, to ensure their employability.

By thinking about this, it seems that the story is a process of constant renewal. Some small companies grew, became giants and then disappeared. It could be that finally, small could be still beautiful.

(*) Philippe Buschini website: http://www.buschini.com/

Picture from http://www.flickr.com/photos/explorer/112761636

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Written by Eric Saint-Guillain

November 19, 2009 at 19:45

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