I am a believer and a naysayer in certain business concepts and one of the business concepts I have always had a hard time wrapping my head around is “Too Big To Fail“. What is the rough definition of this concept?
- Specific corporations so large and so interconnected that their failure would be disastrous to the greater economic system, must be supported by government when they face potential failure.
The concept was officially coined in the 1980s and was in reference to big banks and financial institutions. One notable early government bailout was for the Continental Illinois National Bank and Trust Company in the early 1980s.
There have been numerous occasions during the last fifty (50) years when this has in fact occurred having expanded beyond the financial realm with GM about ten (10) years ago.
The new issue that appears to be occurring more and more is a corporate attitude of “Too Big To Care“. A few examples of this attitude are shown below but this is an extremely short list.
- Lack of empathy when customer service issues occur.
- Willingness to disregard customer concerns regarding direction of company.
- Assumption that historical record of company will carry them through all business challenges.
- Belief that company is above normal rules of business or law.
We have observed this happen with many businesses over the years when the writing was on the wall but “Too Big To Care” happened. Again a short list of those that failed or those that are failing.
- Sears and K Mart.
- Toys R Us.
- Circuit City.
- Quiznos.
Recently we have experienced a twist to the “Too Big To Care” issue that includes corporations taking political positions and alienating customers instead of being above the issue. I must ask if there is an ulterior motive, are the corporations political hostages, or are the corporations just willing to take the chance of alienating customers.
I scratch my head in regard to this problem and question how any company can turn away customers without regard to impact to its employee base, shareholder, etc.
Most recently, there are reports of law enforcement agencies canceling orders for vehicles from a major manufacturer that has taken a political stand that will result in nearly $750,000 in lost revenue for the local dealership and the vehicle manufacturer. Where there is one occurrence, there will be more in the long run.
Think about the lives impacted because we cannot keep sports, business, family and politics compartmentalized. It is a sad situation and owners and senior staff of the corporations will not feel the pain much like the multimillionaires that have a beef do not feel the pain.
I have a real concern that this mixture of “Too Big To Fail” and “Too Big To Care” will cause significant damage to innocent people watching on the sidelines and we need to take a time out and draw lines in the sand on what is and isn’t acceptable behavior as a corporation.
I am not saying that corporations should not be involved in causes or projects but I am saying that corporations should remain neutral to its customer base.
What are your thoughts and please share them?
Fifty Plus Going On Fifteen (50 Plus Going On Fifteen)
Jay Patterson