The Small Company disadvantage

What happens to companies that start late in any industry that is growing phenomenally?

They are behind in the learning curve to begin with. They are perpetually smaller than the average. They are always playing the catch-up game. They try hard to differentiate. They compete for small deals. They get beaten up on margins pretty badly. They nether have the breadth of service offerings, nor depth in the service offerings they do have.

These small companies find it harder to attract people, retain them and offer them the range of opportunities that the big companies can offer. In-fact small companies offer lesser opportunities for rapid growth, if there are senior people already at upper levels.

Do these companies survive? Some of them do, but most either stagnate or get acquired. It will be interesting to watch where MindTree Consulting ends up being.

Blind Marketing

I just received a special offer to join an esteemed association of professionals.

This highly reverred (at least they pretend to be so) association has been in existence for more than 30 years and becoming its member has seemingly helped people grow professionally. And of-course, by accepting to join this network, I will also be issued a Master Card credit card as a privilege.

Now, I am very grateful for this organization to have gone through my profile available with all the spam mail marketing companies, and deciding to offer me a Master Card through along with the membership to the professional association. Oh! I got it completely wrong - it is the Master Card that comes with the membership!!

While I would love to join the National Association of Female Executives - I am certainly not willing to change my sex to do it!!

One aspect of a high cost economy

My car needs an oil change every 3500 miles. The oil service station always puts a tag for oil change at 3000 miles. I drive around 18000 miles/ year. If I follow the 3000 mile routine, I need one additional gas change - an additional $40 per-year. Assuming that there are 100 million cars in the US, and there is an additional $40 million expense being incurred on them, which is avoidable, as a country the US incurs $4bn extra on car oil change alone.

To be able to afford this additional $4bn, individuals collectively have to earn an additional $4bn. This effectively pushes up the average salaries that all the people will be willing to accept on the average.

Now spread this phenomenon to all other areas of our economy and you will see that a number of such expenses - which do not necessarily contribute to "a good life" consume a significant part of the earnings in the economy, which effectively puts the fixed cost of the economy to a much higher level than is needed.

The other side of this story is that the additional expenses create additional jobs for others, which then sustains the demand in the economy. Maybe the additional job creation outweighs the jobs lost because of high fixed costs. We will know for sure someday.