Thinking Big

Tom Peters takes on the Harvard Business Review regarding the issue of company size

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Thanks, Ted. It's about time the Harvard Business Review recognized the important issues raised by the entrepreneurial renaissance of the past 10 years. Since you're the Review's editor, I guess you deserve the credit for opening up the magazine to a debate on the subject, and for letting George Gilder lead it off with his article in your March-April issue. He was most eloquent in showing how, and why, entrepreneurship has made the United States more competitive in the international semiconductor market. But as for your own column in that same issue, well that's another matter. . . .

1 OK, I suppose there is a thriving industry built around the entrepreneurial phenomenon. You may also have noticed that there's a much, much bigger industry that thrives on advising and chronicling the sparkling personalities who run our largest companies. The Harvard Business School practically invented it. You and your colleagues sit on big-company for the giants. Are we to conclude that your views on the role of large companies are, ipso facto, suspect?

2 Yes, Ted, some guides to small business are that trite, but no serious student of entrepreneurship suggests that success is either easy or certain. To paint all of them as simple-minded cheerleaders is like writing off Forbes, The Wall Street Journal, and the Harvard Business Review just because The One-Minute Manager and a host of kindred publications make fixing General Motors seem as easy as one, two, three.

3 Come on, Ted. To begin with, what economic proposition offers anything but "modest plausibility," from the forecasts of Chase Econometrics to the pronouncements of Federal Reserve chairman Alan Greenspan? And surely there is at least as much truth and plausibility in the work of David L. Birch and George Gilder as in the formerly fashionable hype of, say, John Kenneth Galbraith. You remember him. He's the sage who once wrote: "There is no more pleasant fiction than that technical change is the product of the matchless ingenuity of the small man forced to employ his wits to better his neighbor. Unhappily, it is a fiction. . . . A benign providence . . . has made the industry of a few large firms an almost perfect instrument for inducing technical change."

4 Ted, Ted, Ted. "Privileged few"? "Undistinguished many"? Even at Stanford, they wouldn't go quite this far. By "privileged few," you mean, I suppose, those who've been privileged to attend Harvard Business School, and other assorted denizens of the Fortune 500 boardrooms. But who do you include among the unwashed masses -- excuse me, the "undistinguished many"? Bill Gates? Steve Jobs? Don Burr? Tom Monaghan? Seymour Cray? Fred Smith? This is really too much, dear professor. It's no wonder that guys like poor Dick Nixon, the Whittier bench warmer, came to loathe the Harvard establishment.

5 Yes, it is. But it is easier, and more conventional, to exaggerate what big companies do, and what they've done in the face of new competition and a technological revolution. And what have big companies done lately? Lost jobs. Innovated less. Moved operations mindlessly, and prematurely, offshore. Failed to protect their markets. Kept their leaders insulated from reality (although that may be changing, thanks largely to the efforts of such financial entrepreneurs -- pardon the expression -- as T. Boone Pickens and the Hafts).

6 Now hold on, Ted. When it comes to imitativeness, lack of creativity, and aversion to risk, nobody can top your longtime friends at companies such as Procter & Gamble and NBC. I refer to you to The Bigness Complex, by economists Walter Adams (former Michigan State University president) and James W. Brock, who review numerous studies on the innovativeness of big companies: "Nor do giant firms display any appetite for undertaking more fundamental and risky research projects. That is, contrary to the image that bigness is conducive to risk-taking, there is no statistically significant tendency for corporate behemoths to conduct a 'disproportionately large share of the relatively risky R&D or of the R&D aimed at entirely new products and processes. On the contrary, they generally seem to carry out a disproportionately small share of [that] R&D. . . ."

7 Come, come. Condescension is one thing, but this is perverse. Of course, many start-ups fail. So do most new products from large companies. And, yes, companies -- as well as products -- often start out as "illusionary creations." A dream is illusionary by definition. To become reality, it must be modified again and again. Even then, it may come to naught. But without such dreams, there is no progress -- at IBM, at GE, or at Microsoft.

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