Just received an op-ed from the New York Times in my email.
The story is entitled “Tech Goliaths Act Like Davids,” and the main thrust of the
story is that the tech giants like Google, Apple, Facebook, Uber and so on have
become the corporate bullies that they once fought against. The story can be
found at:
If one studies history, one will notice that this isn’t a
new story. History is filled with examples of young, vibrant revolutionaries
who fought to overthrow an overbearing power and once they had succeeded, they
proceeded to behave as the power that they overthrew.
As an ethnic Chinese, I think of Mao, who lead a peasant
army to overthrow a corrupt regime that was oppressing the poor. However, once
in power, the communist proceeded to enforce an iron grip on power and proved to
be as nasty if not more so than the nationalist that they overthrew. There are
other examples. In the Middle East, there’s the example of Naser who overthrew
a corrupt and repressive monarchy, only to replace it with another form of
dictatorship that has stifled progress.
I think of Singapore, the country that has been my home for
the last two decades. We’ve been run by the same party since our independence in
1965. While the party has delivered prosperity and done well by the citizens
for the most part, they’ve moved a long way, as in a very long way, from the party
that was a plucky upstart fighting to rid us from the yoke of colonial rule and
later race-based politics of the Malaysian Federation. The part that once wrote
a national pledge of “Regardless of Race, Language or Religion,” now stresses
the fact that “The population is not ready for a non-Chinese Prime Minister,”
and delightfully uses every trick in the book to ensure that it wins more than 60
percent of available seats in parliament (it remains an achievement for our
rag-tag opposition to contest let alone win seats).
Why is this the case? The answer is as simple as this fact –
power is exceedingly addictive. The people who get power tend not to want to
lose it. Young idealist who become revolutionaries to get rid of entrenched powers
becoming the very entrenched powers that they overthrew. This remains true in business
and politics.
Some systems have found a way to survive this. In America,
the political system was designed to limit the damage a bad leader could do.
Presidents have to share power with Congress and a Supreme Court and much of
the power over citizens is devolved to local governments. Furthermore,
Presidents are limited to two terms of four years. Thus, you only put up with
an incompetent leader for eight years at the most and no individual has to
chance to hang on for years until they get drunk and senile with power.
This system works in America because there’s a reverence to
the constitution and laws and there’s a press to keep the powers that be on its
toes. In places that don’t have this, there is a real danger that the man in
charge can merely change the laws. China is a case in point. Prior to President
Xi’s ascension, it was understood that a generation of leaders would step down
after a decade. While China didn’t have elections, it had some form of
leadership renewal. Unfortunately, this is no longer the case and one cannot
assume that President Xi, may enjoy his power a little too much, even at the
risk of the wealth that the Chinese people have grown used to.
The same is true in business. The story in dynamic economies
is that of plucky start-ups with a bright idea or a new technology taking on and
taking market share from established firms. The problem is that once the start-ups
become big firms with deep pockets, the game no longer becomes about coming up
with new products that delight consumers but about enhancing market share and getting
consumers to continue buying what you’ve been selling them. As I was once told,
“Big firms don’t innovate, they just buy small firms that do.”
While the dangers of minimal competition for businesses are
less obvious than that for political leaders, they are non the less very
present. Businesses that become too interested in their market position tend to
forget that consumers can find and will find alternatives. I think of Singapore’s
media scene, which could not accept competition and kept peddling the myth that
Singapore was too small for media competition. The established media powers
were so busy defending their turf that they failed to see people moving away
from printed newspapers and terrestrial television. They even got the
government onto their side in branding online media as “anti-establishment.”
There was one small problem. Consumers stopped reading newspapers and the
advertisers noticed. Singapore Press Holdings (SPH) has had to diversify into old
folks’ homes to keep shareholders happy and more recently had to suffer the
indignity of being kicked off the stock exchange index.
Successful big firms are the ones that find a way of growing
big but keeping their units running like start up enterprises. Big law firms
are trying to do that, working as a big unit in the centre for things like branding
and HR policy but getting their respective practices to compete for business
like sole proprietorships. In theory this should prevent the groups from
becoming immune to market forces.
The other factor for businesses is law. Laws that prevent
companies from becoming monopolies should be made stronger.
Let’s go back to tech as an example. Microsoft was once a
start-up that had a clear goal of having a desktop on every desk running its
software. It became a monopoly and defended it tooth and nail. Unfortunately, Microsoft
was late into the internet and thus lost ground to Google. Microsoft has only
become a dynamic player under its current CEO, Satya Nadella, who moved it away
from defending its old business market.
Limits on power are not just good for consumers or voters.
They are actually good for incumbents as it keeps them on their toes and forces
people to innovate. The Goliaths of the day should remember that they had their
best victories as Davids and trying to crush today’s Davids will only lead to
them sharing the fate of Goliath.
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