# Why Are Large Corps So Short-Sighted? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [February 24, 2006, 4:04am UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886 "2006-02-24T04:04:18Z")\ **Posts on this page:** 10\ **Page:** 3
**Author:** ![Gangster\_Octopus](https://avatars.discourse-cdn.com/v4/letter/g/a8b319/32.png) [@Gangster\_Octopus](https://boards.straightdope.com/u/Gangster_Octopus)\ **Post date:** [February 27, 2006, 4:47pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/41 "2006-02-27T16:47:13Z")
Corporations are not short-sighted. Wasn’t that simple? ---
**Author:** ![D\_Odds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/d_odds/32/2882_2.png) [@D\_Odds](https://boards.straightdope.com/u/D_Odds)\ **Post date:** [February 27, 2006, 5:44pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/42 "2006-02-27T17:44:49Z")
_Business Week_ (27 February 2006) is right on time. > [@Going Private; Hotshot managers are fleeing public companies for the money](#): > > Ask J. Crew Group Inc. chairman and chief executive Millard S. `Mickey'' Drexler what it's like to run a public company, and he curls his fingers into the shape of a pistol. `You have a gun to your head,’’ he says. Drexler knows of what he speaks. He spent four years running AnnTaylor Stores Corp. and seven years as CEO of Gap Inc., where he gained his reputation as a turnaround artist before being ousted in 2002. > > Drexler, 61, could be enjoying an uncommonly comfortable retirement right now. Instead he’s working harder than ever, trying to revitalize the fashionable clothier. He loves the challenge of transforming companies, and retailing is in his blood. But the best part about the new gig is that he doesn’t have to answer to public shareholders every step of the way. Drexler works for Texas Pacific Group, a $22 billion Fort Worth private-equity firm. It hired Drexler in 2003 and supported him through a long overhaul that included chucking a year’s worth of J. Crew skirts, pants, and sweaters. Now, he says, he has ``an ownership that truly cares about long-term shareholder value,’’ in stark contrast to public investors who obsess over quarterly earnings. Mr. Drexler goes on to say that tossing the J. Crew inventory would never have happened in a public firm. Please note, public shareholders don’t necessarily refer to me and you. The ones ‘feared’ are mutual and hedge funds. Mutual and hedge funds are marketed on quarterly returns, thus they look to the companies they hold shares in to perform in the short term. Good public company stewards will try to appease short-term interests while ensuring long-term growth, but it can sometimes be at odds. ---
**Author:** ![Maeglin](https://avatars.discourse-cdn.com/v4/letter/m/8baadc/32.png) [@Maeglin](https://boards.straightdope.com/u/Maeglin)\ **Post date:** [February 27, 2006, 5:49pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/43 "2006-02-27T17:49:56Z")
> [@featherlou](#): > > If I understand you correctly, you are saying that employees with bad attitudes are what are causing corporations to make short-sighted decisions? Absolutely. Much of the “work”, as it were, is performed by mid-level functionaries. They produce data, analyze data, and refer business decisions upward along the chain. Senior management utterly relies on these workers to produce accurate information and to apply themselves to keep abreast of changes in the marketplace. When these employees have bad attitudes, become complacent, or pass bad data and low quality analysis, this can inform broader business decisions with serious implications for the company. ---
**Author:** ![threemae](https://avatars.discourse-cdn.com/v4/letter/t/5f9b8f/32.png) [@threemae](https://boards.straightdope.com/u/threemae)\ **Post date:** [February 27, 2006, 6:07pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/44 "2006-02-27T18:07:06Z")
> [@featherlou](#): > > If I understand you correctly, you are saying that employees with bad attitudes are what are causing corporations to make short-sighted decisions? Yes. I’m rather suprised by your insistence that public corporations have a duty to show good faith attempts to protect the wellbeing of jobs and their employees (which I think that well-run and profitable corporations ultimately have to), and yet you post IMHP threads about actively making yourself a less capable employee and decreasing your value to the corporation that you work for. Ooookay. ---
**Author:** ![mrklutz](https://avatars.discourse-cdn.com/v4/letter/m/ebca7d/32.png) [@mrklutz](https://boards.straightdope.com/u/mrklutz)\ **Post date:** [February 27, 2006, 6:19pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/45 "2006-02-27T18:19:34Z")
I think a lot of the perception of large, for-profit corporations as EEEEE-VIL is based on the few news-making examples, as opposed to the much more mundane, everyday experiences of the average corporate worker. I work for a large, publicly-traded company with a 110-year history. The company’s strategy for success is to build long-term (i.e., decades-long) relationships with clients. Winning a single client today, if we do things right, means we get revenue from that client for decades to come. The only way to maintain that kind of long-term relationship is to provide a genuine long-term benefit to the client. Are we some revolutionary outlier? An aberration in the marketplace? Are we controlled by a cabal of do-gooders? Of course not. We’re just an ordinary, big company, doing relatively dull but needed work. Just like lots of others out there. Large corporations are made up of people. We don’t suddenly transmogrify into giant walking leeches when we swipe our ID’s at the front door. ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [February 27, 2006, 6:51pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/46 "2006-02-27T18:51:58Z")
> [@featherlou](#): > > If I understand you correctly, you are saying that employees with bad attitudes are what are causing corporations to make short-sighted decisions? It was the very first thing I posted in this thread: Corporations make the same sort of decisions that people do because they are agglomerations of _people_. Your problem is that you separate the employee from the company. That is incorrect: the employee _is_ the company. Talented, motivated employees make for a talented, motivated company (MS, Google). Slothful, shortsighted employees make for slothful, shortsighted companies (GM, KMart). Criminal and uncaring employees make for criminal and uncaring companies (Enron). ---
**Author:** ![Cat\_Whisperer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cat_whisperer/32/4839_2.png) [@Cat\_Whisperer](https://boards.straightdope.com/u/Cat_Whisperer)\ **Post date:** [February 27, 2006, 10:42pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/47 "2006-02-27T22:42:13Z")
> [@threemae](#): > > Yes. I’m rather suprised by your insistence that public corporations have a duty to show good faith attempts to protect the wellbeing of jobs and their employees I truly don’t understand where you are getting this from. I don’t think I have insisted that public corporations have any duty to do anything. In my mind, what I have been talking about in this thread is not what corporations should do, but, in my opinion, what they actually are doing. ---
**Author:** ![Cat\_Whisperer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cat_whisperer/32/4839_2.png) [@Cat\_Whisperer](https://boards.straightdope.com/u/Cat_Whisperer)\ **Post date:** [February 27, 2006, 11:02pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/48 "2006-02-27T23:02:44Z")
> [@JohnT](#): > > It was the very first thing I posted in this thread: > > Corporations make the same sort of decisions that people do because they are agglomerations of _people_.\ You’re absolutely right. I didn’t pay much attention to your first post because it looked like you just tossed off a one-liner, but on second reading, there’s more to it than I previously noticed. > [@](#): > > \Your problem is that you separate the employee from the company. That is incorrect: the employee _is_ the company.\ I’m not sure I agree with this, however. I do separate the employee from the company, but people do many things in a corporation that they either don’t care about or actively don’t agree with. A large number of the people in a corporation don’t have any say in how it is run, and simply do as they are directed to keep their jobs. I don’t think I would say that the corporation is the sum total of its parts, when so many of those parts have no influence on it. ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [February 27, 2006, 11:41pm UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/49 "2006-02-27T23:41:05Z")
> [@](#): > > You’re absolutely right. I didn’t pay much attention to your first post because it looked like you just tossed off a one-liner, but on second reading, there’s more to it than I previously noticed. I’ve taken over companies in buyouts, and I’m in line to take over the family business. “Business” is what I do, it’s what I love. I’m not the greatest in the world at it, no, but I’m getting better. So, yeah: while my tone was light, I tried to give you a serious answer. > [@](#): > > but people do many things in a corporation that they either don’t care about or actively don’t agree with. Again, a point I made earlier in this thread: > [@](#): > > It was, in many way, the Kitty Genovese of corporate bankruptcy’s, where everybody (including government regulators, the IRS, the SEC, the banks, the rating agencies, Enron’s executives, **Enron’s rank-and-file** , everybody) saw that crimes were occurring but they all deflected responsibility to the other watchdogs who were also watching the victim get pummelled, saying nothing. **Emphasis** mine. There were thousands of people who worked at Enron, from accounting clerks to mid-level managers to division heads who knew that something _wasn’t right_. Most of those knew that their divisions were losing money, but “assumed” that the other divisions were covering losses. Hundreds of them figured out that criminal activities were occurring, many of them mentioning their concerns in emails, phone conversations, meetings, etc. Dozens of people knew that the smelliest, shadiest, most illegal deals were being done by Andrew Fastow, and a number of people eventually resigned when the moral taint got to be too much for them. And not a one of them blew the whistle. Every single one of them, regardless of title or position in the company, who knew things were hinky but didn’t do anything about it also share in the blame for their lost 401(k)'s, their lost jobs. Not as much as Fastow et al, of course, but a part of the blame nonetheless. However, since you seem to want to pin everything on management, I’ll throw you a sop: I will not deny, of course, that a company’s culture is set by the people at the top: Enron happened because the people at the top were bad and they made a bad company. GM is happening because the people at the top got complacent and they made a complacent company. People at the top put in controls and processes that satisfy them both intellectually and emotionally. For example, let’s say we have a person (or group of people) who moves to the top in a 30-year career. Now this guy is the sort who likes to cover his ass. What he’ll do is install processes and controls that are eventually designed to cover peoples’ asses. As he makes his way to the top and puts in more controls that effect larger amounts of people, he’ll end up with a company where people are easily shielded from their own bad decisions. This is the precise thing that happened to many American companies in the 1950s-1970s as the managerial revolution, led by Robert MacNamara and the Whiz Kids at Ford Motor, swept corporate America. Now instead of having an investor (capitalist) class only in charge of corporate wealth, America also had a managerial class to contend with as well, one that is well-situated to, well, cover their asses. If this bothers you, the obvious solution is for you to try to join the managerial classes. It requires hard-work, an education at a top-75 school (to join the truly elite you have to go Ivy League or comparable (Stanford, MIT)), probably a fair amount of debt early-on, and dedication to both your career and your employer. But once you make the hurdle… well, life looks a lot better on this side. 😉 ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [February 28, 2006, 2:02am UTC](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886/50 "2006-02-28T02:02:06Z")
> [@featherlou](#): > > I truly believe that large, publicly-traded corporations are indeed blind, uncaring and indifferent to their impact on the world. How fortunate that such corporations are a minority of all corporations, and of all business in general. > [@](#): > > My problem is not with corporations making a profit; my difficulty with them is that they are driven to always make _more_ profit, and I believe this is where the problems lie. A 5% profit might be very comfortable and sustainable, and allow a corporation to benefit everyone involved in it as well as being responsible to its immediate community and the larger community of the world. Corporations are not content with 5% profit, though. A corporation that makes only 5% every year would be considered failing That is plainly false. **The majority of businesses in any given year lose money**. I work with literally scores of companies a year, and any company that that consistently make a profit of any percentage is happy with its performance. They always want to do better, but generally speaking so many companies lose money that consistent profits are considered a mark of great success. The company I work for never makes a profit at all, technically. We’re a corporation without shareholders. Where does that fit into the equation? > [@](#): > > You’re saying that not all corporations are like that? Yeah, I guess you are correct. I will give you that. Far, far too many are, though. Really? How many, exactly? [Previous page](https://boards.straightdope.com/t/why-are-large-corps-so-short-sighted/345886.md?page=2)