The urge to conquer
How big is your yam? (not that it matters)
hy are so many executives so preoccupied with the
size of their company? As if bigger is always better. It
especially annoys me when it is used as an excuse for
acquisitions. “This take-over will immediately make us the largest
company in the industry”. So? What is your point?
I am sure being the biggest can have certain advantages, but that
doesn’t mean that bigger (let alone being the “biggest”) is always
automatically better. If you can explain to me why more scale is
better, OK, but until then, I remain skeptical.
Of course company size is often associated with (nancial)
success. For example, the rms that always feature on “the most
admired companies” lists are usually behemoths such as Toyota,
Dell, Intel, Wal-Mart, and Pzer. Several of them became big
And I am sure a company worth $10 billion attracts quite a
bit more attention (for instance in the business press) and
admiration than any of the 10 companies that they acquired
that were worth a mere $1 billion. But that doesn’t mean that
our $10 billion behemoth generates more prots than the 10
smaller ones would have made together. It wouldn’t have been
as eye-catching to have 10 small ones instead of one biggie, but
it just might have made more sense (and money). Importantly,
managers who opt for a strategy of increasing size reverse cause
and effect; although success will likely make you bigger, striving
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