Are Silicon Valley companies FAT ?


Recently I came across a blog from Sramana Mitra very interesting points. So I am going to take a detour from the main feature and ponder …

I read the blog with interest. Of course, can agree neither with the reasoning nor conclusions. Moreover, there is not enough direct facts to ponder (but enough inferred ones to reply!). Naturally I work for Cisco (but this is my personal blog not anyway related to the organization I work), but am also a pragmatist – I do not hesitate to call a spade a spade. Am a fan of disruptive technologies and do understand how companies can lose their edge and finally disappear if they are complacent and bureaucratic. Burying our heads in the sand will not help in any way.

First, if a company is fat, talking 21 people each to Mumbai/Chennai/Munnar and saying “Go forth and multiply” doesn’t cut it. It actually exasperates the situation, now the company is fat all over the globe ! Even if we assume a cost advantage in doing so, that is only a one time advantage or in the best case a few years of Opex advantage. If the company is fat, how does adding more people overseas make it any more efficient ?

Second, engineering and collaboration is a human effort, and as such does not scale infinitely (or spatially or temporally) that easily. While a lot of functions can be flattened, many aspects of modern organization certainly require critical mass everywhere.

Third, there is an inherent “waste” in the way we, as humans, organize. If all of us were Vulcan, we would be exponentially more productive, and naturally, exponentially less fun to be with !

Fourth, a company is not fully about the number of people/cost structure but about the culture, how it understand and internalizes disruptive technologies and most importantly how it raises to the agonies and ecstasies of a changing landscape.

For example, Detroit didn’t get to the current situation by a flat world; it reached there by not innovating or more precisely not responding to changes. Agreed their cost structure is impossible to maintain; but that was comparing to the current products. I am not an expert, but if they all had started making fuel efficient vehicles, for instance, the cost structure wouldn’t have been that apparent. (DTW fans, you are free to flamme!)

Which leads to my fifth point, there is a form functionality equilibrium for everything. For example with the current physique, we will not be able to function well if we all are 8 feet tall (even though that is the right height for my weight ;o(). May be, companies like CSCO, MSFT and INTC are hovering around the form equilibrium for their current functionality. I am the first one to agree (to the chagrin of my bosses) that we have a few more VPs and directors than needed ;o) But, this equilibrium does change with every technology transition and companies do need to have some “fat’ to get over the famines during the transitions ! As I had said earlier, we are not 100% efficient and cannot react to changing environments instantly and need some time to ramp up.

Finally, I would like to invite the author to visit us one of these days. Let us agree to disagree and exchange ideas over a salad (No fat there ;o))

P.S: On an unrelated topic, Sramana’s site has a list of good books. A couple more books to add to the list:

1.    The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations
2.    Wikinomics: How Mass Collaboration Changes Everything
3.    Know-How: The 8 Skills That Separate People Who Perform from Those Who Don’t

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