Small Businesses Positioned For Post Recession Economy
Echoing the bMighty mantra, Wired's Chris Anderson declares that the new economy emerging from the meltdown favors small over large.
Echoing the bMighty mantra, Wired's Chris Anderson declares that the new economy emerging from the meltdown favors small over large.Some months ago, bMighty editor-in-chief Fred Paul declared:
"At bMighty.com, we hold the following truth to be self-evident: That today's technology has radically shifted the competitive landscape, giving smaller, more nimble organizations a profound advantage."
Citing examples from Detroit's Big 3 to Google, Anderson contends that:
"This crisis is not just the trough of a cycle but the end of an era. We will come out not just wiser but different.
What we have discovered over the past nine months are growing diseconomies of scale. Bigger firms are harder to run on cash flow alone, so they need more debt (oops!). Bigger companies have to place bigger bets but have less and less control over distribution and competition in an increasingly diverse marketplace. Those bets get riskier and the payoffs lower. And as Wall Street firms are learning, bigger companies are going to get more regulated, limiting their flexibility. The stars of finance are fleeing for smaller firms; it's the only place they can imagine getting anything interesting done.
As venture capitalist Paul Graham put it, "It turns out the rule 'large and disciplined organizations win' needs to have a qualification appended: 'at games that change slowly.' No one knew till change reached a sufficient speed."
The result is that the next new economy, the one rising from the ashes of this latest meltdown, will favor the small."
Moreover, Anderson doesn't just see small as the way out of the current recession. Rather, he sees the seeds of transformation with the recession merely the catalyst for germination:
"Involuntary entrepreneurship" is now creating tens of thousands of small businesses and a huge market of contract and freelance labor. Many will take full-time jobs again once they become available, but many others will choose not to. The crisis may have turned our economy into small pieces, loosely joined, but it will be the collective action of millions of workers hungry for change that keeps it that way."
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