Wednesday 17 July 2013

Out and out competition may not be the best management technique...

Via Paul Krugman, via David Atkins, an article about how managing the Sears Group by turning it into small entities that compete against each other is driving it into the ground.

Well, the fantasies about free markets will always remain a wonder. But it's even weirder to think of that as a management technique. I mean, even if you believe that you are in the pure situation where free markets give the optimum social utility (I know, those conditions are never met. But you could believe that you are in a situation that is not far enough from the pure model that the outcome stands -and for some values of "social utility", such situations probably exist), that would not mean that the situation is optimal for the individual actors.

But, surprise, surprise, when you are a company, you are not society as a whole.

It's not the main reason why it fails abysmally of course. I'm just nonplussed because even if you accept all the religion around competition, it should still not make it a sensible management strategy. Especially in retail.

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