Stormy Seas for Google and Other Giant Corporations
It is not only Google that is facing the peril of capitalism’s “creative destruction,” it is every corporation that thinks it has made it into the safe port of the S&P 500. Average time of residency within the Standard and Poor 500 companies is shrinking rapidly, making the concept of a “secure harbor from the storm” quite unrealistic.
Google, Facebook, and Apple are three of the wealthiest companies in the world. And yet, each of these companies is exquisitely vulnerable to a number of economic, political, and technological forces that could rip the magic carpet of success clean away from their expansive posteriors.
Few companies are immune to the forces of creative destruction. Our corporate longevity forecast of S&P 500 companies anticipates average tenure on the list growing shorter and shorter over the next decade.
… There are a variety of reasons why companies drop off the list. They can be overtaken by a faster growing company and fall below the market cap size threshold (currently that cutoff is about $6 billion). Or they can enter into a merger, acquisition or buyout deal. At the current and forecasted turnover rate, the Innosight study shows that nearly 50% of the current S&P 500 will be replaced over the next ten years. This projection is consistent with our previous analysis from 2012 and 2016, which Innosight originally conducted with Creative Destruction author Richard Foster.
Shrinking lifespans of companies on the list are in part driven by a complex combination of technology shifts and economic shocks, some of which are beyond the control of corporate leaders. But frequently, companies miss opportunities to adapt or take advantage of these changes. For example, they continue to apply existing business models to new markets, are slow to respond to disruptive competitors in low-profit segments, or fail to adequately envision and invest in new growth areas which often takes a decade or longer to pay off.
At the same time, we’ve seen the rise of other companies take their place on the list by creating new products, business models, and serving new customers.
… most leaders see future competition coming from existing players, rather than new competitors… Due to blind spots like these, our survey pointed to what we called a “confidence bubble,” in which leaders expressed high degrees of confidence they could transform but at the same seemed to underestimate specific threats and opportunities. __ Innosight
Google Grows Brittle and Dogmatic
Innovative companies succeed when they make the most of their talent. As soon as a wealthy company falls to nepotism and the promotion of the unqualified to high position, the joints grow stiff and the bones brittle. Cracks form and extend into vital areas of former productivity. Degeneration and decay inevitably follow — unless the company institutes rapid and radical reform to return it to a hierarchy of merit and competence, away from nepotistic corruption.
Details from diversity training sessions, accounts of alleged reverse discrimination, and screenshots of internal communications on company forums and message boards in the lawsuit cast the company culture as extremely hostile to employees with unpopular opinions, especially heterosexuals, men, white people, and those who hold conservative views. __ The Federalist
But it is not just libertarians, centrists, and conservatives who are suing Google now. Everybody wants to get into the act.
Live by Political Correctness, Die by Political Correctness
George Orwell’s masterpiece 1984 painted a masterful portrait of political correctness in totalitarian societies. The orchestrated “Two Minutes Hate” of public emoting against the “enemy of the state” is a classic image of modern brainwashing techniques seen on television shows such as those of Stephen Colbert, Trevor Noah, Bill Maher, Jimmy Kimmel, and many others. Within the brainwash factories such as Google or Facebook, such mindless emotional displays against [fill in the blank] would not seem surprising or out of place.
Judging by its policies of outright discrimination by race and sex, Google is clearly an evil entity. Understanding further how deeply Google’s brainwashing wishes to penetrate into the psyches of ordinary people around the world, the company is malignant and malevolent, deserving whatever the forces of creative destruction and inexorable obsolescence can wreak upon it.
Perhaps more telling, Google’s counterproductive forays into unreliable forms of energy production — such as grid-scale wind and grid-scale solar — reveal to those who can see, just how ideologically bound the company is becoming. And in a world of rapid turnover, creative destruction, and disruptive innovation, allowing one’s company to become so tightly bound up in a rigid ideology of obtuseness and self-destructiveness is a clear signal to the more cognitively capable parts of the outer world.
The US economy is in better shape than is being reported. And a healthy economy lends to greater creative destruction and disruptive innovation. The US got used to Obama’s 0% interest rate fake stimulus and settled in for a long stagnant stretch of status quo. Trump is a different beast. The Trump economy is facing a decade’s worth of deferred blowback from the 2007-2009 deflation and the 2008-20016 Obama economic suffocation. These things must be worked through the system, along with a globe’s worth of economic dysfunction that has been waiting in a very long queue of neglect.
Expect turbulence — but not doom — ahead.