> If you are in the business of making feather hats, and suddenly feather hats go out of style because of shifts in market demand, how can you fire the business leader?
Were you a c-suite at Kodak or something? "There was nothing we could do after people didn't want to shoot photos on film anymore" meanwhile Fujifilm pivoting hard into chemical materials, makeup, medical etc etc (although ironically due to the meteoric rise of Instax, their highest income is once again consumer photo film...)
You fire the business leader because he didn't see the writing on the wall and expand into down comforters, other styles of hats, etc etc.
That's one view of the world. One people try to push for but I don't agree with. It's OK for companies to have a lifecycle associated with what they do. There's no need for companies to be behemots that last forever. If you are a hat company, to me there's no direct implications that tells me it's better for society if the hat company starts making shoes vs the company ending and different cohorts of employees going to different places, potentially some founding a shoe company, potentially not.
Many many dollars are wasted due to companies trying to survive at all costs and fail at it.
But a company deciding "okay, were done" and just shutting down is effectively laying off 100% of the staff. This company's leadership is already getting flak for laying off under 4%.
Sure and laying off 100% of staff might be better for society if you can replace the jobs with higher productivity ones somewhere else.
Same with unions, instead of starting one to fix a dystopian company with bad leadership, could be better to have the employees leave and have the company go downhill than trying to fix something that isn't worth fixing.
> Same with unions, instead of starting one to fix a dystopian company
There is immense value in the company structures themself. You can't just bail and take them with you. The inertia of the customer base for example. It has to be really bad to not be worth fixing if the alternative is redo from the ground up.
> The inertia of the customer base for example. It has to be really bad to not be worth fixing if the alternative is redo from the ground up.
This only matters from the pov of the company. From the pov of society those customers will move faster or slower to better competitors, which is what you want. Though you don't even need to have them have to figure it out from one day to the next, you could for example go to your best competitor ask them for money to buy your customer base, and use that money to pay your creditors, employees etc in the bankrupting process.
Building companies takes resources. Just bailing if the executives go mad is probably not optimal either. You can somewhat keep executives or shareholders in check and protect them from each other by being difficult. Just as long as not both are bad, or at least only temporary bad.
But with job hoping being incentived I guess it is futile?
There are so much BS I blame on the concept of job hoping engineers. Companies can't even make bags for spaghetti nowadays that are openable by hand since there are a constant churn of newbie plastic pasta bags engineers around at them.
>This only matters from the pov of the company. From the pov of society those customers will move faster or slower to better competitors
It absolutely matters to customers. Depending on the type of business, it could be extremely inconvenient to have to change to a different one when they close.
The costs depend on a lot of variables we're assuming here, they might be negligible. In some european countries where I live (not sure how it works in the US) if you get fired you'll get several months up to ~2 years - depends on the country - of subsidies while you look for jobs. Of course there will be more stress during the months you are switching but economically, having big companies with old business models, syphoning subsidies and tax breaks and all manner of life support measures just to stay alive... In many cases you'd spend less by letting the company go bankrupt and supporting the employees directly in their transition.
And once they come back to the workforce, every month of increased productivity might be "making it back" much faster.
Were you a c-suite at Kodak or something? "There was nothing we could do after people didn't want to shoot photos on film anymore" meanwhile Fujifilm pivoting hard into chemical materials, makeup, medical etc etc (although ironically due to the meteoric rise of Instax, their highest income is once again consumer photo film...)
You fire the business leader because he didn't see the writing on the wall and expand into down comforters, other styles of hats, etc etc.