No Margin of Error: Lessons from Small Countries and Smaller Companies

Singapore, Georgia, Armenia, Estonia, Israel, Kazakhstan, all tiny countries surrounded by large geopolitical powers. Small populations, poor in natural resources & energy. They have very little room for error. Hence the folks who run these places really need their Sh-t together or they will get eaten. They have to play the geopolitical and diplomatic game better than anyone else. They have to have good long term planning and proper execution and investment in their people and policies. 

Contrast this to the United States. A  big massive population, the biggest economy, the most powerful military. A place rich in money, resources & energy and food. Geographically secure and well positioned with plenty of margin of error. Because of this, the place operates with a level of dysfunction intolerable in most countries. We have grossly incompetent, ignorant and venal people running the place. The reason for this is that we have no near and present threats. So it’s easy to become complacent and overly tolerant of incompetence. There is Nothing to make us wake up and force us to get things in order. At least not until we face some real massive pain. Small countries, like the ones I mentioned earlier, do not have that luxury. 

This is also the reason why Big tech companies are not ones you should emulate. Bad management & dysfunctional cultures are a feature not a bug in Silicon Valley. Go down the list: Salesforce, Google, Yahoo!, Oracle, Uber, Netflix etc. etc. are all fat, bloated and poorly managed companies. 

They can get away with this because they have amazing business models and crazy good profit margins. All this allows them to get away with incompetence. 

The only well managed FAANG companies are 1) Facebook because Zuckerberg is a great operator and probably sociopathic & 2) Amazon under Bezos (also a great operator and probably sociopathic) with the addition of massive offline components & complexity. Thus by nature they have to get their stuff sorted well or the model breaks. Just like an airline or complex industrial manufacturing company. Running these kinds of companies smoothly and efficiently is incredibly hard. 

The point I’m trying to make as I’ve stated before is that Silicon Valley giants are probably the wrong model for top exemplars of management. We overlook the importance of business models which turn them into de facto monopolies in their sectors. Their cultures are a result of the business model, not a driver of their business model. 

There is so much bloat and fat at these companies, I reckon they can fire 50 percent of their staff and have little impact on their overall business. In fact, margins may even go far higher after. 

This is why I believe in startups. Small is beautiful because there is almost zero margin of error. Startups have to operate at a crazy high tempo to survive. If something is not working, they have to fix it right away or they die! 

So the analogy of small countries does work with small startups. The future belongs to the small and focused, not the big, powerful and shockingly dumb.