Too Big To Fail

It appears that the new formula for long term success (if you define success as staying in business vs. going out of business) is just to grow so big that you are 'Too Big To Fail'. We first heard about this concept in relation to big financial institutions and now it is being applied to the US automotive industry.

While I am very sympathetic to the many individuals that would be hurt by the failures of these companies, and the failure of them would certainly be extremely painful in the short term, saving them will potentially have even more damaging long term effects that no one is talking about. By saving these companies we are building a system that has no consequences. There is no reason to strive for excellence or invest in innovation if you can get by being mediocre; and there is no reason to be wise and responsible if there is no consequence for making very risky loosing bets. The only requirement for success is to grow big enough that you are too big to fail.

And now, too big is becoming relative. It is not just the biggest banks and biggest car companies that are using this rationale, I have recently seen this mentality begin to permeate the local non profit sector. A local non-profit I am aware of is in the process of dealing with a very difficult situation that could feasibly impact the agencies ability to continue. Most of the ideas being raised for addressing their problem are very positive but, one of the options that has actually been suggested is to simply do nothing. Why would they do nothing? Because as the argument goes, the agency provides too many critical services to be allowed to fail, so someone will bail them out. They are not by any means a huge non-profit by national standards but they are the one of the biggest fishes in their small pond.

If this trend continues what are we teaching our next generation of leaders?