SCALE. ETC.

Sluggish + Obese + Unimaginative + More

Sluggish + More Obese + More Unimaginative + Even More Sluggish + Even More

Obese + Even More Unimaginative = Nissan + Renault + GM = Innovative Challenger for Toyota????

“I don’t believe in

economies of scale. You don’t get better by being bigger. You get worse.” —

Dick Kovacevich/Wells Fargo/Forbes/08.04 (ROA: Wells, 1.7%; Citi, 1.5%; BofA, 1.3%;

J.P. Morgan Chase, 0.9%)

Last week’s “Invincibles”:

DellMicrosoft

Big Pharma

Scale?

“Microsoft’s Struggle With

Scale” —Headline, FT, 09.2005

“Troubling Exits at Microsoft” —Cover Story, BW, 09.2005

“Too Big to Move Fast?” —Headline, BW, 09.2005

New Economy?!

Genentech09, Amgen09

> Merck09 (70K-3/394B-5)

Wal*Mart + Home Depot + Walt Disney +

Intel + Microsoft + Pfizer = Flat

Source: “Blue Chip Blues”, Cover, BW, 0417.06

More than $$$$

#1 R&D spending,

last 25 years?

GM

Line Extensions:

86 percent of new

products. 62 percent of revenues.

39 percent of profit.

Source: Blue Ocean Strategy, Chan Kim and Renée Mauborgne

I HEREBY PLEDGE …

When asked, “What are some examples of companies stepping up to today’s

challenges?” … I will … NEVER AGAIN … offer an example of a Giant Company; instead I’ll refer to

Cirque du Soleil, Donnelly’s Weatherstrip Service, 3K tanning salons, 10.6M women-owned businesses (or the

typically female recipients of micro-lending) …*

*There is more to Biz Life than Giant Cos … LOTS MORE … that “hidden 99%”

“While many people big oil finds with big companies, over the years

about 80 percent of the oil found in the United States has been

brought in by wildcatters such as Mr Findley, says Larry Nation,

spokesman for the American Association of Petroleum

Geologists.” —WSJ, “Wildcat Producer Sparks Oil

Boom in Montana,” 0405.2006

Market Share, Anyone?

— 240 industries: Market- share leader is ROA leader 29% of the time

— Profit /ROA leaders: “aggressively weed out customers who generate low returns”

Source: Donald V. Potter, Wall Street Journal

Sluggish + Obese + Unimaginative + More

Sluggish + More Obese + More Unimaginative + Even More Sluggish + Even More

Obese + Even More Unimaginative = Nissan + Renault + GM = Innovative Challenger for Toyota????

??????????????

Crappy Management (GM) + Arrogant-Overstretched

Management (Carlos G) = Great Management

Bacteria. (“Left tail” limits.)

Productivity of small.Failure rate of Big Mergers.

Failure rate of Big Companies.Terrorists.

Galbraith vs Hayek.