4 Comments
Feb 2, 2022·edited Feb 2, 2022

"Increase shareholder value" one of the most destructive concepts in human history. I work for a company that provides products to the government. When I started (mid-2000s), it was a 400 person company working mostly direct to gov't and to some primes. It grew to a 600 person company, and doing well. We were efficient, liked our jobs, focused on the products and innovation, and solving tough technical problems. An engineering company. But business people gained footholds of power (stemming from the cardinal but lucrative sin of 'going public' a decade or so earlier). Sold to a large defense contractor, we became a small voice among hundreds. Our processes didn't match. We were agile with our customers, but to the prime that bought us, we were "cowboys" to be tamed that didn't do things rigorously or carefully enough. After over a decade of process, taming, and control, we are far less efficient and productive. IT issues are commonplace, turnover is way up. Resources to create and test products and innovate are very hard to come by and take unreasonable efforts to secure. Customers are still with us because there's nowhere else to go, even though we're not as good as we once were. More than a few of us wished to break off and form a competing firm, get back to focus on the products, the technology, but the very high capital investments and fear of litigation stopped people from taking the leap. Recently, the giants that consumed us have themselves been consolidating - L3 merging with Harris, Raytheon with United Technologies, etc. Even companies like Parsons Corporation, which have acquired over a dozen companies in the last decade, seem small compared to these giants. Where 20 years ago our competitors were often other small companies, now most are gone. Instead of having 400 coworkers I have many tens of thousands of coworkers. Seeing it from the inside has been very eye opening, and I have seen our productivity drop not by a little but by half in some technology areas. Partly by the bureaucracy that creeps in, partly by the lack of competition, partly by the loss of our best people who want to innovate and create - and found they could no longer do it here. I have seen no evidence in all my time in this industry that acquisitions and mergers have helped employees, the government, our military, or the American people as a whole. I have seen ample evidence that it has decreased choice and productivity, increased prices, demotivated employees, and only lined the pockets of two groups of people: Executives so rich they already don't know what to do to hold all their money, and those of other stock shareholders (in other income brackets) that don't even know what the company actually does let alone contribute to it.

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Excellent news that the military is finally starting to understand (again) the dangers of letting Share Value control the world. In WW2 the military tried hard to keep smaller companies in the game, and a lot of smaller companies survived because of this effort.

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A smaller defense budget by 90% would still be my priority. Lockheed might suddenly decide that civilian spin-offs are a good strategy.

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