Shift to seeing systems LO5749
Tue, 20 Feb 1996 14:22:17 -0500

Replying to LO5712 --

Why would stock prices increase when layoffs are announced?

Imagine that a paper boy is using a 1955 T-bird to deliver papers. The
car plays a part in generating total revenues of about $25 a day. In this
case, the car is worth more on the collectors' market than it is in the
generation of income. Better to sell the car than drive it around town
delivering papers.

To put it in systems talk, the piece is worth more outside its current
system than inside the system. So, the real question about layoffs (to
make the leap from T-birds) is "Why isn't the company worth more with the
inclusion of that person?"

My succinct reply is that our current systems do not realize the potential
of the people within them. People have to fit in to the company, even if
that means lost potential. If our corporations were designed to be tools
for the people within them, rather than vice versa, there would be less
social benefit to layoffs.

Our current economy really is geared towards innovation as an exogenous
factor. That is, innovation is expected to come from someone's garage
rather than inside a corporation. (I know, I know. Companies spend
billions on R&D.) Imagine how differently our businesses and economy might
operate if we expected as "gales of creative destruction" to come from
within companies rather than just from start-ups. This can only happen
when organizations put as much emphasis upon creativity as conformity.

I'll stop, unless someone else wants to pick up on this thread.

Ron Davison, San Diego
Producer of the video "A Change in Thinking: Systems Thinking, Learning &
Intellectual Capital."


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