This is because they're trying to reduce the wrong headcount. The largest inefficiencies in corpo orgs lie in the ways they organize their knowledge and information stores, and in how they manage decision making. The rank and file generally have a really good grasp on their subset of the domain -- they have expertise and experience, as well as local context. Small teams, their managers -- those are the ones who actua…
I've wondered sometimes what the root of this dynamic is, and why corporations are as inefficient as they are. I've come to the conclusion that it's deliberate. When I look at top-level decision-makers at my Mag-7 employer, they are smart people. Many of them were go-getters in their earlier career, responsible for driving some very successful initiatives, and that's why they're at the top of the company. And they're…
So we're seeing this play out. There are two factors that exist in tension here:
- The valuation of many of these companies depend on the perception that they are The Future. Part of that is heavy R&D spending and the reputation that they hire The Best. Even if the company mostly just wants to sit and milk its market position, keeping the stock price afloat requires looking like they're also innovative and forging the future.
- Some companies are embracing the milk-it-for-all-its-worth life stage of their company. You see this in some of the Mag-7 where compensation targets are scaling down, explicit and implicit layoffs, etc. This gear-shifting takes time but IMO is in fact happening.
The tightrope they're all trying to walk is how to do the latter without risking their reputation as the former, because the mythos that they are the engines of future growth is what keeps the stock price ticking.