Monday, January 11, 2010

Lessons from AOL-Time Warner

In this New York Times retrospective on one of the largest mergers in U.S. industrial history, AOL and Time Warner, the writer interviews key players who reflect on what went wrong.  Regardless of the specific causes (culture clash, wrong business model, implementation mis-steps) the story holds a critical lesson for management.

The more complex a system, the more likely it will break.  Whether in healthcare, national security, financial institutions or energy security, the Federal government's attempts to build massively complex systems needs to be re-thought.  Build simple and flexible systems that push decisions down to the level to where they are first felt.  Such systems can break without catastrophe and are easy to fix.

Economic recovery requires risk seeking capital to reflow.  The uncertainty surrounding the government's various massively complex interventions, coupled by the likelihood and costs of failure, will keep risk money on the sidelines.

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