Change the strategy to stay alive
The question on the table was, whether the end of a public company only comes when it is declared bankrupt. It seems that the only possible end station for a public company is just that. I haven’t heard of any companies that simply said: “We don’t have a role in society any more. There’s no purpose for us to stick around, so we’re calling it quits. Here’s the money back, thanks for the business.” But I might be wrong. If you have any examples of this happening, please let me know.

In any case, our discussion focused on how far a company should go in order to survive. Some companies have successfully managed to change their strategy to serve a different market. Most notably might be Nokia. A company that started out as a paper manufacturer and that is now of course a handset manufacturer. My argument is, that such fundamental shifts in the business can only be done, if the company stays authentic to itself, a theme that Joseph Pine has touched upon in the recent interview we conducted with him. In short: there’s only so much possible future positions as can be related to the future, present and past story of what the company has been doing. And if you stick within that space, you can successfully turn your company around.

Help a business stay alive
Now, the alternative to the above is to help out a business that is bound to fail, because it doesn’t (want to) change their strategy or core business. Case in point is of course General Motors. The company has a profound impact on the US economy as it is reportedly providing jobs (directly or indirectly) to 3 million people in the US. If those jobs would be lost, you can rest assured that that would have a very profound impact on the US economy. So it seems important to help them out. However, GM has been in trouble for years now. It is not as if this was caused solely by the current financial crisis. The company simply doesn’t want to change course and has bet on selling SUV’s instead of making cheap and clean cars.

By bailing out the company, there’s no guarantee that they will survive. It sounds more like a great American social plan for 3 million unemployed people. Isn’t it time to say: there’s no demand for our product in society anymore, we’ll just quit? Of course, neither of the above is a prefered scenario. But which one is the best? Stop now and take the losses or bail them out and take the losses later? As we’ve mentioned before: it is such dilemma’s that increasingly will need a solution.