Beware the Bloat: Scale Isn't Everything

In the 1960s, businesses adopted a conglomeration model, acquiring diverse firms across various sectors. This approach became problematic in the 1970s as companies grew excessively large, leading to inefficiencies. Leaders of specific industries, such as oil, found themselves making decisions in unrelated fields, like film production, where they lacked expertise. As American firms experienced a lack of competition post-World War II, the entry of proficient global competitors from Europe and Japan exposed the bloated nature of these companies, particularly in the auto industry. This competition highlighted the need for change, especially as economic growth from the previous decade began to slow down.