When Your Reach Exceeds Your Grasp
Issue 139, December 14, 2023
Here’s a question for you as we wrap up 2023: Why have so many organizations reset themselves by dramatically cutting back on their staff and operations? Why did their aspirations seem so out of line with their new reality? Whatever happened to foresight?
This syndrome makes us think of two quotes from two distinctly different individuals. Poet Robert Browning said, “A man’s reach should exceed his grasp, or what’s heaven for?” And then Teddy Roosevelt’s grave site offers a corollary thought, “Keep your eyes on the stars, and your feet on the ground.” And if you want to add one more layer of complexity, poet Virgil wrote in the Aeneid in 29 BC, “Reach for the stars.” So, if you unpack all this advice, you might question the sanity of what’s going on in the tech industry.
In other words, why do organizations build up their staffs and then come to the realization that what they had hoped for doesn’t match their forecasts and hopes? How could they be so disconnected from the reality of the market, the size of the audience, and the desire for their products or services? Is it a lack of critical thinking? And how could the workers who were once so critical to them then become irrelevant?
The impetus for this exploration is Stockholm-based Spotify’s recent news that it was cutting 1,500 jobs (17% of its workforce) in a third round of layoffs after a spending spree. The New York Times reports Spotify “has struggled to become consistently profitable after spending aggressively to expand beyond music streaming into areas such as podcasting.” And Spotify is not alone, “Industry’s giants like Amazon, Meta and Salesforce cut costs and shed jobs,” according to The Times.
In fact, the tech sector may be intentionally designed to exceed its grasp. In an interview with NPR, Boston University Mark Williams said, “If you think about high tech, it’s all about growth. And for them, the formula of success for growth was really taking on lots of debt. So, they borrowed big, and they spent big. They took that money. They hired a lot. They put a lot of money into advertising, research, and development. And they hoped for growth. And over time, profit came.” Or it didn’t and a reset ensued.
Cynicism and Profit
The cynic in us says that the entire tech business model is to gin up the economy as part of a systematic process to keep the investment community in business. What happened recently was so many organizations were lured into what seemed like favorable economic conditions in 2021 with the availability of seemingly limitless and cheap funding. Those economic conditions created the perception of unbridled opportunity and a clear runway to take big risks with someone else’s money. The problem was, and remains, that leaders set high expectations that big payoffs were nearly guaranteed and then those big payoffs didn’t materialize.
Cheap money results in cheap debt maintenance and cheap money feeds the growth machine building to capacity and capability for aspirational forecasts. That was then and this is now. Williams adds, “Within 18 months, by 2023, interest rates had skyrocketed. The Fed has increased rates 11 times to now ultra-highs not seen since 22 years ago.”
The Illusion of Growth
As a side note, consider a family’s financial options for buying a home. In the early 2000s, Adjustable-Rate Mortgages (ARM) were all the rage. Buy at a low-interest rate locked in for a year or two and then try to increase one’s income in preparation for the very near term when the interest rate on the loan increases. In the immediate, the cost of “servicing” the loan (rate of interest) appears manageable. In fact, one may have bought a bigger house with a higher price tag as a result. Organizations do this too, and act as if the aspirational growth will lead to higher profit, which in turn will accommodate higher rates.
ARMs, like cheap interest rates in the commercial sector, result in a disconnect with the near-term future and feed aspiration and unrealistic foresight in the near term. And the need for efficiency, downsizing, or course correction takes hold when reality turns out to be different than expected and projected.
TechCrunch collected data on layoffs up through October 2023 which is pretty sobering. With at least 240,000 jobs lost in 2023, it’s already 50% higher than last year.
- January: 89,554
- February: 40,021
- March: 37,823
- April: 20,014
- May: 14,928
- June: 10,958
- July: 10,589
- August: 9,545
- September: 4,632
- October: 7,331
Remember, these numbers represent talented, optimistic college grads (among others) who bought into the American dream, only to be betrayed by the larger, highly rationalized capital-based system. These layoffs include popular brands Spotify, Meta, Amazon, Alphabet/Google, Salesforce, FreshBooks, Chewy (this one makes us pet lovers sad), LinkedIn, Stitch Fix, Microsoft, Shopify, Zoom, Dell, and PayPal. And Elon Musk’s X is in a league of its own.
It isn’t just Spotify; the media industry seems to be in a period of major correction and retraction. Bluntly, media is having a moment. Media companies in recent years have become targets for equity firms that see the potential to buy and invest in the short term. But what happens is that the equity firms are so embedded with strategies of near-constant acquisition and mergers to reach a large size and capture a sizable market share. Often the opposite happens and their media clients only fizzle out and crash. Local and regional newspapers now have no local staff and resort to syndicated content. Even large media companies like the Washington Post have deployed a correction strategy to align actual revenue to a right-sized workforce (via buyouts and layoffs). How it comes out is anyone’s guess. Our guess is that antiquated media may be hearing its death knell.
And there are plenty of other mainstream brands from retail and mobility to banking and publishing that have had to retrench this year to right-size their operations. You just have to wonder who was manning the foresight fort all year. As we said, critical thinking and market orientation are not to be trifled with.
Exceeding a Grasp
So, let’s go back to our poets and politician. America, if nothing else, is a poster child for manifest destiny. Optimistic, can-do problem solvers, and resilient, Americans (new and recent) believe in the American Dream. When you look at the layoff carnage, for Browning to espouse we should exceed our grasp is to advise a romantic, idealistic notion.
We tend to prefer the idea of something to its reality. However, as business coach Charlie Gilkey writes, this approach can trip you up: “The world has the wonderfully mysterious and frustrating way of being different than the way we imagined it. The elusiveness of the world wreaks havoc on us when we expect the idea of what it’s like to do something to match the reality of doing that thing. It rarely does, and though we might enjoy the gifts of the mystery, we usually don’t adjust the plan and expectations we had in the first place.”
Tech consultant Gary Wilkinson adds, “When your grasp exceeds your reach you exceed your dreams!” That may be a self-limiting motto or downright depressing to an entrepreneur or a leader wanting to make his or her mark. It all depends on whether exceeding your dreams is a good thing or a fool’s errand.
And then there is the revisionist Mark Zuckerberg who explained the shortfall of exceeding dreams as a reckoning with efficiency when he eliminated about 13% of his workforce. That is hindsight wordsmithing. Really, who ever built a company based on the concept of inefficiency? What were all those workers doing day to day? What were their contributions? With their departure, what is the company not doing?
Overall, are all these layoffs contributing to continued workforce dissatisfaction? Quiet quitting? By right-sizing organizations there is the potential collateral damage of worker unhappiness and disengagement. And further, when an aspirational reach exceeds its grasp, you have to speculate that an overcapacity of workers are just filling time because they don’t have enough work to do.
Maybe it’s time to write our own modern myths or fables (with those morals) on the business case for attempting to exceed one’s grasp. It’s so tempting to write a real-time history of success and chasing dreams. Social media is the enabler and who’s to say if what you claim online is true? Who’s to know if it was even you who said it? We’re looking to a future of AI-generated coaches, counselors, therapists, advisors – any number of too-good-looking-to-be-true avatars. The medium, as Marshall McLuhan said, is the message. Claim it, true or not.
Reaching for the stars is ingrained in our worldviews, and whether we are writing our own stories or GenAI is creating the narrative for us, we need a new North Star. Fueling the economy with private equity that is not necessarily invested in the product or the people, just its return, is not reaching for the stars — not even looking at stars. How are we going to inspire our over-leveraged, well-educated next gens to be loyal to an organization? To dream big with a tether to reality?
We’re going with Teddy Roosevelt’s epitaph. Critical thinking, transparency, empathy, inclusivity, and authenticity—these are the stars to look to while pragmatically keeping your feet on the ground following your footpath to success.
Need to immerse yourself further in defining those stars? Get yourself a copy of our book, The Truth About Transformation.
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