We are reading about the possible break-up of CitiCorp, Countrywide Bank, Barry Diller's Internet holdings and many more.
My point, made here regularly and made in my book Commerce, is that management of industrial commerce and management of clientric commerce are so different that the two can not be handled effectively together. Most corporations combine these two separate forms of business.
Industrial commerce is driven by cost reduction and clientric commerce is driven by lifetime client relations. Airlines need to be broken up the way Air Canada has been broken up; industrial commerce in one part, client services in the other part. Boeing and other aircraft manufacturers need to be broken into manufacturing and service components.
Merrill Lynch not only needs to be broken up it will be broken up. The
client service component of brokerage, accounting, trading, arbitrage,
insurance and traditional fund management are clientric
commerce...aimed at lifetime relations with the client. The high risk
investment banking, hedge-fund, mergers and acquisition and tax
sheltering is aimed at profit from cost control, risk dispersion,
economies of scale and one-time speculation...industrial commerce. Those are two separate forms of management.
The talk about the extreme difficulty in finding good CEO's is off base. The problem is nobody can handle two different forms of management. There are abundant managers who can handle one form of management either industrial or clientric; but not both.