There is a lot of literature on why companies die, but hardly is the post mortem conducted after their death on the implications of their demise. When companies die, what happens afterwards? The immediate effect that is easily seen and felt, is the loss of jobs. The economy of the affected community suffers. That cannot be hidden. The humming of the turbine engine comes to a stop. The party is over and folks go home reluctantly.
What else happens when a company dies? I think a lot happens. First, let us look at what a company does.
In general, a company exists to offer products and services. To do that, the company would rely on other companies and people to provide raw materials as input for its products and services. Nestle would want maize from farmers. Olam would need the rice farmers to do well in order to supply it with rice. Tech companies would need Amazon AWS and Microsoft Azure for their cloud services. In addition, companies need other companies to provide services for their existence. Think of maintenance services, janitorial services, technology services, etc., Finally, companies need customers for their products and services. In essence, every company has a supply chain built around it.
When a company goes under, the web of the supply chain will have no host to “feed” on. It is not a zero-sum game but an actual loss to many people in the value chain and the ecosystem, and the economic impact is unmistakable. Lost jobs and loss of purchasing power leaves the economy of the community in tatters. If this is sustained, people move out of that community.
But there is something that is not glaring — the loss of a skilled workforce. When companies die, the skill sets that support that sector of the economy either dies entirely or moves to another place where there are opportunities. As you now know, talent is always attracted to opportunities. This is apparent today as many countries are using the opportunities they have, to attract top talents from around the world. Canada, Australia and the UAE are all singing from that hymn book as of today.
Let us think of the death of the automotive industry in Nigeria. It started slowly and after a while, it became apparent that the supporting industries also followed suit. Tyre manufacturing also left with it. That means auto technicians and electricians had to find other jobs or move to countries that can support their skill. That also means it would be hard to get good company-trained mechanics. The same fate attacked the tyre industry (Michellin, Dunlop, etc). It is now hard to get people who can advise you on what to look out for when getting a tyre. You now understand why it is hard to get a great mechanic. When the auto-companies (Volkswagen, Peugeot, PAN, etc.) were around, they trained the mechanics in their dealerships and that knowledge was also passed down informally to friends and acquaintances of the trained. That meant it was easy to get folks who could offer that service either independently or as affiliates of the car brands. But this is all now in smokes. Those skill sets and capabilities are gone.
The other thing that goes when a company dies is innovation. You cannot innovate on the dead. Innovation is a living thing. It is alive. It grows, mutates and co-exists with existing processes and technologies.
The final part of the trifecta that dies is the dreams of the young; the future generation. It is hard to dream to be an astronaut as a Nigerian living in Nigeria. It is not because it is forbidden but because there is no reality to attach that dream to. Back to the issue of the auto industry, it is hard to have auto engineers and designers when there are no vehicle manufacturing companies (thank God Innoson is unbuckling this trend). University students have nowhere to intern. The companies are dead and they cannot support the skill set of the young.
Culled from an article by George Omin on Medium