A company from spare parts?

Electronic arts cuts staff and onboards an expensively-purchased social media company.

Gamestop goes for DLC and talks about building the company by acquisition.

Mergers, acquisitions, outsourcing has all made me wonder this:

  • There is a lot of common technology (databases, Office docs, etc.)
  • The internet and these technologies let companies collaborate and combine efforts faster.
  • It's a tough economic time.
  • Companies want to change and move fast, and building new divisions is hard.

So I've wondered if what we're going to see in the future is an outburst of Frankencompanies, pieced together from the acquired parts of other companies, merged-in studios, and mass-hired consultants.

First of all, it's easy to do (legal issues aside).  Technically there's less hurdles because of a variety of standard technologies, and translation and integration technologies when there are non-standard technologies.  A lot of stuff is outsourced (like phone meetings and webinars) anyway, or can be outsourced and get rid of internal resources.

Secondly, there's plenty of specialized companies, ambitious startups, and consulting groups that do their work particularly well.  Some of them would be easy to buy/merge with/take over, especially in an unstable economy.

Third, the buy-the-right, fire-the-unneeded model I postulate works FAST in theory – fast enough to satisfy stockholders and some employees I imagine.  You can just slam together what you need fast and get moving – or if you buy/merge with a partner, keep going.

So I consider it possible what EA has done and what GameStop will probably do, may actually be a model for the future.  Large companies, well-connected ones, could morph and change pretty fast if needed (and if they throw good process and money at the situation).  Smaller companies could go fast and nimble and join forces fast.

This would be especially relevant in geekonomic businesses because they usually deal with technology and communication – they are on top of what's going on and have the resources and skills to do it.  Video games, tech companies, media companies, etc. could benefit from the Frankenmodel (or at least want to try it).

So watch and see if others try this.  It's a tough time and speed may be important in a tight market and when there's limited spending . . .

– Steven Savage