Is the pandemic of bankruptcies actually changing our national perspective on corporate mortality in some fundamental way? It’s an important question to ask, given the frequency of once-iconic brands turning into corporate panhandlers, at the mercy of creditors and the courts.
Clearly, on one level we are becoming bankruptcy-immune. The latest fumble and tumble of Delta and Northwest, long expected, were notable more for the coincidence of their simultaneity than anything else. How is it possible to get worked up about large-scale collapse anymore? It’s not like 1970, when the bankruptcy of Penn Central stunned the nation.
In fact, rather than their rarity it is the very frequency of these events that has had a profound effect on the way we think about the enduring versus the ephemeral nature of the corporation. Once, we implicitly believed that big companies would live on forever — the way young children think of their parents — somehow destined to survive deep into the future. Yes, we recognized that profound shifts could put some industries out of business — the buggy whip manufacturer reduced to irrelevance by Henry Ford being the operating cliché — but those were exceptions to the Gibraltar-like presence of the economic giants.
Of course, these large-footed entities did everything they could to foster this perception. As modern corporations emerged after the Civil War and the successive period of rapid industrialization, they sought to be nation-like in the stability they projected. So they named themselves in an appropriately monumental fashion — U.S. Steel, General Motors — and they built headquarters, modeled after the institutions of government, clad in marble and graced by Ionic and Doric statements of immutability.
Today, we really don’t expect companies to be around forever; without realizing it, we’ve become Schumpeterettes, accepting the notion of “creative destruction” as part of the world. (Which explains why our aptly titled magazine is both a harbinger and a herald.) If it can happen to Kmart and Enron (and it once almost happened to Apple, but Bill Gates bailed them out) it can happen to anyone. Sometimes companies disappear all together — think how many department stores have had going out of business sales over the last two decades — and sometimes they “emerge” from bankruptcy, a telling term that captures the American faith in rebirth and reinvention.
Of course, all bankruptcies are not created equal. Each represents a specific kind of failure, with a different explanation: crookedness, massive misjudgment, foreign competition, fuel prices. But taken together, they’ve made us see the corporation as disposable, with some obvious results — like the death of the job-for-life model — and some more subtle ones, like the increasingly rapid turnover in the composition of both individual and mutual fund portfolios. Why hang onto anything more than a nanosecond?
Another outcome of our bankruptcy culture is that we’re not really seeing companies trying to project permanence. Sometimes it actually seems as if they are embracing a shorter shelf life, cultivating an aura of the transitory; note the proliferation of lower-case logos like jetBlue, a powerful anti-corporate cue. Online companies don’t even have a physical presence, yet we accept them as every bit as substantial (or not) as the bricks-and-mortar company around the corner.
You would think that in this environment where sudden corporate cardiac arrest is common, we’d be suspicious of companies that haven’t been around. But paradoxically, we aren’t. (Perhaps it’s Schumpeter again; we’ve accepted that successes emerge from the rubble of sacked conference rooms). Take a bank like Washington Mutual, which has only appeared on the scene recently, but has succeeded as a species of anti-bank, consciously shunning the trappings of faux historicity. Once upon a time, a new bank would desperately try to create a manufactured provenance; today, when 100-year-old institutions routinely go belly up, legacy itself can be an anchor.
The free market tells us that bankruptcy can be a good thing, in the way that the death of an old tree allows younger ones under its oppressive canopy to grow. There’s a lot of truth to that. But beyond the physical, bankruptcy has triggered an emotional change in our expectations. We’ve experienced what can only be called the Death of Permanence; what remains to be seen is the way the new Economy of the Evanescent will influence our business and even personal interactions. Never before have so many people lived with one finger on the game-reset button.