These cycles of initiative-consolidation-new
initiative-revolution-consolidation are the dynamos of company growth.
Growth leads to maximization of value. However, the players don't know
or do not fully believe that they are in the process of maximizing the
company's worth. On the contrary, consciously, the managers say: "let's
maximize the benefits that we derive from this company, as long as we
are still here." The entrepreneurs-owners say: "we cannot tolerate this
stifling bureaucracy any longer. We prefer to have a smaller company -
but all ours." The growth cycles forces the entrepreneurs to dilute
their holdings (in order to raise the capital necessary to finance
their initiatives). This dilution (the fracturing of the ownership
structure) is what brings the last cycle to its end. The holdings of
the entrepreneurs are too small to materialize a coup against the
management. The management then prevails and the entrepreneurs are
neutralized and move on to establish another start-up. The only thing
that they leave behind them is their names and their heirs.
We can use Game Theory methods to analyse both these situations.
Wherever we have economic players bargaining for the allocation of
scarce resources in order to attain their utility functions, to secure
the outcomes and consequences (the value, the preference, that the
player attaches to his outcomes) which are right for them - we can use
Game Theory (GT).
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