It’s not hard to imagine how a company filled with great people can thrive. More intriguing are the companies that inspire Dilbert cartoons and yet manage to succeed. When a company thrives despite bad service and incompetent employees, they’re doing something right that isn’t obvious. Not everyone can be incompetent. Someone somewhere in the company must be very competent to keep it alive despite liabilities. Or at least there used to be someone very competent who set things in motion.
Maybe the company is good at attracting investors. Maybe they have enormous economies of scale that overcome their diseconomies of scale. Maybe they’ve lobbied politicians to protect the company from competition. (That’s a form of success, though not an honorable one.) Maybe they serve a market well, but you don’t see it because you’re not part of that market.
I’m reading “the e- myth revisited” and it talks about how the system (of business processes) is the business, not the people. I guess if some brilliant business person set up the right system in the right way, then the system works regardless of who is inside… To some extent! Also I have seen some really disfunctional companies make a LOT of money because they had one enormous captive customer. Business wise that covered a multitude of sins.
Maybe all their competitors are even more incompetent.
Some companies succeed despite the odds because they have an excellent business model. It’s hard for those companies to not make money. Consider pharmaceutical companies in the 80’s and 90’s, the model was great, a couple of block busters and you won the lottery. Automotive was similar at one time as well. This goes along with John’s statements but is more blunt. The regulatory or economies of scale angles sometimes get forgotten. But there must be a few that are just “lucky”.
A lot of the Dilbert stuff is inspired by the engineers at the bottom level not having visibility into the factors driving executive decision making. Executives are by and large brilliant people. Their decisions often appear bizarre from below because they are not at liberty to fully explain them. Sometimes, business processes are responding to twisted and paradoxical incentives given by regulation.
I’ve worked as an engineer at a defense contractor and there were some clearly insane things imposed on us by corporate rules, costing our organization millions of dollars a year. Digging deeper, the rules were a result of compliance with federal regulations which saved billions in taxes, enabled by different accounting enabled by compliance with byzantine laws which also begat the insane rules.
Give the executives the benefit of the doubt.
Tomas: I agree with your points. I served on a school board for a while. Our decisions were nearly always unanimous, but some of them did not make sense to others who weren’t part of the discussion or who didn’t know some things that we had to keep private.
I’ve also found that many things that look far from optimal are actually close to optimal once you become aware of the constraints.
Some things really are dumb, though, because decisions are made too far from the action. Sometimes this is because a company is working at too large a scale to allow common sense.
I don’t mean this in a cynical way, but it is interesting to apply the comments specifically to government inefficiencies. I suppose efficiencies sometimes continue to exist, because the overall business of government is a monopoly (in a sense) with one captive customer (the taxpayer base).
Dan: As Russ Roberts put it, “It’s much harder for me to opt out of government mistakes than private mistakes.”
I want to second Thomas’s point (third? since you agree too). Business is wholly different from engineering. While I do enjoy Dilbert, it’s obviously written to flatter engineers, almost all of who would drive any company into the ground if given executive authority due to ignorance of how to actually run a business. Being a smart engineer almost always means being a stupid businessman.
This is not to imply that smart engineers cannot become smart businessmen. I’m just pointing out the obvious fact that it’s a time suck to become a quality engineer and every second dedicated to learning your engineering craft is a second that cannot be used to do anything else, like learning business. Becoming a quality businessman involves the same level of dedication to becoming a quality engineer. To have the capacity to become quality businessman AND engineer is exceedingly rare.
As I said above, I find Dilbert funny, but it irks me to no end the idiocy that comes out of some of my colleagues mouths when commenting on business and most things outside their particular area of expertise. Being smart in one area does not mean you are smart in anything else. I try to acknowledge my ignorance (but often fail, as my ego doesn’t let me admit ignorance a lot of times). I wonder if others actually understand how ignorant they are of other things and in their arrogance still feel the need to comment (as I, sadly, often do) or if they really do think that they understand those other topics despite it being obvious to anyone else who does that they really don’t.
Also, it makes me smile to see that you read Russ Roberts.
Ken: I agree that it takes much more to run a company than an engineer would be aware of. I appreciate that more now that I have my own business.
See Geoffrey West’s TEDx talk about economies of scale and corporate senescence.