Why America Can't Make Squat
Jan. 5th, 2010 10:31 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
elfsMaxine Udall has an interesting piece entitled The Price of Casino-Like Finance Is Higher Than We Think, in which she touches on many of the reasons why America is in so much trouble. Her thought processes are of a piece with Noam Schrieber's piece in The New Republic, Upper Mismanagement, and they dovetail nicely into my favorite boogeyman, the ongoing pressure by the Religious Right to destroy childhood incentives to go into the sciences.
Schrieber starts out by stating that for the past twenty years, the best minds in management have all been driven by business school ideals: not "make better stuff," but "make more money with the stuff we have." Converging with other threads of thought I've had over the decade, Schrieber points out that most upper managers come from business schools and know how to play the market game. No longer to CEOs (and even CTOs) come up through the engineering ranks, familiar with what the engineering departments are capable of producing; instead, they come from outside the business, full of knowledge about financial management, and are expected to figure out how to "leverage" what they can learn about engineering's "role" into financial success.
Udall goes deeper, and points out that engineering is probably full of mediocre minds who couldn't or wouldn't put their talents on the line for the hard-core stuff:
I'd like to add that ever since 1972, when the last Apollo mission returned to Earth, we have looked inward, looked downward. Hell, even the Space Shuttle rotates to face downward, toward the Earth, navel-gazing. Meanwhile, too much of America is scared that what science reveals makes the universe a scary place, a place without God or divine providence, and that the conclusions of biology are so unsettling its best that children not hear them. From an early age now, science curricula in pre-college classrooms has been dumbed down-- from the right, by fear of "naturalism," from the left, by fear that excellence by some will mean disappointment for others. We have relentlessly dumbed-down our curricula to the point where kids are entering college with no pre-calculus skills, no capacity to write a meaningful cover letter, no capacity to discern bias in a newspaper editorial.
Only the mathematics of finances is dually blessed: mathematical abstractions are sufficiently abstract that they seem free from having any impact on the "real world," and so are an acceptable pursuit to the religious. And it's about making money, which in some sense is divorced from the ethic of making good stuff. That might seem unChristian, but if it does, you're not hip to The Prosperity Gospel, which states that God provides material prosperity for those he favors.
All of these forces merge to create a situation where we've made "making money without getting your hands dirty" seem the only rational alternative. Nobody would go into the sciences in America: science is boring, hard, icky, unholy, and disruptive. And who wants that?
Frankly, I do.
Schrieber starts out by stating that for the past twenty years, the best minds in management have all been driven by business school ideals: not "make better stuff," but "make more money with the stuff we have." Converging with other threads of thought I've had over the decade, Schrieber points out that most upper managers come from business schools and know how to play the market game. No longer to CEOs (and even CTOs) come up through the engineering ranks, familiar with what the engineering departments are capable of producing; instead, they come from outside the business, full of knowledge about financial management, and are expected to figure out how to "leverage" what they can learn about engineering's "role" into financial success.
Udall goes deeper, and points out that engineering is probably full of mediocre minds who couldn't or wouldn't put their talents on the line for the hard-core stuff:
It will be from two powerful, long-standing price distortions that have distorted the composition of our labor force and the mix of human capital within it. The first distortion is the past diversion of some our best technical and mathematical minds away from physics, engineering, biology, chemistry, and, yes, even economics, to financial modeling, risk analysis, and all the other marvelous tools of speculation and gaming.It's not just that management came out of business school and has no clue what engineering does, but that the talent management has to work with has been skewed downward by the immense seduction of money pulling talented engineers and scientists into studying financial alchemy rather than biochemistry or architectural engineering.
Maxine is thinking of all those bright, young, energetic people who came out of some of our best universities and opted to go to work for investment banks, not in technical jobs, but as traders, ratings specialists, analysts, again to support the conversion of trillions of dollars into chaff. Many of them might have gone on to graduate degrees in chemistry, biochemistry, physics, engineering, biology or medicine. Graduate work in psychology, sociology, English, history, political science, public health would have added more value than destroying wealth across the globe. Instead of a workforce that gained diverse skills that might one day transform the world in positive and substantive ways, we have a surfeit of MBAs with concentrations in finance and empty houses on overgrown lots.
I'd like to add that ever since 1972, when the last Apollo mission returned to Earth, we have looked inward, looked downward. Hell, even the Space Shuttle rotates to face downward, toward the Earth, navel-gazing. Meanwhile, too much of America is scared that what science reveals makes the universe a scary place, a place without God or divine providence, and that the conclusions of biology are so unsettling its best that children not hear them. From an early age now, science curricula in pre-college classrooms has been dumbed down-- from the right, by fear of "naturalism," from the left, by fear that excellence by some will mean disappointment for others. We have relentlessly dumbed-down our curricula to the point where kids are entering college with no pre-calculus skills, no capacity to write a meaningful cover letter, no capacity to discern bias in a newspaper editorial.
Only the mathematics of finances is dually blessed: mathematical abstractions are sufficiently abstract that they seem free from having any impact on the "real world," and so are an acceptable pursuit to the religious. And it's about making money, which in some sense is divorced from the ethic of making good stuff. That might seem unChristian, but if it does, you're not hip to The Prosperity Gospel, which states that God provides material prosperity for those he favors.
All of these forces merge to create a situation where we've made "making money without getting your hands dirty" seem the only rational alternative. Nobody would go into the sciences in America: science is boring, hard, icky, unholy, and disruptive. And who wants that?
Frankly, I do.
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Re: … Go Run a Bank
Date: 2010-01-10 08:16 am (UTC)Most important thing: to make money. Second most important thing: make
goodmarketable software so that you can make money. They can't have one without the other, and if a company makes the best damn software in the world, that probably means that someone else has already beat them to market with an inferior product that customers are unwilling to move away from due to time and effort already spent on using that product. Then the company fails to make money, fails to pay the engineers, and in turn, fails to exist.Kind of like how cheap appliances beat out good appliances by the time the 80s rolled around. It turns out that not enough of the market wants excellence at the expense of... expense.
Re: ... Go Run a Bank
Date: 2010-01-10 06:18 pm (UTC)If the most important thing is, "to make money," then more things will go wrong than just having a shitty product.
An important part of making the best-damn product is knowing what customers want, then turning that into a spec describing what they need. That goes for software as well as toasters and blenders. And if your salesforce is focused on conning people into parting with their coin, you'll make money. But if your salespeople are focused on convincing people that you have what they want at a good price, you'll make money by making loyal customers.
If you hand your salesforce piss mixed with ink and tell them to con people into thinking it's a cure for baldness, they'll make money. For a while. Eventually, your customers will get wise to what you're selling them — or at the very least, they'll realize that it doesn't cure baldness.
As to your last point, there is a very simple reason why people shifted to the cheap products during the 80's. The expensive brands were also cheap crap by then, but sold at a ridiculous markup for the sake of owning the brand label, not the actual product. And who was moving into management in corporate America in large numbers during the 80's? The very MBAs that Elf's talking about. They were the ones not only tossing away quality for the sake of a quick buck, milking the existing brand loyalty until the teat bled, but also were tossing the average American employee under the bus. This shrank the purchasing power of the U.S. middle class, making it harder for them to invest in more durable, longer-lasting products.
As this downward spiral progressed through the 90's and into last decade, it became impossible for the average American to afford anything except the cheap crap.
The poster-boy for, "make money, not products," is the RIAA. Y'know, the folks who've been trying to bribe your MPs into enacting U.S.-style junk-laws that make you guilty of piracy until you've proven that you're innocent? They don't care about their customers, and never did; their "piracy" witchhunt is nothing but a smokescreen. Their customers aren't buying CDs because the customers know that they're being sold piss-mixed-with-ink.
Contrast this with Steve Jobs … who certainly has his flaws. (FYI: I've never owned a Mac, am a longtime Linux geek, used an Atari ST during college, and was mighty pissed when Apple sued the makers of the OS' used by Atari & Amiga, instead of competing with them by releasing a color Mac.) "Make money, not products," is definitley not one of those flaws. Whenever he's been in charge of Apple, Apple has created products that provide something that customers want. Sometimes, they flopped. Whenever the MBAs were in charge of Apple, Apple released nothing truly new, milked its brand reputation … and floundered as a result.
But back on track: Jobs saw that customers were tired of the crap that the RIAA was peddling, wanted to buy music on their own terms (including song-by-song) and use it how they wanted, where they wanted, when they wanted. Apple created a product based on what customers wanted that delivered what customers needed: the iPod and iTunes. Okay, Okay, so the iPod doesn't necessarily deliver everything that all customers want. But it does and did cover quite a bit, featurewise. That's why it … and iTunes … remain category-killers.
So, I repeat: a company's primary focus should be on delivering a product or service that its customers want, thereby earning a profit and building the company. If the primary focus is, "make money," Go Run a Bank. Otherwise, the company will spit out crap that its customers buy only out of desperation.
Re: ... Go Run a Bank
Date: 2010-01-11 03:14 am (UTC)But it's worth noting that the straw man I gave you came from Marc Andreeson to the employees at Netscape. Before version 1.0 if I recall correctly. Maybe that's why Netscape died, but I'm pretty sure that it's really the reason that Microsoft killed them - because they're better at that game than everyone else in the software industry.
Re: ... Go Run a Bank
Date: 2010-01-11 03:52 am (UTC)Actually, I must confess that I've been hearing lots of things on both my local public radio station and on CBC's, "As It Happens," that have broadened my knowledge.
Also, you're still thinking, "software industry." The software industry is a complete mess, mainly because software is really just infrastructure. It's the 19th Century Railroad-Wars, all over again. Infrastructure must be standardized, or you can't do a damn thing with it.
TCP/IP became, "The Internet," because it was a completely-standardized networking protocol. The proprietary ones all died, precisely because they're proprietary. Email is widespread because SMTP was standardized outside of the meddling tentacles of MBA's.
…aaaand I just lost my train of thought. Well, nevermind. I think we have another problem here, one of miscommunication. Because you're focussing solely on the software industry (at least, from what I can tell), you have an additional ingredient in the soup: lock-in.
I'm ignoring the issue of lock-in. Lock-in totally changes the game of, "Provide a product or service that fills a need." Lock-in doesn't exist in the automobile industry. You can't have lock-in with a dishwasher, or a stove. Lock-in is a meaningless, laughable concept when you hire someone to refinish your hardwood floors, lay new carpet in the living room, or reshingle the roof.
Lock-in only exists (ooh! just remembered) when an industry needs a standard, but ends up, instead, with a product. Hmmm … and where there's lock-in, is there also not a monopoly?
Re: ... Go Run a Bank
Date: 2010-01-11 04:59 am (UTC)The computer hardware industry before around 1990 was the same way. Proprietary parts for everything, all the time. Fortunately, every other manufacturer also wanted to build parts and computers to compete with companies like IBM, and did it cheaper and at least as well. Plus the hard-core computer geeks that basically made up the market didn't like the lock-in, especially when replacement parts were astoundingly expensive. That business model has thankfully died a horrible and natural death, along with the businesses that tried to implement it.
Re: ... Go Run a Bank
Date: 2010-01-11 03:29 pm (UTC)Point about car parts: well, do I need to buy GM tires for my GM car? Do I need to use a GM-wrench to remove the GM-specific nuts to change the tires?
The lock-in you're describing is a mere consequence of how one designs internal parts.
Lock-in is not a natural part of providing goods and services, much less a requirement. It's something that a company must consciously design into their products, and the only reason for making that conscious effort is to ensnare your customer. Kinda like a drug-pusher.
Re: ... Go Run a Bank
Date: 2010-01-11 04:50 am (UTC)My point is that companies have symbiotic relationships with money and engineering. Making good products requires that the company makes money, and making money requires making good products.
Coincidentally, this is also true of banks. Ask my wife sometime about the products (or more accurately, services) made by the bank she works for.