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And let's suppose for a second that HP is somehow right. How did they just notice that 10% of their employees are doing something totally worthless? The keywor

And let's suppose for a second that HP is somehow right. How did they just notice that 10% of their employees are doing something totally worthless? The keyword to search for in the economic literature is "labor hoarding". In short, companies tend to (by default) keep employees until well after they are no longer useful. Then some sort of a shock causes the company to shed the deadwood all at once. This is management incompetence, but it's exceedingly common. If you ever see a company (e.g. Netflix) which sheds employees regularly, that's a very good sign.

mercer 11y ago
Could you argue that in a broader sense this exact same thing happens not just on the company level, but on the level of entire economies? I recall reading a few articles on how recessions/depressions often have a way of shaking up industries to align (or rather, catch up) with new innovations/developments.
- yummyfajitas 11y ago
  I imagine one could - certainly many companies which should die actually do die during a recession. Some structuralist theories are based on this. But this is just theory. The empirical grounding for labor hoarding is pretty solid.
- kaffeemitsahne 11y ago
  It's like a spring/mass dragging across a rough surface: it stays behind until the tension gets too much, and then skips forward. You can find this effect in a lot of places.
drzaiusapelord 11y ago
Not to mention politics. Its ugly to lose this many people and job creation and protection is often encouraged by the government via incentive programs. If HP opened an office in some state and got a shit-ton of tax incentive and federal job creation credits, well, those pay off for a while. After those expire then its safe to cut these people. Or use the threat of cuts to get more credits. If these negotiations fail, then a big cut happens. Big companies don't really operate by simple supply vs demand laws. They play a much more complex game and many large businesses have long figured that gaming the system is just as profitable as actually shipping product.
sgt101 11y ago
But it's a weird idea. The assumption is that the activity of a company is limited to a static set of things and that when those things require less activity (because the market shrinks) then the people are not required. In fact companies are constantly starting and changing business activities, and their people should be being moved onto those new activities, sometimes these activities fail, and I would argue that the shock is the result of a set of these transitions failing, resulting in a collapse of the organisms ability to adapt - and layoffs. This is what seems to be happening at IBM and HP - their management (at all levels) has stopped being able to find new activities for their workforce, and this failure is creating the shocks. My belief is that this is due to a disruption - specifically Hadoop, which has torpedoed the market for differentiated servers and software in enterprise data. "The Machine" was an attempt by HP to ride this out and find an new set of activities (by redefining enterprise computing) maybe the 3D crosspoint announcements from Intel have convinced the HP Enterprise management that the gig is up for this and there is no point in continuing?
- yuhong 11y ago
  I think the failure of memristors played a bigger role. I think Intel was beating HP in R&D probably long before that. I wonder if HP should have been taken private back in 2000 or so.

mercer 11y ago

Could you argue that in a broader sense this exact same thing happens not just on the company level, but on the level of entire economies? I recall reading a few articles on how recessions/depressions often have a way of shaking up industries to align (or rather, catch up) with new innovations/developments.

yummyfajitas 11y ago
I imagine one could - certainly many companies which should die actually do die during a recession. Some structuralist theories are based on this. But this is just theory. The empirical grounding for labor hoarding is pretty solid.
kaffeemitsahne 11y ago
It's like a spring/mass dragging across a rough surface: it stays behind until the tension gets too much, and then skips forward. You can find this effect in a lot of places.

drzaiusapelord 11y ago

Not to mention politics. Its ugly to lose this many people and job creation and protection is often encouraged by the government via incentive programs. If HP opened an office in some state and got a shit-ton of tax incentive and federal job creation credits, well, those pay off for a while. After those expire then its safe to cut these people. Or use the threat of cuts to get more credits. If these negotiations fail, then a big cut happens. Big companies don't really operate by simple supply vs demand laws. They play a much more complex game and many large businesses have long figured that gaming the system is just as profitable as actually shipping product.

sgt101 11y ago

But it's a weird idea. The assumption is that the activity of a company is limited to a static set of things and that when those things require less activity (because the market shrinks) then the people are not required. In fact companies are constantly starting and changing business activities, and their people should be being moved onto those new activities, sometimes these activities fail, and I would argue that the shock is the result of a set of these transitions failing, resulting in a collapse of the organisms ability to adapt - and layoffs. This is what seems to be happening at IBM and HP - their management (at all levels) has stopped being able to find new activities for their workforce, and this failure is creating the shocks. My belief is that this is due to a disruption - specifically Hadoop, which has torpedoed the market for differentiated servers and software in enterprise data. "The Machine" was an attempt by HP to ride this out and find an new set of activities (by redefining enterprise computing) maybe the 3D crosspoint announcements from Intel have convinced the HP Enterprise management that the gig is up for this and there is no point in continuing?

yuhong 11y ago
I think the failure of memristors played a bigger role. I think Intel was beating HP in R&D probably long before that. I wonder if HP should have been taken private back in 2000 or so.