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I used to work for a consulting company and heard similar stories for IT budgets. Companies nearing the end of financial year with budget to spare would scrambl

I used to work for a consulting company and heard similar stories for IT budgets. Companies nearing the end of financial year with budget to spare would scramble to get more consultants in to spend the remainder, otherwise the following year their budget would be scaled back to whatever they actually spent.

Ididntdothis 7y ago
Don't forget that a company internally is run like a Soviet Style planned economy. 5 year plans, no way for people on the ground to adjust plans, inflexible leadership. I could also mention things like total disconnect between communication from leadership and reality or motivational posters. It's all there. It's not surprising they create similar behaviors.
- vkou 7y ago
  And yet, all of these companies that run like command economies have collectively out-competed all the companies that run like market economies. We know this, because the latter... Don't really exist. No company of any note operates like one. Does that imply that command economies are actually more efficient than market ones?
  - p_l 7y ago
    The problem of command economies aren't related to being command economies, they tend to be related to communications. A market is a form of communication, with various forces that are supposed to balance themselves. Many of them actually outside of market (the supposed anti-monopoly aspect heavily depends on externalities preventing concentration, like slow travel/shipping, non trade barriers, etc.)
  - Ididntdothis 7y ago
    "Does that imply that command economies are actually more efficient than market ones?" I think it's probably similar to politics. A well-run dictatorship can do better than a democracy but usually dictatorships deteriorate after a while.
    - vkou 7y ago
      I think it has to do with leadership. Corporate leaders get sacked by the board rather quickly if they completely screw up. Most of them also don't blatantly steal from their firm. Regime change in governments happens much slowly.
  - paragraft 7y ago
    I've thought about this for different reasons lately and concluded that companies that operate internally as a market would be vulnerable to second system syndrome, ie just becoming a poor imitation of the actual market. You could argue that some (rare) companies that act like markets are those with a safe income stream that insulate them from financial pressures enough to create a market of a second sort. The only sort I can think of is any sort of market of ideas where employees are reasonably free to invest their time as they see fit. Something like Google's 20% time (at least in the old days when that was apparently still a thing) or Valve, where they say the reason desks are on wheels is so you can move to join the team you think is doing the most important work. Whether that's how it works out is another matter...
  - magicsmoke 7y ago
    It might be an issue of scale. Centralized control allows for faster decision making and exploitation of opportunity that outweighs inefficient resource allocation when you're a small organization, but once you get to a certain scale it's simply not feasible to make all the decisions at the top due to how opaque the view from the top becomes. Once you get to the largest of multinational companies, they try to mimic the competition in a market economy by using metrics to allocating more resources to profitable divisions. That might also explain why centralized command was so common throughout history. The political entities of the past were much smaller than today and could be centrally organized, but they competed against their neighbors for resources in a regional market. It's only in the past 2 centuries that political entities have become large enough to encompass entire markets within themselves and have had to step back and let the market do the large scale economic allocation that they've become too large to do effectively.

Ididntdothis 7y ago

Don't forget that a company internally is run like a Soviet Style planned economy. 5 year plans, no way for people on the ground to adjust plans, inflexible leadership. I could also mention things like total disconnect between communication from leadership and reality or motivational posters. It's all there. It's not surprising they create similar behaviors.

vkou 7y ago
And yet, all of these companies that run like command economies have collectively out-competed all the companies that run like market economies. We know this, because the latter... Don't really exist. No company of any note operates like one. Does that imply that command economies are actually more efficient than market ones?
- p_l 7y ago
  The problem of command economies aren't related to being command economies, they tend to be related to communications. A market is a form of communication, with various forces that are supposed to balance themselves. Many of them actually outside of market (the supposed anti-monopoly aspect heavily depends on externalities preventing concentration, like slow travel/shipping, non trade barriers, etc.)
- Ididntdothis 7y ago
  "Does that imply that command economies are actually more efficient than market ones?" I think it's probably similar to politics. A well-run dictatorship can do better than a democracy but usually dictatorships deteriorate after a while.
  - vkou 7y ago
    I think it has to do with leadership. Corporate leaders get sacked by the board rather quickly if they completely screw up. Most of them also don't blatantly steal from their firm. Regime change in governments happens much slowly.
- paragraft 7y ago
  I've thought about this for different reasons lately and concluded that companies that operate internally as a market would be vulnerable to second system syndrome, ie just becoming a poor imitation of the actual market. You could argue that some (rare) companies that act like markets are those with a safe income stream that insulate them from financial pressures enough to create a market of a second sort. The only sort I can think of is any sort of market of ideas where employees are reasonably free to invest their time as they see fit. Something like Google's 20% time (at least in the old days when that was apparently still a thing) or Valve, where they say the reason desks are on wheels is so you can move to join the team you think is doing the most important work. Whether that's how it works out is another matter...
- magicsmoke 7y ago
  It might be an issue of scale. Centralized control allows for faster decision making and exploitation of opportunity that outweighs inefficient resource allocation when you're a small organization, but once you get to a certain scale it's simply not feasible to make all the decisions at the top due to how opaque the view from the top becomes. Once you get to the largest of multinational companies, they try to mimic the competition in a market economy by using metrics to allocating more resources to profitable divisions. That might also explain why centralized command was so common throughout history. The political entities of the past were much smaller than today and could be centrally organized, but they competed against their neighbors for resources in a regional market. It's only in the past 2 centuries that political entities have become large enough to encompass entire markets within themselves and have had to step back and let the market do the large scale economic allocation that they've become too large to do effectively.