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Just picking a passage from the top of the article: > There's a vague plausibility to that kind of statement, which is why it's a debate I've often heard come

by ephbit 5y ago

Just picking a passage from the top of the article: > There's a vague plausibility to that kind of statement, which is why it's a debate I've often heard come up in casual conversation, where one person will point out some obvious company inefficiency or product error and someone else will respond that, if it's so obvious, someone at the company would have fixed the issue or another company would've come along and won based on being more efficient or better. --- This sounds like the question whether the market mechanism that ought to remove grave inefficiencies is actually working because there appear to be many examples where it looks like it's not. My explanation for why the market actually works and we can _still_ see those inefficiencies: Complexity. The reason why - even though the mechanism of the market making efficiency a necessity (to not be replaced) is working correctly - we often see inefficiency, is that a complex world enables niches for inefficient unnecessary complexities to exist, where they can consume resources without being easy to remove. The more complex the environment, the higher the number of possible/existing additional overhead and inefficiencies.

snarf21 5y ago
I think complexity is definitely part of it but it is also mis-aligned incentives. The person running an assembly line has a vested interest in changing nothing. Everyone knows how it works and consistency sometimes is more important than raw efficiency. If they change something and if breaks the machine or they have a month of lower productivity, they don't get a promotion and/or bonus. Why would they risk it? Plus, people generally hate change. You actually have to have someone whose job it is to look for inefficiencies. Someone who goes and talks to everyone on the line because they are the ones that really know. Someone who also recognizes that a 5% improvement in one area may not be worth the risk but a 1% improvement somewhere else may be. Just like staff scheduling: do you schedule the bare minimum of staff? What happens when 3 people next to each other all get the flu? Now where are you? Are you better off normally over-staffed and constantly cross-training? Most companies make money despite their operations. This is where Amazon has taken over the world, they have that as a core goal and corporate focus.
- ephbit 5y ago
  > I think complexity is definitely part of it but it is also mis-aligned incentives. The person running an assembly line has a vested interest in changing nothing. Is this really a case of mis-aligned incentives though? The person running the assembly line has an interest in the business model of the company not being destroyed, because their salary depends upon it working. So they'll try to prevent the worst (to the business model) from happening. Risking to break some important production process for a lousy low percentage potential gain in efficiency sure doesn't seem to be in the interest of neither the individual person, nor the company, nor the customer. As you write: the risks and benefits need to be carefully weighed perpetually .. simply an ongoing optimisation.

by ephbit 5y ago

snarf21 5y ago

I think complexity is definitely part of it but it is also mis-aligned incentives. The person running an assembly line has a vested interest in changing nothing. Everyone knows how it works and consistency sometimes is more important than raw efficiency. If they change something and if breaks the machine or they have a month of lower productivity, they don't get a promotion and/or bonus. Why would they risk it? Plus, people generally hate change. You actually have to have someone whose job it is to look for inefficiencies. Someone who goes and talks to everyone on the line because they are the ones that really know. Someone who also recognizes that a 5% improvement in one area may not be worth the risk but a 1% improvement somewhere else may be. Just like staff scheduling: do you schedule the bare minimum of staff? What happens when 3 people next to each other all get the flu? Now where are you? Are you better off normally over-staffed and constantly cross-training? Most companies make money despite their operations. This is where Amazon has taken over the world, they have that as a core goal and corporate focus.

ephbit 5y ago
> I think complexity is definitely part of it but it is also mis-aligned incentives. The person running an assembly line has a vested interest in changing nothing. Is this really a case of mis-aligned incentives though? The person running the assembly line has an interest in the business model of the company not being destroyed, because their salary depends upon it working. So they'll try to prevent the worst (to the business model) from happening. Risking to break some important production process for a lousy low percentage potential gain in efficiency sure doesn't seem to be in the interest of neither the individual person, nor the company, nor the customer. As you write: the risks and benefits need to be carefully weighed perpetually .. simply an ongoing optimisation.