12 ms·

I liken this to a sesame seed bun manufacturer. After some experimentation, they realize that shaving roughly 10 sesame seeds from each bun means they save one

I liken this to a sesame seed bun manufacturer. After some experimentation, they realize that shaving roughly 10 sesame seeds from each bun means they save one cent every 100 buns. They continue to sell the buns at the normal price and consumers are none the wiser: After all, who's going to notice 10 sesame seeds missing? But the sesame seed bun manufacturer continues the experiment. They continue to remove the seeds, making small savings each time, until eventually: they just start selling buns with no sesame seeds. The bun sells for the same price as the seeded one. But the core value prop has been lost due to greed. Exactly what's happening here at Google.

twelfthnight 3y ago
This is actually a real thing. I worked at a consulting company partnered with McDonald's and they asked if we could help them optimize the number of sesame seeds on their burger buns.
- skippyboxedhero 3y ago
  Also raises the question: why does an executive need a consulting company to tell them to put less seeds on the bun? We can accept that "optimize" does not mean more...so...?
  - s1artibartfast 3y ago
    The question makes perfect sense to me. I don't know the ideal number of seeds on a bun off hand, and don't expect the executive does either. Do you know it?
    - skippyboxedhero 3y ago
      Why would me knowing it matter? So shareholders are paying for the exec, and they are paying for the consultant who is doing the exec's job? If you work as an exec at MCD, working this out is the kind of thing that you should know. It is the reason why you are being paid money to be there.
      - s1artibartfast 3y ago
        The exec does know how to work it out: You hire a consultant to give you an answer. The job of the executive isn't to know the answer to every question. Their job is to make sure questions get answered. There are an infinite number of ways you can do this and hiring a consultant is a valid option.
        skippyboxedhero 3y ago
        As I said, the job is not to know the answer to the question but to work out how. If you are hiring someone from the outside, you are outsourcing basic functions. If his job is as simple as hiring consultants, why do you need to pay someone $1m+/year to hire a consultant. Just hire a guy on $10k/year who tells you to hire a consultant. It isn't a valid option. This is one of the reasons why most corporations are poorly managed (right now, I would guess that there are maybe 10 CEOs of US listed companies who will go down as great CEOs...that is being optimistic, almost every CEO is paid like they are a star). Their "thinking" is outsourced to someone hiring a bunch of grads with no experience, that is what consultants are...it is like advertising, churn and burn grads. A key part of making better decisions is taking those decisions yourself and learning from the outcomes. But the way things happen now, all of the experience is gone and it is just a revolving treadmill of people who move through jobs too quickly to ever see the result of what they did or take responsibility for it. Hiring consultants is an indication that the company lacks executives with the capacity to perform their function correctly (unfortunately, this is the case at most companies now).
        s1artibartfast 3y ago
        I think you're starting from the conclusion you want CEO is bad and reverse engineering a justification along with making up supporting facts. I hire consultants and outsource activities all the time. It isn't all I do but a key part of it. There's no chance you'd find someone to do my job for 10K a year. There is no chance I would want to hire dozens of employees each time I have a rare off question. Your example and position make no sense: hiring an outside group is always wrong and hiring inside team is always right. I don't learn anything different either way. You call it a basic function, but what if I wont want to indefinitely keep a team on staff to answer seed questions?
  - fbdab103 3y ago
    I think consulting company could just mean someone to do market research. Produce buns with 200, 100, 50 seeds and do consumer surveys. Find that sweet spot before people start doubting the value proposition. Edit: Any idiot can build a burger that people like, but it takes an engineer to build a burger that is just tolerable.
  - toomuchtodo 3y ago
    Because if they're wrong, it's the consulting company's fault, not the executive's. It is accountability laundering with a budget.
    - skippyboxedhero 3y ago
      Yes, I asked the question facetiously...I worked in equity research for consumer products companies, and you see this (alarmingly) at good and bad companies. "We did X, it went very badly...don't worry, we have fired the consultant who was responsible"...the question you want to ask (but cannot) is then: why I am paying the salary for the monkey, not the organ-grinder? The worst part is that I have seen this at companies that are doing well, you just have to accept the fact that you are getting pickpocketed by a bunch of idiots who control the money printer.
      - toomuchtodo 3y ago
        The sarcasm did not come through, my apologies!
        skippyboxedhero 3y ago
        It wasn't sarcasm, it was just being humorous...and, indeed, I have replies saying how ridiculous it is to expect executives to be able to run a company. The sarcasm wouldn't have been detected because the reality is that this kind of thinking has become embedded in US corporate culture: reward with no responsibility.
    - s1artibartfast 3y ago
      I don't think that's true at all. If you're a shareholder you're not happy with an exact that gets wrong answers. If that's why the answer is wrong, having paid a consultant is still a better answer than we didn't try and simply guessed.
- fbdab103 3y ago
  Now I wish I could see a timelapse segment of McDonald's burgers over the years to watch the progressive loss of sesame seeds. Similarly, I believe Oreos have been optimized to death. A current Double Stuff is actually smaller than the original regular Stuff.
archsurface 3y ago
Shrinkflation.
crazygringo 3y ago
That analogy doesn't hold up. Because if consumers genuinely don't notice the sesame seeds are gone, that means they never cared in the first place, and this is a better outcome for everyone. Why were farmers growing useless sesame seeds in the first place? Now they can switch to blueberries or whatever and the world is better off. It's kind of like, thank god those nasty canned olive slices finally disappeared from salads. Also, the company can't get away with raised prices because those buns are still next to regular buns from other companies, and consumers will buy the cheapest one. (Or if inflation is happening, everybody's raising prices, but that has nothing to do with sesame seeds.) On the other hand, if consumers are actively seeking out sesame seed buns, there is absolutely a point at which they notice and say, what the hell, this brand hardly has any sesame seeds, I'm going to buy the competing brand that still has a normal amount of sesame seeds. The company sees sales are plummeting, and they quickly add back seeds until people are buying them again. But there is an optimal number of sesame seeds here. It makes no sense to double the sesame seeds when consumers don't care. The idea that a company can keep removing something consumers want to pay for, but they won't notice, just doesn't exist in the real world. In the real world, either consumers do want to pay for it and sales will suffer, or it turns out consumers don't actually want to pay for it and the company gives consumers a simplified product that is still subject to market price competition like every other product, and everybody is better off for it.
- enumjorge 3y ago
  This is such a Hackernews comment. > The idea that a company can keep removing something consumers want to pay for, but they won't notice, just doesn't exist in the real world. Have you heard of shrinkflation?
  - crazygringo 3y ago
    ...And yours is such a Hacker News response? I don't know why you're even saying that. But yes, everybody's heard of shrinkflation, so I don't know what your point is. When inflation is happening or product-specific input costs are increasing, companies can either raise prices or shrink quantities. They have to do one or the other if they want to stay in business. Consumers are well aware of what's happening. Everybody knows a Haagen Dazs "pint" isn't a pint anymore. But shrinkflation isn't bad and it isn't hidden. If someone doesn't want to pay more than $5 for a container of ice cream, then keeping the price $5 but reducing the quantity is better meeting consumer demand, than keeping the size but upping the price to $6. It's the better tradeoff. In fact, shrinkflation is a perfect example of my argument -- 10 oz bags of potato chips haven't shrunk down to 1 oz. It happens in a narrow band, just like the number of sesame seeds might. Things don't shrink down until they just disappear, unless consumers want them to.
thomastjeffery 3y ago
I never understood the desire for sesame seeds in the first place. To me, they only add an annoying texture. I would probably pay more for a bun without them, given the opportunity. I think that's a pretty good illustration of how cost and value do not naturally align to each other. If a business can find a significant divergence between cost and value, it can take advantage of that gap by calling it profit.

twelfthnight 3y ago

This is actually a real thing. I worked at a consulting company partnered with McDonald's and they asked if we could help them optimize the number of sesame seeds on their burger buns.

skippyboxedhero 3y ago
Also raises the question: why does an executive need a consulting company to tell them to put less seeds on the bun? We can accept that "optimize" does not mean more...so...?
- s1artibartfast 3y ago
  The question makes perfect sense to me. I don't know the ideal number of seeds on a bun off hand, and don't expect the executive does either. Do you know it?
  - skippyboxedhero 3y ago
    Why would me knowing it matter? So shareholders are paying for the exec, and they are paying for the consultant who is doing the exec's job? If you work as an exec at MCD, working this out is the kind of thing that you should know. It is the reason why you are being paid money to be there.
    - s1artibartfast 3y ago
      The exec does know how to work it out: You hire a consultant to give you an answer. The job of the executive isn't to know the answer to every question. Their job is to make sure questions get answered. There are an infinite number of ways you can do this and hiring a consultant is a valid option.
      - skippyboxedhero 3y ago
        As I said, the job is not to know the answer to the question but to work out how. If you are hiring someone from the outside, you are outsourcing basic functions. If his job is as simple as hiring consultants, why do you need to pay someone $1m+/year to hire a consultant. Just hire a guy on $10k/year who tells you to hire a consultant. It isn't a valid option. This is one of the reasons why most corporations are poorly managed (right now, I would guess that there are maybe 10 CEOs of US listed companies who will go down as great CEOs...that is being optimistic, almost every CEO is paid like they are a star). Their "thinking" is outsourced to someone hiring a bunch of grads with no experience, that is what consultants are...it is like advertising, churn and burn grads. A key part of making better decisions is taking those decisions yourself and learning from the outcomes. But the way things happen now, all of the experience is gone and it is just a revolving treadmill of people who move through jobs too quickly to ever see the result of what they did or take responsibility for it. Hiring consultants is an indication that the company lacks executives with the capacity to perform their function correctly (unfortunately, this is the case at most companies now).
        s1artibartfast 3y ago
        I think you're starting from the conclusion you want CEO is bad and reverse engineering a justification along with making up supporting facts. I hire consultants and outsource activities all the time. It isn't all I do but a key part of it. There's no chance you'd find someone to do my job for 10K a year. There is no chance I would want to hire dozens of employees each time I have a rare off question. Your example and position make no sense: hiring an outside group is always wrong and hiring inside team is always right. I don't learn anything different either way. You call it a basic function, but what if I wont want to indefinitely keep a team on staff to answer seed questions?
- fbdab103 3y ago
  I think consulting company could just mean someone to do market research. Produce buns with 200, 100, 50 seeds and do consumer surveys. Find that sweet spot before people start doubting the value proposition. Edit: Any idiot can build a burger that people like, but it takes an engineer to build a burger that is just tolerable.
- toomuchtodo 3y ago
  Because if they're wrong, it's the consulting company's fault, not the executive's. It is accountability laundering with a budget.
  - skippyboxedhero 3y ago
    Yes, I asked the question facetiously...I worked in equity research for consumer products companies, and you see this (alarmingly) at good and bad companies. "We did X, it went very badly...don't worry, we have fired the consultant who was responsible"...the question you want to ask (but cannot) is then: why I am paying the salary for the monkey, not the organ-grinder? The worst part is that I have seen this at companies that are doing well, you just have to accept the fact that you are getting pickpocketed by a bunch of idiots who control the money printer.
    - toomuchtodo 3y ago
      The sarcasm did not come through, my apologies!
      - skippyboxedhero 3y ago
        It wasn't sarcasm, it was just being humorous...and, indeed, I have replies saying how ridiculous it is to expect executives to be able to run a company. The sarcasm wouldn't have been detected because the reality is that this kind of thinking has become embedded in US corporate culture: reward with no responsibility.
  - s1artibartfast 3y ago
    I don't think that's true at all. If you're a shareholder you're not happy with an exact that gets wrong answers. If that's why the answer is wrong, having paid a consultant is still a better answer than we didn't try and simply guessed.
fbdab103 3y ago
Now I wish I could see a timelapse segment of McDonald's burgers over the years to watch the progressive loss of sesame seeds. Similarly, I believe Oreos have been optimized to death. A current Double Stuff is actually smaller than the original regular Stuff.

archsurface 3y ago

Shrinkflation.

crazygringo 3y ago

That analogy doesn't hold up. Because if consumers genuinely don't notice the sesame seeds are gone, that means they never cared in the first place, and this is a better outcome for everyone. Why were farmers growing useless sesame seeds in the first place? Now they can switch to blueberries or whatever and the world is better off. It's kind of like, thank god those nasty canned olive slices finally disappeared from salads. Also, the company can't get away with raised prices because those buns are still next to regular buns from other companies, and consumers will buy the cheapest one. (Or if inflation is happening, everybody's raising prices, but that has nothing to do with sesame seeds.) On the other hand, if consumers are actively seeking out sesame seed buns, there is absolutely a point at which they notice and say, what the hell, this brand hardly has any sesame seeds, I'm going to buy the competing brand that still has a normal amount of sesame seeds. The company sees sales are plummeting, and they quickly add back seeds until people are buying them again. But there is an optimal number of sesame seeds here. It makes no sense to double the sesame seeds when consumers don't care. The idea that a company can keep removing something consumers want to pay for, but they won't notice, just doesn't exist in the real world. In the real world, either consumers do want to pay for it and sales will suffer, or it turns out consumers don't actually want to pay for it and the company gives consumers a simplified product that is still subject to market price competition like every other product, and everybody is better off for it.

enumjorge 3y ago
This is such a Hackernews comment. > The idea that a company can keep removing something consumers want to pay for, but they won't notice, just doesn't exist in the real world. Have you heard of shrinkflation?
- crazygringo 3y ago
  ...And yours is such a Hacker News response? I don't know why you're even saying that. But yes, everybody's heard of shrinkflation, so I don't know what your point is. When inflation is happening or product-specific input costs are increasing, companies can either raise prices or shrink quantities. They have to do one or the other if they want to stay in business. Consumers are well aware of what's happening. Everybody knows a Haagen Dazs "pint" isn't a pint anymore. But shrinkflation isn't bad and it isn't hidden. If someone doesn't want to pay more than $5 for a container of ice cream, then keeping the price $5 but reducing the quantity is better meeting consumer demand, than keeping the size but upping the price to $6. It's the better tradeoff. In fact, shrinkflation is a perfect example of my argument -- 10 oz bags of potato chips haven't shrunk down to 1 oz. It happens in a narrow band, just like the number of sesame seeds might. Things don't shrink down until they just disappear, unless consumers want them to.

thomastjeffery 3y ago

I never understood the desire for sesame seeds in the first place. To me, they only add an annoying texture. I would probably pay more for a bun without them, given the opportunity. I think that's a pretty good illustration of how cost and value do not naturally align to each other. If a business can find a significant divergence between cost and value, it can take advantage of that gap by calling it profit.