Thursday, December 10, 2009

Give Me Cake (A personal rant on business, ethics and technology)

First some humor - the first person has their cell implanted in finger, second in nose and the third is receiving a fax - care to guess where it is coming out?

Seems like the past few days I have been sharing my thoughts on prorated fees for data both land line and cell based. Instead of various sentences explaining my position figured it would be good to put most of my thoughts in a single place.

The simple version is I do not think it is ethical or right for me to pay for someone else’s mistakes. When a company leader or leadership team decides to pay themselves and their staff large bonuses instead of investing in infrastructure due to poor planning and then complain because the consumers did what was requested and punish them for listening and doing only what they were asked it is wrong. Further when a company is loosing money executives do not deserve any bonuses period – how can you reward someone for poor performance or when a company reduces work force artificially or cooks the books. If we want to keep the same structure in place with little changes then instead of basing on quarterly or yearly do so on a weighted 3 year performance so that strategy is required. However I think factors such as customer satisfaction (rating on meeting of real and implied customer expectations and service) should factor into compensation as well as the performance of all departments with at least a third based on customer service and a minority based on meeting your own personal objectives.

Long version using analogy. I equate exploitation to strip mining or to plowing a field using a crop that you know will after 1 or 2 seasons leave the soil infertile. Sure you can do it and it is your choice but it is not wise because sue the cash crop will get you $3-4/unit for two seasons but does it not make more sense to run crops that will consistently ensure you get a $2/unit over 10-15 years while allowing you in off seasons to use that same soil to grow other items which will also allow you some gain say another $2-3/unit and leave the nutrients in place and with proper planning albeit more work allow a longer effective yield of about $4-5/unit. Or look at it this way – you can rob a bank and provided you do not get caught get away with say $200K one time but you cannot spend the money and must launder it say for 20-40% so you make say $120-160K and when that money is gone if you did not invest you have to rob another bank and home you are not caught and in the process of taking money from others you did not in fact earn you harm the bank customers or you kill some people – get where I am going? Yet, you start a sound business or you get a nice paying job – you are making say $20-30K/yr – 10 years = $200 - 300K providing a service and risking no potential harm or loss of life.

So lets move on to the sell of bandwidth. My question is why has more money been invested in the equivalent of hub technology – shared bandwidth. Example – 100 GB and 50 users = max worst case 2 GB/user instead of switch (more efficient) so 100 GB and 50 users = 100 GB/user. Any here is how I explain what has been done in the industry overall but I will use cakes as an example of my opinion of the pay for more bandwidth scenario:

  • XYZ Cake Company - Buy our new flavor of cake it is great and has all of these layer of icing – you will really enjoy and it will dazzle your taste buts and improve your live – is you are diabetic – no worries there either we have a formulation that is sugar free
  • Consumer – that sounds great I will get on
  • XYZ Cake Company – great – do think any of your family members want one
  • Consumer – sure - want two (2) more for them?
  • XYZ Cake Company – Happy to hear that here you go
  • Consumer – Thank you and takes cakes home and presents cakes to family. Family members take a bite of their own cakes and there is a knock on the door
  • XYZ Cake Company – For each bite of the cake here is the cost/bite
  • Consumer – but I already paid for the cake and the container to carry it and now you are telling me I have to pay for each bite I take
  • XYZ Cake Company – that is correct – in the past we thought the cost of the cake covered the materials and the extra we charged for the container to take it home in covered our expenses but we realized demand for the cakes was so great we were loosing money because we did not anticipate demand and our manufacturing plants and the container maker cannot keep up so we are charging you for each bite of the cake to generate money to cover our poor planning
  • Consumer – you are joking right – this cannot be right
  • XYZ Cake Company – see the fine print on the contract you signed – we can assure you it is perfectly legal – further – we see you are using you own silverware and napkins – that is unacceptable – you must use our (here is the cost) or you will not be able to eat the cake and should for what ever reason you find a problem since you were not using our items we can not nothing to make matters right by you.

Here is the question – would you buy a cake from a company who sold them like that?

So what are your thoughts want to know your opinions

Disclaimer - this post in is strictly my personal opinion and posted in part because I personally believe I or my partners in my new venture could do a better job of running most companies while assuring that they are both sustainable and profitable with a focus on innovation leading to profit instead of profit in and of itself. No company is identified and the only one's mentioned are done so for humor or to explain and differentiate the technology used.

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