Diatribes: It’s the Economies, Stupid

By Anthony J. Lockwood

... The economy tanked. The sales department got intoa kafuffle because of sales lost to a minor competitor. The boss determined thatthe other guys were underpricing their stuff. The industry’s talking heads saythat your product is demonstrably better. Still, potential buyers say that theother nurf’s price is too good to pass up.

So, your company matches the cheapo rate, rationalizing it as capturing marketshare to rake in some money. It then repeats this process with one client afteranother until it discovers it’s hemorrhaging money.

This is a catalyst to swift action: Marketing is slashed and the guys with 20years’ experience are dis-employed. A recent college graduate, at one-third thepay, replaces the silverbacks. Nice kid. Shows promise. Makes pretty pictureswith Pro/E. None are workable designs. The kid knows nothing about the art ofengineering yet; the company got rid of the guys who knew how to engineer. Butmoney is saved, right?

Well, sure, but the company is not making any money. So, management gets ridof everyone in marketing, except for some kid right out of college. Nice kid.Shows promise. Never wrote a press release in her life, knows nothing of manufacturing,and has never developed a marketing campaign.

So, the company is still losing dinero, only more quickly than it was. To savemoney, all your clients got rid of their experienced buyers, replacing them withkids right out of college, none of whom ever heard of your company. You get notrade press coverage because your marketing person dutifully sends press releasesto the local papers and posts them on the company’s website.

Since sales underwent its human capital reduction regimen, your half-staffedefforts are always a day behind your competitors. Who, incidentally, have befriendedall those new buyers and have helpfully defined your product and company for thosekids.

So, outsourcing becomes the magic bullet. But first, they dump all the remaininghands-on guys and unhire most everyone else. You and Design Dude are retained,even though you just go to meetings to yack about the same thing you yacked aboutat the last meeting. A low-cost outfit overseas gets the contract to manufactureWonder Boy’s second-rate designs.

The guys overseas provide OK product for a while. Then, the owner’s cousin’srelative’s subsidiary starts OEM-ing an improved version. Its first major clientis your main competitor, which, incidentally, has hired your former engineersto fix the design. Meanwhile, management discovers that enforcing internationalpatent laws is like getting a shave from Hannibal Lecter. So, it opens up a jointchecking account with a lawyer.

“What’s up with this?” laments the boss. “How did this happen?”

Don’t you just want to reply: “It’s the economies, stupid”?

Thanks, Pal. —Lockwood
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