1/06/2014

#34 The Rat's Rules: #1 (2000)

All Rights Reserved © 2000 Thomas W. Day

For the last twenty-five years, I've gathered a collection of business rules based on observations I've made whilst trapped in the business world. I used to give those rules random numbers, to make it seem like I have more than one or two of them (the same way some people start a new checking account). Not anymore. I'm going to expose, to the world, just how little I've learned in my dreary little career. So here goes:

The Rat's Eye Business Rule #1: No business is more than necessarily smarter than its customers.

This is a rule of efficiency, in my opinion. When a company is a lot smarter than its customers, resources are wasted. Brainpower and possible technology, for instance.

For example, a company that could be designing user-hostile WYSIWYG operating systems, is wasting time and money porting a me-too, de-featured version of Basic to dozens of godawful personal computers and remedial operating systems. In a perfect business world, this sort of new wave, mid-tech, ambitious little company ought to make an alliance with a really big, really dumb mainframe computer company and concentrate on building software that will make millions of people miserable, instead of just a few thousand nerdy programmer types. That's a hypothetical example, of course.

At the other end of the spectrum, a company that isn't as smart as its customers isn't going to build products that those customers will respect. Worse, if that company is based on an originally good idea, but can't competently execute it, someone will. If the company is really dumb, someone will do a great knockoff almost instantly.

For instance, once there was a really big, dumb computer company that made huge, slow, hard to program computers and software. They accidentally hired and promoted a not-dumb executive who saw a future where very small companies and individuals would have applications for cheap, small, reasonably powerful computers. He drug the big, dumb company (kicking and screaming) into his vision and they did their usual mediocre job of cobbling up the first system they offered to the world. But it was a great idea and that stimulated about every reasonably intelligent computer engineer and techno-executive to reconsider the application for what became "personal computers."

"Big Dumb," we'll call them, flourished for a few years and then has floundered ever since in, what became, a new world of high tech, intense competition, high profile for computer companies. Big Dumb abandoned the twelve loyal (and dumber than most) customers they'd held onto and went back to building large, slow, hard to program computers for the Fortune 500 companies who are not as bright as the PC crowd. In other words, Big Dumb managed to survive because they bowed to the Rat's Rule #1, they moved down the intellectual scale until they found their natural customers.

Another example of this rule was apparent in the 'ole Military Industrial complex. These guys had an unearned reputation for excellence that still sticks in the most terminally brain-dead technological backwoods. In the late 1980's, some of these giant industrial sloths saw the writing on the wall. That brand of rich man's welfare was coming to an end. They made feeble attempts to move their companies away from building products that needed entire battalions of repair techs and millions of dollars of cost-overrunning re-engineering to produce $3,000 toilet seat lids into the hot new world of high tech consumer products.

They failed in every attempt they made. From CAD systems to industrial controls to communications satellites, these foolish executives and their big, dumb companies ended up downsizing so fast they practically killed Southern California's economy. The state still hasn't regained its standard of living, after twenty years of leaching the life out of the other 49 states during their golden corporate welfare years.

What they discovered would have been obvious to anyone interested in doing the research: the military is a dumb customer and, in comparison, consumers are infinitely smarter (it's a divide by zero thing). People who have no vested interest in buying a functioning product don't spend their money carefully. People who are spending their own, hard-earned money on something they intend to use tend to pay attention to little things like reliability, ergonomics, function, and cost.

You can find examples of this rule everywhere you look. Doctors aren't nearly as interested in effective medical procedures and products as are patients. Government is considerably less competent in managing money as taxpayers. And so it goes.

Remember, you heard it hear first: The Rat's Rule #1.

February 2000

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