Great article on how focusing solely on financial efficiencies is one of the reasons our economy is broken. A couple of related items I'd add to Frank's thesis here are the short-term-itis of Corporate America and the financialization of the American economy.
In addition to min-maxing and putting every financial metric on a spreadsheet, modern Corporate Executives no longer live in a long-term planning/investment mindset - they are infected by short-term-itis. Wall Street quarterly earnings partially force executives to "manage their financials" to meet short-term earnings reports that are usually more focus on stock-buybacks, CEO-options targetets/etc and less focused on long-term planning for a company's success. Same goes for the constant drumbeat of layoffs, outsourcing, mergers & acquisitions, constant exec turnaround that Frank mentions, etc.. Having worked in Corporate America for 30+ years I saw these trends get worse and worse - execs could not care less about their employees or their customers because they have short-term blinders on.
I got an MBA back in the day where we studied legendary Management professor Peter Drucker. Drucker used to say "if you take care of your employees, they will take care of your customers." It's really that simple. Unfortunately most of the brokenness of our current hyper-capitalist economy is due to CEOs who have little regard for their customers and even less regard or interest in their employees. The Costco hot-dog example Frank brings up is instructive; Costco has so many more examples of their excellent business model - they actually pay their employees well and take care of them with good benefits (which is why so many Costco employees' name badges show "Employee since 2004, 2010, etc-show me another retailer with that kind of employee tenure!).
Sorry long post but Frank is spot on here- we need to reform hyper-capitalism and bring back capitalism.
Thanks, great response! I agree with almost all of it. In fact, I think that kind of short-term thinking is part of the kind of metric following I'm talking about. They think their job is maximize the charts for the next quarter instead of trying to be excellent at what they do.
I think this idea plays out very much even in highly personal decisions. The recent issue with CompSci grads not being able to get jobs, for example. Lots of people ran to CS (who really had no business in CS) because the math said “CS degree = good job after graduation”. Many of these newly unemployed graduates would have been unironically better served with middling degrees in business or at least something they’re passionate in.
There is a large slice of PE that is predicated on the min-max principle. Yes, without question they destroy companies, wreck careers, and generally have absolutely no idea what they are doing. Min-max is an excuse to feast off the carcass of dying companies.
Other PE is avoiding the enforced min-max of being a public company. Make something great and hire MBAs to make sure it turns into garbage ti satisfy the market.
The way forward now is to destroy industries to end competition by selling under cost using VC money and then destroying the product when the competition goes away. Min-max is the method used to justify failing and then declaring victory.
Is efficiency good? Yes it is. Is making a profit by charging less than competitors good? Yes it is.
Is engaging in market manipulation good? No, it is not. Is enshitification of products good? No it’s not.
The later is the preferred method of capitalism right now. Is it any wonder people are lose confidence in it?
Excellent essay which motivated me to subscribe to your substack. You describe something I have observed along with a feeling of uneasiness that we are strangling all the joy out of products and experiences in the name of profit. The notion that we can cut our way to profit is endemic. There is a place for that approach where bloat and lax management have allowed inefficiencies to creep in. Delivering profit through growth is harder. It requires risk taking, investment up front before return, dialing into people’s desire for that moment of delight that stays with them, and worth the price. Deliver that with a smile and people will flock to your product. I’ve been to Cracker Barrel, and while it’s not my thing, it made me smile as I browsed the too crowded shop, looked at the non essential Knick knacks. I may have bought a ruffled kitchen magnet, because why not for 6.99. It sits in my junk drawer and I recall that time I stopped there on the way to Sea world with my kids. This same principals applies to many things. Let’s bring back the heart and soul of the products and services that drove the engine of growth.
This made me weep. I wish everyone in the country could read this. You have given a name to the horrible ennui I experience now. Very very sad. I hope America will turn things around.
This is right on, but it vastly underestimates the problem—as if only business and our economy were suffering its effects. What you call “min-maxing” is “technique,” the mania of efficiency that’s baked into our whole technological society. (cf Jacques Ellul’s The Technological Society). It’s got a life of its own now, and to sustain itself it doesn’t care how much life it sucks out of all things.
I completely agree, I think this is a really underrated component of the populist anger out there. I loathe the blind drive for efficiency and profits at all costs. It’s leaching all the particularity out of everything and making every place like everywhere else. It’s like a plague of mediocrity.
I encountered the term “premium mediocre” a few years ago and have never stopped thinking about it since - that one and Enshittification, which is what a lot of min maxing entails doing in practice, and is something you can feel happening in real time to almost everything around you all the time. It’s maddening and horrible, like being trapped in a restaurant that used to be nice but is slowly turning into an airport lounge where they charge you to charge your phone, the drinks cost $20 an ounce, and (and this is the most critical part) where your flight never actually boards.
This is a good take on this that I hadn’t thought of before … I do live in Cracker Barrel country and what I love about it the most is it reminds me of my mom. The store, the Knick knacks, the old timey decor.
I’m a CPA and a spreadsheet and numbers person obviously… I know that marketing is so not my forte. Sounds like the wrong kinds of people are making these decisions … you gotta know what you don’t know and stay in your lane
Great article on how focusing solely on financial efficiencies is one of the reasons our economy is broken. A couple of related items I'd add to Frank's thesis here are the short-term-itis of Corporate America and the financialization of the American economy.
In addition to min-maxing and putting every financial metric on a spreadsheet, modern Corporate Executives no longer live in a long-term planning/investment mindset - they are infected by short-term-itis. Wall Street quarterly earnings partially force executives to "manage their financials" to meet short-term earnings reports that are usually more focus on stock-buybacks, CEO-options targetets/etc and less focused on long-term planning for a company's success. Same goes for the constant drumbeat of layoffs, outsourcing, mergers & acquisitions, constant exec turnaround that Frank mentions, etc.. Having worked in Corporate America for 30+ years I saw these trends get worse and worse - execs could not care less about their employees or their customers because they have short-term blinders on.
I got an MBA back in the day where we studied legendary Management professor Peter Drucker. Drucker used to say "if you take care of your employees, they will take care of your customers." It's really that simple. Unfortunately most of the brokenness of our current hyper-capitalist economy is due to CEOs who have little regard for their customers and even less regard or interest in their employees. The Costco hot-dog example Frank brings up is instructive; Costco has so many more examples of their excellent business model - they actually pay their employees well and take care of them with good benefits (which is why so many Costco employees' name badges show "Employee since 2004, 2010, etc-show me another retailer with that kind of employee tenure!).
Sorry long post but Frank is spot on here- we need to reform hyper-capitalism and bring back capitalism.
Thanks, great response! I agree with almost all of it. In fact, I think that kind of short-term thinking is part of the kind of metric following I'm talking about. They think their job is maximize the charts for the next quarter instead of trying to be excellent at what they do.
I think this idea plays out very much even in highly personal decisions. The recent issue with CompSci grads not being able to get jobs, for example. Lots of people ran to CS (who really had no business in CS) because the math said “CS degree = good job after graduation”. Many of these newly unemployed graduates would have been unironically better served with middling degrees in business or at least something they’re passionate in.
There is a large slice of PE that is predicated on the min-max principle. Yes, without question they destroy companies, wreck careers, and generally have absolutely no idea what they are doing. Min-max is an excuse to feast off the carcass of dying companies.
Other PE is avoiding the enforced min-max of being a public company. Make something great and hire MBAs to make sure it turns into garbage ti satisfy the market.
The way forward now is to destroy industries to end competition by selling under cost using VC money and then destroying the product when the competition goes away. Min-max is the method used to justify failing and then declaring victory.
Is efficiency good? Yes it is. Is making a profit by charging less than competitors good? Yes it is.
Is engaging in market manipulation good? No, it is not. Is enshitification of products good? No it’s not.
The later is the preferred method of capitalism right now. Is it any wonder people are lose confidence in it?
Agreed!
Excellent essay which motivated me to subscribe to your substack. You describe something I have observed along with a feeling of uneasiness that we are strangling all the joy out of products and experiences in the name of profit. The notion that we can cut our way to profit is endemic. There is a place for that approach where bloat and lax management have allowed inefficiencies to creep in. Delivering profit through growth is harder. It requires risk taking, investment up front before return, dialing into people’s desire for that moment of delight that stays with them, and worth the price. Deliver that with a smile and people will flock to your product. I’ve been to Cracker Barrel, and while it’s not my thing, it made me smile as I browsed the too crowded shop, looked at the non essential Knick knacks. I may have bought a ruffled kitchen magnet, because why not for 6.99. It sits in my junk drawer and I recall that time I stopped there on the way to Sea world with my kids. This same principals applies to many things. Let’s bring back the heart and soul of the products and services that drove the engine of growth.
Thank you Deborah! I really appreciate it.
This made me weep. I wish everyone in the country could read this. You have given a name to the horrible ennui I experience now. Very very sad. I hope America will turn things around.
Is the new logo woke? To me it's just a bland corporate logo. It doesn't have a trans flag in it, or anything like that.
This is right on, but it vastly underestimates the problem—as if only business and our economy were suffering its effects. What you call “min-maxing” is “technique,” the mania of efficiency that’s baked into our whole technological society. (cf Jacques Ellul’s The Technological Society). It’s got a life of its own now, and to sustain itself it doesn’t care how much life it sucks out of all things.
Completely agree.
Great essay.
I completely agree, I think this is a really underrated component of the populist anger out there. I loathe the blind drive for efficiency and profits at all costs. It’s leaching all the particularity out of everything and making every place like everywhere else. It’s like a plague of mediocrity.
I encountered the term “premium mediocre” a few years ago and have never stopped thinking about it since - that one and Enshittification, which is what a lot of min maxing entails doing in practice, and is something you can feel happening in real time to almost everything around you all the time. It’s maddening and horrible, like being trapped in a restaurant that used to be nice but is slowly turning into an airport lounge where they charge you to charge your phone, the drinks cost $20 an ounce, and (and this is the most critical part) where your flight never actually boards.
https://www.ribbonfarm.com/2017/08/17/the-premium-mediocre-life-of-maya-millennial/
https://en.m.wikipedia.org/wiki/Enshittification
This is a good take on this that I hadn’t thought of before … I do live in Cracker Barrel country and what I love about it the most is it reminds me of my mom. The store, the Knick knacks, the old timey decor.
I’m a CPA and a spreadsheet and numbers person obviously… I know that marketing is so not my forte. Sounds like the wrong kinds of people are making these decisions … you gotta know what you don’t know and stay in your lane