Unintended Consequences, Part 2

Now let’s consider a few unintended consequences in business. Keeping unintended consequences from being whoppers can be the very thing that keeps your business alive—especially in times like these.

Not Recognizing the Value of Trained, Experienced Workers

When funding for the Apollo space program ended and new funds for the Shuttle had not been allocated yet, NASA let go of a lot of people. They believed they could rehire most of those people when new funding came in. Putting specialized facilities on ice is not as easy and cheap as it sounds, so I suppose trimming costs by releasing personnel appeared sensible at the time.

By the time Shuttle funding came in, those people were settled in new jobs that generally paid better. NASA had to replace them with newcomers–like me, soon after university. I could go from a student budget to maybe half of what I would make in private industry and be delighted about being part of the ground team behind the first Shuttle flight. Bouncing from the space program to a higher salary in private industry and back down the pay scale again was not so appealing to the experienced space hands who had been let go.

NASA strove not to do that again during the gap between Shuttle development and the start of Space Station funding.

Many organizations don’t learn this lesson from watching someone else. They’ve got to repeat it themselves. In more than one instance these decisions by my clients jeopardized multi-million dollar revenue sources.

The lesson doesn’t sink in until something very bad springs from the decision. It has to be bad enough to force the executive suite to think business instead of just think spreadsheet.

The current trend to emphasize numbers and quarterly reports makes managing by the numbers seem like the safer course for an executive’s career, so that’s what they do. Only people like Warren Buffett have the nerve to say doing sound business with a long term view is more important than quarterly reports.

Standardizing Too Much

Too often, I have seen a client standardize on a single commercial package for a particular mission critical purpose in the business. This is supposed to reduce IT costs and leverage human resources, since all systems for that purpose in the company will run the same way.

Standardizing on a list of about three packages from different vendors allows a business to rein in rampant divergence that makes IT too complicated to maintain cost effectively. But as soon as it narrows to just one, the chosen vendor recognizes that as a license to commit abuse, and might do so.

Replacing a mission critical system is expensive and disruptive. Rather than face a project that daunting, the client sticks with the vendor even if annual fees become stratospheric, customer service becomes dismal, upgrades introduce new bugs, or whatever else the vendor chooses to do. The business no longer gets what it is paying for and, as times change, lumbers along with a package that has not changed in the same direction the market wants the business to go.

I have at least three clients in that situation right now. For one of them, when a system the factory relies upon began to corrupt itself, for four months the vendor’s customer support would only say it couldn’t possibly be corrupting itself. Then when it became so bad that the system melted down, the vendor refused to lift a finger unless the client paid a quarter of a million first. (My client did not pay the ransom. Under my direction, the client’s IT staff, a former employee of mine, and I built a replacement for the highly customized system in half the time it normally takes to load a plain vanilla version of the vendor’s software.)

The same vendor was chosen by another of my clients, and has continued to collect handsome support payments every year despite simply dropping all effort to resolve a long punch list several years ago. I could cite similar examples involving other sole source vendors. To be fair, there are some vendors who don’t take a sole-source situation as a license to behave so badly. But for some reason businesses–even some that have a reputation for thoroughness–often do a terrible job of checking on that before giving a vendor sole source status.

Standardizing on the wrong vendor can be deadly. Unfortunately, it’s commonplace.

Pride Goeth Before a Fall

In the 1970s, the Germans and Japanese were regarded as the world’s master builders of supertankers. A large USA based oil company decided to build the largest American flag, American designed supertanker. As a matter of pride, the company also decided all the design, engineering and construction would be done by Americans. They explicitly decided not to find out how the Japanese or Germans did it.

A partial list of what they missed:

• The ship was built with no laundry room. As an afterthought, a commercial washer and dryer ended upon a metal grate midway up the engine room.
• The pipes topside were mounted on the deck instead of six feet above the deck where the Japanese and Germans put theirs. As a result, crewmen could not see each other and exchange hand signals to coordinate work on both sides of the deck. Also, the ship had to carry two Butterworth machines for cleaning tanks, since there was no way to move a single machine from one side of the ship to the other.
• The ship was fitted with state of the art electronic systems for nearly everything, but no cooling was provided for electronics in the engine room. In tropical regions, an engine room can get so hot that crewmen need to wear leather gloves to touch anything without burning their hands. The engine room crew spent most of its time replacing burned-out electronic components.
• Pumps were installed backwards. During the maiden voyage, a team of specialists had to be helicoptered to the tanker and worked around the clock to correct the installation so the ship would be able to load and unload properly by the time it reached its first port of call.

It is perilously common for businesses to believe they have nothing to learn from anywhere else, or for an industry to believe it can only get the work it wants from people whose experience is in their industry–not some other industry.

One Last Note

Unexpected consequences are inevitable. They cannot be completely prevented. But some people are better than others at thinking things through to anticipate consequences. In IT, those are the people who devise software that is exceptionally good at coping when something does not behave as expected, or tests that are exceptionally good at putting software through every situation imaginable instead of only what the designers intended.

If someone like that tells you that a business decision you are about to make will come back to bite you, pay attention. You might not like what they say, but keeping the unintended consequences from being whoppers can be the very thing that keeps your business alive–especially in times like these.