Of shareholder profits, leveraged buyouts and “crapification”…

Two recent articles caught my eye and relating to what I call the STEM conundrum.  In a country that has been wringing their hands over a supposed STEM crisis, we find that Facebook – perhaps the ultimate employer of a geeks in the US is switching its focus from development to acquiring sales staff!

Apparently, the innovation curve has maxed out.  The blue sea market that they started has turned red with copycats. So it’s out with the geeks! In with marketeers!  What begins as something unique  becomes humdrum rather quickly In a world that values marketeers over innovation. This should come as no surprise.  Perhaps it’s the ultimate triumph of form over substance which then trends downhill towards mediocrity.

It seems an appropriate paradigm for what is happening in our country right now.  If you can’t win on the merits,  simply try to eat your competition by using the bigger megaphone.  Rather than developing new antibiotics, it’s far easier to just stretch patents out for a thousand years.  Rather than inventing a better mousetrap, you manipulate the market to ensure you are the only game in town.  (Remember Microsoft and their “bundling” issues in the 90s?)  Rather than innovating new green technology that wouldn’t warm the planet, the powers that be make sure  that  thee new disruptive technologies can’t gain a toehold.  We prefer to market the same old stuff repackaged as something “new” for the gullible public.

Ives Smith referred to this recently as “the crapification of just about everything”.  Listing a long line of consumer products that have steadily gone downhill since the 1970s, it’s hard to ignore the obvious. The article is an interesting read as is the comment thread about how products have gone downhill.   Looking back to youth in the 80s, it is true that so many products have spiraled downhill in terms of quality.  I found the comments about clothing and mattresses particularly compelling. I recently was in the market for a new mattress. In spite of careful research, I  bought one that  turned out to be a piece of crap….expensive crap.

The emphasis of this article by Smith is how a  “sea change” occurred in the 1980s away from building a great product to a focus on cutting costs and maximizing profit.   This coincided with the emergence of corporate raiders who took over established companies with no intention of improving the consumer experience.  It  became all about maximizing gains  per unit and giving the shareholders what they wanted – massive profits – often at the expense of quality. Here is a quote from the post that pretty  much sums things up:

 (There) was a shift away from businesses focusing primarily on good old fashioned success in the marketplace (via matching product quality/price attributes versus customers needs, improving manufacturing processes, looking for new product/technology opportunities, etc) to focusing much more on financial results as the key determinant of success. That orientation arose as raiders, later rebranded as leveraged buyout firms, and now private equity, took over companies, sold unproductive assets, piled on debt, and pushed hard to wring out costs…the pressure to reduce costs soon moved into areas that involved manufacturing and product quality. Companies began subtly, and then more overtly, lowering product quality and running on brand fumes.”

But how does this translate into “excellence”?  The answer is that it doesn’t.  How does this translate into innovation/invention? With the possible exception of finding new ways to make a product cheaper without the public noticing, it doesn’t.  In fact, there is little or no room for breaking new ground, or anything truly unique.  Even disruptive technology has been relegated to making production cheaper.  That’s not the exciting stuff that will drive us into the 21st century economy.  That’s the stuff upon which rests the foundation of many a third world nation.  This is the ultimate race to the bottom.  Its a recipe for a train wreck where the needs of the paying public have been completely subjugated to the bottom line of shareholders.

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