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The Forum > Article Comments > Why smart firms should experiment > Comments

Why smart firms should experiment : Comments

By Andrew Leigh, published 12/1/2010

From fruit farms to travel agencies, experiments represent a powerful challenge to business as usual.

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Applying science to management is an excellent idea, but it inevitably clashes with cultural factors.
The system TQM was developed in the US but was not taken up widely because it involved empowering workers and making management accountable. In the corrupt world of mediocre middle management and boys clubs, this idea is very threatening!
The current consultant industry makes most of it's profits from "bums on seats". Because of this there is a very strong profit motive to bulk up projects with staff. This causes projects to run slower and involve more communication/coordination costs, so still more staff are hired. 9 women cannot have a baby in 1 month; Similarly putting too many people on a task makes it go no faster, but it does add to confusion and extend the revenue.
Lots of "good practice" spouted by consultants are actually profit maximising strategies...not "good" for the customer at all!
In a society that thinks it is OK for the boys-club of company directors to be paid $Millions a year for showing up to meetings, whilst paramedics, nurses, teachers, etc. struggle to earn enough to own a is clear that our "Leaders" would kill off any competence based reward system.
The parasites make the rules, because they have all the gold.
Ideally companies beset by parasites should die...however most of them have arranged for a government lifeline so that even completely deranged businesses (Macquarie...) can continue to make "profits" from paper manipulation. All this while our future wealth industries are starved of funds.
I honestly believe a generational shift is required before we can recover from the cultural nightmare of Profiteers.
Posted by Ozandy, Tuesday, 12 January 2010 11:50:41 AM
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I often ask myself why I find articles like this so offensive.

Usually they are written by someone with no direct experience of business. The result is a bunch of random observations that have value only in the incestuous halls of academe, or in the columns of journals in need of some pseudo-intellectual spack-filler.

It is a pattern. An art-form honed to shiny pointlessness by the "management gurus" of the eighties.

The bones of this particular article are simultaneously facile and meaningless.

The forced comparisons - "neighbouring farms go about business as usual, the owners of this establishment see each season as a chance to run experiments" - are pure embellishment.

And this one:

"To see how radical this approach is, imagine how the typical firm would have approached the same problem. Step one: hire a team of well-dressed management consultants. Step two: pay six-figure bill. Step three: hold nose and implement recommendations."

Typical, mein tuches.

True, there are firms out there who employ consultants for tasks such as this. But the author's description is pure straw-man.

Mr. Leigh, there are thousands of firms out there who, of absolute necessity, experiment every day, week and year of their business lives. Few can afford anything but their own resources to do so, and deserve far more than patronizing pats-on-the-head from a (presumably) tenured, government-grant-fed resource such as yourself.

Making a three-act drama out of "thinking about your business" merely shows how far from the coal-face your self-promotion requirements have taken you.

But I may be doing you an injustice.

"Economist Steven Levitt gives the example of his work with a direct-marketing travel service, which experimented with randomly changing prices on its mailings, and found that demand barely fell when it raised prices. Not surprisingly, the company now charges considerably more than it did in the past."

Maybe you are yourself experimenting with your product.

Experimenting with randomly-assembled info-gobbets, designed to discover how demand from gullible editors barely falls so long as you meet the required word-count.

This article is compelling evidence that you could charge what you like.
Posted by Pericles, Tuesday, 12 January 2010 1:12:31 PM
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One of the first things learnt in management is that different structures and procedutes fit different products and sizes of company.

As no two work places are the same, it pays to try new things, However, it pays to see whether something similar has been implemented successfully in a similar environment first, and small changes are usually more successful.

For example TQM if fully implemented comes with huge labour overhead, which is expensive and difficult for small firms. If the principles are followed, a trimmed down version can benefit even the smallest firm. The success of the implementation will entirely hinge on whether the manager knows exactly what he is trying to achieve, and how the change will improve things.
Posted by Shadow Minister, Wednesday, 13 January 2010 11:30:00 AM
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