It has been ages since I have have gone on a rampage concerning the beancounter-ization of the private sector. One cannot blame Obama (or Bush or Clinton, Reagan et al), the political parties, or even the Supreme Court or laws.
This diatribe was triggered by a recent John Mauldin Outside the Box – The Financialization of the Economy. Memories of my past life came flooding back which I left after 25 years to go out to sea. The reason was simply that the end product became secondary to revenue. The boardroom discussions had started discussing monetary matters first – and at the beginning of my career they began with technical discussions of product. The bean counting MBA’s had taken control of the company, and only had a layman’s understanding of the product. This situation is common throughout most of corporate world.
Without product, there is no revenue.
There is a balance between product and revenue. Corporations for a large part have become radically profit-centric which results in short term gains but tends to destabilize long term corporate viability. However, under few circumstances, it is unlikely that any company with a single product will survive long term. All products have a cycle:
The beginning stage – A product is conceived, developed, and brought to market. Sales are likely low. However expenses will be high due to r&d, testing, funding and other costs necessary to bring the product to market. In a new company with little to lose, whatever funds exist are leveraged to get the job done. In a mature company – costs are controlled, and it usually is cheaper for a mature company to buy a new company to acquire a new product. Cost control works against product development.
revenue Stage – The company starts to benefit from economies of scale in production. This is where the benefits of cost control start become apparent – and laymen beancounters running product management can be more successful (sometimes much more successful) than the developers of the product.
Leave A Comment