Supply Creates its Own Demand

One sign that the overall economy is improving is that completely asinine business proposals are starting to bubble up again.  It's not as prevalent as it was during the dot-com boom of the late 1990s, but it does seem to be resurging, and I'm getting nibbles for "exciting ground-floor opportunities" that are very bad ideas for untenable services, particularly in the mobile channel.   In one such instance, a recruiter responded to my disinterest by insisting "Somebody's going to buy this.  It's a basic economic principle that supply creates its own demand."

The problem is, I've read a bit of economics, and am familiar with that phrase: "supply creates its own demand" is a attributed to Jean-Baptiste Say, an eighteenth-century French economist - and while the phrase is entirely pertinent to the situation of a firm with an untenable proposal, it's not meaningful in quite the way that people who misuse the phrase seem to think.

Say used this phrase in defense of laissez-faire capitalism, arguing against the proposition that a regulatory agency should prevent entrepreneurs from pursuing frivolous ideas that are wasteful of financial resources.   His counterpoint was not that any product that is manufactured can be sold, but that the process of manufacturing a product created economic activity equal to its value -  the producer pays his workers and his suppliers (who in turn pay their workers and suppliers) - such that even if the product is completely unsellable, the producer has still generated valid economic activity (particularly the employment of labor) that has provided income to others who will spend it less frivolously.

That is to say that an entreprenuer who pursues a ridiculous and fruitless scheme ultimately wastes only his own fortune in doing so, and brings the loss upon himself for his own foolishness.   In the sense of the economic efficiency of a market, I can't find reason to disagree with that assertion - but in the sense of reputation, it is not entirely correct.

Anyone involved with an ill-conceived venture takes damage to his reputation for having chosen to be involved in it.   A candidate whose experience reflects a string of misguided failures (Flooz, WebVan, eToys, Kozmo, Pets.com, Friendster, and the like) is likely to have a hard time finding employment with a reputable firm, and rightly so: he has clearly made very poor career choices, to the degree that his intelligence and judgment are not to be relied upon.

So in the economic sense, the money that was spent chasing bad ideas is still in circulation and found its way into the pockets of people who would spend it with better discretion, bankrupting only those who were less that circumspect in investing in it.    But the time, effort, and expertise that went into realizing a foolish plan are gone forever - and it's incumbent upon prospective employees, as the owners of that time and expertise, to make better judgments about how it is applied.

Granted, there are ulterior motives to signing on with a doomed company - an unemployed person who must tend to the needs of his family can't be too choosy about where he gets a paycheck.  It's also fair to say that even a good company has a shocking number of very foolish projects, and if an employee were to flee every time he's called in to lend a hand to giving birth to an executive's deformed brain-child (or even, in some instances, even to remark that the idea is ill conceived), he would likely change jobs several times a year.  Such are the trade-offs we must make in this life. But at the same time, I don't expect that the worst-case scenario applies to every case, and it is more often the case that career decisions are not made in a desperate situation.

But to the original point, "supply creates its own demand" does not mean that any product that anyone cares to produce will find a customer base to return his investment and generate a profit.   It means that the act of creating something (even if it be useless) generates demand for labor and supplies and does negligible damage to the economy.   However, individual fortunes will be lost and individual reputations will be damaged  - and while to former may be restored with some difficulty, the latter is often an irrevocable loss.   This should not be blithely ignored.

Shovelware and Shiny New Things

It's said that the point of studying history is so that we can learn from the mistakes of the past so that we can avoid making them again - and the tragedy is that we never seem to do so. We merely acknowledge, with distressing nonchalance, that we made the same mistake a second time (or a third, or a fourth, etc.) after we've already taken action.

Case in point: I was listening to a colleague vent about how his employer was presently attempting to recreate its entire Web presence on the iPad. To his way of thinking, it was "shiny new thing" syndrome - the executives were distracted by the tablet device and shifted significant budget to pursue it ... by cutting the budget to the smartphone development initiatives, which only a few years prior was funded by cutting budget to their Web site initiatives.

Each time, the abrupt change in focus left work half-completed in the previous channel, and work in the new channel-of-obsession was done in a hectic and sloppy manner. The repetition had him discouraged, and unable to commit himself wholeheartedly to his new projects because it seemed inevitable that, a year or two in the future, there would be a new platform (the iWatch or somesuch) for which his present work would be abandoned.

This took me back to 1994, a time when the Internet was relatively new to business, and their immediate reaction was to stop doing print and re-create all of their existing print documents online. As a result, many Web sites were a jumble of disorganized information, shoveled from archives of print documents that were written at different times, for different purposes, and for different audiences - and clients completely ignored the nature and potential of the new medium.

Perhaps I shouldn't complain too much, as it was the start of a fairly decent career when one savvy executive recognized the problem and reached outside the IT industry to get someone with a communications background to help make sense of it all - but one of the most frustrating aspects of my work from that day to this has been fighting against the shovelware mentality and the gormless enthusiasm for shiny new things.

No-one seems to have recognized that the mistake that is made when there's a heated rush to adopt a new channel and shovel over the content and functionality of older ones without regard to the nature, capabilities, and usage patterns of the channel. Or worse, they do recognize it, but issue the order to "just get something out there" and fix it later. But later, some other distraction comes along and the work that was done in a sloppy, heated rush is left that way indefinitely. Or worse still, the sloppy work that was done in other channels sets a precedent - it becomes a standard way of doing things that should be imitated in new channels for the sake of providing a consistent customer experience. Consistently awful, but consistent nonetheless.

I'm feeling far too pessimistic at the moment to propose a solution to the problem. Perhaps anyone with a long enough memory can use the example of the past to suggest we avoid, rather than repeat, the shovelware mistake in future. Or given the shorter span of time between platforms these days, perhaps it doesn't take so long of a memory to provide an example.

The point being that when the Internet came along in 1993 (or more accurately, that's when it went commercial and opened itself to the general public), there was not much in the way of a precedent. I think it was around the fifth century when books came to replace scrolls and tablets, and the originals probably were little more than collections of parchment and papyrus scrolls, cut apart and bound together without regard to whether the collection made much sense.

It took centuries to get books right, and decades to get the Web sorted out (if, indeed, it could be deemed "sorted" even today), and new media are bubbling up at such a frantic pace that it remains likely that decision-makers will latch on to them compulsively for a short amount of time, adopting them with reckless lust and abandoning them prematurely.

Historically speaking, it's a great time to be working in this industry if you enjoy fiddling around with shiny new things ... not so much if you care about doing things well.

Reputation Management

The idea of reputation management is getting a great deal of attention, and in what I've read on the subject, I notice that something is completely lacking: that the best way to ensure you have a good reputation is to earn it.

The majority of interest seems to be focused on cleaning up the public image of a firm that have egregiously mistreated their customers or their employees. Not only have they treated people poorly, but they intend to keep treating them poorly. They are motivated merely to suppress any evidence of their behavior so they can carry on with business as usual.

Firms claim to be the innocent party, wrongfully attacked by individuals who seek to do them harm, or victims of a smear campaign. Such claims lack credibility: while there are people who delight in being malicious, and others in the traditional media who profit well by doing so, they must be handed an opportunity to do so - people don't look for things to complain about, but delight in complaining about the things that actually happen to them - to vent their frustration, and to (justly) provide a warning to others.

In instances where a firm accepts responsibility for its actions, it gains credibility. There is no firm, and no person, that has never made a misstep - but many that have never admitted or acknowledged the errors they have made. Customers, by and large, are willing to overlook a single negative review in a queue of positive ones in forming their overall impression - in fact, a string of reviews that are universally positive lacks credibility at all and has about it the stink of a carefully orchestrated cover-up.

However, a firm that has an occasional misstep isn't concerned about reputation management - though it may monitor negative comments, it is more in the nature of identifying a problem that needs to be corrected. This requires not public response on the part of the firm, only introspection as to whether the comment reflects a need for change.

Moreover, any negative comment is seen in the context of many more positive ones, and a firm that treats customers or employees well can expect them to come to its defense when it is "attacked" by a person whose experience was negative, and these rebuttals hold more weight than any comment the firm or its paid spokesmen might make in response. In that way, the reputation of a good firm will mend itself, without any action on its own part.

The firm that takes a great deal of interest in reputation management is the one who has a poor reputation - which is to say the one that has earned a poor reputation - and is primarily interested in suppressing the comment rather than addressing the problem. These are the firms that delete comments that reflect poorly upon them, or feel the need to post an immediate reaction on their own, fearing (or perhaps knowing) that no-one will come to their defense.

In all, I think that specializing in reputation management is a career option I'd prefer to avoid: while there is increasing interest in the topic, and a correspondingly increasing demand for individuals who are skilled at it, I don't think it's a line of work I'd care to be in: it would lead me to work for a string of ill-reputed firms that merely want to do damage control rather than address the problem and restore the reputation of their firms in the proper way.