No Credentials Needed

In previous posts I have often noted that I attempt to stay away from political topics in this space, partly because none of my degrees are in any relevant discipline, but also because I find it impossible to believe that anyone needs another political blog. I have also pointed out that no matter how extreme my personal beliefs should happen to become, the diligent reader should still be able to find dozens (if not millions) of bloggers who completely agree with me, completely disagree with everything I believe, or any possible gradation in between. It is only when a political position or legislative action will have a specific impact on business that it comes into my purview, and even then I try to remain within the areas of analysis in which I have the proper credentials. However, this week’s legislative lunacy in the state of Mississippi requires no training beyond that which any pre-teen already has…

If you would like to, you can access the Washington Post article about the situation, which also contains the link to the exact language of the legislation. If I’m reading it correctly, however, this new law would allow any business in the state of Mississippi to refuse service to anyone whom the owners have a “sincerely held” religious belief against serving. While very clearly aimed at the LGBT community, there’s nothing here that would prevent someone from refusing service to Jews, Muslims, Buddhists, Hindus, Atheists, Agnostics, Democrats, Liberals, Native Americans, persons of African ancestry, persons of Asian ancestry, persons of Hispanic, Latino or Chicano ancestry, doctors, lawyers, teachers, soldiers, community organizers, or clog dancers – provided that they had a “sincerely held” belief that serving those individuals was somehow forbidden by their religion…

Personally, I can’t help wondering what would happen if someone were to declare that serving racists, sexists, ultra-nationalists or bigots of any description was against their religion. But even if we leave the obvious logical disconnect out of it, this legislation still makes no sense for at least two reasons that have nothing to do with political ideology. On the one hand, refusing service to anyone on the basis of what demographic group they fall into is a direct violation of the First Rule of Business: When somebody comes to you and says “Hello, I would like to give you money now,” you say, “YES!” No one is asking you to love all of your neighbors and accept them as your brothers and sisters – although if you’re a Christian that’s exactly what your faith is asking you to do – they’re just asking you to do business with them to your mutual benefit…

On the other hand, passing this kind of law will offend many other potential business partners, the vast majority of whom will not have any direct connection to the group or groups of people whom you hate. The fact is, simple pig-ignorant bigotry is bad for business, and being associated with a city or state that condones such bigotry is, if possible, even worse. We’ve seen examples of that recently, with North Carolina’s extraordinary restroom legislation leading to the loss of hundreds of jobs and millions of dollars added to the local economy, and the NCAA threatening to pull out of Indianapolis. None of those previous cases was quite as blatant as this one, however, and the fact that Mississippi is already widely regarded as the poorest and most backward of all of the states is definitely not going to help. Unless something changes soon, any remaining chance the state had of attracting either new businesses or additional tourism is going to evaporate…

Now, I don’t mean to suggest that forward planning is a particularly easy job. I have made my living that way on several occasions, and trying to anticipate all of the factors that can improve or erode performance in advance can be extremely complex, let alone trying to predict the eventual success or failure of an enterprise. But when the action you are considering is so flawed that an ordinary ten-year-old can explain several important reasons why you shouldn’t do it, then it’s probably time to hire someone else to do your forward planning – or at least explain to you why choosing religious ideology (or outright bigotry) over profit is a bad idea…

Worse Than I Thought

Some years ago, when the Uber service first launched, I wrote in this space that while I couldn’t speculate on the eventual profitability of the company, the concept was something with which I personally would not want to get involved. On the passenger side, the company’s business model did not include any effective way for them to guarantee that you wouldn’t randomly get a ride from a serial killer, whereas on the driver’s side, the service seemed tailor-made for carjackers. Experience over the years since has proven my point on a number of dimensions, ranging from disputed claims of violence and abuse (from both parties) to the Uber driver who went on a shooting spree two years ago, but that hasn’t kept millions of people from driving for the company, and millions of others to paying for a ride. The company’s market value is now estimated as being in the $70 billion range, with new services being announced all the time…

Unfortunately, it would appear that working conditions for the full-time Uber drivers are actually worse than I suggested they might be. According to a story from the Bloomberg site, it has become increasingly common for drivers to work for up to eighteen hours in a day, and then sleep in their cars for a few hours before repeating the schedule. In some cases the drivers will pay for a motel room or a bunk at a hostel, but for large number of them this isn’t financially possible. It would seem that most large cities, where there is enough traffic to make driving for Uber full-time possible in the first place, the typical driver isn’t making enough to pay for living expenses. Accordingly, the drivers will live somewhere less expensive and commute to the city, where they will stay for days at a time, driving until they can’t stay awake anymore and then sleeping in their back seat…

I’d feel better about this story, and about bringing it to you in this blog, if I had more specifics about how many people are involved in the practices described, but there is no reliable information available. Since the drivers are considered independent contractors, not employees, the company knows almost nothing about them apart from their actual working hours, and since sleeping in your car in a public place is illegal in many cities, it’s unlikely that the drivers would respond to a survey even if somebody did one. The fact that there are places in several major cities where the drivers gather for mutual protection while the sleep, and that the Bloomberg reporters were able to find such locations in San Francisco, Chicago and New York (among others), suggests that there may actually be something to this story, however…

Now, I don’t mean to accuse the company of wrongdoing. Nobody forced these people to drive for Uber in the first place, much less quit their day jobs and attempt to drive full time. And as some of the drivers interviewed for the story indicated, there are people who actually enjoy this lifestyle, sleeping in their cars and all. It is possible that the classification as contractors, rather than employees, is making things worse for the drivers, and there are still allegations that the company has misrepresented the earnings potential for drivers. None of this changes my original point, however, which was that the entire experience sounds worse than any of the jobs I’ve ever had – and let’s remember that at least one previous gig of mine included cleaning the Incontinent Supplies aisle whenever the janitor called in sick…

I’ve often commented in this space that if laws are ever passed to outlaw making money off of the greedy, credulous, or stupid people in our society, the economy will probably collapse. But even assuming that’s true, it seems unfortunate to have to add the naïve, unprepared and optimistic to that list…

The Ethics of the Commons

For almost two centuries, the economic theory known as the Tragedy of the Commons has been used to explain the negative consequences of a completely self-serving standard of behavior on the community at large. The term derives from the idea that if individual townspeople were to use up all of the grass available on the commonly-held pastures there would not be anything left for their neighbors to use for grazing, and therefore the long-term interests of the entire community would be better served by sharing and conserving those resources. A more modern example would be the collapse of the North Atlantic fisheries due to over-fishing, which has decimated an entire industry in the American Northeast. But in recent times this concept has become increasingly obscure, given that it runs counter to most of the common strategies of a Free Market economy, where everyone is assumed to be trying to maximize their own short-term profits at the expense of all competitors. Given some of the recent developments in both the political and economic conditions in this country, and several others around the world, it seemed time we took a closer look at the concept…

In its simplest form, the Tragedy of the Commons argument seems almost self-evident. If we completely use up a resource, common or otherwise, we will not be able to use it in the future. If other groups are also dependent on that resource, then consuming it to the point of destruction will harm not only our future prospects but those of everyone else in the community or industry. Unfortunately, things in an interconnected global marketplace are rarely that simple anymore, and we have begun to encounter versions of the problem where millions or tens of millions of users are attempting to make maximum use of a shared resource. To take a familiar example, if one tourist removes one ounce of rock from Yosemite National Park, this would be trivial, but if each of the four million people who visit the park each year were to remove one ounce each, that would be 250,000 pounds or 125 tons. And since the vast majority of the visitors stay in Yosemite Valley, that would mean 125 tons of rock per year being removed from an area less than seven miles square…

We could also consider examples where failure to take action by large numbers of people can have massive cumulative effects, such as the case of when during a closely-contested election individual voters decide to write in a candidate, or vote for a third-party candidate without any broad public support. Each of those individual voters may believe that his or her specific vote will not make any difference in an election where tens of millions of people will be casting ballots, and to some extent this might be true, but when thousands or millions of people all take up such a belief, the cumulative effect frequently does change the outcome – and sometimes the course of history…

The real problem, at least from a business standpoint, is that it isn’t always clear when a given resource is going to be exhausted, or even how many other firms are depending on it. And, as managers, we have a fiduciary responsibility to our shareholders and a moral responsibility to our employees and the other stakeholders to maintain a profitable company. Of course we’re not going to intentionally wipe out a non-renewable resource just to gain a momentary advantage, but bankrupting the company and all of the people who depend on it in order to meet a conservation goal that may or may not even be necessary does not make sense either.

All of which leads me to the question: At what point does our potential responsibility to our industry, our society, our species, or our planet supersede our responsibility to our employers, whoever and whatever they happen to be? Clearly, we cannot in reason expect to behave as if ours was the only company in the world, just as we would never behave as if we were the only people in the world. But at what point does the risk of destroying something much larger than ourselves override the need to do our jobs?

It’s worth thinking about…

Defense Spending Follow-up

Some years ago I brought you the curious case of a low-cost close-support aircraft that the Textron Company was developing for use by the Air Force. What make the story, and the airplane it describes, so unique was that no one in any of the Armed Services or either house of Congress had asked for such a thing. Given the enormous cost of designing and flying even the prototype for a new military aircraft, it has become increasingly uncommon for anyone to risk developing one on spec. Even more peculiar, though, was the fact that the next Textron product, now tentatively called the Scorpion, isn’t fast, sleek or pointy, and does not introduce any brand-new gee-whiz wonder technology – setting apart from everything the Department of Defense (DoD) has been interested in for the past few decades. But then, that’s kind of the point…

According to the story this week on the Business Insider website, the Air Force has finally agreed to run some tests with the Scorpion prototype and see it they can find a role for it in their upcoming doctrine. There’s no indication that they intend to give up any existing aircraft or support units, but it seems like the idea of having something in inventory that can perform some of these basic, low-prestige missions at less than a quarter of the cost per flight-hour is starting to catch on. How much of that policy shift is the direct result of the development and teething issues with the F-35 program is not mentioned in the article, and may not be clear even to General Goldfein, the Air Force Chief of Staff, who is apparently now in favor of the trials for this airplane…

The possible change in policy appears to be at least partly the responsibility of Senator John McCain, who recently released a policy statement about future defense spending. That the Chairman of the Armed Services Committee would be in favor of increased defense spending should not come as a surprise to anyone who has been paying attention, but McCain’s new policy statement contains a surprising amount of support for low-intensity and non-traditional systems, such as unmanned vehicles and low-cost combat support units like the Scorpion. This is encouraging, in the sense that it isn’t more of the same warmed-over thinking we’ve been seeing from the DoD since the 1960s. The problem is that it’s an increase, not a reallocation, and that would mean spending more money we don’t have…

In his policy paper, Mr. McCain makes the point that the outgoing administration lowered discretionary spending for each of the past eight years, which greatly curtailed the amount of funding available for the Department of Defense to spend on untried weapon systems. It also left some of our more Hawkish lawmakers and their uniformed allies in the unenviable position of having to fight for funding to maintain aircraft that can’t fly in the rain, can’t fly in the dark, can’t fly above or below certain temperatures, can’t fly at all, or in extreme cases, that asphyxiate their pilots during their flights. Even granting that we need programs like the F-35, the F-22 and the Osprey, and we might, there remains the issue that the United States is only staying out of bankruptcy by borrowing money every year, some of which is coming from countries that aren’t particularly friendly…

Regular readers of this space (assuming there are any) will recall that I have been in favor of increased defense spending in the past, provided that the new acquisitions offer greater value for the money than existing systems. This is why, for example, I have objected to aspects of the F-35 program, and the development of supersonic aircraft into ground-attack platforms while trying to get rid of the highly-effective A-10 Thunderbolt II attack plane. In this particular case, I do believe in the Scorpion program, for its capabilities as much as for its lower operating costs. I’m also in favor of the program in job-creation terms, assuming that Textron is willing to keep most of the airplane’s production units in the U.S. But in a time when this country’s infrastructure, healthcare, education, and human services needs are all dramatically underfunded, I’m not convinced that maintaining all of our current pork-barrel spending while purchasing cost-efficient new systems is the right answer…

You’re Not Helping

I think it’s probably fair to say that things have been a bit weirder than usual around here since the last Presidential election, and given how weird life in these United States has gotten to be in this 21^st Century, that’s really going some. Life in this country is always a bit confusing right after a change in administrations, and this one is stranger than usual. A lot of things that “everyone knew” could never happen just did, and with the arrival of a “post-factual” society it’s getting harder every day to tell what is real, what might be real even though it makes no bloody sense, and what is just people acting out something they saw in a Saturday Night Live sketch. And while it seems unlikely that tomorrow will see either flights of angels with trumpets soaring over Washington D.C. or the entire city dropping straight into the Pit, some of the things people and organizations around the world are doing to celebrate the event aren’t making things any more believable…

Consider, for example, the story about a Russian company minting commemorative coins, in silver or gold, that bear the likeness of our President-Elect on one side and the legend “In Trump We Trust” on the other side. You can pick up the story from the CBS News page if you’d like, but so far it looks as if this one is correct. A Russian company called the Art-Grani Metal Works is striking a small series of 45 commemoratives, each supposedly about five inches in diameter and weighing about two pounds, although that should vary depending on the base metal. In addition to the aforementioned Trump portrait, the other side of each coin looks very much like the one on the back of the U.S. Presidential dollar coins, although carrying a different motto, of course. How much these “coins” will sell for, or rather if they will sell for more than the price of the metal, remains to be seen…

Now, we should probably acknowledge that this is a publicity stunt, almost certainly aimed at a Russian audience, rather than us. Even assuming that the company was making a large number of these coins, it’s difficult to imagine that there are that many people anywhere who would want to spend over $38,560 for a commemorative coin bearing the likeness of a U.S. president, no matter how controversial he or she happened to be. Even the silver coins would be a bit of a stretch at $545.92. But more to the point, perhaps, there are private companies all over the world, many of which actually have the word “mint” in their name, who produce gold and silver commemoratives featuring all manner of images of people and places all the time. The only reason this one is drawing attention on the Internet, instead of being relegated to the inside cover of a dead-tree magazine, is the momentary notoriety of its subject matter…

If the past 240 years are any indication, it seems probable that the new administration will be rather less wonderful than its supporters would have you believe, and possibly even slightly less horrible than its opponents are forecasting. If we are all very lucky, sometime in the very near future this whole passage will be left to the historians to figure out, and the rest of us can get back to trying to figure out what is fact, what is fiction, and what is something that somebody just pulled out of their hat. But on behalf of a generally confused American electorate, I can honestly say to the Art-Grani people, and all of the other companies like them, you’re not helping matters…

The Other Bernie

In the movies, and in most other narrative art forms, once the bad guy is convicted and sent to jail that’s usually the end of the story. Occasionally there will be a follow-up or a coda that talks about the character’s experiences in prison, but for the most part there isn’t a lot to say about sitting in a small room with bars on the windows for fifty years without the possibility of parole. But sometimes the conviction and jail sentence is the beginning of the story, or more correctly the end of one story and the start of a new adventure. As such, I really wasn’t all that surprised to find our old friend Bernie Madoff back in the news…

You can take a look at the Quartz Media page if you want to, but it’s a fairly simple tale. Apparently, while in Federal prison in North Carolina (at Butner Prison, one of the infamous “Club Fed” facilities), Madoff managed to buy up all of the instant hot coca packages available in the commissary and started reselling them at a profit in the prison yard. According to this report, things have gotten to the point where if you want to purchase any of the stuff you have to “go through Bernie”. Since he’s already considered a prison-house celebrity – other prisoners come to him for financial advice and stock market tips – no one seems to mind, and given some of the things that a criminal mastermind can get up to while in prison, I doubt the prison officials are worried about it, either. What struck me as funny was that this actually makes the previous Madoff story somewhat more credible…

Back in 2011 I brought you the story about Madoff claiming to be working with Harvard Business School to develop content for a new course offering in investments – and how to detect fraudulent ones, I would assume. You can look up my original post here, if you want to, but at the time I used this as an example of not believing everything you read on the Internet, a topic which has now become all too common on business blogs and related sources. But if this story is true – and so far it appears to check out – then it would appear that Madoff has, once again, proven himself to be sharper and more ruthless than the majority of the people living in his environment, which suggests that he really might have some lessons worth listening to. What struck me as most unfortunate was that he didn’t figure all of this out ten or twenty years earlier…

You see, none of the activities described in the Quartz article are illegal, or even against prison regulations, apparently. Yet, despite the obvious handicaps of operating inside a Federal prison with limited funds while surrounded by thieves, fraudsters, and con artists, he still managed to pull off a financial (commodities trading) coup like this one. That, combined with some of his earlier success before he turned to running a Ponzi scheme, makes me wonder what Madoff might have accomplished if he’d actually stayed on the straight and narrow. Granted, it probably wouldn’t have been anything as lucrative as stealing $50 billion, but it probably wouldn’t have involved a 50-year prison sentence, either…

Please understand me when I say that I’m not trying to excuse any of Madoff’s behavior; quite the contrary. I consider this story to be the final evidence, if any was actually needed, that Bernie could have achieved almost any conceivable level of success without ever committing a crime, which leaves arrogance and narcissism as the only possible motivations for his offenses. And while it doesn’t seem likely that anyone will risk letting him loose on the public again, particularly in light of his most recent activities, I would still advise my readers (assuming I have readers) not to bet against hearing from Bernie Madoff again in the future…

Not More Hogwash!

It’s still too early to be sure, but apparently Volkswagen may not be the only company that has been defrauding customers – and the EPA – on how clean their diesel engines really are. Last week the US Department of Justice announced indictments of six VW executives involved in the use of “Defeat Devices” that allow the so-called “Clean Diesel” engines to pass air pollution tests despite being as dirty as any other diesel engine the rest of the time. To their credit, the company owned up to the wrongdoing with surprisingly little fuss and appear to be accepting the massive fines our government is hanging on them, although so far they have not agreed to hand over the five executives who are currently believed to be in Germany. Personally, I was very disappointed to learn that the widely-hyped technology that could make diesel engines much cleaner than regular gasoline engines was a hoax; I still believe that we need Clean Diesel, and will need its potential more than ever as alternative fuels become more important. But unfortunately, it seems that things are even worse than we thought…

You can pick up the ongoing story from the Bloomberg site, and I’ll update the link if there are updates. Apparently, the EPA is now charging Fiat-Chrysler with using specialized software in their car’s engine computers to lower the emission levels during testing – essentially a software version of what VW was doing with hardware. There’s no indication as of yet that Chrysler was also using hardware systems to produce false results, but that may just mean that the EPA hasn’t been able to prove anything so far. The other major difference in the stories is that the CEO of Fiat-Chrysler dismissed the allegations as “unadulterated hogwash” when he was asked about the case, and so far the company is stonewalling any attempt to resolve the issue…

Now, we should probably acknowledge right off the top that the US Department of Justice, and law enforcement in this country in general, has not had the highest possible levels of credibility in recent years. It really is possible that somebody at Justice is jumping the gun and attempting to bully Chrysler into confessing to the wrongdoing because they don’t have enough evidence to actually bring the case. And it is important to note that emission-control software isn’t actually illegal in the US; as the Bloomberg article notes, it can be used for a limited time under some conditions to prevent engine damage. But if that software has actually been programmed to detect test conditions and alter the engine’s emissions for the duration of the test from the profile it maintains during normal operation, then that is fraudulent. Whether the charges will stick, or whether anything will be done about the situations if they do, is another matter…

At the moment, the EPA’s enforcement people are saying that it is up to Chrysler to prove that they aren’t using defeat devices, but unless somebody in our government actually has proof that they are using such devices it does not seem likely that the charges would hold up in court. You can’t prove a negative, and you generally can’t ask someone to prove that they aren’t doing something without any evidence that they are, or at least that’s what they taught us in business school. The change in government that is set for the end of next week may also shake things up, since the incoming administration is expected to be much more business-friendly than the outgoing government has been. What remains to be seen is how the customers will react to this – and what impact that will have on sales…

When the EPA called them on it, Volkswagen owned up to their malfeasance and accepted the penalties without much further discussion. This may not make the affected vehicles look any better, but it definitely improved the company’s issue, turning the potential scandal into old news much more quickly than a drawn-out battle of words and accusations would have. By choosing to fight, Fiat-Chrysler is going to keep this case in the public eye for much longer, and if they are eventually proven to have defrauded their customers and the EPA the penalty and the impact on their reputation will probably both be much worse than if they had just come clean…

We should also consider that, if the company does turn out to be innocent of these accusations, then this is the correct course of action and they will have reason to be proud of their resolve once they win the court case. The question there is how much damage this situation will do to their sales and their public image in the meanwhile – and whether they will still be around when the dust settles this time…

How Stuff Works: Franchises

I was reading a story earlier this week about a man who owned a Dairy Queen franchise who apparently did not understand how a franchise agreement works. I say that because after he went off on a racist tirade that was captured on video and posted online he was still surprised when the parent company revoked his franchise and closed the location he had previously run. The only explanation I can imagine for the original meltdown, let alone the naïve belief that a public apology would be enough to extricate himself from this mess, was that the former franchisee believed that since he owned and operated his own business, no one could call him into account for behaving like an ass in front of customers or making the company look bad. But in a franchise arrangement this isn’t always the case…

You can find the original story from the Washington Post here if you want to, but there isn’t a whole lot more to it. James “Jim” Crichton had been the franchise owner of the Dairy Queen location in Zion, IL, until he was unwise enough to get caught on video yelling racist epithets and profanity at a customer. Although Mr. Crichton tried issuing a public apology and promising to put himself and his staff through sensitivity training, the parent company was no more impressed by that offer than the community in Zion was, although I would imagine the fact that one of the things he was recorded as saying was that he could call anybody anything he wanted to in his own restaurant probably didn’t help in either case…

The reason I am calling Mr. Crichton’s understanding of franchises into question is that control over the operation of these locations is the entire point of franchising a Dairy Queen in the first place – at least, as far as the company is concerned. Selling somebody a franchise license is, by definition, cheaper than building and staffing a new store yourself. Once the franchise makes back the franchise fee the subsequent profits will be much lower for the company, but that can take years, and long before that happens the company should be able to sell another franchise somewhere else. But if it were to become known that any Dairy Queen franchise is selling an inferior product, or, as in this case, an inferior dining experience, the company’s chances of selling either Dairy Queen products or additional franchises will drop significantly…

For this reason, all major franchise contracts incorporate quality standards, and most of the ones that involve consumer services also place requirements on the behavior and conduct of the operator and his or her employees. Without seeing the Dairy Queen franchise contract I can’t tell you how strict their version happens to be, or how draconian the penalties for failing those quality standards are, but the ones I’ve seen from other fast food chains also had provisions that would have allowed the parent company to revoke the franchise under these conditions. In the case of a McDonald’s franchise, the company would not have to return the franchise fee, either, and a McDonald’s franchise can run upwards of $2 million USD just for permission to start one. Unless the Dairy Queen corporation is a great deal more understanding than any other I’ve ever heard of, the tantrum in the linked story may turn out to have been a seven-figure mistake…

Now, I don’t want to suggest that franchises, or even licensing agreements, are by any means simple. There is no way I would ever negotiate, let alone sign, such an agreement without advice of counsel and a great deal of background research. But in all honesty, if I’m going to sign a multi-page contract that not only lays out how much money I have to pay someone else but also the conditions under which they can repossess the property they are selling me without refunding my money, I’m going to be very careful about remaining in compliance with that agreement. Because the fact is, despite the name, you don’t really own a franchised business. You may control certain rights, but ultimately you are operating a branch of somebody else’s company, and they can and will dictate the terms and conditions under which you are allowed to do so…

If that idea bothers you, or if you want to truly have the right to scream any racist, sexist, profane or stupid thing you want in your place of business, then you’re going to have to start your own…

The Ethics of Deep Pockets

There was a news story last week about a family that is suing Apple for damages after a driver who was apparently distracted by a call on Face Time slammed into the back of their car. They are claiming that Apple should have known that people would make Face Time video calls while driving, and should have made some modification to the software that would prevent people from doing so. Leaving aside for the moment the issue of whether or not that’s even technically possible, it seems as though it would be more appropriate for them to sue the distracted driver. After all, Apple didn’t tell him to video chat with someone while driving, and even if Face Time never existed, he could still have been texting, reading a book, or just not paying attention…

I will again remind my readers (assuming I have readers) not to take legal advice from scruffy bloggers without legal qualifications, but it doesn’t take a great deal of training to understand the concept that there are limits to how much money you can obtain by suing an individual, particularly if he or she doesn’t have much of it. By the same token, it doesn’t take a degree in accounting to understand that Apple can be expected to earn more money in the time it is taking you to read this blog post than the average person will make in his or her entire lifetime. This type of action is sometimes called a “Deep Pockets” lawsuit, and is obviously completely legal, but I can help wondering about the ethics of the situation. I thought we should take a closer look...

On the one hand, we could dismiss the family’s lawsuit as simple greed. A good attorney should be able to play upon the sympathies of a jury, considering that the crash in question resulted in the death of a five-year-old girl, and wring a large amount of money from the huge company that put the loaded smartphone into the offending driver’s hand. Millions of dollars (or possibly tens of millions) won’t bring anyone back, but even a token settlement might help bring closure to the family. Alternately, an admission from Apple that their bad product design was at least partly to blame for the tragedy might help some of the people involved deal with their various kinds of guilt. But what if there’s more to it than that?

Since the crash happened, several reporters have confirmed that Apple has patented technology that would allow the company to disable apps on your iPhone if it detects that you are driving a car – you can read the Forbes article here if you want to. If the company really could have prevented the accident, but hadn’t bothered to implement the changes that would have done so, then they might actually have some amount of responsibility for what happened. There’s also the public awareness aspect – people might not pay attention to a single distracted-driving accident, and it’s doubtful that Apple would take notice of one. A huge product-liability case is far more likely to attract attention, however, possibly resulting in product changes or even new laws against operating a videoconferencing app while driving, while at the same time reminding more people about the dangers of distracted driving in the first place…

There’s no way to tell if the technology would actually help, of course – how would your iPhone know that you were driving a car instead of riding in one, for example? And given the number of texting-while-driving accidents that occur each year, and the number of people who are killed in one, it’s not clear if any additional examples would be any more helpful in raising public awareness. But it still begs the question: Does a company have an ethical responsibility to try to prevent people from using their products in idiotic and potentially fatal ways? Do they have an obligation to compensate innocent bystanders who are injured when someone does use one of their products in such a manner? Or is it acceptable for them to sell a product, complete with warnings against doing things that even a small child would know are idiotic, and then absolve themselves from the stupidity of their customers?

It’s worth thinking about…

It’s Not April Yet...

From time to time I will wander across a story so outlandish that I have to start back-tracing the sources to make sure it isn’t another Internet hoax or April Fool’s Day joke – to the extent that there’s any difference between them these days. Years ago this wasn’t such a big deal, in the sense that if someone started telling you about something that sounded like a plot device from a James Bond movie you could just assume they were kidding. But we’re living in an era in which we actually have television sets that watch you while you’re watching them, mass-market cars with an Autopilot function as standard equipment, and semi-autonomous flying drones that can deliver a package of cheesy-puffs directly to your doorstep without direct human control. Even in this era, though, I have to say that the Flying Warehouse concept seemed like a hoax the first time I saw it…

If you missed the story you can pick it up from the Gizmodowebsite here, but the basic idea is that Amazon (who else?) has been talking about pairing their delivery drones with a flying distribution center that would make them somewhat more efficient. The thing looks more like a high-tech blimp than an Avengers-style helicarrier, which actually makes it more believable, in the sense that very large lighter-than-air vehicles have been possible for more than a century, but 100,000-ton flying aircraft carriers still aren’t. The company hasn’t definitively stated if the production models will use helium, hot air, or some other form of lifting gas, but they are talking about using solar and other renewable energy types to move the thing and maintain altitude and position once it’s on station. The drones can then just glide down from the carrier, unpowered except for their guidance/control surfaces, and use their solar collectors to ride back up to their mothership…

Naturally, there are a number of questions about this vehicle that remain unanswered. For example, how do the crew get to and from work? Even if a fully-automated warehouse this size is possible (and there are some issues with that), not having any human crew aboard to deal with unexpected problems or at least fix the robots when they break down does not seem like a good idea. Then there’s the resupply problem – how exactly does the flying warehouse replenish its inventory? You could land it next to a railroad yard or a conventional warehouse every so often and transfer cargo aboard, but the whole point of this thing is that you don’t land it; it’s supposed to be in the air launching and recovering drones. You could have two of them working the same position, and reload one on the ground while the other is in the air, but now you’re doubling the cost of the operation, not to mention the costs of the ground base you would need to support the airships…

Now, we should probably note that so far, at least, all the company has done is to register the patent for their flying warehouse design; there has been no suggestion that Amazon has any plans, immediate or otherwise, to actually build these things. It’s entirely possible that they did so just to establish their claim to one or more of the technologies involved in the design; it’s even possible that the entire project is a decoy to keep potential competitors from looking too closely for what Amazon is really working on for their next big innovation. People tend to forget that Amazon is, by some measures, the world’s largest technology company, and that it employs a huge collection of technology experts who have no particular attachment to traditional business models or operations methods. If anybody out there would have both the ability to develop a flying warehouse and the sheer gall to do it, it’s almost certainly them…

I don’t mean to suggest that we’re any closer to being able to place an order from Amazon and have whatever we want land on our doorstep an hour or so later when the drone drops it off. But we should probably keep in mind that when the idea of e-commerce first appeared people dismissed that as preposterous science fiction rubbish, too, - and that wasn’t that long ago…

The Robots Strike Back!

Oddly enough, I have history with the much-reviled automatic dialer machines that goes back well before the appearance of the “Do Not Call” list that was supposed to have killed them off. Back on my first management job out of college, before the invention of the MP3 protocol or predictive dialing, my boss issued me one of the then-current generation machines (it used a cassette tape I had to record myself) and told me to use it to canvass the people in my district. I can still recall telling him it wouldn’t work for a service business that most people weren’t even aware was a thing, and some of the threatening messages I got from people who hated robo-calls back before that was popular. I can’t remember that we actually got a single client from the automatic dialer before I managed to convince the boss that the whole thing was a waste of time…

Over the years since, people have come up with a number of measures to fight these robotic sales calls, not all of them legislative in nature. A friend of mine once developed a gizmo that played the three-tone signal you hear when you call a phone number that is out of service just when he picked up the phone – causing the automatic dialers to think his line was out of order and disconnect. I’ve also known people who kept an air horn by the phone and would just blast the sound down the phone line until the thing disconnected, and people who made a hobby of tracking down the companies that were calling and pranking them in various fashions…

Over the years I’ve worked a number of cold-call jobs, mostly for non-profit organizations (which are exempt from the “Do Not Call” registry), during which I found out that the idiosyncratic pause you here before a modern automatic dialer starts playing its recording isn’t so much the machine waiting to see if the line is out of order as it is a side-effect of the dialing software. When one of these systems is working, each of its outgoing call nodes will be placing a dozen or so calls at once, and as soon as one that isn’t connected picks up it will select that one and start playing. This is how my old friend was able to spoof them into hanging up; it’s also the point at which I usually just hang up the telephone. But those tactics may no longer be enough…

Last week my phone rang, and when I answered it there was a short pause, and then a woman’s voice said “Hello? Oh, I’m so sorry; I was having a problem with my headset.” The voice then went into a pitch I’ve heard many times before, both from automatic dialers and from live telemarketers, telling me that because I had stayed at one of their “resorts” in the past, I had won a “free” four-night stay. This is the point at which I usually just say “Sorry, not interested,” and hang up the phone. If you actually go through with this scam “prize” you will generally end up having to buy something (typically transportation or more nights at the “resort”), assuming it’s not just an old-style phishing scheme in the first place. I did this and didn’t think any more of it until yesterday…

Shortly after lunchtime yesterday my phone rang from a local number, and when I answered it there was a brief silence, and then a woman’s voice said “Hello? Oh, I’m so sorry; I was having a problem with my headset.” It was the same voice, too. I tried interrupting the message, just to see what it would do, but there was no indication that whatever was reading me the program could hear me, even when I said several unpleasant things about its mother…

I’m not sure how many people are still using disruption devices to foil the automatic dialers, or for that matter how many people just make a practice of hanging up the phone before it starts playing the message. But there’s no question that the computers that run this class of program can store multiple outgoing messages, which means there’s no telling how many times it could make someone hesitate before slamming down the receiver. It’s just their bad luck that it didn’t realize I had heard that specific outgoing message before…

I don’t know what the next phase of this war will be like. But it seems clear to me that no amount of legal or legislative action will ever be able to take out all of the illegal automatic dialers that remain in use – and as of today, the robots seem to be getting smarter than ever…

EDIT: A week or so after I brought you this story, KTLA-TV in Los Angeles broke the news that some versions of this scam are actually recording YOUR voice if you reply to the robot, in attempts to use that recording to con you into believing that you have some verbal contract with the scammer. Which means that, among other things, saying unpleasant things about the robot's mother may not have been a bad response after all. It you get one of these calls you're probably still best off just hanging up, though...
 

Take Back the Showroom

Not long ago I was browsing my way through a nearby Meijer hypermarket when I came upon a display of pod-based coffee machines and suddenly realized that this was the perfect item to wrap up my holiday gift list. Unfortunately, there were a bewildering array of sizes, styles, colors and features to choose from, and I didn’t know the first thing about coffee or coffee makers, pod-based or otherwise. Over the years I’ve tried to cultivate a taste for the stuff, but so far I can only drink coffee if you mix a large amount of milk, sweetener, chocolate, and preferably ice into it – at which point even I have to admit that it’s more of a coffee slushy than actual coffee. Finding someone to help me in the middle of a Meijer in the run-up to Christmas week would have been even more impossible than trying to find a sales clerk in any other big box store under the same conditions. But expecting any retailer to tell you that any of their merchandise is anything less than “really super extra superior,” let alone post shelf tags critical of any of their goods, would be even sillier. Clearly, I needed to look somewhere else…

We’ve talked about the concept of “Showrooming” in this space before, but if you’re not familiar with the term it refers to the increasingly common practice of going to a traditional retailer to examine different products and then going home and making one’s actual purchase online. It has had a horrible effect on small businesses, most of which couldn’t possibly compete with an online retailer given the overhead and volume advantages that such operations can realize, but Showrooming had also be problematic for big-box stores and national retailers like Wal-Mart and Best Buy. What I hadn’t considered until that moment was that, in addition to the ability to comparison shop and find the best sale price (and the best deal on shipping, one assumes), shopping from home would also give me access to hundreds, if not millions, of consumer reviews of each one of these products. If only I had some small, portable device on my person that could access those same websites…

Of course, I did have such a device in my pocket. Taking out my smartphone, I quickly surfed over to a couple of product review sites, and then checked the online comments on Amazon, just for good measure. Much of the blame for Showrooming is pinned on Amazon, since they have listings for almost anything imaginable, so it seemed fitting to use them to reverse the process. The price differential between the different models wasn’t much, and none of them were noticeably cheaper online, even before I took into account the cost of shipping. But there were some models that definitely worked better than others, and even a couple that were reputed to leak after a few months in service. In a few moments I had made my selection and started schlepping the machine up to the registers…

Now, I’m not going to claim that this story, or even thousands of others just like it, are going to do anything about the Showrooming problem. Sometimes there are going to be better deals available online, and if you can find free shipping – or get it as part of your Amazon Prime membership – it may even be possible to cover those costs. But I think we should all consider the advantages to actually going to the store and physically selecting and purchasing a product, not least of which is that you don’t have to worry about your merchandise being delayed by weather, train derailments, longshoreman’s strikes, or airport closures since it’s already in your hands. There’s also the fact that you don’t have to worry about the delivery service stealing it, running it over, throwing it into a pond of stagnant water, or leaving it at a vacant house somewhere else along their route – all of which have happened to members of my household before now…

Five Hundred Channels, but Nothing’s On

I was scrolling through the program guide on our television recently, looking for something that I’d actually be interested in wasting a few minutes on until it was time for the baseball game, when I noticed an infomercial channel with an unusual program offering listed on it. There, on the “Mall” channel, just between the Night Court re-runs and the Secrets to a Better Golf Game was the interrogatory tittle: “Are You Pooping Enough?” Now, I’ve been watching cable television for a long time, and at odd times of the night on obscure channels I’ve seen the so-called “Sponsored Programming” selling everything from the legendary Bamboo Steamer to what is essentially hair-colored spray-on Christmas tree flocking to cover your bald spot. But this was the first time I’ve ever seen a group of otherwise functioning adults asking the world about a possible deficiency in their bowel movements…

Intrigued by this strange offering, I wandered out onto the Internet and ran a couple of searches looking for other oddball infomercial products. Within moments, however, I realized that the problem wasn’t going to be finding enough information here to write a 600-word blog post; the problem was going to be which of the completely insane offerings available to include. Because lurking out there among the perfectly normal “as-seen-on-TV” products were a few items so bizarre that even after finding their company’s home page I’m still not sure if these are real offerings or some elaborate online hoax…

Consider, for example, the Potty Putter ™ - not a golf club that you can use as a chamber pot (that’s the UroClub, which is from a different infomercial altogether), but rather a practice putting green and putter designed to use while sitting on the toilet. The question of why you couldn’t make such a thing yourself out of a dollar’s worth of outdoor carpeting pales before the question of why on Earth you would want one in the first place. Or if that’s not strange enough, how about the Better Marriage Blanket – basically a cotton blanket on one side and an activated-charcoal filter on the other side, which the inventor claims will eliminate the effects of flatulence in the bedroom…

Now, we should probably acknowledge right at the top that not all late-night infomercial products are sleazy or fraudulent. The oft-parodied “Ginsu” knives work exactly as advertised, and the ones we can still find around the house are as functional as ever after three decades or so. I also have it on good authority that the bamboo steamers actually worked like a charm, and the handy device that can scramble an egg while it’s still inside its shell operates perfectly, assuming that you can think of a use for one in the first place. And while the various dial-a-psychic services may be complete nonsense, there’s a limit to both their humor potential and how much harm they can actually do to the unwary. Gastrointestinal Quackery, on the other hand, has its own page on the Quackwatch website…

“Why does he tell us this?” I hear some of you asking. After all, infomercials and “sponsored programs” were a fact of life long before the dawn of the Internet age, and it is far easier to debunk the value of any of these products today than it has ever been before. The thing is, people are just as likely to use Internet research to confirm a mistaken belief as they are to debunk one; the need to do your homework and remain skeptical of any information source is getting larger, not smaller, as we plummet further and further into the new century. And with well over 500 cable channels already, and more coming all the time, not to mention an almost unlimited volume of snake oil ™ vendors on line, I don’t see the situation getting better any time soon…

Where’s the Strategy?

I’ve always tried to stay away from politics in this blog, partly because along with religion it’s one of the two things you should never discuss in public, but mostly because I don’t feel qualified to talk about it. I’m just as business instructor, albeit at a top business school, and none of my degrees are in Political Science, Social Psychology, Economics or Law. More to the point, perhaps, the Internet is already overflowing with opinionated idiots who believe that their personal confirmation bias makes them the only one who truly understands the situation at hand, whatever that might be. But one of the things I teach is Strategy, and one of the things that has been bugging me lately is people who really should know better displaying no understanding of a very basic strategic concept…

You may have heard the saying “Plan for an enemy’s capabilities, not his intentions” at some point, especially if you study strategy, tactics, or military history. Or, I suppose, if you eat out a lot, you might have seen these sentiments in a fortune cookie somewhere. Regardless of its origin, the phrase has relevance in a number of situations. It isn’t possible to know whether an adversary is really going to attack you; even if they say they will (or will not) you can’t be sure of their intentions short of the event. What a lot of otherwise very shrewd people seem to be losing track of these days is the fact that if your intelligence regarding an adversary’s capabilities is sufficiently accurate you may be able to determine that they will not be able to attack you regardless of what their intentions may be…

Suppose, for example, that a small group of ordinary citizens decide that the Dell organization has offended them for the last time, and they are going to acquire controlling interest in the company by purchasing 51% of its common stock, and then institute some changes. This is improbable for several reasons – notably including the fact that the company has an annual revenue reported to be on the order of $55 billion per year, which would put such a takeover beyond the resources of most average people, even in large numbers. It is, however, also impossible, because Dell is a privately-held company, and therefore has no publicly-traded stock to acquire…

By the same token, members of the Executive Branch of the Federal government can’t pass legislation, no matter how much they may want to do so. It is possible for the President to veto legislation, but since Congress can override a veto, even that isn’t certain if a measure has sufficient support. The President also cannot declare war on anybody, approve or vacate treaties with other countries, or randomly imprison people – these are not powers given to that office. It also is not possible for Congress to pass laws that violate the Constitution or any of its Amendments. They can vote to amend the Constitution again, but passing such an Amendment requires ratification by the states. And while the Supreme Court can strike down existing laws as Unconstitutional, they can’t create new laws of their own…

Now, I’m not going to suggest that there isn’t any point in planning for an opponent’s capabilities – I’m a planner by nature, as well as occasionally by trade, and I believe in planning for all the foreseeable contingencies. I also believe in employing a team of pessimists, assuming you can afford them, to consider every possible way in which things could go wrong and what would happen to your organization if they did. People will dismiss planners and strategic planning in general by claiming that you can’t, by definition, plan for the unexpected – which is perfectly correct, of course. It’s also the whole point of developing plans in the first place, however. After all, if you have already planned for a possible event, it’s no longer unexpected…

I’m not saying that this new year isn’t going to bring with it disasters, unpleasant changes and difficult decisions; most new years do, after all. I’m just suggesting that the problems we’ve already got, and the new ones that we will not be able to avoid, are going to be quite sufficient without worrying about the things that can’t happen – no matter how many times a politician claims they are going to…