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Heat loss from big corporate projects

rachelbythebay.com

11–20 of 57 posts

Re: Heat loss from big corporate projects

#11
Isn't this just switching costs?

The author assumes that a change in a process never amortize. However, some changes cost time and money yes, but they amortize after a few months ans are worth it.

Yes, some changes might lead to worse processes than others, but most changes aren't.

It all comes down to a good CEO, if you make too many changes that make it worse, the business becomes bankrupt after a few years. If your changes amortize, even only slightly, your business stays afloat or improves.

Re: Heat loss from big corporate projects

#13
post #9
post #3

The whole system where all of these projects generally go towards some form of advertising where we convince people to buy things they don't really need is a far worse form of heat loss than this. Buying the latest shiny smartphone every year isn't just the heat loss of thousands of engineers making it slightly thinner, it's the actual loss of all the resources that went into last year's batch of smartphones that end…

Exactly. But what are people meant to do? The information isn't there. Should I chuck away my diesel car and buy a Tesla? I'd certainly have a psychological reward for that, but what about the huge amount of energy/resources already invested in the diesel car? "But your old car will be used by someone else" people will say, and then it all starts to get complicated. We need tools to make this decision clearer.

You should probably keep your car but use it as little as possible. Try getting a bike.

Re: Heat loss from big corporate projects

#14
I completely agree with this. Something I would add here is the great danger of wanting to recreate products from scratch. You have the "heat loss" effect as stated here but you also have a massive amount of expectation from the users of the existing product. It can quickly become "the product which will fix all our issues" over time and the goalposts are being moved so much that the release day is just pushed forward forever.

Re: Heat loss from big corporate projects

#17

Earlier quoted context omitted.

Isn't this the perfect example of lack of markets inside companies? i mean the consumers of your reports are either perfectly prepared to pay your department enough to keep the reports coming, or they don't want them that much. but without a free floating price the larger company will never know. Roald Coase probably has something to say on it

How can you have a market inside a company? Markets depend on having multiple suppliers and multiple customers. Nokia tried having internal competition and it didn't go well. Something like it can work though. Many years ago I worked for Philip Semiconductor at the Mullard factory in Southampton in a department that designed and built production and test equipment. We had a formal project process where if the custome…

Its not a market so much as an economy. Instead of necessarily saying "you must do things this way" its "you must meet these requirements and these SLAs/goals/dates, and you have this many Magic Corporate Resource Bucks to spend". Those Magic Corporate Resource Bucks aren't real dollars necessarily, but they are representative of the costs of things that other divisions of the company may provide.

You can swap your MCRBs for real dollars and go out and purchase your own hardware, for example, or do your own service monitoring, or you can "pay" the team that manages hardware to maintain it for you. And the service monitoring team can integrate your project into the company-wide monitoring system. If you do the first option, it might be cheaper, but when things inevitably break, you're the one who takes the blame and has to fix it, instead of having in house experts who fix it.

There's central planning, so you don't have monopoly issues. The hardware provisioning team can't just jack up the price to infinity, because the company can see what the actual cost is and force the team to provide the stuff at cost.

Then you do a little magic like loosely tying bonuses to the amount of MCRBs you receive if your team is an infrastructural one, and perhaps allow management to redeem MCRBs for things like additional capacity to hire employees, and potentially even use MCRB allocation by end users as a way of figuring out what pieces of infrastructure are the highest impact/most in need of additional staffing/etc.

You end up with a system where infra teams have decent incentives to offer good tooling and to fix bugs/implement features (because there's always the looming threat of a client team leaving you and developing their own solution). User facing teams have an incentive to use existing tools and rely on the infrastructure that exists, unless there are compelling reasons not to, but when there are such reasons, they have some level of autonomy to develop unique solutions to fit their needs, and you have indirect, but still useful, signals of where upper management needs to invest additional resources, because something is being used a lot.

Re: Heat loss from big corporate projects

#18
post #9
post #3

The whole system where all of these projects generally go towards some form of advertising where we convince people to buy things they don't really need is a far worse form of heat loss than this. Buying the latest shiny smartphone every year isn't just the heat loss of thousands of engineers making it slightly thinner, it's the actual loss of all the resources that went into last year's batch of smartphones that end…

Exactly. But what are people meant to do? The information isn't there. Should I chuck away my diesel car and buy a Tesla? I'd certainly have a psychological reward for that, but what about the huge amount of energy/resources already invested in the diesel car? "But your old car will be used by someone else" people will say, and then it all starts to get complicated. We need tools to make this decision clearer.

Depends how much you use it. The heuristic I use it that eventually they money I spend goes to a consumable, so if I spend as little as possible by focusing only on what actually makes me happy then I’m also being as environmentally friendly as possible. I’m basically retired already. That’s as much due to inheritance as frugality, but even without inheritance I think I would’ve managed to retire by 48 at this rate.

Re: Heat loss from big corporate projects

#19
as a chemist, love the analogy, resonates a ton with me. a little bit nit-picky, but:

"That is in addition to the actual cost of pumping the water from one tank to the other."

should be something like "that is in addition to the actual cost of lifting net 25 units of water higher".

The cost of moving from one tank to the other is, also heat loss, but the lifting part is recoverable.

Re: Heat loss from big corporate projects

#20

Earlier quoted context omitted.

Isn't this the perfect example of lack of markets inside companies? i mean the consumers of your reports are either perfectly prepared to pay your department enough to keep the reports coming, or they don't want them that much. but without a free floating price the larger company will never know. Roald Coase probably has something to say on it

How can you have a market inside a company? Markets depend on having multiple suppliers and multiple customers. Nokia tried having internal competition and it didn't go well. Something like it can work though. Many years ago I worked for Philip Semiconductor at the Mullard factory in Southampton in a department that designed and built production and test equipment. We had a formal project process where if the custome…

Sears tried having internal competition (and markets. IIRC) and it really didn't go well.
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