Hubris Follow Up
It's clear from the preceding post that either I failed to convey the problem with industry telling the military what to do or there are readers with an inaccurate understanding of the customer-company relationship. I'll try to briefly clarify the issue.
A company, and its Board of Directors and CEO, have a legal fiduciary responsibility to the company's shareholders to wisely manage the company's finances and direct its performance. A company cannot spend money in a manner that might lead to bankruptcy. If a company opts to "bet" a portion of its earnings on a particular piece of R&D, it does so with no more money than it can afford to lose. In this respect, a military supplier is much like a customer in Las Vegas - don't bet more than you can afford to lose.
Further, it is vital to understand who a company is "working" for. Boeing, for example, is not working for the United States or even the US military. It is working for its shareholders. This is an incredibly key point. What it means is that Boeing is not trying to develop and sell the product that best suits the military - instead, Boeing is trying to develop and sell the product that best suits Boeing, meaning the product that best fits their existing or desired product line and generates the greatest profit and cash flow. Think about it - if Boeing and every other company were trying to develop the best product for the military they'd all agree on who's product was best and the other companies would drop out of any procurement competition. Well, of course they don't do that. That means that in any given competition several of the competitors are knowingly putting forth sub-optimal products without saying so and are happily trying to take the taxpayer's money regardless. There's nothing wrong with that. That's how the market system works and the onus is on the military to be able to distinguish between good and bad products (an argument for establishing internal design capability and technical expertise within the military!).
Let me summarize. Boeing (and everyone else) is not investing R&D to help the military. They are investing to help themselves. Boeing (and everyone else) is not producing the best product for the military. They are producing the best product for Boeing.
The mere fact that Boeing "bet" on a particular line of research and product development does not in any way, shape, or form obligate the military to pursue that path from some sense of responsibility (that's corporate welfare sponsored by the military) or in response to some veiled (or, in this case, explicit) threat from industry. Response to a threat is extortion.
Those of you who worry that Boeing will fold because their product was not chosen are not grasping the Microsoft-IBM example.
Eisenhower warned us about this and some of you are buying into the very phenomenon he pointed out. Think harder about this.
A company, and its Board of Directors and CEO, have a legal fiduciary responsibility to the company's shareholders to wisely manage the company's finances and direct its performance. A company cannot spend money in a manner that might lead to bankruptcy. If a company opts to "bet" a portion of its earnings on a particular piece of R&D, it does so with no more money than it can afford to lose. In this respect, a military supplier is much like a customer in Las Vegas - don't bet more than you can afford to lose.
Further, it is vital to understand who a company is "working" for. Boeing, for example, is not working for the United States or even the US military. It is working for its shareholders. This is an incredibly key point. What it means is that Boeing is not trying to develop and sell the product that best suits the military - instead, Boeing is trying to develop and sell the product that best suits Boeing, meaning the product that best fits their existing or desired product line and generates the greatest profit and cash flow. Think about it - if Boeing and every other company were trying to develop the best product for the military they'd all agree on who's product was best and the other companies would drop out of any procurement competition. Well, of course they don't do that. That means that in any given competition several of the competitors are knowingly putting forth sub-optimal products without saying so and are happily trying to take the taxpayer's money regardless. There's nothing wrong with that. That's how the market system works and the onus is on the military to be able to distinguish between good and bad products (an argument for establishing internal design capability and technical expertise within the military!).
Let me summarize. Boeing (and everyone else) is not investing R&D to help the military. They are investing to help themselves. Boeing (and everyone else) is not producing the best product for the military. They are producing the best product for Boeing.
The mere fact that Boeing "bet" on a particular line of research and product development does not in any way, shape, or form obligate the military to pursue that path from some sense of responsibility (that's corporate welfare sponsored by the military) or in response to some veiled (or, in this case, explicit) threat from industry. Response to a threat is extortion.
Those of you who worry that Boeing will fold because their product was not chosen are not grasping the Microsoft-IBM example.
Eisenhower warned us about this and some of you are buying into the very phenomenon he pointed out. Think harder about this.
Belum ada Komentar untuk "Hubris Follow Up"
Posting Komentar