Why Are You Still In Business? | Avneet Singh
There are millions of jobs and businesses under threat today from changing geopolitical environment (globalisation, trade wars, protectionism), innovation (smartphones, artificial intelligence, robots, drones, self-driving cars, genetic modification), technology (different ways to do business, outsourcing), changing social environment (gig economy), retail apocalypse (online shopping), changes due to population explosion, climate change, and resource crunch (scarcity of resources).
Yet millions of people and businesses continue to do business as usual as if it is the 1960s. Even worse, they are barely profitable, rely on outdated anti-consumer practices, and cheap debt to survive.
Why are they still in business?
The prime example is retail where people line up to get food. Every day in most cities in the Westernised world, there are inefficiently long queues of people waiting to pay, indecisive customers who can’t make up their mind; and then more wait while you wait for food to arrive. There are overworked and stressed retail employees, and one size fits all approach to everything. A big hungry man can’t get one and half times of what a small person gets. Why should a customer have to buy 2 of what he wants if he just wants 20% more of something? If you want extra chicken curry and less rice, you have to buy 2 meals. So much inefficiency, long lines, and stress, just to get a meal.
Why can’t people just pick up a plate and bowl, serve their own food to themselves from the buffet bar, take it to the pay station to pay by weight, and swipe their card or phone to pay? A few small independent outlets do it. It is a haven of speed, efficiency, and customer satisfaction. Customers serve themselves exactly what and how much they want, pay by weight, and never have to queue.
Another example is the Apple Card. As soon as you pay using your Apple Card, you get immediate notifications and good transparency into your spend and cashback. Contrast this with apps and websites of all other credit card apps and websites that are still archaic, old fashioned, badly designed apps, no transparency into your account, intentionally designed to confuse you with dark patterns, and with long delays before you see what you spent.
Examples abound of outdated, fossilised, inflexible practices in real estate, law, education, government, pharmacies, medical, banking, airlines, cars, retail, and food franchises.
Millions of demoralised, underpaid, ignored, un-empowered, exhausted, overworked employees work for millions of archaic, inflexible business managed by fossilised, politically savvy, manipulative, shrewd, incompetent managers. Customer value and experience is the last thing they care about.
They exist because they haven’t been eviscerated by something better yet (automotive sector, food outlets); or because they have long term contracts with government; protected by complex laws, regulation, and lobbying (medical, pharmaceutical, education, insurance, financial); or they rely on government bailout (automotive sector in the US, banks, farming); or just survive on cheap debt; or have friends in high places.
That is why they are in business.
As an example, Atrium, a “hybrid legal software and law firm startup” raised $75 million from investors but is now “shutting down today after failing to figure out how to deliver better efficiency than a traditional law firm”. How did they get $75 million without first figuring out their value proposition and reason for existence?
What is the logic in government using taxes (public money) to subsidise farmers so people can buy cheap food? What is the logic in government using taxes (public money) to bail out the automakers that make cars are not competitive? Why not let those who are inefficient go out of business?
As the forces of innovation, technology, geopolitics, climate change, and resource crunch get stronger, these millions of employees and businesses are seeking government help via politicians and lobbying. Many of them need help at the first sign of trouble. Those who adapt are having to bail out those who didn’t evolve. Why should this be?
As Peter Schiff, CEO of EuroPacific Capital says:
They don’t blow up the hotels. They don’t blow up the planes. What happens is, in a bankruptcy, new owners come in, all the debt is wiped out, and now you have an efficient management team with an un-levered company that can actually lower prices. So, consumers end up with a better deal once the companies are restructured. But by keeping them afloat with more debt, the companies are never viable and they have to keep overcharging customers based on a government subsidy. And once the government steps in and prevents them from restructuring, they’re going to be in constant need for additional government money”.
There is nothing humane, compassionate or altruistic about supporting inefficiency using money on loan from our future or taken from others.
Politicians are happy to support inefficient businesses with their employees for votes, the government is happy to enable it, and the corporations are happy to administer it, all using your money. They all have their snouts in the trough and their two front trotters as well.
$500 billion and $377 billion of public money as part of the stimulus package is being used to bail out inefficient big and small businesses that can’t survive on their own. It is not one-off but likely to be repeated. This is bad for the taxpayer and the consumer. It is just another chapter in decades-long story of supporting businesses that should not even exist.
Natural evolution demands that we adapt our working practices and businesses to changing environment, geopolitical realities, and changing customer demands, or let it die out just as steam engines, paper maps, and travel agents did. The government and politicians should not protect these outdated businesses at such high costs. The consequence of money being used to subsidise inefficient businesses is that we have to live with outdated and inefficient business practices, poor quality products and services, populist politicians, high taxes, broken infrastructure, big fascist governments, and worse.
Here is a question to millions of workers and businesses: Why are you still in business?
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