Corporate Idiocy
Bureaucracy, Law, and Business

The other day, I picked up a book called Built to Last: Successful Habits of Visionary Companies. Amazingly, it finds that companies that focus on their products and customers produce the greatest returns for shareholders. On the other hand, companies that focus on delivering higher returns to shareholders, well, usually don’t. It’s a matter of defining your output: does the company produce widgets, or does it produce itself? Too many public companies, egged on by unrealistic demands of the securities markets, seem to regard their stock as their primary product; whatever it is they actually do in order to make money is merely an inconvenient part of the stock-manufacturing process, its costs to be cut ruthlessly in the name of short-term profits.

For some reason, this reminded me of an article by Jonathan Rauch in the New Republic a while back called Law and Disorder. The article is about Hidden Law, and how a lot of things, like sexual harassment or “hate speech”, are fundamentally ill-suited to being regulated or eliminated by formal law. Rauch’s (excellent) thesis is that these things must be dealt with by hidden law, which is really nothing more than a fancy term for mutually-agreed social convention.

In the article, on the subject of the law’s struggles to handle something it’s innately not designed to deal with, he says:

Then you get Bureaucratic Legalism: the notion that if you get the process right, the outcome must also be right. Outside of the legal system, people realized years ago that red tape, in the form of rules and hearings and paperwork, does not ensure sensible outcomes.

Though I would contest this; certainly the mad rush of the last decade or so to ISO-9000ize things in the business world points to a thirst for bureaucracy in private enterprise as well.

Posted by tino at 14:29 27.11.01