Month: May 2005

I picked up an old copy of Fortune (12/13/04) to read on the plane…among other interesting stuff, it had an article on the reintegration of Saturn–which was once run almost as a separate company–back into General Motors. I was particularly struck by this paragraph:

Another thing buyers will notice about the new models is that the plastic body panels are gone. Saturn used to promote the panels heavily because it had little else to sell, featuring them in commercials that showed them fending off dents from trash cans and bicycles. Some had argued that they were integral to Saturn’s brand identity, but there was no room for them in GM’s complex global product development system.

Now, I don’t know if the plastic body panels are a good idea or not. Such a decision would involve many factors: cost, maintainability, and consumer preference/branding issues, among others. Probably in the scheme of things, it doesn’t matter all that much one way or another. But there’s a broader issue here.

Sooner or later, there will be something that one of the product line groups wants to do that does matter a great deal in the scheme of things–and that will turn out to matter for the overall future of GM, not just for the brand. What if that proposal doesn’t fit “GM’s complex global product development system”?

Were GM a more decentralized company, then the loop between the product change proponent and the ultimate decision-maker would be a shorter one. An individual executive could make the decision on behalf of his business unit, and develop product/process/technology approaches that would later–if they succeeded-turn out to be beneficial to the entire company.

Yes, there are clearly cost benefits in the centralization of manufacturing and product design. And, yes, part of the problem with Saturn in the first place seems to have been that as an individual brand it didn’t have sufficient scale to carry its own infrastructure. And in times of stress, there seems to be a natural human instinct toward centralization.

But when dealing with change, centralization can impose some serious limitations on flexibility and agility…and in today’s world, those can be devastating.

What drives technological progress?

Customers do. They pay the bills in exchange for the gizmos. Government science doesn’t produce technology (except in very limited cases where the technology is a weapon or a showpiece) – it produces basic science, which is of use mainly to other scientists until some private operation sees a way to use it to make new gizmos that people will pay good money for.

So what determines which gizmos get developed and which gizmos get improved, and what improvements are made to them? The potential market for the gizmos and improvements to existing gizmos.

If you want the best chance for some physically possible gizmo, or improvement to an existing gizmo, to come into existence, it should have a large potential market. This enables it to be made at a lower unit cost than if it had a small potential market, and increases the odds that, at a given overall level of technology, it can be made cheaply enough to be sold at a profit.

If you want the best chance for the gizmo to end up being relatively easy to use, then the potential market should include plenty of people that are not highly trained in its use and not willing to invest lots of time and money to get that way. This means that ease-of-use translates directly into size-of-market which brings profit.

The general public has both of these nice properties, so any gizmo that’s useful to the general public will, in the fullness of time and technological development, become relatively cheap and easy to use. As long, of course, as the general public is permitted to use it.

If, for example, a high training requirement is imposed on anyone who would use the product, both of these nice properties go away. The potential market drastically shrinks. Unit costs go way up and stay there. And, any effort to make the gizmo easier for an untrained user to use is money flushed down the toilet, since that untrained user is forbidden to use it and is therefore not even a potential customer, which means that the difficulty of safe use which was used to justify the regulation never goes away. Especially since the high unit cost means that demand for the unit’s complement, training, stays low.

This Catch-22 produces an impressive stall in the gizmo’s improvement and proliferation for generations. If you want to see an example of this mechanism in action, just go in your yard and look up at the sky at all the traffic that isn’t passing overhead. You might see a single private plane, along with a couple of flying cattle-cars. Then go for a drive, and look at all the groundcars bottlenecked on thin strips of concrete.

Or you can go to the hospital. You’ll see a large array of gizmos, drugs, and other useful things that are unbelievably difficult to use safely and outrageously expensive, even if they’ve been in use for decades. The potential market for the whole mess is practically microscopic, and the training requirement is among the highest in the known world. And if your life depends on hiring someone to use this stuff on you, well, you’ll see the true cost of this for yourself. You might even be driven to suicidal despair by the prospect of such expensive, primitive, and uncomfortable means employed to keep you alive, and hire a lawyer to help you write a “living will”.

And you’ll see the true cost of four little words: “for your own good”. These products could have been made easier to use, so that many more people could use them, yielding a much larger potential market, leading to much cheaper products, leading to more demand for both the training that’s actually needed and a demand for a version that requires less training even if it’s more expensive, leading to more development, leading to more ease of use and more advanced functionality, etc., etc. But that would have meant accepting a small amount of natural selection at the outset of this process. Society’s consensus is that this is unconscionable. So several kinds of gizmos are locked in stasis, including one class that could be saving far more lives than could ever have been lost through natural selection if they and people capable of using them and the capital for further developing them were as abundant as they could have been.

But no one could make a convincing case for untrained users being able to hurt themselves with computer, nor for the possibility of evil corporations to hurt innocent little 40 year old children by selling them crappy computers that they don’t know better than to buy. So that gizmo developed in cheapness, ease-of-use, and functionality with lightning speed, and remains one of the brightest spots in our generally depressing technological landscape.