Product People and Bean Counters

I watched a short but powerful video this week. It comes from an interview that Steve Jobs sat for toward the end of his "vacation" from running Apple. The important clip is brief and well worth watching. Go ahead-- I'll be waiting for you on the other side

The basic complaint here is the classic argument against bean counters. The bonus insight for me is the idea of exactly how the bean counters end up in charge.

I've watched this process up close with a manufacturing firm right here in my small town. By the 1970's they had come to dominate their industry, and they did it by having the product guys run the company. Sales agents and even customers would sometimes make request for, say, a bifucated widget that could dispense cookies and ice cream, and the engineering department, backed up by the boss who came from the engineering department, would tell the customer "No. You can't have that. You don't even want that. Let us look at your problem and give you the best product design for the job."

They came to dominate their industry because customers who stayed inevitably said, "Yeah, they were right, and we'll never go to anyone else." Customers who walked away to do business with Brand X, who promised them the magic widgets, inevitably came back, saying, "Yeah, that didn't work. They were right about denying our request, and we'll never go to anyone else again."

As Jobs suggests, when you focus on your product and are passionate about your customer's needs, you succeed.

But the company topped out in market dominance, and it went from private ownership to public. Now they were worrying about the shareholders, not the customers, and anyway, there was no way that improving the product was going to get them more market share. And so the sales and finance guys rose to the front offices. When a customer ordered a magic cookie widget, the sales-and-finance bosses told the engineers, "You'll damn well make it." Bosses who had no knowledge of the machinery or the industry tried to demand the impossible, kind of like a yard work company boss telling his snow plow operators that they weren't bringing in enough plowing jobs in June and July.

The process that Jobs is describing has happened over and over and over and over and over in American business-- companies run by bean counters who care about neither the product nor the customer.

You recognize where we're going. The bean counters have, in the last decade, set their sights on the two huge service sectors of the US-- health care and education.

They were late getting to education because it was not immediately evident where money could be made. When the bean counters go to work on a company, they can lower the costs of the product, bump up the marketing, squeeze labor costs, and find ways to monkey with stock values as a way of generating more dollars.

But the education system was so entrenched. Revenue and labor costs were largely frozen, there was no stock to manipulate, and no marketing to be done because geographic boundaries ruled out somehow grabbing more customers.

Reformsters have now figured out how to fix all of those problems. Crush labor costs. Dissolve the geographic boundaries that keep customer locked in so that marketing can be used. Hand operation of schools over to private corporations that can proceed to juggle the books however they wish. We're working on the revenue stream, but that requires legislators to rewrite some rules and kick in funding, so that's last on the list.

The end result, we can already see, is just as Jobs predicts. Product guys-- the teachers and career educators who are concerned with creating the product-- a good education-- are pushed out, because doing a better job of educating students does not help the bean counters. Their passion for the product and for the students who are a big part of their customer base is inconvenient. The bean counters have no feeling for a quality product and no concern for the needs of the customers, but having redefined "success" as "handling the pile of beans really well," they stay in charge.

I wish Jobs had outlined a way for product people to take a company back from the bean counters, because that's the next thing American education will need to do.