Theory: Why Planes Fall Out of the Sky
A weakness of how we currently do business is our belief that profit and/or wealth maximisation are the major business goal. The example I’m going to use is the commercial aviation industry, if only because most of us ride these steel creatures sometime during our lives. And we ride them in good faith that they care about us and not because they’re squeezing every penny to maximise shareholder gains.
My theory has everything to do with the trend over the last 20 years to cut costs and provide higher outcomes with less inputs. Now, in the short run, that rationalisation kind of makes a little bit of sense to the average Joe (or Jo). And the result is that for a little while more gets done with less and therefore profits and wealth maximisation are provided the corresponding short-term boost.
So where does that end? When everything is cut and there are the minimum amount of people providing the airline services with the minimum (or less) maintenance and there are competitive pressures from other companies almost willing to throw out the toilet and the pilot’s seat – where does that rationalisation end? Because I can’t see that end of the line scenario filtering through to business… and my perception is becoming that planes seem to be falling out of the sky more. I don’t care about statistics here because they can be fudged – I’m talking the bottom line of everyday consumer perceptions about safety and value.
My theory of why perfectly good planes fall out of the sky is because the emphasis moved away from the quality air service and became focused on the cheaper air service. Does anyone remember Quantas being the only service in the world which had a fatal accident free record (at least since 1945)? Nowdays you can pretty much hike a ride for a 30 second freefall over the Indian Ocean, and its probably a matter of time until the big Quantas cost-cuts its way into a fatal accident. What changed? Yep, the attitude towards rationalisation.
Transpose that business logic across the board – what do you see? I’ll coin a phrase here, if its not already taken – Hyper-rationalisation. My theory of hyper-rationalisation predicts that more planes will fall out of the sky as the unrealistic expectations of cost-cutting moves from 2010 to 2020. A safe air service with quality inputs versus a crap air service with third world standards and international fudging to get around regulations.
Because, in everything we do in business, if our goal becomes only one thing – for example, wealth maximisation – then we’re screwed. Maybe not in the short term, but in the long term. Hyper-rationalisation of government is another quick example… less councils, less government, less beaurocracy sounds good – but in the end don’t you get one dictator and a secretary?
Why planes fall out of the sky is because we’re buying into an economic vision that is unsustainable. Just because everyone’s doing it doesn’t make it right.
