New Deadly Diseases

Management and the economy keep evolving. Many good things happen. In the last decade the best things are probably the increased deep adoption of lean thinking in many organizations and the adoption of lean and Deming methods in software development (agile software development, kanban and lean startup [which I do realize isn’t limited to software development]).

Sadly all the deadly diseases Dr. Deming described remain. And, as I said in 2007, I think 2 new diseases have become so widespread and so harmful they have earned their place alongside the 7 deadly diseases (which started as the 5 deadly diseases). The new deadly diseases are:

• extremely excessive executive pay
• systemic impediments to innovation

In my view these 2 diseases are more deadly to the overall economy than all but the broken USA health system. The systemic impediments to innovation are directly critical to small percentage (5%?) of organizations. But the huge costs of the blocks to innovation and the huge “taxes” (extorted by those using the current system to do the oposite of what it should be doing) are paid by everyone. The costs come from several areas: huge “taxes” on products (easily much greater than all the taxes that go to fund our governments), the huge waste companies have to go through due to the current system (legal fees, documentation, delayed introduction, cross border issues…) and the denial of the ability to use products and services that would improve our quality of life.

The problems with extremely excessive executive pay are well known. Today, few sensible people see the current executive pay packages as anything but the result of an extremely corrupt process. Though if their personal pocketbook is helped by justifying the current practices, some people find a way to make a case for it. But excluding those with an incentive to be blind, it is accepted as a critical problem.

More people understand the huge problems with our patent and copyright systems everyday, but the understanding is still quite limited. Originally copyright and patents were created to provide a government granted monopoly to a creator in order to reward that creator for contributing to the development of society. Copyrights and patents are government granted interventions in the free market. They are useful. They are wise policy.

But they have been so manipulated as to do the exact opposite of what they were created to do. The most obvious extent of the corruption of the government granted public benefits to a private party is when the government grants extensions of rights after the work was already created. This has happened repeatedly with copyrights.

The only justification for taking away the public benefit and giving it to a private party is to encourage investment in creating those works to benefit society. When the government takes away the public’s rights to give them to private parties that have already obviously decided to create the work (it was already created) without such extra incentives being needed it is obvious how clueless (or actually more likely how corrupt) those people making policy decision in these area are.

Patents are meant to encourage innovators to innovate in order to increase the public benefit. The granting of monopoly rights for a period is to provide benefit to those that create something useful. Those rights let them create products and service to provide to the public and make a profit. The current system is crippling the ability of innovators. It has become a legal morase of patents that have no business having ever been granted, extortion and bullying with threats to use the legal system to punish innovators.

If someone is serious about improving the future of the economy fixing the current systemic impediments to innovation needs to be at the top of the list, along with: fixing the broken health care system (in the USA) and huge debt levels.

Dr. Deming’s 7 deadly diseases include 2 that are largely economic – not within the sphere of control of 1 CEO: Excessive medical costs and excessive legal damage awards swelled by lawyers working on contingency fees. The broken innovation system falls into this category. The deadly diseases are critical issues the CEO’s have to put forth effort that results in getting political solutions adopted. And until then countermeasures are needed at the local level to cope with the broken, larger system.

Excessive executive compensation is entirely with the companies ability to control. Those making decisions have an incentive to keep the diseases around so it takes putting people with integrity in positions of power to change the results. Those with integrity won’t just take whatever they can get away with – like so many executives today. They will work on create the best system for the organization. As there is no justification for massively overpaying executives from such a perspective they won’t do it (if they do they obviously are not as interested in the organization as they are in feeding their egos or greed).

While the system is the way it is some people will decide to go grab huge pay elsewhere. Fine, let them. Some will be valuable team members that will be missed. But if you pay all employees reasonably and provide honorable, meaningful work many that leave are just unethical, selfish people that may have charisma and strengths but you can find people that can do the jobs perfectly well and share a respect for those they work with, the owners and customers of the enterprise. I would much rather go forward with such people.

Some of the deadly diseases are fairly easy to tackle. Some (those outside anyone in your organization sphere of control) are not easy to fix yourself. They require a constancy or purpose, commitment to long term thinking and the ability to find creative solutions in complex systems.

Related: The Patent System Needs to be Significantly Improved (2005) – Innovation Needed in Granting Patent System (2006) – Innovation and Creative Commons (2005) – CEOs Plundering Corporate Coffers (2008)