The rewards of failure

One of the most tiresome spectacles in life is that of besuited businessmen lecturing the rest of us on the consequences of poor performance. Thus we are told that workers who are laid off because their productivity isn’t up to scratch somehow deserve their fate. But further up the capitalist food chain, the situation is reversed. There, failure is lavishly rewarded. The Financial Times tells me, for example, that Sir Peter Davis, the bloated smoothie who presided over the decline of the Sainsbury supermarket chain, is to get a £2.6 million cash payoff. And my own newspaper reveals that the former chairman and chief executive of Jarvis, Paris Moayedi, received a £260,000 ‘performance bonus’ for 2002. Why is this noteworthy? Well, 2002 was the year of the Potters Bar rail crash. Jarvis was responsible for the maintenance of points at Potters Bar which broke when a train passed over them and derailed, killing seven people. And this happened on the aforementioned Moayedi’s watch. Quite a performance. Quite a bonus.

After phones for dogs, what?

The industry’s got ones for toddlers too. Quote:

“MYMO (My Mobile) is a three-button, cat-shaped mobile phone aimed at five to 10 year-olds. It can dial five pre-programmed phone numbers and is available online for £69. It is billed as a “security mobile” that buys parents “peace of mind”.

Doggerel

Now that every man, woman, child and dog has a mobile phone… Hang on — did I say “dog”? Yes, I did. You couldn’t make this up, you know. But it appears to be real.

The law of unintended consequences

Among the people with whom I work and correspond, it’s a commonplace that the patent and copyright systems are broken, and that this will have terrible long-term consequences for society, business and innovation. Few legislators seem to understand this, which makes the position even bleaker. In an interesting forthcoming book two American academics, Adam Jaffe and Josh Lerner, track the breakdown of the US patent system to two isolated administrative changes made years ago. The first was a decision in the early 1980s to establish a single federal appeals court to hear patent lawsuits, replacing 12 regional courts of appeal. The second was a decision by Congress in the early 1990s to change the way the US Patent Office was financed: henceforth it would get its income from the fees that it charged for granting patents.

Guess what happened. The easier it became to get patents, the more people wanted to apply for them, and that led to a situation where examiners were deluged with more patents to review, which led to pressure to conduct quicker reviews and a degradation in quality of patents issued. This is what led to the granting of absurd ‘business process’ patents like Amazon’s one-click ordering, and to the granting of countless others where there was clear ‘prior art’ that the examiners simply hadn’t the time or the resources to uncover.

Jaffe and Lerner describe this in terms of the Law of Unintended Consequences, which is true in one sense. But in fact it’s symptomatic of something deeper — the failure of policy-makers to take a systemic view of the decisions they recommend. Some consequences are indeed unpredictable; but taking a systems perspective, and using systems modelling techniques, can help to identify implications that might not otherwise be obvious.

This insight was the basis for a ground-breaking pamphlet that my former colleague Jake Chapman wrote for DEMOS, the UK thinktank. Jake’s ideas have spread like wildfire in the UK civil service, and he is now developing an online course based on it for my Open University Relevant Knowledge programme. The course is scheduled for its first presentation in May 2005.