Originally posted by  RichardGabriel <rpg@steam.stanford.edu>
on the organization-patterns list.

	 :	In fact, it IS the company that best meets the needs of its society. 

Unfortunately, I've studied how companies succeed and what such
success means, and it boils down to something like this, but not
exactly what you've written. The key is in the phrase ``its society.''
A company has a set of entities that buys its ``products'' and thereby
provides revenues to the company. This set is ``its society'' in the
sense I think is the thrust of the e-mail exchange I saw (what is
important to the members of the corporation is a little different). 

This set of customers, let's call them, has a mode (the most common
sort of customer) whose needs the company meets best (by definition, I
suppose). The needs of this mode might not be the needs of the whole
set, and certainly those needs are not the needs of the let's call
them the elite of that set. In fact, like many biological-like sets,
the mode is bacterial - low-end, simple, casual users. Let's look at
an example, Microsoft Word. The mode of people who buy this product
use it infrequently and probably use computers infrequently. They are
happy that what Word produces looks better than what they could scrawl
on a pad, and they can get things done with it faster than handing it
to their secretaries because with Word you can throw together a wide
range of document things quickly but crudely. The mode loves it.

The best strategy for Microsoft is to improve Word as slowly as
possible, and the fewer the number of competitors, the slower that is
(development is ''the constraint'' in EliyahuGoldratt's term (and isn't it
odd that this guy's name is Gold Rat?)). (I know one hardware company,
for an automatic knitting machine, that has no competitors at all, and
today they use 30-year-old technology and charge $500 for a 32k memory
upgrade.) The required rate of improvement is what satisfies the mode,
because anything more leaves money on the table and anything less
leaves an opening for a secondary competitor.

There is another factor which I call Gambler's Ruin and which another
writer (a business theorist) calls the Law of Increasing Returns which
says that the company in the lead in revenues/profits increases its lead.

This implies a few things:

	* Competition is better than no competition
	* The mode tends to drag down the quality of the product as far as the non-mode is concerned
	* Gambler's Ruin says that the rich get richer, and so the leader can slow down and make more profit (the asymptote is the knitting company)
	* The average customer is not served because the mode expects less and the elite customer is screwed

I don't know of anyone who writes for a living where they typeset what
they write who uses Word (I'm sure there are some, but I don't know
any). All such people use, in order, Frame, Tex, and
Interleaf. Yet Word is the best-selling, most profitable
``typesetting'' system. Does this serve society? It certainly serves
the target society for Microsoft.

Another example, 15 years ago there were around 22 relatively major
publishing houses which, in the 1960's and 1970's, put out quite good
literature in addition to trash. Now there are 8 conglomerates who put
out mostly trash. Trash to us is literature to the bacterial mode of
readers. A few years ago Doubleday tried to lure Chris Alexander away
from Oxford with a big contract. Chris asked them to list all the
books they had in print that were more than 20 years old, and
Doubleday couldn't name any. Chris also asked how their longevity
compared to the 500-year-old Oxford. 

Who serves which society best?

                        -rpg-

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See also: ImbalanceOfPower, StrategicPlanning