Although I have two degrees in business and 40 plus years of experience, there are many, many things that businesses do that befuddle me. Whole industries make massive mistakes that eventually prove fatal. Other companies then make the exact same mistakes. It seems that no one ever learns. I realize things are different with yet another wave of COVID-19 deaths, but not all of this can be chalked up to the pandemic.
I recently read an interesting article, “Why Did America Give Up on Mass Transit? (Don’t Blame Cars.)” that provides a prime example. I suggest that you read the article if you’re a student of business–not just those of you who are studying business in an academic setting, but anyone who engages in business. My synopsis does not do it justice, but, hopefully will pique your curiosity.
America once had an efficient and effective mass transit system, which both enabled and limited geographic dispersion. After the Second World War, inspired by the German Autobahn, the federal government funded the interstate highway system. At the time, it was perceived and justified as a defense measure to move troops from one place to another quickly. In addition, stretches of the highways were constructed in a straight line without obstructions so they could be used as air strips if military air bases were destroyed.
In the meantime, mass transit systems did not receive such generous funding. Even though the train and trolley car companies were well entrenched, they did not, as opposed to could not, successfully compete. Their response was abysmal. Essentially like wagon trains in the Old West, they pulled the streetcars into a circle and hunkered down.
Instead of improving service to be more competitive, they hunkered down and cut expenses. Then they cut expenses more.
There is an old saying in business. “If you let marketing run the company, you’ll go into bankruptcy, reorganize, and come out as a profitable enterprise. If you let accounting run the company, the company will stay in the black until the very last stick of furniture is auctioned off and the doors locked.”
What if the industry had improved service to make mass transit more appealing? In an ideal world, would you rather fight rush hour traffic, or would you prefer to sit in a comfortable train car? Unfortunately, in those cities that do have a more-or-less successful mass transit system, the comfort is still lacking. Instead, mass transit rush hour means being packed like sardines so that your nose is in another rider’s armpit (or vice versa). They could have done better and done so in more markets. They still can.
Today, we’re seeing the same thing in other industries. Newspapers are cutting expenses (staff) and printing papers that rely on news services rather than reporters. Those few dogged souls who still subscribe get to read the same stories they read online yesterday. Today you need a magnifying glass to read the funnies–soon you’ll need a scanning electron microscope. The only reasonable amount of space is for obituaries (which are paid for by the bereaved).
Then there are retailers, who have pretty much handed everything over to Amazon and slunk away with their tails between their legs. Actually, they might be in a better position than they think. I’ve heard many people complain about Amazon, how Jeff Bezos treats Amazon employees, and some very cutting comments about greed.
What’s next? We’ve already got teleworking, online pharmacies and virtual doctors’ appointments, church services and dating apps. Soon it will be possible for people to spend their entire lives without face-to-face encounters with others. The first time they’ll leave home is when the undertaker picks up their body for disposal.
More’s the pity.
sfnowak 