Why on Earth

Businesses tend to overtighten. They do it because they’re led there by simple, persuasive logic, which we can boil down to this: it is cheaper to print “do not overtighten” on the instructions than it is to supply products that can withstand formidable strength.

What can we learn about business diagnosis from TV’s nastiest doctor? Quite a bit. We take a look at Safeway and Supervalu pricing on our rounds.

I presume you would like to predict your competitors’ moves better than you do now. Say, for instance, their prices. Let’s work on that, perhaps with a shock as we go along. We structure today’s harangue around a pricing quiz.

Prognosticators would rather be right than wrong. The question remains, why do they (and we) get it wrong? Here are some reasons, and here is a way to distinguish good remedies from bad.

Executive compensation is top-headline news these days. It commands the attention of the President and Congress. It’s an attractive problem, full of righteous indignation, handy villains, and clear action plans. Unfortunately, it’s not the important problem.

People talk of business models with certain words and meanings in the USA. People may use the same words with different meanings in France, Malaysia, Brazil, and South Africa. We may translate the words but we may not understand each other, with real consequences.

What does your strategy development have in common with the financial crisis? And why did smart, self-interested, experienced people decide to buy and sell complicated financial instruments, risk so much on unsupportable assumptions, and let the inmates run the asylum?

Although this post seems superficially about stock-market investments, it really isn’t. It applies equally to virtually any competitive-strategy decision.

“Decades ago, GM controlled half of the U.S. market… Last month,… GM’s share of the U.S. vehicle market sank to 19.4%, according to Autodata Corp.” (WSJ, 6/24/08) We note in passing the “controlled” language, and wonder: If GM really controlled the market, would it have let its share decline so much?