I think the biggest change in general corporate management in my lifetime was the deprioritizing of the concept of goodwill. I’m not naive, businesses have always prioritized profit. However, there used to be this idea that pure profit maximization ruined your brand and reputation. You didn’t want to be known as the asshole company that nickel and dimes everyone or has draconian policies that make people hate dealing with you. Now the corporate mindset is seemingly that if anyone leaves any interaction with you with any positive feelings, you didn’t squeeze enough money out of them.
The biggest driver i feel is increased financialization of company ownership. Since the 80s, financiers essentially punish any boards or CEO who prioritizes longer term impact items like goodwill at the cost of short term quarterly results. This massively influences incentives - as a CEO or board you may know what is the right thing for long term success but you'll be fired if you choose that over short term results.
I also think that brands are being attacked and devalued.
Look at all the ASKJKL type uppercase brands on amazon.
Meanwhile trusted/established brands are impossible to search for specifically.
And established brands are bought and sold to bad new owners. Pyrex was sold and doesn't make good (borosilicate) glass products anymore. Segway went to ninebot.
I don't think that Segway was ever considered trusted or established. It has always been kind of a goofy niche product used by guided tour groups and mall security.
Nope. Financiers don't punish CEOs who prioritize longer term impacts, as long as the CEO maintains credibility by communicating a viable business plan and consistently delivering on commitments. The classic example is Amazon which had huge stock price appreciation while being unprofitable. Activist investors only step in to demand changes when the CEO and Board are incompetent.
My gut is this comes down to lack of real antitrust enforcement. If your customers have no choice but to come crawling back to you then why treat them well?
One is, you want a phone with drivers in the kernel tree so you can keep putting the latest version of vanilla Android on it without relying on the OEM. Except the market is too concentrated and then nobody makes that. Competition fixes this.
The other is, if you give people the choice between a $200 plane ticket with two checked bags and lots of leg room and a $170 plane ticket where it's standing room only and you can't check bags because the airline is reselling the cargo area of the plane to UPS, customers pick the second one. And then a competitive market provides you with that option which people choose and then complain about it even though the alternative is available. Choosing differently fixes this.
Everyone loves to complain about flying but generally all search by lowest price sort, click the first one. Flying is quite cheap in inflation adjusted dollars and customers could be a bit more selective, but are not.
It may just be a misperception on my part, but it appears to me that on average publicly traded companies are more likely to engage in this behavior and to greater extents than private companies. Startups can be pretty bad about it once the VCs come knocking, too. Maybe bootstrapped and private forever is the way.
I agree, although there’s a lot of selection bias at work here: companies usually don’t get bought by private equity unless they’re already in distress, so whatever they were doing before the acquisition clearly wasn’t working.
C.f. Private equity entrance to the veterinary market. Were they all really distressed? The issue is valuation of company vs underlying assets, isn’t it? Distress is one way, but a solid company not squeezing all of the value out of its customers / capital is another.
