Customers, Companies, and Power – imbalances drive inequities


I’ve been in the process of buying a house for the past month. It’s been a rocky process. Some of it has been on us, but a lot of it has been on the side of the lender. The first problem came when they basically started the process they day we were supposed to sign. This precipitated a series of events that as lead to the fact that it’s unlikely for us to actually fund the house on the last day we possibly could. Furthermore, they have been rather cavalier about the fact that we can just move closing dates without a problem. Essentially their poor processes have required us on multiple occassions to modify a private contract. We’ve been punished again and again because of their inability to meet their obligations. This strikes me as a serious inequity, especially since it’s not a big deal for them that we essentially lost out on a full month’s of rent from the seller. We have minimal to no recourse to address this loss.  On top of this, they still get paid. In my mind they’ve provided little to no value in this process and have in fact simply added a great deal of waste. They should no be paid and in fact should pay us the loss in rent we should have received from their inability to meet deadlines.

This sort of behavior is rampant in industries and companies that are essentially monopolies. Either their customers are fully locked in to a specific company because it is expensive or difficult to extract personal data or some other technical issue or the customers have no other option. In either case the company is able to act with a great deal of disregard for their customers. The goal of the business then becomes to extract maximum rents from their customers not to provide maximum value to the customer. This can create existential issues for a company that undergoes this transition, because many of the people that made that company great are pressured and have the quality of their employment decline without understanding why. Essentially these folks still try to do the right things and in many cases don’t agree with their corporate leadership. In many cases, such as with a Telecom, it’s likely they are exempt from the full rent seeking behavior of the company.

Thinking about these things have made me really frustrated the past few weeks. My job is to help my company deliver more value to the customer so seeing these actions is increasingly frustrating and counter productive to Lean principles. If companies aren’t adopting principles that improve value for end customers, then what can we do? Well, I think that in each of these cases the root cause comes from two totally different policy actions. First many of the issues we’re having are designed to protect customers so we enacted policies to that end. While the other problem, rent seeking behavior comes from the lack of policies to protect customers.

In each of these cases different government actions have lead to different actions for end customers. In actually these painful delays for our loan may for many other people, truly protect them. However, in our case, they aren’t. In the case of push deregulation on telecom the result has been monopolies and behavior designed to continually take more money from their customers. In each cases, these derive from two different philosophies around the value of government regulation. I think these situations highlight the nuances in this area.

In the end it’s important that we have real conversations about the underly reasons for different policy decisions. We need to understand that there are imbalances of power between customers and companies. In many cases those companies will exploit them to their best advantage. Unfortunately, these imbalances extend to the realms of politics as well. This of course is another area where we have issues and will continue to have issues. It is unclear how to address these imbalances, i’m not confident that we’re going to be able to do this in the next few years. If we cannot address these issues I believe they will continue to get worse as the economy remains flat in it’s growth.

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