the taxi business

I just had a project cancelled, because the business features it would have introduced are not sufficiently high priority right now. I’m fine with that approach. (It may be re-awakened in 6-12 months, if there’s enough money and interest.) Fortunately it was still in its infancy, so not much money has been spent on the wrong thing. Apparently. But as with everything else in this very strange organisation, when taken with the prevailing cost-accounting culture this decision may prove to be short-sighted. Let me explain…

Every project here is costed separately, and each is also judged separately for its revenue-earning ability. So infrastructure projects rarely occur; instead, the first project that needs to change the prevailing infrastructure / architecture gets to pay for that change. As one of the designers on my project put it: “The first person who needs to go somewhere buys a taxi; everyone else then gets a free ride.”

Now my project was going to be putting in place a whole raft of new infrastructure. In many respects it was seen by the techies as heralding a new dawn. And now it’s gone. And so has the taxi for all of those passengers who had planned to hitch a free ride in the next 12 months. Now they have to develop that infrastructure themselves. And pay for it. And instead of being co-ordinated by one team of designers, it will now be done in disjoint chunks, probably leading to overlap and conflict. So their costs will go up and their timescales will lengthen. The overall cost increase may well be greater than it would have cost me to buy the taxi.

So yet again, localised measures prove to be very expensive and wasteful when compared against more global measures; there has to be a better way… What would a lean manufacturing organisation do? Suppose we have a factory in which various products share the facilities; would each product carry its own production costs? What if a machine needed to be upgraded – would we charge that to the first product that needed the upgraded machine? I’m sure the Theory of Constraints muct have something to say here…

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