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IBM Chief: All CEOs Reluctant To Invest In R&D

Soulskill posted more than 2 years ago | from the evolving-into-pakleds dept.

IBM 321

theodp writes "In his Centennial Conversation at the Computer History Museum, IBM CEO Sam Palmisano emphasized the importance of investing in R&D, even in a down economy. 'Shareholder expectations for higher returns don't diminish when the economy stutters,' said Sam. 'And yet, Tom Watson Sr. actually increased research investment during the Great Depression.' Palmisano added, 'I will tell you that my own instinctive reflex isn't to continue investing $6 billion a year during the worst economic downturn since the Great Depression. In that regard, I'm like all CEOs.'"

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IBM Chief: All CEOs Reluctant to Invest in R&D (1)

Anonymous Coward | more than 2 years ago | (#37160212)

If R&D is cut, where do the new products come from to provide new revenue to pull the company through? Cutting off your nose to spite your face seems to be instinctive. Prudent investment will help them, not scatter-gun spending.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (0)

Anonymous Coward | more than 2 years ago | (#37160238)

what are you talking about all the companies are doing it, products without any R&D is the future! *sarcasm*

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (1)

Opportunist (166417) | more than 2 years ago | (#37160908)

Why the sarcasm? Just wrap some spiffy design around the old crap and sell it as new. Hey, it worked before!

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (1)

Cryacin (657549) | more than 2 years ago | (#37160998)

Note everyone can be the next Microsoft.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (0, Interesting)

Anonymous Coward | more than 2 years ago | (#37160272)

You steal them from others, silly! And when the inventor tries to sue for patent infringement, you bury them in legal fees. And then your PR department writes an "article" about how this poor poor mega-corporation is being wrongfully sued by a patent troll, Slashdot then puts it on their front page, and you get hundreds of comments saying the whole patent system needs to be abolished.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (0)

Anonymous Coward | more than 2 years ago | (#37160678)

Cutting R&D spend doesn't mean eliminating R&D. They'll send it to China or some other country where it can be done for a fraction of the cost.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (2)

Lumpy (12016) | more than 2 years ago | (#37160778)

THIS!

This is what is happening. because you can get the best of your competitors by paying a china firm to go and steal the details and make you a product. They will even deliver you a "clean room reverse engineered" certificate. Because how can it be proven otherwise...

Here you go.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (5, Interesting)

Cryacin (657549) | more than 2 years ago | (#37161070)

It's so amusing to me when people trump up the "outsourcing" solution. I have had to deal with many many overseas outsourcing companies, some with shoddy talent, but some with some extremely bright and talented individuals as well. Unfortunately, none of the endevours bore fruit. Why? Because no matter how hard you try, you face the tyranny of distance. Not just geographical location, differing timezones etc., but cultural distance. This is why numerous banks are bringing their overseas talent onshore, rather than outsourcing cheaper overseas. Oh yes, and before everyone gets all huffity and up in arms about bringing workers in to work cheaper etc, note that these guys aren't cheaper. In fact, they are more expensive than their local equivalents for the business due to visa's, relocation costs and finally in some cases, their negotiated wages. Remember those bright sparks I was mentioning before? Well, they're these guys, and hence why at the end of the day the outsourcing companies don't have many of the bright sparks left, because you get what you pay for, and some companies are willing to pay more than others.

It will be a simple matter of a few years until a substantial portion of work comes back onshore as more companies understand the distance issue (and of course, talent becoming more expensive overseas), but there will be fewer seniors available to train the juniors.

At the end of the day financially for the effort and risk expended, the intelligent manager knows it is better to land R&D talent onshore rather than funding a research lab overseas; Unless of course, it's simply a bottom line fudge to get the shareholders to agree that you've met your 2 year KPI, and burying a nice little landmine for the next sucker CTO to find and rebury when he steps on.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (2)

tmosley (996283) | more than 2 years ago | (#37160888)

Incorrect. China does very little if any R&D for Western Companies. Rather, the big western companies outsource R&D, and the associated risk to small Western companies. If a breakthrough is made, they will buy out said companies. The problem with this is of course that the R&D results can go to ANYONE who is willing to write a check, so it is actually very dangerous for said big companies. They won't always (and in fact very rarely are) the first ones to write a check. Usually it is smaller, hungrier companies that are willing to invest in a promising but incomplete proof of concept that get the license in these types of situations.

Basically, by eliminating their R&D departments, they have destroyed their competitive advantage that served them so well in the past. This is the result of the rise of the MBA, who on the whole are a pack of fools who don't know anything about real business, as opposed to the earlier industrialists who worked their way up from nothing by rising through the ranks and learned how to run a business on the side, while keeping the "business" stuff secondary to the engineering and science.

But there is little need to fear. This system won't last much longer.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (2)

Opportunist (166417) | more than 2 years ago | (#37160970)

The problem is that those MBA CEOs have little attachment to the company. Their goal is to rip as much money out of it in as little time as possible, if that means bleeding the company dry, so be it. The "old school" tycoons who built the companies themselves wanted the companies to thrive and prosper, they were their baby, their legacy. They gave their life, blood and sweat for their company.

Not a single one of those wannabe CEOs today would shed as much as a tear over the company they're responsible for. And if the crisis told us anything, why worry? If everything fails and your gambling puts the company in jeopardy, the tax payer will cover for you!

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (4, Interesting)

Opportunist (166417) | more than 2 years ago | (#37160944)

Sorry, but no. You can manufacture in China, but doing R&D there will lead to a disaster.

In China, working to spec is the be-all-end-all way to do something. I had my share of work with Chinese companies, and they will do everything to your specification. Exactly. This. Way. Which is good if you have a finished product and just need it assembled a billion times. It gets completely out of hand the moment you try to let them decide anything. Because they will invariably choose the way that's cheapest to do. Don't be surprised if the task is "add another button" to find the button inside the device, unreachable, because it was simply easiest and cheapest to put it there.

In a nutshell, never ever let a Chinese company design anything. Invariably, you'll end up with a product you can't use.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (1)

ObsessiveMathsFreak (773371) | more than 2 years ago | (#37160738)

If R&D is cut, where do the new products come from to provide new revenue to pull the company through?

Marketing.

Re:IBM Chief: All CEOs Reluctant to Invest in R&am (1)

jo42 (227475) | more than 2 years ago | (#37160914)

Marketing.

AKA "Buy! More! Shiny! Shit!"

Without R&D investment, innovation WILL falter (5, Insightful)

intellitech (1912116) | more than 2 years ago | (#37160228)

The problem with R&D is that many company executives that make these investment decisions typically have trouble seeing the chain of innovation that heavy R&D investment brings to the table. Most companies right now (or at least a majority, in any case) expect instant-gratification on every damn investment, forcing every R&D department to constantly justify its existence through operational and productive changes, which almost always involve cutting costs somewhere.. and that's just not the way the fucking world works. If you want to rake in revenue, you're going to have to invest in R&D, and people may eventually figure that out.. hopefully.

Re:Without R&D investment, innovation WILL fal (2, Insightful)

whisper_jeff (680366) | more than 2 years ago | (#37160532)

I agree (which means I shouldn't reply and instead should just mod your post up but I have something to say so here I am :).

I'll use an example (not necessarily the best example but a good enough one to certainly support your point): Apple.

Apple invests an enormous amount of resources into R&D and it is paying off (to say the least). The most important resource that they're clearly investing into R&D? Time. While they're certainly interested in making lots of money now, they've clearly made the investment into making lots and lots and lots of money over the long haul. Thus, they are developing products until they are just right. Rumour has it the iPad was shown to Steve Jobs back before the iPhone at which point he put the iPad on a shelf and said "we can make a phone out of this." My point? The iPad had been in development (in one stage or another) for many years before it was launched. Most other companies seem to give their designers and engineers a year, two max, before they expect to see a product on store shelves. Apple is taking several years to polish a product before showing it to the public.

So many companies want to do what Apple is doing but they seem to think that means "release products and make tons of money." No. What Apple is doing is making a solid commitment to R&D and releasing polished products that people want (among other things but the majority of those other things come after the R&D). Until other companies start to similarly invest time and effort into R&D, they will never be able to "do what Apple is doing."

As you said, if you want to rake in revenue, you have to invest in R&D. That simple.

Re:Without R&D investment, innovation WILL fal (1)

CrackedButter (646746) | more than 2 years ago | (#37160564)

It's not really a rumour when Steve Jobs himself mentioned they designed the iPad before the iPhone on All Things D. ;-)

I agree with your point though and you saved me the time to write my own, also citing Apple as an example. It seems so simple AND they said they would be investing in R&D during the downturn. Now look at them, they are making a killing in profits IN A DOWNTURN! Imagine what it would be like if we weren't living in a recession?

Re:Without R&D investment, innovation WILL fal (5, Insightful)

Billly Gates (198444) | more than 2 years ago | (#37160906)

Here is a little secret.

CEO's are not in it to bring profits for a company. That is not their job. Their job is to boast the share price at all costs. Its taught in finance 101 in any college.

Now imagine you are the CEO. You can invest in R&D and have your shareprice get cut down by almost half in this recession and risk your job for not using the money to hire more marketing and sales people, but if you stay on for 5+ years you will make tons of money and create long term value. Or you eliminate R&D and your company will die within 5 - 7 years right? As CEO you get a 20 million bonus for selling your prized assets that make you money for short term gain and your stock price goes up a good 35%. You do not think such CEOs who do this stay right? They jump ship within 2-3 years with a golden parachute. Even better with that track record you go on raiding the next company for even more money and become a guru and genius to stroke your ego. 90% of CEO's would pick this and let the next CEO take the fall when they go out of business or fade to the competion. Meantime you buy a yatch and retire or buy a bigger one as you ruin the next company, etc.

This is how the real world works.

If this needs to change we have to stop having Wall Street reward short term behavior and start punishing companies like HP who do retarded things for long term shareholder wealth. I do not know how and do not think it is our job to do this. Steve Jobs was fired from Apple initially because of R&D and a lack of results. Wall Street hated him for his long term ideas and R&D. They wanted the mac done cheap like a generic PC. HE came back and risked everything for the IPOD as most CEOs refused to work for Apple thinking they were dead.

Re:Without R&D investment, innovation WILL fal (2)

Cryacin (657549) | more than 2 years ago | (#37161128)

This.

You are spot on right. Unfortunately there is no penalty to be paid for instant gratification. Hopefuly after this correction, investors will learn that 5-10% is an appropriate ROI. Currently the banks are facing an interesting problem. They had a group of essentially conmen, providing unsustainable 20-30% returns, a mad rush on profits and valuation of shares, rather than stable long term business. Now, when the reality cheque's bounced, the shareholders are unhappy with the 5-10% return, so the banks are cutting deep into their costs to try to maintain this ludicrous state. Something will give. It is a certainty. Unfortunately, we all know that it will be investment, because this is not instant gratificaiton. Unfortunately CEO's don't like, and certainly are not rewarded for saying no to shareholders. Unfortunately, it would take a far more intelligent person that I to come up with the solution. Let's hope that person steps forward sooner rather than later.

Re:Without R&D investment, innovation WILL fal (1)

mvdwege (243851) | more than 2 years ago | (#37160876)

Apple invests an enormous amount of resources into R&D

Actually, R&D is only about a third of Apple's expenses. And compared to their revenues, the sum gets even smaller. Don't fall for the narrative: check the 10-Q and 10-K for yourself.

Mart

Re:Without R&D investment, innovation WILL fal (1)

Anonymous Coward | more than 2 years ago | (#37160952)

R&D is rarely a third of anyone's budget.

Re:Without R&D investment, innovation WILL fal (2)

Opportunist (166417) | more than 2 years ago | (#37160982)

Only?

A third expenses for R&D alone sounds quite a lot, I doubt many companies spend that much on R&D alone.

Re:Without R&D investment, innovation WILL fal (1)

mvdwege (243851) | more than 2 years ago | (#37161042)

Compared to their overal revenue? Yes, only. Apple is good at keeping costs down, which is why R&D is a fairly big hit out of their expenses. However compared to their revenues, they invest very little.

It's a nice narrative, but the numbers don't hold up.

Mart

Re:Without R&D investment, innovation WILL fal (1)

Cryacin (657549) | more than 2 years ago | (#37161132)

3% R&D is standard for an established business. Any more and the shareholders would have your head as CEO.

Re:Without R&D investment, innovation WILL fal (0)

Anonymous Coward | more than 2 years ago | (#37160546)

The problem with investing in R&D in a down economy is that a lack of R&D will cause your company to fail within the next 5 years... but in an econ this down, failing to provide the returns being sought by your shareholders will cause your company to fail within the next 5 MONTHS.

So the knee-jerk CEO reaction is: Slash R&D, invest company money ONLY in damage control, short-term long-shot gambles, and only use long-term investments that result in immediate PR gains greater than the cost of the investment... then start looking for what you're going to do when you "decide to spend more time with the family".

There is not a single company on the face of this planet with the goal of "innovation".
Every single company on the face of the planet has the goal of "personal profit" for each and every shareholder and employee of that company.
Any company that does not provide the profit dies.
There are MANY companies that survive and profit even though they are uninspired and fail to innovate at every turn.

Re:Without R&D investment, innovation WILL fal (4, Interesting)

SomeKDEUser (1243392) | more than 2 years ago | (#37160650)

Actually, American corporations are awash with cash. They could very well afford more R&D, and don't need the shareholders.

There is no risk of failure in many cases. Simply, the habit is to hire psychopath as CEOs, who are really good at squeezing the lemon. This works in times of boom, but when a crisis comes along, and some real insight is necessary, as well as long-term thinking, there is no one.

The culture of the deification of the CEO-psychopath is what is killing America.

Re:Without R&D investment, innovation WILL fal (5, Interesting)

Opportunist (166417) | more than 2 years ago | (#37161036)

What puzzles me to no end is that they didn't even lose their divine status when they had to grovel for MY (and your, don't feel left out) money to keep their company from failing because they themselves are utter failures as managers. I wouldn't trust the management of my spending money to those duds, let alone a company where thousands of people are working hard.

These people proved they cannot manage, they cannot run a company and they cannot handle money, yet they not only keep their job, no, we (as taxpayers) get to pick up the tab for them and those friggin' morons continue moving from one blunder to the next without remorse or regret.

Care to explain to anyone why these people are supposedly worth the money they rake in? I refuse to call it "earning", they most certainly didn't earn it. But I guess if I post what I think they'd earn instead, in this day and age this might be grounds for a lawsuit.

Re:Without R&D investment, innovation WILL fal (0)

Anonymous Coward | more than 2 years ago | (#37160976)

failing to provide the returns being sought by your shareholders will cause your company to fail within the next 5 MONTHS.

This is almost completely untrue. Shareholder expectations have almost nothing to do with a company surviving. If a healthy company isn't losing lots of money, it won't go out of business. It doesn't have to make money. The stock can go down and the company, which would make the company a more attractive acquisition target, but that won't lead to the company actually failing.

What will happen if shareholder expectations aren't met is that the CEO will be replaced. The shortsightedness on the part of CEOs isn't about ensuring that the company survives, it's about ensuring that they survive at the company. CEOs would rather go down at the helm 5 years from now than be fired from a company that's raking in cash 5 years from now.

Innovation is gambling (2)

Chemisor (97276) | more than 2 years ago | (#37160636)

Innovation does not always lead to future profit. Sometimes you sink billions into a project only to find out that it can't possibly work. Taking chances like that requires disposable income, which is not available when times are bad. In a boom a company can easily afford to invest in long-term projects that provide no immediate benefits, but now when companies struggle to stay afloat amid all that debt they took on while betting on infinite growth, it would be totally insane to spend money on flakey things like research.

Re:Without R&D investment, innovation WILL fal (1)

mounthood (993037) | more than 2 years ago | (#37160690)

Managers aren't stupid; they don't "have trouble seeing the chain of innovation". By cutting R&D management can balance budgets, create short term profits, meet earnings projections, get huge bonuses, get promotions, and generally live the good life. It's the board and investors who are supposed to hold management to strategies of long term value, but they often don't have any long term commitment themselves.

Re:Without R&D investment, innovation WILL fal (1)

Lumpy (12016) | more than 2 years ago | (#37160786)

"Managers aren't stupid; "

You've never worked at Comcast or AT&T

Re:Without R&D investment, innovation WILL fal (0)

Anonymous Coward | more than 2 years ago | (#37160956)

"Managers aren't stupid; "

You've never worked at Comcast or AT&T

...or, for that matter, IBM.

Self managed companies (1)

mangu (126918) | more than 2 years ago | (#37160840)

It's the board and investors who are supposed to hold management to strategies of long term value, but they often don't have any long term commitment themselves.

In today's world of mega-corporations there's no personal involvement in the future of a company.

In the days of family owned businesses a long term vision was what guaranteed the retirement pensions of the investors. Today investments are managed by pension funds, none of which is committed to investing in one company alone.

Likewise, board members are director of several different companies, they are always ready to sacrifice one of them for short term profit.

theodp (1, Informative)

Raenex (947668) | more than 2 years ago | (#37160230)

I was surprised to see a story from theodp without a ton of links and screechy hyperbole, but then I looked at the original submission. Kudos to Soulskill for doing some editing.

Re:theodp (1)

RogerWilco (99615) | more than 2 years ago | (#37160518)

I found the speech itself good to read as well.

The reduction in R&D spending by several companies has me worried. It's nice to see IBM speak out in favour of it.

Re:theodp (1)

Ambiguous Puzuma (1134017) | more than 2 years ago | (#37160788)

My dad worked for IBM on the sales and management side for over 30 years.
He told me on several occasions in the 80's and 90's how important it was that IBM was investing in fundamental research, even if the research didn't have an obvious, immediate application. They could afford to throw a lot of things at the wall and see what sticks, and things that did stick could become part of products IBM could introduce and/or license technology to (at their option, whichever is more profitable) some 10 to 20 years later.

Of course this was a lot easier to say in the 90's when the economy was healthier. It's good to see that this line of thinking hasn't been abandoned.

IBM benefitted from massive government spending (2, Insightful)

decora (1710862) | more than 2 years ago | (#37160258)

the social security system was one of the most massive IT projects ever undertaken in history, when it came about in 1930s. IBM made massive amounts of money off of that project.

the German Census of 1936 was a massive operation and brought huge profits to IBM, as well as Hitler's grand plans for a massively centralized healthcare system which required vast amounts of data processing.

then there was the Soviet Union, which ran a planned economy - meaning that massive amounts of data had to be sifted in a centralized fashion. IBM was there too.

then there was Japan....

so its kind of easy for IBM to spend on R&D in the 1930s, considering that every government on the planet was pouring money into it's coffers.

Re:IBM benefitted from massive government spending (0)

DNS-and-BIND (461968) | more than 2 years ago | (#37160504)

so its kind of easy for IBM to spend on R&D in the 1930s, considering that every government on the planet was pouring money into it's coffers.

This doesn't follow. Who the hell is talking about the 1930s? Where did this come from? We're talking about 2011. Just because a company is making money doesn't mean they invest in R&D. That's the entire point of the fucking article. Did you take some weird anti-IBM university course? Are you a disgruntled former IBM employee? Do you understand how "3 countries" does not equal "every country in the world"? I weep for the state of higher education.
PS, that shift key next to the "Z" on your keyboard is used to capitalize the first word of each sentence. Obviously, you know where it is because you correctly capitalized IBM, IT, and (bizarrely) Hitler. Oh, and this link's for you: Bob the Angry Flower's Guide to its and it's [echoesandmirrors.com] .

Re:IBM benefitted from massive government spending (0)

Anonymous Coward | more than 2 years ago | (#37160590)

The CEO of IBM is talking about the 1930's.

  'And yet, Tom Watson Sr. actually increased research investment during the Great Depression.' Palmisano added

The CEO of IBM is lauding R&D "during the worst economic downturn since the Great Depression."

Seriously... there are two quotes... this is the entire content... how did you miss it?

The Great Depression began in 1929 and is generally accepted to have ended in the late 1930's.

decora is pointing out that due to being supported by 4 of the spendingest world governments of the time, IBM wasn't affected by the Great Depression nearly as badly as all of their peer companies.
At that same time, identifying the specific projects from each government (except Japan, where we are all expected to remember that piddly little "blowing two entire cities off the face of the earth" thing IBM cashed in on the reconstruction of) allowed decora to illustrate how the IBM of the 1930's didn't survive the 1930's due to spending on R&D during the 1930's but rather by having the correct political connections to monetize their current technologies when the rest of their sector had no customers to sell to.

Next time, you should focus less on tearing apart grammar and capitalization and actually read the content of things before spouting off like that.

the entire article is a history article (1)

decora (1710862) | more than 2 years ago | (#37160670)

and it is attempting to draw lessons from IBM's history.

i thought it would be appropriate to discuss historical fact. especially if those facts contradict the theory that has been presented. its called the scientific method.

my phrase 'every country on the planet' was an exaggeration. it is true. IBM only had offices in a few dozen countries, including the Netherlands, France, Switzerland, Sweden, Poland, Russia, Germany, Italy, Japan, Vietnam (a French colony), Belgium, Hungary, Austria, Czechkoslovakia, Romania, etc etc etc. They did not, for example, have an office in Mauritania or Mongolia, that I know of.

Re:IBM benefitted from massive government spending (0)

Anonymous Coward | more than 2 years ago | (#37160900)

Ahh, now I remember why I have you on my foes list. You can't even draw a straight line between several points of reasoning that all line right up.

Re:IBM benefitted from massive government spending (1)

RogerWilco (99615) | more than 2 years ago | (#37160540)

I think the point of the article is that when those challenges came, IBM was ready to answer them and apparently nobody else was. They could have just kept making cheese slicers, but IBM had a vision to be on the edge of what is technologically possible.

there were a number of competitors (2)

decora (1710862) | more than 2 years ago | (#37160612)

to IBM in the era, including several in europe.

Watson destroyed them, partly through competition, but partly through IBM's endless schmoozing with high government officials, including Nazis.

it would be like saying that Microsoft invested in R&D during the Great Recession. Of course they did. They also bribed teachers to teach students their products, forced Andriod phone makers and linux vendors to pay them protection money, launched a patent war (through SCO) against Linux, schmoozed with high government officials, etc.

Well duh. (0)

Anonymous Coward | more than 2 years ago | (#37160270)

Of course they're reluctant to spend money, R&D or otherwise. That would dig into their golden parachute funds.

It's--- (0)

Anonymous Coward | more than 2 years ago | (#37160300)

---Research&Destruct, mostly.

CEOs Unwilling Even To Pay For Technical Debt (5, Informative)

curmudgeon99 (1040054) | more than 2 years ago | (#37160308)

Not only is the modern corporation and its CEO unwilling to pay for R&D, they are unwilling to pay for the Technical Debt of their existing systems.
Software developers who work in production support know they will only be able to fix individual defects that have been targeted by the business customers. So, any production system becomes a series of code compromises. Developers fix individual issues and never do a broad refactoring of the code base. So, when a developer comes to a page, sees it's a collection of compromise/hacks, there is no stomach from the business to taking the time to refactor the page. So, instead, the developer holds his nose and adds another hack. Horrible.
So, developers do the refactoring on the sly. If they are really honorable, they come in on their own time and implement architectural improvements on their own dime.
No one in business understands it idea of Technical Debt and the value in future bugs prevented of paying that debt off.

Re:CEOs Unwilling Even To Pay For Technical Debt (2)

obarel (670863) | more than 2 years ago | (#37160332)

You have to be more careful with the way you describe reality. Too much accuracy may cause depression.

mod parent up (0)

Anonymous Coward | more than 2 years ago | (#37160390)

+funny

You have to spend money to make money.. (1)

intellitech (1912116) | more than 2 years ago | (#37160338)

Those modern corporations may end up burying themselves alive, and they probably won't see it until they're gasping for air.

And, those developers that never refactor, should be shot. I totally agree with you on almost all points, and especially so on Technical Debt.

Re:You have to spend money to make money.. (1)

SomeKDEUser (1243392) | more than 2 years ago | (#37160684)

No, the devs who never refactor simply do what they are told. It is not your job to save your company from its management.

And if you are a manager? hire enough people that they are not overworked and have time to think about the future. Otherwise, you are a management failure.

But then, the managers themselves typically follow instructions from above. The rot starts in the head.

"Technical debt": A new bullshit buzzword. (0)

Anonymous Coward | more than 2 years ago | (#37160410)

"Technical debt" is a new bullshit buzzword that I've been hearing a lot lately.

Everything that encompasses "technical debt" is merely a small subset of incompetence. That shitty code you wrote that's now causing problems? It's shitty because you're incompetent. Not being given time to fix it, or not hiring somebody competent in the first place? That's because management is incompetent.

So as we can see, "technical debt" is merely a euphemism for incompetence. These shitty developers and managers don't want to say they're incompetent, so instead they'll go on and on and on about "technical debt" to avoid having to hurt their egos. It makes the poor software they created sound like something some dipshit over in the finance department caused, and should thus be responsible for fixing.

As somebody who is competent, I ask that people like you stop using the term "technical debt". It's misleading, and it's a poor form of cover-your-ass. Just admit that you're incompetent, and find some other field of work to screw up in. Leave software development to those of us who are capable of doing it properly, on-time and on-budget, without having to cry on about "technical debt" and other bullshit like that.

Re:"Technical debt": Accurately describes (3, Insightful)

clay_shooter (1680300) | more than 2 years ago | (#37160446)

Technical debut is a term that accurately describes the sum tradeoffs of the decisions made for each release. The granularity or technicality of the debt metric may vary by management tier but it's real. Refactorings or subsystem re-designs create credit that lets future releases go out the door more smoothly. Rushed changes use up some, or more than all, of that credit putting future releases at risk. Business wants the changes. IT management doesn't want to be unresponsive. You get tradeoffs. People who say they never make those tradeoffs are either kidding themselves or they've never worked in a "go to production" IT shop.

Re:"Technical debt": Accurately describes (0)

Anonymous Coward | more than 2 years ago | (#37160538)

Nobody suggested that trade-offs won't be made. Of course they will! That's just the nature of every project involving resource allocation.

Again, it all boils down to competence. A competent software developer or manager will deal with these trade-offs in a way that doesn't cause problems later on. An incompetent developer, on the other hand, will leave "TODO" comments and poorly-implemented code all over the place. An incompetent manager will allow the incompetent developer to get away with crap like that. Then, later on, the incompetent developer and the incompetent manager will cry about "technical debt" and other bullshit like that, instead of owning up to their incompetence.

"Technical debt" never comes up in real engineering professions. You never hear a civil engineer talk about the "technical debt" incurred while building a bridge or a large building, or an aerospace engineer talk about the "techical debt" that accumulated while designing and building a commercial jet. That's because these fields only allow competent practitioners, and the fools get run out of town very early on. Unfortunately, in the software development field, we still allow Ruby on Rails "developers", JavaScript "programmers", MySQL "DBAs" and other idiots to make one mistake after another.

Re:"Technical debt": Accurately describes (2)

SomeKDEUser (1243392) | more than 2 years ago | (#37160860)

In the case of civil engineering, failure is not really an option, for one, and further modification of buildings is rare. But it is still the case that wrong urban planning incurs a debt : case in point, suburbia will take tens of years to resorb, until cities are densified again.

In the case of aerospace, you need only look at the space shuttle to see this effect in action. Design decisions had to be lived with for 30 years, because the shuttle was not treated as the prototype it was. It should have operated for 5 years, and given rise to a new design based on the lessons learnt.

Technical debt is not just incompetence: sometimes, there is no optimal solution, and you cannot know which tradeoff is the best. Then as you have a deadline, you get something out, and you hope that iterating to a better solution will not be too painful. Sometimes, I write code that is there purely because it might be needed later -- and this time ends up sometimes having been a waste, and sometimes a saviour. In general, it is not wasted, but I have the luxury to do such developments.

Pressed more for time, and if I depended on tighter schedules, many of those developments would have never existed. And I would be less efficient in the long run. Many managers do not understand this.

Re:"Technical debt": A new bullshit buzzword. (2)

curmudgeon99 (1040054) | more than 2 years ago | (#37160480)

I will agree that many times what I called "Techical Debt" is just bad coding that was there when you got there.
But another kind is caused by changing requirements. You design a system to meet the needs of the requirements when it is first written. But, as we know, over time the uses for a system can change. A system that was initially intended to support 100 users can grow to support 10,000 users. When that happens, your original design may not be up to the challenge and a redesign becomes necessary. You can retort that you should have built your 100-user system to support 10,000 users but that sort of overbuilding is another kind of mistake.
In other cases, an old system could have been built with EJBs for the solitary purpose of gaining the transaction support. After that system has been in place for a few years, it may make sense to rebuild it using a technology that emerged later such as Spring or Hibernate. In that case, the old system is technically fine (as much as an EJB can be) but a lighter weight and smarter technology such as Spring is a better idea. In that example, I would consider the original system to be a "technical debt" only in light of a newly emerged technology.

Take another example: a system that was originally built using simple declarative or programmatic transactions. Then, as the needs of the system change, it becomes necessary to support higher speed transactions. In that rare circumstance, the strategy of using rigid ACID transactions may change and the architect may realize that a high-performance design needs to be implemented.
Paradoxically, a high-performance design might remove the direct implementation of rigid ACID and instead use something called a "Compensation system". That's the way super-high-performance systems are built. They don't try to implement a two-phase commit and instead build a "Compensation system" that tracks the updates that have been performed and--if some issue arises--undoes those updates in reverse order. That keeps the intent of ACID without actually using official transactions.
That is an example of a technical debt. The original system may have had no problems but outside events called for a major redesign. To my original point, no CEO would pay for that massive change. This is an example of the sort of "Technical Debt" that does not mask any incompetence--just changing use cases.

Re:"Technical debt": A new bullshit buzzword. (2)

dbIII (701233) | more than 2 years ago | (#37160508)

Competent? All we know about you is that you are either unable to log in or unable to sign up for an account and that you jump to very quick conclusions on the competency of others based upon insufficient evidence.

Re:"Technical debt": A new bullshit buzzword. (-1)

Anonymous Coward | more than 2 years ago | (#37160580)

The message within the GP's comment holds true regardless of the name that is shown above it. It would be just as valid, and apparently hurtful to you, if it had any other name on it.

I suspect it hurts you so much just because it is far too truthful. It hits way too close to home for you. Are you the incompetent software developer it describes? Are you the one who screams about technical debt in endless Agile scrums, rather than doing it properly the first time around?

Re:"Technical debt": A new bullshit buzzword. (1)

dbIII (701233) | more than 2 years ago | (#37160648)

Insulting in addition to being unable to read to the end of a sentence as well? You do not appear to be doing your best tonight. I suggest you create an account and log in so that we can get some evidence to judge your competency or otherwise from a few posts for ourselves instead of just random insults from the anonymous ether.

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

rubycodez (864176) | more than 2 years ago | (#37160416)

if you want to talk about brutal reality....

That's why I only like to work on new projects. Let drones maintain it and deal with any architectural flaws and burn out doing it, that's why they get half my pay.

Re:CEOs Unwilling Even To Pay For Technical Debt (2)

curmudgeon99 (1040054) | more than 2 years ago | (#37160512)

Sir, I have spent many years building brand-new green field systems. Then again, every company has their legacy systems and they expect every architect to be willing to dig into those. I have had great success in my career by being willing to work on any project--green field new development and on existing systems. Primadonnas like you are the kind that give software developers a bad name in the eyes of the business side. I made $200,000 a year in NYC just because I was willing to go into companies in a world of pain and rewrite their systems from scratch. They always had drones who made less than half of what I did, but I took their technical debt off their laps and cheerfully solved all their problems. I sense that you are a pain in the ass to work with and you would cause your employers to roll their eyes. I'm glad you don't work for me now.

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

rubycodez (864176) | more than 2 years ago | (#37160554)

I made $200,000 a year in NYC just because I was willing to go into companies in a world of pain and rewrite their systems from scratch.

Said the primadonna no different than me. You didn't go in a quarter of that pay and fix the existing system. you might think between your left and right ear that yours will be easier to maintain, but by the way you said "you" rewrote it that will not be the case. You did do the good thing of giving them the features they wanted at the time, but down the road the same type of issues with the old system will reappear again, and they'll hire another primadonna or two or three.

Re:CEOs Unwilling Even To Pay For Technical Debt (4, Interesting)

curmudgeon99 (1040054) | more than 2 years ago | (#37160586)

No, you don't understand at all. The old system had all kinds of abominations such as database-access code mingled inside of JSPs and inline styles. So, I rewrote their apps with clean separation into tiers with proper style sheets and security and proper service/Dao layers. I actually got them to use a source control system rather than storing code in developer's unix home directories. I insisted on primary keys for DB tables and all kinds of no brainers like that. I resisted the urge to use Hibernate because I knew the existing staff could not support that. So, you underestimated the scope of what I fixed. What I left behind will be much easier to maintain. Separating the view code from the DB access code alone made it infinitely easier to support. Using PreparedStatements instead of Statements made their lives so much easier and removed a whole class of defects from occurring.
The difference between dumb and smart is not measured in percentages--but in orders of magnitude.

Re:CEOs Unwilling Even To Pay For Technical Debt (5, Insightful)

Anonymous Coward | more than 2 years ago | (#37160442)

If they are really honorable, they come in on their own time and implement architectural improvements on their own dime.

Stop right there. That's not honor, that's foolishness. Give up your life, family time, whatever, for a corporation that couldn't care less if you dropped dead right now. Furthermore, shit like that hides the true cost of the work being done, and increases expectations on under resourced staff.

Re:CEOs Unwilling Even To Pay For Technical Debt (1, Insightful)

curmudgeon99 (1040054) | more than 2 years ago | (#37160548)

Welcome to the real world. In every profession the true professional spends much more time than they bill to make sure they do a quality job. While I agree it's counterproductive because it changes expectations, this is a cost of doing business. I'm sure you spend plenty of time on your couch watching TV when I and others like me are writing code, learning new technologies and in general kicking your ass. I have not had to worry about being replaced by an offshore resource for the last decade because I have invested heavily in my own brain. Producing a brilliant design is worth the time I spend on it. I have no respect for lazy fools who expect to be paid for every little thing. You invest in yourself and you reap the rewards year after year. I'm sure your "family time" is spent watching TV or drinking beer. If you are lazy--admit it.

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

gdy (708914) | more than 2 years ago | (#37160634)

So your idea of life and family time is watching TV and drinking bear. Maybe you should get a life or something

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

curmudgeon99 (1040054) | more than 2 years ago | (#37160662)

[No, my idea of family time is playing with my son. I stopped watching TV in 8th grade. I drink about 2 cans a beer a year.]

Re:CEOs Unwilling Even To Pay For Technical Debt (0)

Anonymous Coward | more than 2 years ago | (#37160978)

I have no respect for people who don't value their own time.
It doesn't matter how he spends his own time, but he should be paid for any time spent working.
(Improving yourself by reading or coding at home is not work.)

Re:CEOs Unwilling Even To Pay For Technical Debt (0)

Anonymous Coward | more than 2 years ago | (#37161020)

That's a disgusting attitude to have.

Improving yourself on your own time is a very good thing, because corporations don't train the people they have.

But working for free? I'd do that only for a volunteer organization.

If you want to be an indentured servant, feel free. You'll burn out with health problems, and be let go for some lame ass excuse a management type makes up when you can no longer perform the way you used to.

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

Anonymous Coward | more than 2 years ago | (#37161078)

Absolutely right! When ever you circumvent a process just to get it done, you're actually re-enforcing management's delusion that their processes work when in actuality it's the PEOPLE who are making it work in spite of broken processes. You have to expose the broken process in order to change it.

Re:CEOs Unwilling Even To Pay For Technical Debt (0)

Anonymous Coward | more than 2 years ago | (#37160462)

Every year at my company's Sales Meeting our CEO underlines that we invest 13% of our revenues in R&D, and that this is a higher rate in the IT/Networking industry (he says they are usually single digit percentage). I always found that a bit underwhelming.

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

RogerWilco (99615) | more than 2 years ago | (#37160506)

It's called maintenance. Most people don't understand that software needs maintenance and regular check ups, just like hardware does.

Refactoring (1)

wombatmobile (623057) | more than 2 years ago | (#37160562)

Refactoring is fraught because to do it, you have to know what you are refactoring for. To make that judgement requires and engineer to think above his/her pay grade, and predict the future. Now, good engineers can do that, but there's no guarantee that their judgement will be supported by the manager that pays the salary. The disincentives are high.

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

Lumpy (12016) | more than 2 years ago | (#37160576)

" Developers (are told to only) fix individual issues and (directed to by management) never do a broad refactoring of the code base."

I fixed that for you as you made it sound like the developers are being lazy and dont want to do this. We want to do this, it's management that is being lazy.

I know of 4 installed systems that are a ticking time bomb because of this. Management has been warned about it to the point that we were told, "do not bring it up again". So we all sit here quietly waiting for the biggest customers system to explode or be compromised. Luckily many of us have a paper trail of who told us to pound sand and not fix it, so when it does explode and the CEO comes looking for heads, we have heads to serve him, and it will not be ours.

The sad part is that this SOP at most shops now. Nobody is interested in quality anymore just how fast can you half ass it and get onto the next project.

Re:CEOs Unwilling Even To Pay For Technical Debt (2)

Billly Gates (198444) | more than 2 years ago | (#37161040)

CEO/PHB voice here

How does refactoring bring shareholder value? How does it boast the company's stock price? How does it increase revenue? .../CEO/PHB voice

First off the CEO is there to make bonus money by screwing the company and leaving in 2-3 years before shit hits the fan. He doesn't care about you or technical debt .... infact he doesn't care about the company.

  Its a viscous cycle, but if you want to do innovative and wonderful things do not become a public company. Wall Street only cares about its shareprice and cutting costs with tangable things that can be done on paper. Unfortunately if you lack the funds to do R&D going public is the best option and now you are in a catch 22. Since no benefit on paper can show an increase in assets by refactoring then it is a cost center and the accountants will fight you. Wall Street looks at metrics only on paper with tangable and not software/virtual assets. Sorry you arein this sitation and I would look for work elsewhere because in my experience management always wins and the head always falls from the bottom. Of course the manager will do whatever it takes to keep his job and that comes by blaming the guys with the least amount of power

Re:CEOs Unwilling Even To Pay For Technical Debt (0)

Anonymous Coward | more than 2 years ago | (#37160868)

If they are really honorable, they come in on their own time and implement architectural improvements on their own dime

What's "Honorable" about it? It's actually stupid to whore ourselves like this. I know I have for years, but, have recently decided to stop. If companies want crap, they can have crap. For all I care the whole thing can implode.

Re:CEOs Unwilling Even To Pay For Technical Debt (1)

Antique Geekmeister (740220) | more than 2 years ago | (#37160934)

This is not only true of software development: it's true in IT as well. Far too often visiting with corporate partners, I see racks of equipment wired like a cat's cradle, where the engineer on site says "oh, we're not very neat" and I see core servers at risk from unlabeled wires, power and cabling that are out of spec and likely to fail under load, and where expensive system redundancy is wasted because the matched pair of servers are plugged into the same switch and the same power supply and the same storage array.

I'm afraid to say that I've become known as an uholy terror about this, because I or a colleague I can trust photograph the racks, bring boxes of cables and appropriate ties and labelmakers, and demand access to their inventory systems and network diagrams to record _all_ the systems. The result is, far too often, political furor as people discover that the much vaunted "high availability" systems were absolutely _not_ high availability. Far too often, fiber optic cables are bent too sharply and unprotected from tangled cables, expensive smart UPS's and switches have never had their configurations recorded, and redundant systems and systems have never been configured for proper failover behavior. And often we discore absolutely mission critical systems that are not on any network diagram or inventory that were ignored in the project plan.

Really, we're as prone to the problems in IT as the devlopers are.

Another failure of the kind of capitalism... (3, Informative)

gestalt_n_pepper (991155) | more than 2 years ago | (#37160350)

...that cannot think beyond the next quarter's profits. And hasn't that worked out well for the economy? We used to be a country of inventors and innovators. Now we're a country of servants and finance dickheads who neither invent or implement new technology. We went from a country of Hewletts and Packards to a country run by the likes of Carly Fiona.

Re:Another failure of the kind of capitalism... (2)

Veetox (931340) | more than 2 years ago | (#37160414)

I think it's important to point out why research is getting the cold shoulder:

Shareholder expectations for higher returns don't diminish when the economy stutters.

There it is. Investors of greater means have come to believe that they are entitled to greater than 6% interest. They don't expect to take risks anymore, so they turn their money towards market hacking, and essentially producing shit products that are just shiny enough for the masses to buy.

Re:Another failure of the kind of capitalism... (1)

the eric conspiracy (20178) | more than 2 years ago | (#37160432)

Nonsense. The US is home to 80% of the Nobel Prize winners since 1940. It makes easily the largest research investment in the world today, almost 3 times that of the next nation, China. A measure of scientific productivity is how often articles are cited by other scientists in the field. The US holds a 30% share of citations which is much larger than it's share of world GDP.

Re:Another failure of the kind of capitalism... (0)

Anonymous Coward | more than 2 years ago | (#37160592)

So why are the Chinese doing so much better than the Americans by many indications, while spending only 1/3 of the budget?

And the Nobel Prize has become a joke of giving it to your friends, associates, and other left wing idiots, And I'm not even talking about the "Peace" Prize.

Re:Another failure of the kind of capitalism... (1)

SwedishPenguin (1035756) | more than 2 years ago | (#37160698)

Try 40%.. Certainly commendable, but not all that surprising considering the US was the only major wealthy nation left untouched by WWII..

Re:Another failure of the kind of capitalism... (2)

Grave (8234) | more than 2 years ago | (#37160484)

The Japanese stock market, once upon a time (I suspect no longer) seemed to be focused more on long-term health than quarterly profits, and so the companies that crashed were the ones who didn't invest in the future--this was in direct contrast to western stock markets, where investors only care if the next quarter is going to meet the projections.

I work for a company that is expanding, partly through buyouts of smaller players that have complimentary technologies, and partly through hiring after those new technologies have been incorporated into the existing product lines and now need more support and R&D to further them. Given that this process began when there was no certainty of recovery from the recession, I actually feel pretty confident in the long-term health of this company.

Much like when Bill Ford recognized that Ford Motor Company had to shoot for the moon a few years ago, mortgaging everything to invest in new technologies, new vehicles, and new factory equipment, any company that is willing to bet on growth is generally going to do better than those who bet on contraction.

Re:Another failure of the kind of capitalism... (0)

Anonymous Coward | more than 2 years ago | (#37160880)

That's what happens when CEO's are treated as rock stars with 8-figure annual compensation packages. They're running scared the entire time, looking at the stock price and trying to figure out what product lines to cut, factories and offices to close and mass layoffs to make. Instead of trying to build a sustainable business that serves the community, customers, employees, and shareholders (in that order).

I'm tired of hearing about how Steve Jobs and Jack Welch show that the right CEO is worth paying big bucks for. Maybe they were, but 98 percent of CEO's are nowhere near those two in any measure.

The first step towards sanity is to repeal the Bush tax cuts.

"Even in a down economy"? (0)

Anonymous Coward | more than 2 years ago | (#37160370)

One would think that a booming economy would be more conducive to R&D.

Re:"Even in a down economy"? (3, Insightful)

Shikaku (1129753) | more than 2 years ago | (#37160398)

Quite the opposite. I'm willing to bet R&D would create a booming economy.

Of course there can't be any math to support this, it's subjective to the technology developed. But I think it would be easy to agree that if you make the "next big thing" that you will earn a lot of money.

Read the article (0)

Anonymous Coward | more than 2 years ago | (#37160380)

There is a lot of misguided derision that gets aimed at IBM these days. What Palmisano says in this speech shows why IBM has a respectable approach, inasmuch as any corporation can be respectable. Palmisano offers some lessons from IBM's history and how living by those lessons has allowed IBM to stay relevant when so many other corporations are making bad choices. That alone is deserving of respect.

Palmisano doesn't like spending so much on R&D, but investments in deep science and finding the next waves of innovation are what IBM has to do to keep itself relevant.

YUO FAIL IT! (-1)

Anonymous Coward | more than 2 years ago | (#37160386)

conglomerate in the f8om now on or the bottoms buut achieve any of the

Time preference (1)

trout007 (975317) | more than 2 years ago | (#37160406)

How much you value the present is known as time preference. The more you value the present the more you will spend now and the less money available for lending. This causes higher natural interest rates which makes businesses invest less in the future capital equipment or R&D. This makes sense. If people are worried about eating next year it is worth more to plant more aces of crops than use that money to buy new equipment.

The more forward looking you are the more you save. This makes more funds available for lending and a lower interest rate. This gives businesses the clue that it's time to invest in capital equipment and R&D. Again this makes sense. If you are confident about the present and you are looking forward your present needs are met and you can start building capacity.

Unfortunately the natural interest rate has been hijacked by the federal reserve. This means businesses have no idea what people are thinking. The fed pushes rates low and this gives a false signal people have a low time preference. They go off and invest in capital equipment when they should be worried about current consumable production. This is why the business cycle happens.

Re:Time preference (0)

Anonymous Coward | more than 2 years ago | (#37160582)

Huh? If we are to believe you, then companies should be too long-term oriented. Too much R&D spending. Not looking enough at the quarterly profits.

Last time I checked, that was not our particular reality. Care to explain?

MBAs == incompetent & short sighted (2, Insightful)

Anonymous Coward | more than 2 years ago | (#37160428)

I think the Harvard Business school mentality is the most short sighted though process around and I think will be the cause of the fall of western civilization.

The focus is on short term profit with no long term thought for long term health -- it is the bonus system based on short term gains which generally are at the cost of long term health of the company.

Executives slash & hack at R&D for short term gain & bonuses. IBM is alive today because of the R&D done in the 80's & 90's and they cashed in on intellectual property.

I have worked at too many high tech companies and seen this MBA infection -- it has destroyed every company I have ever worked for despite the talent working for them.

Wake up to the real problem.

Poorly edited quote (3, Informative)

Jazari (2006634) | more than 2 years ago | (#37160444)

Gee, the quote in the summary makes it look like he's not in favor of R&D, but right after that he says "But I also know that if you fall behind, it becomes very difficult to catch up."
He also talks about the evolution of R&D "a deep commitment to both R and D means that it's not only important to innovate it's equally important to innovate how you innovate. "

In the end of course, like any long term investment, it take guts to spend on R&D when the returns are far from certain.

R&D by the people, for the people (4, Insightful)

bzipitidoo (647217) | more than 2 years ago | (#37160482)

Corporations are lousy organizations for anything long term or big. 1st, they really do not have the resources. 2nd, they warp everything for profit. With the current legal climate, there's not much point in private research, as they'd try to lock up everything and then some with patents, copyrights, and so on.

Not saying the profit motive is bad, but for some things it is not the best guide. Why did we go to the Moon? Not for profit! Why was the Titanic operated so recklessly? A huge engineering project such as the Panama Canal couldn't be built by a single corporation. That was done by the US government. The transcontinental railroad was built by 2 private companies, but only with a great deal of help from the government in the form of land grants, military protection from Native Americans, and Civil War training and experience in running large organizations and operations. Some of the leaders of the UP considered cheating. They looked into whether it would be worth purposely making the route longer, much longer than necessary, in order to grab more land. Such thinking is all too typical, and the UP is hardly the only corporation to consider such schemes. Hoover Dam was another effort that could not have been done solely with private resources. The people had to negotiate all the details of water rights, power generation, and land use before turning over the work itself to private industry. The Channel Tunnel, the Erie Canal, the Transatlantic cable, and the Internet were similar. Most large civil engineering projects are government organized.

Reminds me if Atari (1)

GoodNewsJimDotCom (2244874) | more than 2 years ago | (#37160530)

Remember Atari was encouraged to invest in new hardware to make better games, but the CEO basically went along the lines of,"We have a monopoly, so we'd just be competing with ourselves if we made new hardware." Of course this isn't entirely true, better games mean there are more demand for the games and greater sales. I say thank God for Nintendo, 1985-87 were some of my best years of my life. You saw the greatest advancements in gaming in terms of hardware and software in those two years, than we'll ever see up until we start fighting holographic enemies in a field.

Re:Reminds me if Atari (0)

Anonymous Coward | more than 2 years ago | (#37160722)

I say thank God for Nintendo, 1985-87 were some of my best years of my life.

Nintendo has merely been the Apple of gaming: they made it mainstream but technological progress happened elsewhere. Consoles have always been pitiful as far as innovation and technology is concerned. Consoles are successful because they are dumbed down PCs with less complex games, so that Joe Average can use them.

Re:Reminds me if Atari (1)

Zombie Ryushu (803103) | more than 2 years ago | (#37160752)

Atari did make better hardware to replace the 2600, but they screwed up. They made the Atari 5200 intentionally incompatible with the 400/800/600XL. Those were all excellent machines that were ahead of their time in 1984. They even supported Composite output and RF. If you got a 5200 you had a machine that could not play 2600 or 400/800 games with incompatible controllers, an ultra-proprietary RF Switch and power adapter, and broken controllers.

They backslid even FURTHER into obscurity when they released the 7800 which was just a slightly improved 2600 as late as 1988.

What they should have done was just release a version of the 400/800 without the keyboard, or with the keyboard as an add-on... oh wait. They did... The Atari XEGS... in 1991, when everyone was moving to the Super NES.

Because of one reason. (0)

Anonymous Coward | more than 2 years ago | (#37160550)

If they reduce profits for the quarter, they reduce their bonus.

It's because CEO's today are selfish assholes that are not interested in the company's health and growth, just how the next quarter looks for the investors and board.

Makes sense to me. (3, Informative)

sgt scrub (869860) | more than 2 years ago | (#37160558)

When there is an economic downturn it is due to the fact your current process of getting money is no longer viable. In order to change to a viable process of getting money you must start by looking for a new process. In the world of technology this requires researching technology.

The key word is INVEST (0)

gr8_phk (621180) | more than 2 years ago | (#37160614)

R&D is an investment. Too many CEOs can't see it as anything but an expense. This is another fault of the business schools. Just because it's not a "profit centre" doesn't mean it's money down the toilet.

MBAs and Investment (1)

Alomex (148003) | more than 2 years ago | (#37161108)

Business schools will teach you hundreds of ways to cut expenses since those are common across all industries. In contrast you'll get very few techniques on how to increase quality, create a new product, move upscale or increase return customers since those tend to be industry specific.

To give an actual example, consider the case of a corporation--which shall remain nameless--whose entire value proposition is top notch customer service. Its clients are wealthy people whose accounts range in the $100K to $10M a year. One of their brand new MBAs decided in his great wisdom that they could save a few million dollars a year by moving to a voice activated answering service instead of the personalized service their wealthy customers had come to expect.

Call center costs went down by 40%, and the MBA was promoted.

However I happen to know that a few large customers left due to displeasure with the new system. They never took the time to register the reason for walking away, so the original corporation has no way to link the "savings" from the MBA "efficiencies" to the losses in accounts. In their next quarterly report they simply explained away the customer losses as "due to competitive pressures" and life went on, with other MBAs following the example of their predecessor.

When this becomes sufficiently widespread they eventually open space for a competitor to move in their previous space. You can think of many examples of high end producers moving downwards through cost cutting (and ultimately into low margin markets) while opening space for the competition in their previous higher up space.

A consequence of this is that a corporation is quite willing to roll out a $10M dollar call center customer that will "save" a few million a year, but completely unwilling to hire a staff of 15 R&D people at a cost of $3M a year, but with potential returns of $10M a year, every time they chance onto a significant innovation.

I just don't understand (0)

Anonymous Coward | more than 2 years ago | (#37160724)

If we can only extract even just a tiny fraction of the combined brain powers of a Steve Ballmer, a Carly Fiorina, a Eric Schmidt, ...., I mean we'd be lending the Chinese money and not the other way around.
I mean this is the dream team...

Technology change drives all economic growth? (1)

leonem (700464) | more than 2 years ago | (#37160842)

I knew the chap who founded SPRU [sussex.ac.uk] , looking into just such things back when it was largely being ignored. I also worked briefly with a colleague of his [carlotaperez.org] on technology bubbles and the positive transformative effects they can have in the long term, despite 'short-term' financial crises.

Firstly, they are of course of the opinion that R&D is vital. Indeed my limited understanding of their position is that almost all 'real' economic growth can be said to come from technological change. Everything else is either population growth or accumulating fixed assets like materials; the former dilutes per capita growth and is effectively a wash (distribution of wealth aside - yes that's a big issue too, but bear with me...), the latter only have value because of how they are used in technology (market value is of course determined by perception, and that's another reason it gets out of kilter from time to time).

More significantly, perhaps, is their way of looking at tech bubbles: they exist because of R&D, and all sorts of people get overexcited and there's a bubble followed by a collapse but, in the meantime, some entire infrastructure has been replaced. Rail bubble is a good example, the transition to mass production is another, various colonial bubbles etc. In these cases, the real economic growth (of the kind that benefits everyone, not just a financial elite) tends to occur only after the collapse.

I think we are in the middle of this collapse right now, and it may be protracted. Arguably the last similar collapse involved WWII before upward movement was restored. Anyway, the point is this fellow from IBM is absolutely correct, but if history is anything to go by there may well be a serious hiatus in R&D before the next wave of real growth starts, and him saying it ain't so might not do a hell of a lot...

(Just as an aside, a lot of R&D post Wall Street crash started as part of the military-industrial complex, effectively funded by governments as part of the war effort. There are many economists who suggest that, when private enterprise fails, governments have to step in and spend spend spend, but the reactionary governments such crises often engender have difficulty justifying this sort of expense without, say, a huge war. A more positive alternative might be putting large parts of the world economy onto a 'war footing' against climate change: printing money, creating jobs, building infrastructure and so on. Even if climate change isn't happening, this could be no more pointless than developing ways of actively destroying people and infrastructure...)

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