From mboxrd@z Thu Jan 1 00:00:00 1970 X-Spam-Checker-Version: SpamAssassin 3.4.4 (2020-01-24) on polar.synack.me X-Spam-Level: X-Spam-Status: No, score=-1.9 required=5.0 tests=BAYES_00 autolearn=ham autolearn_force=no version=3.4.4 X-Google-Language: ENGLISH,ASCII-7-bit X-Google-Thread: 103376,1116ece181be1aea X-Google-Attributes: gid103376,public X-Google-ArrivalTime: 2003-09-12 05:39:04 PST Path: archiver1.google.com!news1.google.com!newsfeed.stanford.edu!cyclone.bc.net!sjc70.webusenet.com!news.webusenet.com!elnk-nf2-pas!newsfeed.earthlink.net!stamper.news.pas.earthlink.net!stamper.news.atl.earthlink.net!newsread1.news.atl.earthlink.net.POSTED!not-for-mail Message-ID: <3F61BE5F.2010204@noplace.com> From: Marin David Condic User-Agent: Mozilla/5.0 (Windows; U; Windows NT 5.1; en-US; rv:1.0.1) Gecko/20020823 Netscape/7.0 (OEM-HPQ-PRS1C03) X-Accept-Language: en-us, en MIME-Version: 1.0 Newsgroups: comp.lang.ada Subject: Re: Is the Writing on the Wall for Ada? References: <9keolvs9tjbbbuv1ndnsr69af7mtddemhk@4ax.com> <3F5F1ADB.1070008@noplace.com> <3F5F84C4.70902@attbi.com> <3F606BFA.7020407@noplace.com> <3F607DC5.5070408@attbi.com> Content-Type: text/plain; charset=us-ascii; format=flowed Content-Transfer-Encoding: 7bit Date: Fri, 12 Sep 2003 12:39:04 GMT NNTP-Posting-Host: 165.247.64.156 X-Complaints-To: abuse@earthlink.net X-Trace: newsread1.news.atl.earthlink.net 1063370344 165.247.64.156 (Fri, 12 Sep 2003 05:39:04 PDT) NNTP-Posting-Date: Fri, 12 Sep 2003 05:39:04 PDT Organization: EarthLink Inc. -- http://www.EarthLink.net Xref: archiver1.google.com comp.lang.ada:42409 Date: 2003-09-12T12:39:04+00:00 List-Id: Robert I. Eachus wrote: > Marin David Condic wrote: > > And you have to optimize "profit" - not "technical superiority". > That's something > > that most engineers have a hard time grasping. > > No! And that is an even harder lesson. What you want to do is to > maximize the long-term survival of the company. That is the hard lesson > for non-engineering types to learn. > And how is that not "Maximizing Profit"? :-) Would you rather earn one dollar a day for a thousand years or ten dolars a day for a week? Long term survival of a company *is* maximizing profits - and without some focus on the bottom line, investors withdrawal their money from the enterprise and... No long term survival. A corporation exists for only one reason - to make money. The instant it stops doing that, the employees all lose their jobs, the investors lose their retirement funds and the managers are all out hoping some other company won't look unfavorably on their track record. If you don't keep your eye on *that* particular mission, all the good engineering and better mousetraps and R&D in the world won't do the company any good. > > In corporate terms, you need to do R&D so you have products to sell when > the demand for current products dries up. And a company can stay in Not necessarily. There are lots of companies that turn a nice profit over long periods of time and do not invest in R&D. The pizzaria down on the corner has been making the same pizza for the last fifteen years that I know of and they've been doing just fine. Mind you, I'm not against R&D. Just that it is a typical engineer's focus to think that without it a company is going to hell in a handcart. I fall prey to this focus myself sometimes. (I am, after all, an engineer.) Its just that I've seen engineers complain about a lack of funding for R&D when a company might actually be in the middle of an economic crisis and fighting for its very survival. Sometimes you have to focus on all those alligators chomping at your butt rather than on draining the swamp. ;-) > business for twenty years or more with a 'book' loss as long as the cash > flow is positive. (For example, if you depreciate the factory but > maintain it, at the end of the ammortization period you will still own > the factory, and it will still be useful, even if depreciated to zero on > the books. The land you don't depreciate, but at the end of the > amortization period, the land plus building may be worth much more than > the book value. Some REITs (real-estate investment trusts) are > structured this way. They allow you to take a loss every year you own > them, then sell and take the capital gain. ;-) > Yes, I understand how you can have a paper loss and still be on the right course. Here we're simply looking at a company that has positive cash flow and is focused in on its long term strategy rather than worrying about optimizing next quarter's reports. That's a good thing to do so long as your investors understand what the strategy is and agree with it. But if that cash flow goes negative for too long, you don't have a business. What you have is a hobby. Few investors will stick around and keep pitching bails of money at you so you can play with a hobby. I recall going through a business course that dealt specifically with the jet engine industry and after all the lectures we got on the importance to survival of the business of bringing down the manufacturing costs over time, we still had engineers who didn't get it. A jet engine program might go on for thirty or more years. (Is that sufficiently long term focus? ;-) Over that time, you probably are going to lose money on the engine for the first ten years or more. The sooner you can "learn down" the cost of making those engines, the sooner it starts generating profit. When we got to running the business simulations, we still had engineers who kept trying to throw massive amounts of their budget into R&D well before they had made the last engine program pay for itself and had the whole business in a shambles within five years. Of course, one can always argue that it was the "business" guys who created the model, so naturally they can make it fit their view of reality. But it seemed intuitively obvious to *this* engineer that given limited resources and a limited market, you can't R&D every cool jet engine product you can imagine - sooner or later you have to make and sell the ones you already R&D'd and if you make too many products that fit the same market, you're just canibalizing your own business. Its all a delicate ballancing act. Maybe someone will one day come up with a good multi-variable control system that will totally eliminate the need for human judgement in matters of running a business, but I won't hold my breath. ;-) MDC -- ====================================================================== Marin David Condic I work for: http://www.belcan.com/ My project is: http://www.jast.mil/ Send Replies To: m c o n d i c @ a c m . o r g "In general the art of government consists in taking as much money as possible from one class of citizens to give to the other." -- Voltaire ======================================================================