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CAPITAL WASTE
by Bernard Malouin
July 5, 2007


Recently I wrote to a F1 Grand Prix racing team and proposed a concept that would undoubtedly allow them to win more and more races as their technology would improve over the years. Given their poor track record and limited budget, I though they would at least open the dialogue and see what I was all about because my concept did not involve more money: just using what was available in a smarter way. That’s the power of concepts. In this case however, whether the concept may have been good or not is irrelevant because at the center of this story is the fact that they did not want to pursue any form of exchange to see whether this would actually be of an advantage to them. I know for a fact that I did reach the CEO and the CTO but it’s only when I hinted that they did not actually really wanted to win that I got a very short but polite answer.

That question however got stuck in my head”Do they really want to win?” For sure, I really believe that the driver of that team wants to cross the line first, but what about the president…does he really wants to cross the line first as well? His answer tells me that other forces are at play and that he may actually derive more benefits from his racing activities by not winning. What else could explain his attitude toward a new idea no matter where it comes from. If you really want to win and you don’t have the budget for it, you will have to innovate, you will have to question yourself about other things you can do to change and turn things around because if you don’t, you will stay where you are and that’s precisely my point: judging from their answer, this team will stay exactly where it is. Someone wants that team to stay where it is because it suits them.

So let’s now focus on the president. You normally would assume that he has the interest of the team at heart and actually wants to win races for the purposes of marketing and technical innovation. But in today’s world, government and accountant have also made it profitable to deduct losses from your profits. It’s called the tax law and the government will tell you that you can make more money by using the law to your advantage instead of ignoring it. Sure, you can ignore it and it’s not illegal to do so… but you’ll have to write a hefty check to the revenue services once you’re done. However, if you play that game right they will tell you, you will derive more benefits from using the law to your advantage: don’t fight us, be our friends and see what a beautiful path we have laid out for you…follow the maze of the law and make more money. It doesn’t matter if you win anymore, just plan your activities in accordance with the law and you will make more money as a result.

So now presidents and boards of director are squeezed between a rock and a hard place because winning in today’s world does not necessarily equate to more money. It’s a sad fact. And the worst thing they could do is tell their employees that because of the law, all their efforts, their good and honest hard work and the technical innovation they are trying to bring about is wasted. Don’t get me wrong though, presidents and boards of director are good people: they are trying to make more money for themselves just as much as you are trying to make as much money for yourself. Most of them are not even aware of the waste that is currently going on. They will tell you that they are acting in the best interest of the company. And they are! It turns out however that their agenda is different than yours. Their rules are different than yours.

Knowing that helps to explain a few things. It helps to explain why this team will never win despite the good will of the pilots, of the crew, the mechanics, the engineers and the designers because the people at the top do not want it. Well actually they do want to win, however it’s not races, it’s money…it’s the bigger picture. And before you say that the president is not acting in good faith, I can assure you that he does sleep at night because it’s not the only racing team acting this way. Most of them are! The F1 racing circuit has been taken over by the lawmakers and technical innovation has been thrown out the window.

Sure the cars have gotten faster over the years but they still run on 100 years old internal combustion engine technology, rubber remains rubber and their chassis have much more to do with planes than with actual street cars. Your average daily commute hasn’t got any better as a result yet this is precisely what it is suppose to promote.

So while you may be honestly trying to make a decent buck for your company, the company doesn’t actually wants you to go too far because in today’s world, making too much money is detrimental to the organization as a whole. That’s why you often feel frustrated. Being told by your boss that a particular idea is not good is often the result of differing agendas. His agenda includes laws that actually prevent him from being too efficient. In a world supposedly being driven by innovation, it is amazing to see how contradictory forces within the same organization are actually acting on people, making them play against one another.

One particular example of what I am talking about is president double talk where at an employee meeting, he will say that the employees are the most valuable and precious resources (which by the way, is the only useful resource you can have… how flattering!) and at the shareholder’s meeting where he will say that ROI and capital appreciation is the fundamental objective of the organization. Well, which one is it?

Another example of the effects of laws is where we stand now in term of technical innovation today. Depending where you lean on, the computer has been invented in 1949 and the Internet has been invented 1969. That’s almost 40 years ago and since then, nothing! We’re a far cry from the end of the 20th century and beginning of the 21st, where the car, the plane, radio, telephone, television, electricity and the assembly line to name a few, have all been invented and are still in use today!

And that bring me to the conclusion of this article: Laws are designed by a few. They are put in place by a few and promote the flow of capital from many to few. As the number of laws increases over the years the less technical innovation there can be because it creates a void between the ones that have the ideas and the ones that have the money. So much so that today, we are not only leaving a period of progress, we are also entering an era of regression.

So, if I were that pilot, I would not risk my life anymore and stop racing right away for that president whose sole purpose is to make more money by not winning. If I were that Chief Technical Officer, I would also quit because he’s never going to get the liberty to design and build a winning car. Yet all these people, that is the whole team, keep on racing simply because they are not aware of a simple fact: they don’t know about the secret agenda that the president and his friend the lawmaker are keeping to themselves.

This is an insult to human intelligence. Yet, they just keep on racing, dismissing blatant truths about what they could figure out by simple logic, they have entered the rat race just the same because they hope that one day they may win. And the lawmaker leaves them hoping because as long as they hope, money will flow their way.


© 2007
Bernard Malouin
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Bernard Malouin
Montreal, Quebec, Canada
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The opinions of FSU contributors do not necessarily reflect those of Financial Sense.

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