[crdb]

> a bank fired some old people to pay a billion dollars to a contractor who would hire the same (!) people to do the job

"a bank" is technically incorrect. The decision was a perfectly rational prisoner's dilemma defection from one executive (cut costs by firing the "expensive employees" and hiring "cheaper and newer"), who went on to be promoted on that basis, and it was the next generation of executives who had to deal with the mess and "hired IBM" so they could absolve responsibility of a situation with no visible upside if successful and tons of visible downside if not.

[onethree]

Except that's not what happened in the specific example given - it was a strategic decision to spend a billion dollars and multiple years to replace an old system that processed transactions in daily batch jobs with a modern system that can do transactions effectively instantly - which is exactly what the parent post was arguing should occur

[romwell]

In your statement you omitted the fact that they fired the very people they need to bring this "strategic decision" to life.

Spending money on upgrades is not the problem. Firing people who know about your systems is.

[JustSomeNobody]

> cut costs by firing the "expensive employees" and hiring "cheaper and newer"

You should do everything else to cut costs before you start getting rid of your people. Those people understand your business and you're going to need those people when things turn around (and they usually do). Any time you let people go, you're throwing away domain knowledge. You've PAID for that. It is an asset. You'd no more throw away all the computers in the building, why would you throw away your employees!?

[chaostheory]

For the large companies, it was probably due to pensions. When you take into account ever increasing lifespans and the number of people nearing eligibility for pensions at that time, it was a no brainer for finance and management. A lot of people didn't get fired. Instead they were transferred to one of the big consulting firms like Accenture and they ended up working for the same pay but much less benefits as contractor to their former employer. Some of those affected were smart enough to sue their former employers but I would guess that most did not.

[mathattack]

It is the banks who put in the perverse incentive systems. (Pay half of this year’s gross profits in End of Year bonuses)

[noobermin]

You added a wrinkle that seems to partially explain it. Moreover, it does not and should absolve the relevant parties of their responsibility.

[crdb]

The ironic thing about your reply is that it is crafted in exactly the type of management speak that executives used to convince stakeholders in both occasions.

"absolve relevant parties of their responsibilities" - what relevant parties? What responsibilities? It sounds great and responsible, giving a good impression of dismissal of the point made, but the wording is so general as to be impossible to act upon - just as with "a bank". I'm sure standardised checklists were ticked, committees reviewed the decisions and came to the conclusion that it was best, the board was satisfied with the new direction taken by the CTO's organisation, and the shareholders happy with the cost reduction at the time as described by the board. To paraphrase Thatcher, what colour trousers do the relevant parties wear?

You see this defection pattern everywhere. For example, the never ending stream of useless new features in most Google and some Microsoft products which coincidentally get slower and buggier every year, because you can get promoted for the visible addition of a feature as a PM, but it is much harder to prove that getting the Gmail app load time down by 70% has stopped the feeding of your best power users to the competition (Calendar is too easy a target for criticism).

The classic defector on the tech side is the "ninja rockstar developer" whose prolific output of code and visually attractive but functionally superficial features is matched only by the amount of frustration generated after they are promoted somewhere else or changes jobs if it doesn't happen fast enough, and the rest of the team has to deal with the technical debt and new, unrealistic user expectations.

Security is another good candidate for shortcuts, since there is no visible upside to good security (maybe you were just not attacked) and tons of downside for taking responsibility since you make yourself a visible scapegoat for blame when a crisis does happen.

And note that none of these examples are in "move fast and break things" i.e. "do illegal things and hope they become legal ex-post" territory! I personally take great pains to understand these dynamics so that I can avoid them in my own company, which is a matter of survival.