Monday, March 17, 2014

Agency Problems Should be Killing Incumbents

This video is entitled the Second Industrial Revolution but I want to pick out a specific point made in the 2nd half.

Incumbents are caught with a particularly nasty agency problem. The ground is sliding out from under them. The leadership sees what needs to be done to fix it, but the necessary corrective is hazardous to their yearly bonus for a number of years. So they know that there's a problem but they do not behave as if the problem were real out of either conscious or unconscious decisions made in their personal self-interest.

The whole video's worth a watch.