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Niklas Anzinger's avatar

I think this is a great list of problems for B2B / Enterprise entrepreneurs to find solutions for.

In fact, I'm working on a solution to number 9.

Some things that may explain the puzzles:

1) Some of the best companies are better at some of these things (e.g. Ray Dalio / Bridgewater and #14).

There are just too many factors that determine the relative competitiveness of a firm for one of them to be decisive for survival.

That's why firms can live with most of the inefficiencies as long as they have a comparative advantage somewhere.

2) Customer myopia is especially strong in B2B. This is counterintuitive, but often big and expensive solutions are less competitive than small - because there is a lot of legacy and myopia involved in change.

And it's irrational for firms to change if they don't benefit from them. That's why significant technological changes often take decades.

3) You don't list the inefficiencies that businesses don't deal with anymore or to a smaller degree, e.g. data entry and access, hiring only locally or based on nepotism.

All goes to say that firms under competition are relatively efficient, but that doesn't mean problems automatically solve themselves.

There are just too many problems and sources of inefficiency to be on top of all of them.

The best strategy is for firms to focus on relatively few things that make them efficient enough to succeed in their environment.

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brendan_r's avatar

Why again did that fad for public ownership of production die out?

More seriously, if the evidence seems ambiguous it's because the industries that get the most attention are those look least like perfect competition, i.e. operating systems and their increasing returns to scale, communications and their large minimum efficient scale, and medicine where value is hard to judge and people have stubborn intuitions.

That each of these industries (except the IT ones) are heavily regulated everywhere makes the public/private question even harder to evaluate.

The clearer the empirical evidence is that a particular industry is more efficiently run privately - farming, manufacturing, delivering physical goods - the less likely it is we think about it often.

Further, once you know the processes that make such industries better run privately, the existence of those same processes in other industries is at least a strong hint that some private structure is ideal.

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