Down the Docks

September 28, 2008

Kludge Discounts

Filed under: Technology — ealing @ 3:59 pm

When a managment decision favours speed to market (and therefore revenue) over superior implementation (and therefore lower long-term costs) are they generally:

  1. failing to hear or understand that quicker may be more expensive in the long-run?
  2. discounting future costs too heavily?
  3. expecting future costs that are too low?
  4. discounting their future costs correctly, and costs to others too heavily?
  5. getting it right?

The correct discount rate within any company must vary depending on its health and funding, so the rate at which people discount too heavily must also vary. If the discount rate is very high, as it may be for a startup, for instance, then the decision that brings revenue quickly will be the right one.

Are there any other observable patterns in these decisions?

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