They do actually teach this in business school, but not in the way you're thinking. There's a strong business option* where marketing (and thus brand) is more important than actual engineering or innovation. So under this strategy, if you are just a "premium" brand with a mostly outsourced and relatively cheap product line, that's a good thing because your margins will be high. You can actually see this happen to a lot of brands over time that were once trusted for quality and are now kind of garbage (ex. Craftsman tools). It is, of course, a short-term strategy because eventually the market figures it out and the party ends, but while it works shareholders (and executives) are quite happy.

*Note that business school teaches other options, strategies, tools, etc. as well, it's not like everyone is trained from day one to pump and dump.

Source: went to business school.

Yes I've seen it happen many times with products. So it's a conscious decision by the CEO, Board and execs to extract maximum value for themselves and shareholders and do a runner? I imagine they couch it in different terms in the minutes.

Edit: I probably didn't phrase that well - how would this happen, is it a nudge and a wink thing to the board, or the board is clueless and the CEO / execs just decide etc?

It's more of a strategy to maximise short-term gains, and the downsides aren't considered - because they don't need to be.

Public shareholders have absolutely no loyalty to any company they extract wealth from, and they can move their capital elsewhere in seconds. And CxO/execs are typically awarded bonuses on share price movements.

So any action that moves the needle on the share price is a good thing. If this has bad long-term consequences, CxO/execs can always try to bail if they see incoming. They don't always succeed, but they have a fair chance. Employees are more likely to be left without lifeboats in the sinking ship.

This still seems like foolish thing to do long term.

What happens if we move all the profits and manufacturing capacity to markets Western investors are locked out of?

Who cares? I don't mean it in a snarky way, more so I am curious as which groups of people actually get affected. Workers? Certainly. Capitalists? Not so sure. Somebody in charge is making these decisions and they deem them to be good decision, otherwise they wouldn't make them

The shareholders need to be put in the dark otherwise the stock would drop since there is a explicit short term pump and dump scheme. Surely it has to be at executive and board level to maximize bonuses not in the interest of the stock holders.

Sound like most other shorttermist problems we are suffering, i.e. climate change, debt, etc.

I think your terms are spot on.

John Sterman used to say something very similar going back to at least the 2000 and the trend has only accelerated since then.

At the time I remember him giving lectures on System Dynamics models to demonstrate the effects.

Thanks, I'll have a look at his works

Good insight, I feel like engineers/developers would benefit from basic business classes, just to understand the thinking that can lead to the downfall of great engineering companies and hopefully how to avoid it.

Having recently seen this first hand, i.e. great developers being shuffled around and questionable business decisions carried out without a strong engineering buy in, it sucks.

> the downfall of great engineering companies and hopefully how to avoid it.

why is this the responsibility of the engineer (presumably, with no real equity in the company)?

The ability to choose the ship you set sail on and to know when it starts sinking.

My understanding on how to avoid it would be, if you see decisions from management that point in that direction, run. Or raise concern.

> You can actually see this happen to a lot of brands over time that were once trusted for quality and are now kind of garbage

You can see this in Silicon Valley as well with the number of startups that are absolutely worthless but have exorbitant valuations because because they came up with a metric that everyone fell for.

It's the tyranny of the spreadsheet.

The thinking isn't that long-term, it's focused on the next 2-6 quarters. Plenty of people got rich off of plundering Hewlett-Packard; to the point there's no meat left on that carcass aside from garbage printers.

Ironically enough, the test equipment division (what I would call the actual successors of the company) have been through 2 restructurings (HP->Agilent->Keysight). Almost as though having cutting-edge engineering & R&D will have the side-effect of making good products. Shame that costs money though.

I'm not sure I'd describe Keysight as a success story of cutting edge R&D, I can't speak for the current Agilent as I'm not a chemist. They and other namesake test equipment brands seem to only focus on the ultra high end and the lower to even midrange models are frequently white labeled products from overseas competitors with a more polished UI. And they're not even always pushing their top end stuff further, their top end multimeter is virtually unchanged since 1990.

Oh, Keysight gear doesn't hold a candle to vintage Hewlett-Packard. However, I just wanted to argue that Keysight is closer to Bill & Dave's garage than the current HP incarnation. They have some OK gear, but too much of it seems overpriced; they are definitely letting the cheaper Chinese manufacturers catch up to them and seem to only want to rely on institutional contracts.

I personally don't know anyone in the hobbyist electronics space that owns any Keysight gear, my only exposure has been in university labs. Bit of a shame, really.

Yeah it's kind of crazy what HP was able to accomplish, the reason keysight hasn't updated a lot is because they didn't really have to. The DAQs are incremental improvements from what I've seen, the aforementioned 3458A still competes with new instruments, and I honestly enjoyed the 54601A scopes I used in school more than the new Tek ones I have at work.

They are not as affordable as chinese counterparts (Rigol or Siglent) but their 1000x line of scopes is a step in a good direction. I own one although I paid more for less features as compared to Rigol, difference in quality and polish of the UI is staggering.

The 3458A is still one of the highest accuracy, most stable and linear multimeters around, even though new 8.5 digit DMMs have been introduced since then. Anything significantly better is going to look more like a physics experiment than a neatly packaged bench instrument.

I'd appreciate something other than a GPIB connection in 2020, but you're right it's really a marvel of a design. Since getting it in the lab I've started reading more about how it works and there's a lot to learn. The widely lauded ADC in particular is really impressive.

https://doc.xdevs.com/doc/HP_Agilent_Keysight/HP%203458A%20C...

>Plenty of people got rich off of plundering Hewlett-Packard;

certainly not the employees!

C-suite's job is, unfortunately, only to get the shareholders rich, not the employees.

maybe thats part of the problem, I recall a trend where employees bought out the company and ran it. Not sure what happened to it.

We can't let the great unwashed own the company and run it for God's sake. /s

That's what happened.

There have been a only few instances of employee ownership of large corporations, never any sustained trend. United Airlines employees took over majority ownership in 1994 but that never really worked and they ended up bankrupt.

I suppose HP were challenged externally and couldn't adapt, the money savers start moving in, which pumps it up temporarily and it becomes a vicious cycle.

More obvious in retrospect and with experience, perhaps.

In the 1980s or so gadfly (relative to IEEE) Irwin Feerst was sounding a fairly lone warning for US engineers: Outsource packaging, then you will outsource fab. Outsource fab, then you will outsource process engineering. Outsource those, then you will outsource design. ...

https://www.eenewsanalog.com/news/stem-shortage-real-not-rea...

Almost all large, modern, public businesses are engaged in a pump and dump scheme where no one making decisions has any intention of being around for these last phases of corporate decay and death. It seems nuts to us from the outside and is super damaging to the long-term interests we all have in the US but this is taught in business school and is in fact the right business decision for these people to make given the context and sociopathic motivations they operate under.

No US business school teaches pump and dump schemes. The fault lies with corporate boards who set up compensation plans not aligned with the interests of long-term shareholders. It's the basic principal / agent problem.

Ok ok schools don't literally teach that, true, I was ranting but "corporate boards who set up compensation plans not aligned with the interests of long-term shareholders", is a pump and dump, exactly my main point, which stands.