• Prime Mover (unregistered)

    Shrug. Who is frist?

  • Industrial Automation Engineer (unregistered)

    @Prime mover: I'll tell you. For a price.

  • Prime Mover (unregistered) in reply to Industrial Automation Engineer

    No, I Ancona fall for that one. I'd have difficulties if I wanted Taggart out of that financial agreement.

  • Sole Purpose Of Visit (unregistered)

    I believe, in the macro-economic world, this is known as "Creative Destruction."

  • MiserableOldGit (unregistered)
    One of the main tasks any company needs to do is allocate resources. Regardless of the product or the industry they're in, they have to decide how to employ the assets they have to make money.

    I've worked for several outfits where this concept would a be a major revelation, if only they had managers capable of grasping what it means

  • Rob Hoffmann (google)

    C-suite geniuses like this one survive only because they escape their disasters before the disaster fully unfolds, so they avoid blame for the inevitable collapse of their pie-in-the-sky ideas.

    You'd like to believe that this will catch up with them somehow.

    It never does, though, does it?

  • Tom (unregistered)

    If this story is true, it's a fascinating experiment.

  • my name is missing (unregistered)

    The Cobra Effect is a powerful one. Pay for dead cobras, and find out people will raise cobras to kill to make money. Cancel the program, wind up with cobras all over the place.

  • Chops (unregistered) in reply to Tom

    I am sure I recall the BBC had a director who instituted a similar "internal market" philosophy, which led to a sudden massive drop in creativity, with a follow-on drop in what they were actually meant to produce (i.e. quality broadcasting output).

    For example, previously, when a studio or mixing room or any other such wasn't being used, people would simply make use of it to experiment with their ideas or learn things and so on. Every so often, one of these people would develop something with legs.

    Post this change, you couldn't do that. You had to pay for the time out of your own budget, so the unused equipment and facilities went unused, and experimentation and independent learning took a massive hit. Instead of trying new things and experimenting, people simply went home. The enforced, clumsy internal market led to a massive reduction in efficiency and output and woefully misalloacted resources.

  • (author) in reply to Tom

    I mention it in a hidden comment in the article, but Sears quite notably did the same thing. It led to absurd outcomes, like their annual Mother's Day promotion being deals on children's toys (because the advertising circular had limited space, each department was competing with every department for that space, and the toy department won), and the appliance department focusing on selling their competitors appliances (because the Sears branded appliances cost more on the internal market, so despite the company making more money on the whole by selling their own products, the appliance department could make more money for itself by selling competing products).

  • ADBjester (unregistered)

    I wonder if Rand wasn't the prime mover, but instead this was:


    It's the article that completely saturates the results of a search for "internal corporate market".

  • pudin9 (unregistered) in reply to Remy Porter

    "I mention it in a hidden comment in the article"

    Wait, what? How much of these did I miss?

    • goes to read the entire site archive again in source view *
  • EasilyDistracted (unregistered)

    "The C-level executive who had pushed for it had already moved on to another C-suite in another giant company, and was still preaching the gospel of the internal market."

    ^^^ To me, that's TRDWTF. I hate it when the bad guy survives to foul another day.

  • spadgas (unregistered)

    " despite the products being complimentary"

    Products that said nice things about users / the IT department / the internal market? Or perhaps the products were complementary?

  • Mr Bits (unregistered)

    "Prepare three envelopes."

    Look it up if you need to.

  • J.G.Harston (unregistered)

    Internal markets work when they mirror external markets - that is, a multiplicity of alternate suppliers. Internal markets are rarely like that unless the organisation is huge and distributed. "Shall we use Newcastle for payroll, or Southampton?" But not "shall we use HR for payroll or building mainatainance for payroll?"

    As a real world example, it worked when I was a school governor - single primary schools were often too small to do their own payroll, the default situation was to use the local council. Some schools banded together to merge their payroll admin as an independent offshoot outside the council.

  • Scott (unregistered)

    The bit about the life-changing books reminds me of two jobs ago.

    On interview day, waiting in the receptionist area, I noticed a bookcase full of management bullshit. "Hmm," I thought, :it seems like these guys don't know what they're doing and are grasping at straws."

    Very nearly didn't take the offer because of this. Ended up working there. Turned out I was right.

  • Sole Purpose Of Visit (unregistered) in reply to MiserableOldGit

    I believe you are misinterpreting the implied subject of the adverbial phrase "to make money."

    For some reason, that subject is usually inferred to be "the company" or "the share-holders" or (in a particularly let's-not-bother-defining-our-terms way) "the stake-holders."

    Infer it to be "the moron who came up with a scheme such as this, got a raise and a bonus, put it on his resume, and moved to a better-paying position elsewhere," and I think you would see that Remy's apothegm, whilst accurate, is not terribly useful in the real world.

  • D J Hemming (unregistered) in reply to Tom

    Sears is the big example, the NHS in the UK has also been crippled by the "internal market" model.

  • Sole Purpose Of Visit (unregistered) in reply to Chops

    Director-General. John Birt.

    You want WTFs? Man, you should check out John Birt's history. A clusterWTF for 12 years or more. One of his more interesting scams was to take on the job through his own limited company, which allowed him ... a certain distance from taxable income, amongst other things.

    Birt is now a member of the House of Lords (equivalent to the Senate), which just goes to show ... something. Not a particularly agreeable something. But something.

  • (nodebb) in reply to pudin9

    @pudin9 Remy's hidden comments have been a fun Easter egg for some time. I know it's quick to peek at the page source, but if you'd like to make things even easier then you can create a bookmarklet or Greasemonkey script with code like the following:

    document.getElementById('article-page').innerHTML = document.getElementById('article-page').innerHTML.replace(/<!--\s*/g,'<span style="color: green">&lt;--').replace(/-->/g,'--&gt;</span>');

  • Дмитрий (unregistered)

    This story gives a new meaning to "changing your e-mail domain"

  • (nodebb) in reply to jkshapiro

    Thank you for this bookmarklet. If you're color blind like me, consider using "background-color:yellow; font-weight: bold;" rather than just "color: green;"

  • Skull Kid (unregistered)

    selling its services to other departments in the company.

    Or bring IT into the core business. Find new clients and investors. Turn internal systems into products. Not like there's no money in tech or anything. And don't set traps. What happens, is when something goes wrong, it becomes another one of your nefarious schemes, instead of just the everyday.

    I do hate changing things. Amateur hour. You do it yourself. If it works, I'll do it too without you telling me what to do. If your an executive, you should be bringing in entire businesses and money and markets of your own, not meddling into people's lives who are fine without you.

  • Best Of 2021 (unregistered)

    This kind of thing is a good case study in why free market capitalism is not the answer to everything, and why out here in the real world we have some services provided by the state, market regulators and bodies like the Competition Commission.

    Within a corporate environment it's always likely to be a nonsense as almost every service is a local monopoly, protected by barriers of entry that prevent competition (like the ability for IT to gate network access in this story). You can't marketise HR functions - it's not like you can ask an engineer to do them for a cheaper price. The only way this could work is in a big company where different geographic sites could compete with each other for the same service, i.e. 'do I order my computers from Ipswich IT or Barnsley IT'. Even that's likely to result in absurd inefficiencies though.

  • Dave (unregistered) in reply to Best Of 2021

    The fundamental error is in thinking that the reasons for a market economy rather than a planned one - the impossibility of collecting sufficient, timely data to do the job, even if we knew how to use it - are going to apply on a much smaller scale. The C-suite is legally required to have that degree of oversight.

  • thunderbird89 (unregistered)

    Sad thing is, "internal markets" can actually work if done right. I know this HUGE Chinese appliance manufacturer, making everything from refrigerators through stoves to vacuums, where the entire vertical is run as a collection of micro-enterprises, and departments can source services from one another, or from the outside, as they see fit - if an external vendor offers better design services cheaper, the internal design team either needs to up its game or pivot. Kinda like microservices in a business.

  • Vicki (unregistered)

    Something very similar was discussed on this site in /articles/the-billable-hour a few years back.


  • Bruce W (unregistered)

    Corollary story:

    My former company wanted to use Net Promoter Scores for EVERYTHING, including internal IT services. Being in IT audit, asking questions like, "How likely are you to recommend the IT audit services to a peer?" is just weird.

  • Ayn Rand (unregistered) in reply to Rob Hoffmann

    So you're saying they're John Galt?

  • Duke of New York (unregistered)

    The correct solution would have been to put every employee behind a microservice.

  • (nodebb) in reply to my name is missing

    "Tax the rat farms."

  • (nodebb)

    Well, leaving aside the poor implementation of an untested approach to budget management, i think TRWTF is the IT department. In fact, IT departments are frequently a black hole for money. I once attended a corporate IT meeting with 50+ people in attendance, from desktop support to software managers, and CIO said, I have $2 million left in my budget this year with 2 months ago, if anybody has any ideas how to spend it, let me know. Yes, he said just that, to the whole room.

  • (nodebb)

    Regarding "turning the company into a free market", like others said it doesn't work because of lack of competition, etc. But, many companies try to measure productivity using metrics like billable hours, gross income, expenditure per employee in IT/HR/ office services, etc. The C guy had a good hunch, but went about it the wrong way.

    Switching to real life, a lot of things people believe are infrastructure, like schools and hospitals, aren't. All highways should be toll, all schools/ colleges and hospitals should be private and unregulated, to start. Then we can have the real hard discussion about police, courts and military.

  • 🤷 (unregistered)

    I wonder if this internal market idea could've worked for the software development department at my old job. I mean, we already were jokingly toying with the idea of renting our own office and then just bill the mother company for every project. Because, you see, we were simply overwhelmed with projects, ideas, ideas for projects and projects for new ideas, none of which ever saw the light of day because we were constantly bombarded with new projects "of highest priority!"

    Most of the time those projects were planned without any software developer involvment at all. So we got requirements that simply were impossible to implement, and it took us all of two seconds to figure that out. Many worker-hours wasted in meetings because no one ever bothered to ask IT: "Hey, is that even possible?"

    I think if we would've had billing scheme like "propose a new project without any involvement from IT: insane amount of money; hourly rate for one of our staff: reasonable amount of money; propose a new project were one of our staff was present during the important meetings: reasonable amount of money" that could've actually worked.

  • Chris Werner (unregistered) in reply to pudin9

    "hidden comments, how many did I miss" TaperMonkey + this script = visible "hidden comments" (and unicorn buttons)


  • IBM tried that (unregistered)

    At one point in the 80s, a large mainframe maker had a unit that tested electronic components for reliability and performance, and blessed them for use by the company. The manufacturing branch had to buy their components from that unit. However, vetted, tested components were much more expensive than their off-the-shelf counterparts, so manufacturing divisions started procuring components from outside of the company. That quickly fell apart. Such is the sad tale of captive buyers revolting against the mandatory seller.

    Capitalism is a word used by people who don't understand capitalism. The actual key is "market economy". No competition, no market.

  • (nodebb)

    This is exactly how they did things at the late, not-so-great, Digital Equipment Corporation.

  • (nodebb)

    SOP from the 1960's through most of the 1970's....

  • (nodebb)

    Curious - of the people posting comments, how many were active in the industry in the early to mid 1960s?????

  • MiserableOldGit (unregistered) in reply to Sole Purpose Of Visit
    I believe you are misinterpreting the implied subject of the adverbial phrase "to make money."

    Nah, I wasn't getting that deep into it. Many, if not most, of the organisations I have been in can be characterised as having a layer of middle managers who spend their time trying to get new hires as a way of growing their department and, thus, getting more seniority "organically" and then a layer of senior managers who spend their time warring over which departments fall under their control and whose pet projects are being prioritised, for pretty much the same reason.

    Sensible objectives involving the survival and health of the organisation, even if that is just "making money" are a bit of an afterthought and receive only lip service.

  • Floutsch (unregistered)

    In the past I have worked at a company that went that way. Not to that extent though. It always seemed to me our primary mistake was to price the services as you wished the internal cash flow to look like instead of actual cost. Imho it can be a good tool if you map it to actual cost and use it with reason. The latter seems to be the issue.

  • Kgeist (unregistered)

    Looks like in this story, IT is a monopoly. Free market works because of competition... What a silly idea, to enforce this kind of concept without having anti-trust laws in place

  • Wizofaus (unregistered) in reply to Dave

    I'm not sure it's been proven with modern computing power that you couldn't run a whole country as a command economy either. Not that it's likely to be good idea for various reasons but I'm not sure it isn't possible.

  • (nodebb)

    This is the profit center model. My company (long since defunct) adopted it in the late 80's when it was all the trend. Facilities charged us for floor space and cabinet space, so everyone crammed their desks as tightly as possible leaving large stretches of the floor vacant. And you couldn't add anything to a file cabinet without throwing away something first. Instead of using the mainframe, everyone went outside the company to spend real dollars on equipment, which just made our mainframe costs rise. Ironically, our product exclusively interfaced with mainframes and no one could see the paradigm of local processing replacing central processing but us peons. Which explain how we became an ex-company and joined the Choir Eternal.

  • (nodebb)

    A loose variation on this policy can be extremely useful in identifying inefficiencies, over-staffing, under-staffing, bottlenecks, etc. But only from a stratospheric BI point of view (understood only by MBA's, so not me), not something that is actualized as policy.

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