[lbo-talk] direct marketing

Dwayne Monroe dwayne.monroe at gmail.com
Sat Mar 8 06:25:48 PST 2008


Wojtek:

To sum it up, what I am arguing is that these data collection methods are simply used as bargaining chips in corporate dealings and wheelings, but otherwise offer little if any competitive edge in addition to that the firm already has due to its monopoly position.

As I already said, I did not make it up - a similar position was advanced by Baran & Sweezy in _Monopoly Capital_ - which is an insightful Marxist analysis of the US brand of capitalism.

...................

What a hilarious debate.

Me:

I've developed, examined, analyzed and evaluated these systems in real time. Some work better than others but nearly all offer some benefit from the point of view of big enterprises.

Wojtek:

I have zero practical experience in this area but I'm going to unequivocally say: no they don't. Here's a venerable theoretical framework that explains why.

...

Of course monopoly makes it much easier - if you already have tremendous power, it's usually a simple matter to acquire more. But it is not true that these methods are "simply used as bargaining chips in corporate dealings and wheelings, but otherwise offer little if any competitive edge". That is *often* the case but not, as you''re suggesting *always* so. No one who has actually worked in a big enterprise (and thus far, I've had the chance to learn the ins and outs of 15 of the Fortune 500) and carefully analyzed its business practices from top to bottom would reach that conclusion.

How are modern monopolies built? Some are created by exploiting new or little noticed aspects of the capitalist scene (see, for example: the history of MSFT and GOOG) . In the era of smaller and smaller advantages between major players, command and control of information becomes much more attractive to corporate managers.

Indeed, crazy/exotic financial instruments and the endless quest for short-term profit gain are two of the principal factors which catapulted information management to center stage. I'm currently consulting for a firm with a market capitalization of hundreds of billions of dollars that quite literally could not have existed 30 years ago.

If you were to tell any of the money managers that their information intensive methods are "simply used as bargaining chips in corporate dealings and wheelings, but otherwise offer little if any competitive edge" they'd laugh. And I'd have to laugh right along with them. Not because Baran & Sweezy were wrong (because they weren't) but because you're misapplying the "rational means leading to irrational ends" insight, choosing to see it as a universally valid description.

To use an analogy I've applied in other threads, Newton was right, but only up to a certain point. The same goes here: you're not wrong, but you're not nearly as right as you think.

BTW, your comparison of what I'm talking about with the televsion ratings system, and its flawed link to advertising rates, is off: the data gathering happening at stores is almost orders of magnitude more reliable. People are coming to you, they're buying things, there's no fudging of the inputs, patterns can accurately be determined. The traditional data gathering methods for tv ratings - statistical sampling and self reporting - is much, much shakier.

.d.



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