Is it OK to lie in business for the right reason?

Can lying in business be OK?

A long time ago I was in a very difficult ethical position. The best thing to do for the business was to lie and mislead technical executive management, but it didn't sit right with me. My boss was more flexible, he did the misleading for me, and the result was the executives made the right decision. Listen to my story and tell me what you think was the right thing to do.

(Eric Kilby from Somerville, MA, USA, CC BY-SA 2.0, via Wikimedia Commons)

The situation

My company has previously bought exclusively from supplier X, but supplier X was having financial difficulties and had stopped innovating; their products were extremely expensive relative to the market. My company had just spent a large amount of money with X and our technical executive management was very committed to them, it was very apparent we were an "X shop". At the same time, the technology had changed and new entrants had come to the market offering faster and cheaper products. 

My team needed new hardware to generate network traffic. We tried the solution from X, but it just didn't give us anything like the performance we needed and was extremely expensive. We then tried a product from one of the new entrants which gave us the performance we needed (and more) and was much cheaper. In fact, performance was 10x faster and we had the test results to prove it. So my team wanted to buy from the new entrant.

The dilemma

My manager told me that if we told the truth that the new entrant was 10x faster than X and much cheaper, technical executive management wouldn't believe us and we would lose credibility, in fact, it's likely we would be told to go with technology from X even though it wasn't good enough. 

I wanted to educate technical executive management and show them what we'd found. My boss said that was a bad idea and we should spin a story technical executive management could accept.

What should we do?

What happened

My boss took the results and did some massaging. He told the technical executive team that while the new entrant wasn't as fast as company X, it was a lot cheaper and was a better fit for this particular project - he implied it would be a sacrifice for the team to go with the new entrant, but we would do it to save money. He reassured executive management that their prior decision to go with X was sound because the other projects were different. He presented a version of the results that hinted we needed more equipment from the new entrant than we would need from X, but it would still be cheaper overall.

We got permission to go with the new entrant. My boss told me that technical executive management had commented that the new entrant had really come a long way and that maybe in five years they would be as good as X.

Subsequent events

Within a year, supplier X hit bigger financial problems and was taken over. It stopped producing networking equipment completely. My employer moved off their hardware within two years and exclusively bought equipment from new market entrants. 

The story in the specialized press was that X had offered inferior and over-priced products for some time. When new entrants came into the market with faster and cheaper technology, X couldn't compete. X had been reliant on inertia and existing business relationships for sales, but of course, that came to an end eventually.

Technical executive management talked about how their decision to go with the new entrant for my project showed they were on top of things. However, company C-level leadership had changed and they wanted better technical decision-making, so the entirety of the technical executive management team changed. However, I was long gone by this point.

Sunk cost fallacy

This is an example of the sunk cost fallacy where people remain committed to something because of the amount of effort they've previously put into it, even though going with something new would be better. There are numerous examples in business and politics. 

In this case, technical executive management had invested a lot in supplier X, including their own credibility. Because of that investment, they weren't going to change suppliers easily, even though they "should".

Unfortunately, I've seen other examples of the sunk cost fallacy over the years, but never anything as bad as this. Organizational inertia is a real thing and it can be gut-wrenching to make changes. Sadly, the heralds of change are often punished and end up leaving because their message is uncomfortable; the nail that sticks up is the one that's hammered down.

What's the right thing to do?

Over the years, I've come to the conclusion that my boss made the right call in the circumstances. Yes, technical executive management was wrong, but they were deep into the sunk cost fallacy and weren't thinking rationally. There was no way they would have accepted our results, even though they were true. They needed a rationale that would enable them to cling to X while giving us permission to do something new, and my boss gave it to them. The best possible solution for the company was for technical executive management to realize how the market had shifted and change their buying behavior, but they just weren't ready to do so and it would have been career suicide for us to try.

Ultimately, it's not about doing what's right, it's about making the change you can.

What do you think?

A small revolution happened when I wasn't looking

The revolution is complete but I didn't notice

The other day I realized a market segment revolution had happened and I hadn’t noticed. There’d been a fundamental shift in the underlying technology and the change was nearly complete, to the point where very few new devices are based on the old technology. It's a classic case of technology disruption.

Batteries included

I was chopping up an old tree stump with an ax when a neighbor came over with his new chainsaw and offered to help. I gratefully accepted and he sliced up my large tree stump very quickly. Afterward, we got chatting about his new chainsaw; it was battery-powered.

(Not my tree stump, but it looked like this: allen watkin from London, UK, CC BY-SA 2.0, via Wikimedia Commons)

Frankly, I was astonished that a battery-powered chainsaw could chop up a tree stump this big and I said so. He told me the battery was good for more cutting if I had other trees to cut. He also told me he used the same batteries to power his lawn mower and he could cut his whole lawn (suburban New England) on one charge. I was taken aback, last time I looked battery powered devices were a joke.

No more gasoline internal combustion engines

The next time I went to Home Depot, I had a look at their lawnmowers and garden equipment. Almost all the lawnmowers were battery-powered, including ride-on mowers. Almost all the hedge cutters and trimmers and blowers were now battery powered too. In the last few years, garden equipment that was only ever gasoline powered has now become almost entirely battery-powered. 

The benefits are obvious: no storing gasoline, no pull starts, no winter maintenance, and so on. The only drawback I could see was battery price and power, but battery prices have fallen substantially at the same time as battery capacity has gone up. We crossed a usability threshold a while back and the benefits of battery power have led manufacturers to make the switch.

Brushless is the business

Two technologies have made this change possible: brushless motors and improved batteries. Everyone knows battery technology has improved, but brushless technology gets far less attention. Brushless motors are far more energy efficient, which means longer operation and/or more usable power for the same energy cost. They’ve been around for years but they rely on electronic control circuity to work, which made them too expensive for all but specialist applications. However, the cost of electronics has tumbled which meant cheaper brushless motors became possible. The garden equipment I saw all uses brushless motors, as do modern power tools, lawnmowers, and even snow blowers (see next section). It’s the combination of modern batteries and brushless motors that's led to a small revolution.

There's no business like snow business

For home and garden devices, the ultimate test for battery power is a snowblower. For those of you who don’t know, these are a bit bigger than a lawnmower, they’re very heavy, and they have a powerful gasoline engine. To clear a big New England snow dump, you’ll need to use a big snowblower and maybe a gallon or more of gasoline. Here’s a picture of one in use. 

(Image from https://www.wnins.com/resources/personal/features/snowblowersafety.shtml)

Snowblowers consume a lot of power. Is it even possible to have a battery-powered snowblower? Astonishingly, the answer is yes. There are at least two powerful battery-powered snowblowers on the market. You can see a video of one here.

These new snowblowers are a lot lighter than their gasoline cousins, they don’t need you to store gasoline, and they don’t require a pull start or an electric starter. The bigger two-stage snow blowers (which you need in New England) use two big brushless motors and 80V batteries. 

There are downsides though: batteries only last about 40 minutes clearing heavy snow and battery snowblowers are about 20-25% more expensive. This feels like an early adopter market right now, but in a few years, battery snowblowers will probably be the market standard. 

The revolution will not be televised

Batteries have taken over the garden equipment world. The revolution has succeeded but no one is talking about it.

There are a couple of lessons here and some pointers for the future.

It’s not just about better batteries. This garden revolution relied on brushless motor technology too. If we think of what's next for battery power or alternative energy, we need to think about enabling technologies, for example, solar panels are sometimes coupled with inverters, so advances in inverter technology are key.  

Manufacturers had an innovation pathway that made the problem more tractable. Home and garden devices have a range of power requirements. Electric screwdrivers and drills don’t need that much power, blowers and strimmers need more, lawnmowers still more, and snowblowers most of all. Manufacturers could solve the problems of lower power devices before moving up the ‘power’ chain. This is similar to Clayton Christensen’s “innovator’s dilemma” model of disruption.

Battery garden devices will put high-powered batteries in people’s homes, but they’ll be lying idle most of the time. What about using these powerful batteries to smooth out spikes in power demand or provide emergency power? What about charging the batteries at night when power is cheap and using the batteries during the day when power is more expensive? The problem is the step change needed in home electricity management, but maybe some incremental steps are possible. 

Other battery uses become possible too, for example, bigger motorized children’s toys, outdoor power away from electricity supplies, or even battery-powered boats. If powerful batteries are there, innovators will find a use for them.

Perhaps the next steps in home energy technology won’t be led by battery technology imported from cars but by battery technology imported from humble garden tools.