"As I hurtled through space, one thought kept crossing my mind - every part of this rocket was supplied by the lowest bidder."
This wonderful quote, attributed to John Glenn came to mind the other day when a BT engineer turned up to sort out a mission-critical piece of kit in my office - my broadband connection. It turned out that they had been upgrading the box in the street and cut me off but while the engineer was with me he volunteered to replace the router.
This connects me to BT's state-of-the-art fibre optic network and was installed around a year ago. 'I'm amazed it's lasted that long', he commented. 'Really?' 'Yes, we've been replacing them at a tremendous rate. Sometimes I've had to go back on the same day to replace one.' I enquired who made them and he gave me the name of a very well-known Chinese manufacturer. He added that each router cost BT the princely sum of one pence! He added that he thought it was a bit of a false economy as they kept going back and replace them with more faulty routers from the same manufacturer. He assured me the new one he gave me was much better. Perhaps it cost two pence!
This got me wondering whether short-sighted corporate meanness is part of a wider picture described in The Economist in an article titled 'Dead Money.' It's the description by Mark Carney (about to become Governor of the Bank of England) given to the piles of cash mounting up in global companies. The Economist Nov 3 2012.
There seem to be a host of reasons for this phenomenon but a race to the bottom in terms of corporate spending can be seen everywhere including our sector. I work with many agencies and these days they all have similar tales of clients expecting more and more for less and less. We have some great professionals in our industry who manage to 'pull it off' in the most testing circumstances. And of course, once they've done it once, clients keep expecting more. I worked with a company recently that expects the cost of a high level event to reduce in price every year. Given that their expectations rise and inflation is still with us there's only one place those savings can come from - agency fees. And if good agencies keep dropping their margins, eventually they'll go out of business. On the other hand, there are always be people out there who will cut corners to hit the bottom line. So, in the end, as they say, 'you get what you pay for.' It's all about achieving the right value equation of which cost is an important part but not the sole consideration. Perhaps clients will start to realise that buying cheap - like BT and its routers - isn't always such a good idea. But I won't hold my breath while they think about it!