Failure Is Expensive

In Terry Pratchett’s 1993 Discworld series novel Men at Arms, a character named Sam Vimes ponders the profound and counterintuitive idea that it is exceedingly expensive to be poor:

“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”

This concept has since spawned a broader "boots" theory of socioeconomic unfairness and even a proposal for a basic food price index in the United Kingdom.

The basic logic here transcends socioeconomic status. Who among us hasn’t become enamored with a “too good to be true” price tag, only to discover later that we got exactly what we paid for, and then need to make an additional purchase to remedy our prior error in judgment?

Pratchett’s insight about boots is also true for kitchen appliances, fishing poles, and construction contractors – pretty much any good or service you can imagine, enterprise software included. And, it’s a natural reaction to have, particularly in an economic environment where inflation (both core and social), scarce reinsurance capital, and increased catastrophe risk are straining insurance carrier budgets.

I’ve seen an increasing trend recently of insurance executives who previously chose an overly cost-conscious technology path, only to find themselves unhappy with the outcome. And, the reasons vary. Perhaps it’s a product that does not scale beyond your initial pilot, a lack of functional depth or expertise that causes massive project delays, vendor promises that never materialize, or leadership changes that undercut the prior value case.

Having spent hundreds of thousands – or, in some cases, millions – of dollars on solutions that ultimately are not meeting their needs, these leaders are now faced with an even more difficult decision.

Do I allow my business to continue struggling with an undeliverable or not-fit-for-purpose solution? Do I prolong the status quo, keeping aligned to our planned technology budget, but with the implicit knowledge that we are leaking significant enterprise value elsewhere?

Or, do I bite the bullet, write it all off as a sunk cost, and move ahead on a more reliable and proven path? Am I willing to be wrong and ask for permission to start over? Can I even do that without losing my job?

Either way, the ultimate cost is now much higher, both to the executive and to the company, than it would have been to take a longer view at the initial decision point. A more skeptical eye at a made-to-impress price tag, a more thorough interrogation of long-term sustainability, or a heavier weighting on the intangibles of the partnership could have eliminated significant financial and emotional stress over a ten-year planning horizon.

So, are really good boots worth five times the cost of cheap boots? That depends on how long you can afford to have wet feet.