William Eliot

Self-destructing businesses and self-destructing employees

Is self-destruction an undesirable behaviour by default? No, but we typically associate it with a sort of failure.

16 July 2022

I’ve been wondering about the act of self-destruction recently. Is self-destruction an undesirable behaviour by default? No, but we typically associate it with a sort of failure.

A funky case can be found in the ant species Colobopsis saundersi. Threatened by a predator, these soldier ants will squeeze themselves in order to pop open a gland, secrete a sticky goo, immobilise the threat, and thus defend the larger colony. They die in the process. Is this a failure or a success? Dying for the sake of others is called ‘autothysis’, or, according to Wikipedia, ‘suicidal altruism’. I prefer the term ‘altruistic suicide’ — it’s clearer.

Another aspect of self-destruction is obvious but intriguing all the same: you can self-destruct, but not in the same way that you can self-create. If you don’t exist, you can’t create yourself. But if you do exist, you can kill yourself. Self-destruction is asymmetrically able to ‘do more’ since you’re destroying something which is already there, instead of creating something which isn’t.

Self-destructing businesses

There’s a category of businesses who operate to get rid of their current customers. For example, a company which helps people to lose weight by selling low-fat products is seeking to convert their customers (overweight people) to non-customers (healthy weight people, who no longer require their services). Consider too driving instructors, who are employed by non-drivers until they pass their driving exams, and then they are no longer employed.

Here is self-destruction, plain to see. These companies actually seek to remove their clientele, and if they are good companies (i.e. they succeed at their mission), they will do so. Typical companies don’t want to lose any business, because that results in loss of profits.

Despite the regular removal of customers, these self-destructing businesses are able to survive. They depend on the everlasting presence of overweight people and people who can’t drive. When they lose one customer, they replace them with another. Clearly it works, although as a fully long-term plan it seems perilous. A weight loss company could never grow its market, because it serves to reduce its market. Once it has helped every overweight person to become healthy again, it runs out of business and shrivels up. I wouldn’t want to run a business which could only grow its market size by doing things that contradict its mission plan (like lobbying for sugar taxes to be reduced). The best businesses do not self-destruct.

Self-destructing employees

Sometimes you hear the phrase ‘the employee’s incentives are aligned with the company’s incentives’, or the other way around. An employee receives compensation for their work, compensation which they would have to get elsewhere (or not at all) if the business didn’t succeed. Therefore, the employee is motivated to act in the interests of the business. This is particularly strong in partnerships, or when an employee owns equity.

On the surface the employee-business relationship does seem symbiotic as outlined above, but we must remind ourselves than an employee is a cost, and businesses want to reduce their costs as far as possible. There can only be a weak alignment of incentives then as, in practice, the business is constantly searching for ways to remove its employees.

A good employee, from the perspective of the business (a shady, selfish blob) finds ways to make themselves redundant. To be good, they ought to automate their work and create an identical or better outcome for the business. The employee is then let go, replaced by processes, which they built to mimic themselves, at a fraction of the original cost. The best employees self-destruct.

Added 31 July 2022: Perhaps a good way to assess a charity’s motives is to spot whether it will eventually self-destruct. If a charity is working to solve an issue; then once that issue is solved, the charity will cease to exist (unless it pivots). So a successful charity should destroy itself. Occasionally I’ve thought about a silly solution to climate change which involves bottling water from the melting ice caps, marketing it as the best water in the world, and then using the profits to fund climate change projects. If enough water was sold and enough climate change was reversed, then the ice caps would stop melting(?) and there would be no water left to sell.