Welcome to the home of Noah Brier. I'm the co-founder of Variance and general internet tinkerer. Most of my writing these days is happening over at Why is this interesting?, a daily email full of interesting stuff. This site has been around since 2004. Feel free to get in touch. Good places to get started are my Framework of the Day posts or my favorite books and podcasts. Get in touch.

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Business Expiration Dates

I’ve had a few conversations recently about the idea of businesses with expiration dates and I thought maybe it was worth getting some thoughts down. Essentially I’ve been playing with the thought that instead of puttering out 8 years down the line there might be an opportunity for a company to choose its end date and put itself to rest peacefully.

Nobody wins forever. It just doesn’t happen. The big company who have been successful for a century can be counted on your hands. Of course there are Harvard Business Review case studies written about them and they’ve been massively successful, but they are anomalies. A company like GE really shouldn’t exist according to most of what we know about the world. (They are a client of mine, so take whatever I say about them with a grain of salt.) They’re massive, in a ton of different businesses and have existed for over 100 years. This isn’t normal.

What we see in reality are millions of corpses of businesses and ideas that have made their impact (or not) and then petered out into oblivion without leaving much more than a memory. Some of them get bought and swallowed by a bigger company, others have their ideas copied and commodotized and many just don’t have the business or financial chops to make it all work for more than a few years.

So what if instead of worrying about all that you just decided at the beginning you were going to end it all six years in? I’m not sure how you’d decide the timeframe, but let’s put that aside for a second and imagine what would happen if you did. One hope is that it would solve the short-term over long-term problem. Part of the long-term issue is that you have no idea how far into the future “long-term” really is. Company management doesn’t know how long the company will last, so they optimize for the now (they also don’t know how long their jobs will last, but I’ll get to that in a minute). It may be overly hopeful, but as long as one choose a reasonable time-frame (5-10 years) I wonder if you couldn’t lift the decision-making out of the immediate.

The problem here, of course, is that the employees will likely not plan on sticking around for all that time. This, I think, is actually the biggest problem in most of business at the moment. It’s certainly the shortcoming of my business expiration idea, because if employees aren’t in it for the full haul we’ll have the same sort of misaligned incentives and general screwups (at least at the beginning). So on this one, what if we started making jobs with expiration dates? Most of the people I know go into jobs at the moment with little plans of making it beyond three years (as of 2008 the average job tenure for Americans between 25 and 34 years of age was 2.7 years). Whether this is a good thing or a bad thing isn’t what I’m really interested in at the moment, instead I wonder what would happen if you just capped it. Especially in the advertising industry, where turnover seems higher than most, what if you just signed people up for 2.5 years in the first place. Companies would know what to expect out of the employees and could plan their transition far better and employees wouldn’t have to stew as they got bored. Obviously you’d have to figure out a financial incentive system that worked with this sort of arrangement so that the person didn’t check out at year two, but that could be figured out I suspect.

Anyhow, as usual, this is just me thinking out loud. Happy to hear any thoughts. I don’t know if either of these are actually good ideas, but they at least seem theoretically intriguing.

February 27, 2010