the physics of profit seeking

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“Aren’t you violating the building codes? Or the laws of physics?”

Scott Hawkins

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“Free will is the sensation of making a choice. The sensation is real, but the choice seems illusory. Laws of physics determine the future.”

Brian Greene

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There is a direct relationship between the laws of physics and optimizing profits. I am not going to give a physics lesson today, watch Michio Kaku if you want an easy to understand one, but I am going to talk about how physics drives profiteering decision making (and some of the consequences of doing so).

Scientific management, labor studies, is grounded in physics, i.e., what is physically possible.

The distribution of goods, shipping, railroads, air, etc., is grounded in physics, i.e., what is physically possible.

The allocation of common infrastructure, water, electricity, gas, etc., is grounded in physics, i.e., what is physically possible to generate, store and distribute.

Basically, everything that can be profited from demands some exploration of physics, i.e., what is physically possible to do. Why? Well. Profits are grounded in efficacy – what is optimal effectiveness attached to efficiency. In other words, I’d like to maximize my load delivery in the most efficient way possible. Simplistically this means I’d like to build the largest oil tanker that physics suggests is possible, have the longest train physics says is possible, create the largest plane physics says is possible and, well, you get it. Physics tells me what is possible and business optimizes possibilities. This is where limits, or constraints, come into play. This is like Goldratt’s Theory of Constraints on steroids with a twist. Goldratt discussed lean as taking out the slack in the productivity and supply chain. In today’s discussion it is taking out the slack of the unknown or let’s say the possible variables that could nudge the laws of physics. Business inherently pushes the laws of physics every day. That’s almost a law of business. Because if I change the physics, I change the possibilities and, therefore, change profitability. But until I can actually change the machine itself, I become dependent upon the humans involved with any of these machines as, well, machines if I seek to optimize my profits.

Which leads me to humans and laws of physics.

Humans do not follow laws of physics perfectly. Train tracks may not be maintained 100%. Engineers may not do exactly what they are supposed to do when they need to do something. A railroad car, or several in different places, may be slightly packed unevenly. And, maybe most importantly, a human cannot see everything all at once or even all the time in order to assess what is happening with regard to the laws of physics. Optimizing by the laws of physics only tell you what is possible. And let’s be honest. If a business sees the possible profit they will inevitably, the majority of the time, simply implement to the optimal profit – within the laws of physics; not within the laws of humans.

This reminds me of something Mike Walsh said: “Your legal team will never get you to the best ethical decision.” The laws of physics will never get you to the best decision.

Yeah. I am discussing the East Palestine train wreck. But I am also talking about the business of doing business. Most media stories will focus on train brakes, hazardous material designations and general safety guidelines. And none of them are wrong, but they are also not right. All of those things are mitigations to the business management of physics. Business inherently seeks to optimize what is possible and when they get it wrong it is usually when they manage to the margin – the boundaries of what is ‘physics-possible.’ There is no margin of error, but profits get maximized when there is no margin of error. Of course, there is another department in almost all these businesses that are masters at ‘risk assessment.’ They sit side-by-side with the laws of physics people saying things like “oh, there is a 1 in 150 chance of something going wrong, and 1 in 3,000 chance of something catastrophic happens.” From which the business, seeking profits as they should, mitigates the risk with a slush fund to have on hand if something happens. It seems a fair trade, to the business, financially. Once again, the laws of physics, this time combined with the laws of risk, take precedent over the laws of humans.

I don’t have answers today. I am simply pointing out the laws of physics and profiteering. I, personally, wish – and believe – businesses should avoid “wandering the lines of constraints decision making,” but that is tough to do for any individual business in any industry in which any given competitor, seeking an advantage, is willing to skate on the thin ice. And maybe that is my point today. Business is trapped in the tragedy of commons and East Palestine is simply a tragic consequence of a failure of business in totality – not Norfolk Southern. That seems like an important distinction. Ponder.