Time Warner Cable Tries Socialism and It Doesn’t Work

July 16, 2007

Time Warner Cable is known for having terrible customer service. No wonder, since they rely on the failed ideas of socialism to run their business.

Though socialism has been shown to be a failure throughout the world, its ideas still enamor many academics, intellectuals, and businessmen. Businessmen? You may be surprised to see them listed with academics and intellectuals as supporters of socialism. Most businessmen themselves would indignantly scoff at this assertion.

One of the failed ideas of socialism is relying on centralized decision-making; that means substituting the will of one person or small group of people for the on-the-spot knowledge and day-to-day decisions of many people.

For instance, the former Soviet Union instead of having a market system for food distribution had five-year plans. These plans specified which crops a farmer would grow, which train or truck would transport each crop to each city, which stores would stock which products, and how much of each product they were allotted to sell.

No matter how refined the five-year plan was, the result was the same—food rotted in farmers’ fields, transportation was inadequate to get the food that was picked into the cities, and little food was stocked on store shelves.

The idea that centralized decision-making can work has been shown to be theoretically impossible and centuries of failed experiments have confirmed that it does not work.

Yet many businessmen in the United States persist in utilizing centralizing decision-making. Why? They may arrogantly believe that they are smarter than everyone else; and thus, they should make all the decisions.

My own inconvenience is not the point of the following little tale.

Ownership of our local cable company had been transferred from Adelphia Cable to Time Warner Cable. The local town office of the cable company is still in the same building. From the outside it looks like only the name has changed, but there is one big difference. Time Warner Cable believes in centralized decision-making.

Our home, which is on a small side street, needs a new cable buried across the road. We found this out when the local installer was unable to complete our installation. The installer did promise that the additional work would begin within 48 hours.

After a week went by, we called Time Warner Cable in another state? Why would we call another state? We do not have the phone number of the local cable office. It is Time Warner Cable policy that all calls have to be routed to this central office.

After several rounds of phone calls to this “foreign” office and being told a different story each time, we decided to drop in at the local office of Time Warner Cable.

We were actually able to speak to the manager and he was very apologetic. He had our work-order; but other than that, he could give us no information. He explained he was literally not in control of his own crews. The management of his own crews have been taken from him and transferred to this out-of-state office.

He had no way of knowing when our job would be done. Under the former policy of decentralized decision-making, he explained, the job would have been done in a few days. Now, he explained to our frustration, it may be months until the job would be completed. He promised to call us in a few days.

When he didn’t call, we returned to the local office and learned from the secretary that our installation was scheduled. She was surprised that no one had called to tell us. We were not.

A few days later, a Time Warner employee showed up to mark the road. He told us that he didn’t know when the work would be completed. He didn’t know that our installation was scheduled and hoped that the road cut would be completed in time.

Apparently decision-making at Time Warner Cable is not only centralized but information is not even shared. Every employee that we encountered was a decent human being trying to do a good job, but their hands were tied by the policies of Time Warner Cable.

The failed ideas of socialism at work indeed! Human intelligence is not utilized, jobs are not getting done, customer service costs escalate for Time Warner Cable, and everybody is frustrated.

There is enough theoretical and empirical evidence to convince anyone that centralized decision-making can never be efficient. Because they don’t understand this, the leadership at Time Warner is destroying their shareholders’ equity.

Destroying shareholders’ equity is a bold claim. Yet, every time Time Warner Cable employees cannot efficiently coordinate among themselves and their customers, money is lost. Not only that, consumer ill will is created. Isn’t customer good will among an organization’s most important assets?

Currently Time Warner Cable “has no plans to pay cash dividends on its common stock in the future, and expects to retain future earnings for use in the operation and expansion of its business.”

Good luck to their shareholders! Future expansion of their business depends in part upon innovation. Innovation can not easily occur under a regime of centralized decision-making. Innovative organizations, such as W.L. Gore and Associates, use flat hierarchies with decentralized decision-making to promote a culture of innovation. They don’t use the failed ideas of socialism.


%d bloggers like this: