Inefficiencies

Every day, so much food gets thrown out. Supermarkets in developed countries are actually far from the worst offenders - they donate most items to food banks just before the expiry date. If I had to guess, restaurants are probably the worst - every group meal in modern society is a display of excess, a wasteful reminder that in the age of capitalism, leaving food on the table is a sign of status.

I'm reminded of a scene from my childhood, when we were having a holiday dinner with extended family, and at the end of the meal I witnessed my grand uncle and grand aunt getting takeout boxes from the restaurant for all the leftover food. I remember thinking that my grand uncle worked as a gynecologist at that time (and probably had an income in the top 1% of Canadians), so I later asked my mom why he was so insistent on leaving no leftover food.

My mom's response left a deep impression on me: "They remember what it's like to be truly hungry."

It took another few years before I learned about the Chinese famine of 1959-1961 (when tens of millions of people died of starvation) and I really understood what my mom meant.

I'm complicit in the perpetuation of inefficiency every day. For example, I regularly and willingly take part in fake manual labor (running) invented to burn extra calories I've consumed that I didn't need. And this is supposed to be good. I drink bottled water exclusively, supporting a cartel that had utilized creative marketing to create a new product category from thin air. Today when we moved offices, we threw out a perfectly good bookcase, a box of plastic gloves, five new desk organizers, and several plastic containers because no one wanted any of these items.

The average automobile has four seats, and yet the most common number of occupants in a car on the road is one person (the driver). I once read somewhere that the average North American household lives in a residence that's 3-4x bigger than what families lived in 40-50 years ago. My parents are guilty of this one. Their home has five bedrooms and four bathrooms. They live alone. (In their defense, my sister and I used to live with them.)

Inefficiencies abound in business as well. I had a meeting today with some marketing creatives and learned about the endemic information asymmetry that plagues the industry. Apparently, fewer than 10% of creative talents are "good", and they carry the 90% of creative talents that are bad - and clients put up with this because the search costs are so high.

Capitalism is the prevalent system because the alternatives are worse. Inefficiencies amidst abundance is still preferable to efficiency admist shortages.

That said, ideas blossoming into companies that aim to solve a type of inefficiency are becoming commonplace. Platforms such as Uber and Airbnb achieved scale by solving inefficiencies related to automobiles and homes. Other startups are investigating ideas to do similar things, such as solving problems related to leftover food or lowering the search costs for clients who want a high-quality team for their upcoming marketing campaign.

We don't need to invent something entirely new to add value. Ultimately, we may find that any solution for an existing inefficiency could support a viable business.