Bloomberg vs Waffle House / a great example of a company that has learned from the past
 

interesting read for those interested in economics, entrepreneurship and politics.

by Doug French:

so the article is comparing keeping a restaurant chain open with keeping open the largest city in the world. Hmmm which one is easier to manage in a hurricane.

& the business is innovative for preparing, but the government messed up by preparing because the storm wasnt big.

this trash was written by a bafoon.

That article is written horribly. What is the comparison? They are completely different ballparks. And is the author championing or bashing Bloomberg? He is upset that the subways were not running earlier?

Actually I did find it odd that the subway wasn't running quicker, seems it is a critical system and should have enough manpower and resources to resume service much faster.

Maybe the subway workers and their families evacuated too.

.

I'd rather see over reaction and a minor storm with minimal casualties.. Rather than underestimating the situation and having thousands of dead and injured.. Good for Wafflehouse though I guess????

The author would rather have a Blanco, who refused to federal assistance until the city had been under water for two days, or a Nagin, who refused to allow Amtrak to evacuate people, sending the trains away empty?

Where's UBOB when I need him :)

Very interesting article .

cliff notes?

I guess I don't see the comparison. If Waffle House has prepared itself to stay open at all costs they do so because they choose to and are willing to take the risk Vs the reward of that extra business.

With a city full of people you can't take that risk. If you think things are going to get ugly you have to tell people to get out and do whatever you can to help them do so. Had Bloomberg not done this and had things gone ugly and 1000's died he would have been crucified by the media.

author sounds like a fox news analyst got in a tizzy 'cause the trains didnt get running the moment the storm turned out flaccid.

If the waffle house stays open and is wrong they lose a few grand.
If the government doesnt evacuate and is wrong people die.

It's a comparison of apples and hand grenades.

Ok, I'll explain what I got from the article :)

* Economic incentives. Heavily subsidized companies or government agencies get paid no matter what happens. A private company like Waffle House has to be open and serve its customers to get paid.

* Dealing with Black Swans: In his book "The Black Swan", Nassim Nicholas Taleb talks about rare events that have a high impact on people's lives.

People often respond to these kinds of events by constructing massive structures they believe will be robust enough to withstand future "Black Swan events". This is however usually not very effective and comes at a great cost.

If you look at military history for example, you'll see that armies are often prepared to fight the previous war. At the eve of World War II, the French and British armies were prepared for a First World War type of trench warfare. The French had their massive concrete fortresses (that the Germans just ignored), the British had their heavily armored Mathilda tanks (that could be outrun by a German soldier on a bicycle).

While a hurricane in a country that is regularly struck by hurricanes is not a Black swan event per se, this Waffle House scenario does illustrate the different ways one can respond to "high impact events".

What we have here is essentially a centrally structured organization (focus on top-down) vs an organization that is structured to support local initiatives (focus on bottom-up).

Bloomberg applied the classic let's-hide-inside-the-castle-at-the-first-sign-of-danger approach while Waffle House's risk management plans focus on flexibility. Each one of the Waffle House stores is (or was) in a different situation. Waffle House focuses on maximizing the output (services) of each Waffle House store based on each store's potential and situation (and had a flexible network in place to do so), Bloomberg focused on reducing exposure everywhere at the cost of providing services.

On the comments in this thread:
- I have no idea what party Bloomberg belongs to. OP was not political or whatever.
- Waffle House managers are just as responsible for the lives of their employees while they're at work as the mayor of New York is for its citizens. One could even argue that Waffle House's image would suffer even more than the mayor's if anything happened to a Waffle House employee while serving waffles.
Besides... A life lost is always a tragedy.
- The size of the organization doesn't matter. Whether it's one of the biggest cities in the world or a chain of waffle stores. If anything, that large city probably has a lot more resources than a chain of waffle stores.

government agencies are not for-profit entities & have responsibility over public safety without a profit motive. Would the public be safer if the govt tried to profit by underpreparing for a hurricane?



again, comparing responsibility for public safety with keeping a restaurant chain open is folly. waffle house does not worry about cars driving over bridges with 75 mph wind gusts. does not worry about flooding subway cars. does not worry about people living in flood zones. Waffle house worries about eggs & power being at a store. absurd to compare these things like waffle house is doing something right & the govt is doing something wrong by exercising abundant caution over a forecasted category 2 hurricane.


Waffle house was not keeping stores open throughout the hurricane & was not putting their employees lives at risk. I would suggest the mayor of NY would get a lot more flack for being unprepared vs a waffle house not having eggs.


yes, the city of manhattan has more resources then a waffle chain. Nobody died because the mayor neglected to do his job. He gets an A. Waffle house was able to function when other restaurants could not. They get an A as well.

so the subways opened at 5AM monday instead of noontime sunday. What a fucking failure...

The government is an organization like any other. An organization that has a certain objective (providing service X or service Y, making money by doing Z, helping A or B by doing C...) and has certain resources available. These resources didn't come falling from the sky like manna, they have a cost. The Laws of economics apply to every organization, regardless of its objectives.

The objectives of the organization are not the point here. The point is that there are different ways to run an organization. The flexible approach used by Waffle House allowed for a higher output of services (based on the resources available and taking into account the risks involved) than the city of New York's approach.

Waffle House is not running an emergency service or a security firm. Like I said, it's not about the objective of the organization, it's about effectively and efficiently dealing with a problem. One could tell everyone to stay inside for 2 more days after the hurricane passed.. just to be safe. The question is; what are the opportunity costs associated with that decision and are they justified?

The writer referred to 'economic calculation' and how it was not available to Bloomberg. What the writer did was give a possible explanation of why 2 different organizations moved into 2 different directions in regards to their risk management plans. Waffle House went the flexible way. The City of New York went the hide-in-the-castle way. The absence of economic incentives (as in a direct responsibility for the costs involved) could explain that.

I never said anything about Waffle House not having eggs.


I sense a certain hostility in your post *insert pic of Sheldon Cooper* :winkwink:

Because the waffle house chain and NYC are like the same kind of thing????

If anything this article shows what you'd expect from a place called "Waffle House". The owners are at the same mental level as the mouth-breathing patrons.

Comparing apples and waffles.
HAAAAAAAAAAAAAAAAAAAAA.

Article makes no sense.

Also, Bloomberg is an incredibly successful businessman. I don't think he needs tips from Wafflehouse. Dude could buy the company with the change in his pocket.

Having made a lot of money doesn't mean one has no longer anything to learn. You can learn new things until the day you die.

What made Waffle House what it is today: hard work. No financial alchemy from the Wall Street wizards. Just plain old serving the customer what they will trade their dollars for, watching costs, growing with retained earnings and a risk management plan that focuses on flexibility.