Broken business models

by on February 25, 2013


Insurance companies make more money when they deny your claim. As publicly traded companies they have a fiduciary responsibility to maximize profits. It’s no surprise that customers get screwed.

Food companies make more money by making food less healthy. Fresh ingredients are expensive. Adding salt, fat and sugar makes food addictive which is great for profits, but not so great for our growing problem with obesity.

Lawyers drag out a case because they want to bill more hours.

CDNs advertise that they will speed up your website. Making a website smaller will make it load faster, but CDNs also charge by the byte. This leaves them with the temptation to do things that actually hurt performance in order to make more money.

There’s an inherent conflict of interest in each of these business models. How we do fix them? It’s not enough to promise that you’re incorruptible. We’re heard that story before. You have to fix your business model to align your incentives with ours.

How can you design your model so you make more money when you do the right thing?