Who Moved My Juice Bottle?

Most people think of the capitalist marketplace as the venue for the unleashing of the human ego. Selfishness reigns as those with financial means buy and build whatever they want, acquiring and amassing with no concern for the fate of anyone but themselves.

Bah! I can’t even imagine a more inaccurate description of real life. In fact, the opposite is true. The marketplace encourages community-mindedness like no other institution. It prods and pokes and corrects, the rich especially, all with the purpose of inspiring decision makers to leave the self and the individual ego aside and think mainly about the needs of others.

By way of illustration, let me jump right in from a scene from the grocery store this morning. For more than a year, my favorite fruit juice was displayed right as you walked in the front door. There they were lined up. Early-morning shoppers could grab a juice and check out in minutes. It made it all very convenient.

I recall thinking, “Wow, what a science it is to know where to display stuff in a store!” One might expect that these juices would be with the produce, but no. Their inventory signals tell them about the existence of people like me who want to get in and get out in a hurry. Juice is what we want, and we want it fast. Good business!

But this morning, a change rocked my world. I went to my spot at the front of the store, and there was no juice. There were hats, scarves and a wine display, of all things. I was stunned. I called over the friendly store manager and asked him what gives. He politely pointed out to me that two weeks ago, the juice had been moved to the produce section. Stunned, I slogged all the way over there — it was like 100 yards away — and then back again.

Slightly burned, I confronted the guy again.

“Surely, you are losing sales. People want this juice when they first walk in. No one wants to walk to the other side of the store for one item!”

He laughed and pointed out that he had thought this, too. But then last week, a memo arrived from inventory management at the central office. Their tests had revealed that the fruit juices sell more when they are with the fruit. Taking a chance, but not really being a believer, he bundled them all up and moved them, completely changing the front-of-the-store display.

“And how is this working out?”

To my amazement, he had the data for me off the top of his head. It turns out that in the two weeks since he made the move, sales of the precise juice I bought were up by 160%! I was completely wrong. Good thing I’m not in charge around here. I’m only one guy among thousands. My behavior, which I had thought was what “everyone did,” turns out to be eccentric.

Not only that, but the manager was completely wrong, too. His intuition and his ego had been checked by the actual sales data. The profit-and-loss accounting system dictated another result.

Now, to be sure, the manager did not have the final answer. This new system for juice display could change again next week. Maybe there is somewhere else in the store that the juice could generate even more sales. Or perhaps last year, the juice at the front model was the best possible way.

There is actually no way to know, no way to perform perfectly controlled experiments that yield final results. The marketplace is not a laboratory with unchanging variables and elements that behave in predictable ways. The marketplace is made up of human beings who have the crazy habit of making choices and changing their minds for no apparent reason.

This means that the successful business enterprise must be constantly on alert to the decisions that people make. No detail is too small. Moreover, the business must change the way it operates in the face of the evidence of what yields the most profit.

The business that is led by egomaniacs who are always right about everything, implementing a rigid formula that can’t adapt to new influence, is absolutely doomed in a competitive world in which your competition is always free to copy your past successes.

Profits are always tending downward in absence of innovation. There must be new successes all the time, and these depend completely on the ability to bury the past, suppress the perception of managerial infallibility and adapt to seemingly random change.

What applies to the juice bottle applies to every single item in the entire grocery store.

Let’s say you are in charge, but you have no experience. You have to put the maraschino cherries somewhere. Play the game, please: Do they go with baking supplies (fruitcakes!), canned fruits (it is a canned fruit) or with cocktail mixers (they are great in drinks)? Which is it? It can’t be all three. That would create a terrible inventory problem, and shelf space is too scarce. You have to choose.

It’s a serious problem. Your chosen way may or may not be right. You have to try things out, look at the evidence, be prepared to change your mind. You must defer to the buying public. You must be community-minded. You have to be willing to admit error. Must be humble, open to correction. The unleashed ego has absolutely no place here.

(My store went with cocktail mixers.)

Again, this applies to every product in the store. Not only that, but this applies to every good and every service offered in the world economy, all untold billions of them. It’s not just about store display. It is about the whole of the production process: what to make, how much to make, how to make them, where to sell them, what features they should have, how they should be sold. There is a mind-boggling array of alternatives.

As you try to parse out this conundrum, you are free to be a jerk, to be an egomaniac, to be unteachable, to be uncorrectable. No one is stopping you. But you pay the price. You are in business to make money, and the only way to do that consistently over the long term is to be slavishly devoted to the needs of others over the rightness of your own position.

This is why I say that the market instills humility and service as an ethic. After all, you might be in this only to make a buck. But experience tells you that that only way to do that is to defer to and seek out the needs of others. The profits are a reward, but you dare not rest on your laurels. The service can’t ever end. After a while, this sensibility begins to shape the human character. You develop an outward gaze and leave aside the childish demand to always get your way.

This is what is forgotten in all the frenzied concern about how websites are collecting data on our shopping and browsing habits. Why are they doing this? Because they want to invade our privacy? No, it is because they care about us. They want to serve us better. They care for the same reason that the grocery store cares to put the most-demanded items at eye level. In a pure market economy, they are there to meet our needs. To be sure, to existence of the surveillance state changes the situation substantially, since these companies are easily browbeaten to cough up data for political purposes.

No, we don’t always get our way. But rather than a society in which know-it-alls rule with a fixed model, I would prefer to live in a society with a service ethic that drives economic life, one in which there are no final answers, one in which every decision is subjected to a test and that test is graded by the people and their everyday choices. In other words, a free economy is better than a controlled economy precisely because the free society curbs the human ego and keeps the infallibility complex at bay.


Jeffrey Tucker

The Daily Reckoning