The Economics Of Troubleshooting

A Stack of Benjamins
Like Snoop Dogg said, this should always be on your mind…including when you’re fixing something.
(image: Andrew Magill, license: CC BY 2.0)

When fixing things, I often find myself thinking about economics. All work involves economic considerations, but I feel there are unique aspects of repairing machines that deeply touch the core principles of the “dismal science.” Economics are inescapable for the troubleshooter and will set the boundaries for the “if,” “how,” and “when” of fixing something.

We employ machines to fulfill our worldly wants, which are without end. Satisfying our infinite desires with our limited means has been called the “fundamental economic problem”:

Yet despite the comparative abundance of products and services emanating from the process of social cooperation, the economic problem remains: Wants continue to exceed the means or resources for their attainment. The persistence of the problem of scarcity means that even in a modern, highly developed, and productive society decisions have to be made regarding how the various scarce resources should be directed to the satisfaction of the more urgently felt wants of society’s members.
Thomas C. Taylor

Look at the contents of any junkyard or landfill and you’ll realize troubleshooting is a stellar example of this “fundamental economic problem.” Broken machines vastly outnumber the resources to fix them! Given the disparity between the quantity of breakdowns and the means to mend them, the end result is: what gets fixed is subject to a harsh but necessary triage based on people’s most pressing needs. Only the most important systems will be worthy of being fixed.

When a machine breaks down, the entirety of the economic calculation that gave rise to its origin will be thrown into stark relief. Questions arise: What was its purpose? What need was it fulfilling? Is the need still present? If so, what resources will be diverted to fix the machine? Are there other, more pressing needs that I (or my organization) must satisfy first? What combination of labor and capital should be used to fix it? Will you use your own human resources to make the fix or outsource the labor to a repair shop? Will you choose a cheap, quick fix or go with a more expensive, longer-lasting solution? Or, should the machine be replaced instead? And, will it all be paid for with cash or credit?

The issues behind these questions are always present for the business owner, but they are easy to ignore when a machine is happily humming away. Once a system is installed, people tend to forget about the underlying economic motives behind its acquisition—that is until a malfunction occurs. Troubleshooting is deeply linked with economics because choosing a course of action demands an answer to the above questions. You can see that, if the original want is to continue being satisfied, an economic decision will need to be made in conjunction with the technical matters of fault finding and correction. In fact, the two influence each other: what is discovered by the troubleshooter informs the economics (i.e., “this is what is wrong and this is how much it’ll cost to fix”) and the economics dictate what is possible for the troubleshooter (i.e., “you have these resources with which to discover the problem and make a repair”).

Scarce Resources

A wide array of means are available to the troubleshooter: tools, colleagues, consultants, spare parts, manuals, etc. Each of these may be optional, but time is needed for all repairs:

A man’s time is always scarce. He is not immortal; his time on earth is limited. Each day of his life has only 24 hours in which he can attain his ends. Furthermore, all actions must take place through time. Therefore time is a means that man must use to arrive at his ends. It is a means that is omnipresent in all human action.
Murray Rothbard

The smart troubleshooter understands the spectrum of possible fixes and what resources each requires to be properly executed. The resolution of these two opposing forces, the desire for the best possible fix and the limited means to pay for it, is achieved through negotiation and compromise. This dance is most prevalent in outsourced repair work, like an auto repair shop. The person bringing in their malfunctioning machine wants to get it working again by spending the fewest possible resources. Professional troubleshooters have their own incentives: to make a living and to pursue only those repairs that will result in long-term customer satisfaction (and therefore repeat business). This tension is healthy and ensures that both sides are left better off from whatever transaction is finally negotiated. For the machine owner, the value of the repair must exceed its cost. The troubleshooter must be adequately compensated and feel like a project is worth their effort (i.e., there isn’t something better they could be spending their time on). Sometimes these opposing forces will not be able to find mutual satisfaction, and this means that a whole spectrum of repairs will never happen.

That reminds me of a situation I found myself in as a teenager back in high school. It began when I ran over a concrete-filled tire rim with my beloved first car. No one (especially my parents) believed me that the rim was knocked loose by the wind and that it rolled right in front of my car. But, that’s what happened. Anyway, the “spatial conflict” with this “flying saucer” (my Dad’s chosen term) left a giant hole in my exhaust system. There wasn’t much troubleshooting involved in the diagnosis—the source of the deafening noise that announced my arrival from miles away was obvious. What was hard was getting the damage repaired on my tiny budget of “almost nothing” (I think it was about $50). My goals were modest: to shut up that insanely loud car long enough to sell it to another reckless teenager like myself. Getting it fixed almost didn’t happen at all. I took the car to every repair shop in the area, explained the situation and my modest means, and heard many a derogatory chuckle in reply: “You want me to fix that for $50?! Ha ha ha!” I finally found a student mechanic who agreed to make the noise go away for the meager sum I could offer. If I had only $40 to spend instead of $50, or if the damage had been greater, my car would have ended up in the junkyard and been just another example of where resources fall short of what’s required to make a repair.

For some troubleshooters, this negotiation of wants and means will be partially hidden. If you maintain machines internally for your organization on a salary, then someone decided, before you were hired, that the value of maintaining those systems was worth more than the the salary they offered you for the position. If the value was less, the hire would not have occurred at all! But even in this situation, the economics of troubleshooting are not far away and it’s in your best interest to be nimble in your ability to offer a range of solutions. Troubleshooters can also act like entrepreneurs, envisioning new solutions to maintenance problems that save money for their organization or its clients.

Opportunity Costs

When working on a troubleshooting project, I like to keep the idea of “opportunity costs” in the back of my mind. In the preface to his book Cost and Choice, the Nobel Prize-winning economist James M. Buchanan illustrates the concept in a hilarious way:

You face a choice. You must now decide whether to read this Preface, to read something else, to think silent thoughts, or perhaps to write a bit for yourself. The value that you place on the most attractive of these several alternatives is the cost that you must pay if you choose to read this Preface now. This value is and must remain wholly speculative; it represents what you now think the other opportunity might offer. Once you have chosen to read this Preface, any chance of realizing the alternative and, hence, measuring its value, has vanished forever. Only at the moment or instant of choice is cost able to modify behavior.
James M. Buchanan

I guess the same goes for the time you spend reading my writing. I hope you didn’t forgo a hot date! The economics of troubleshooting may be an interesting topic, but it’s not that interesting.

Anyway, if it wasn’t clear from Buchanan’s antics, opportunity costs are the result of making choices about how we spend our resources. If you decide to read an illuminating tract like this, you can’t also use the time to go to the movies (by the way, I applaud your decision). Money earmarked for a new TV can’t also be spent on a new refrigerator. When you divert your means towards a specific end, an infinite number of other possibilities go unfulfilled. The benefits that could have been, from the pursuits that weren’t chosen, are called “opportunity costs.”

If you had unlimited time to muck around with a broken machine, then the choices you’d make about how to repair it would mean little. This strategy or that strategy, who would care? You’d eventually figure it out, but there’d be no emotional weight to either a brilliant solution or a meandering slog. However, our time to make repairs is limited, likewise are our other resources. You can’t be turning a wrench, reading a manual, calling technical support, and shopping for a replacement all at once. You must make a choice about what direction a repair is going to take and forgo the rest. Speaking of choice, every troubleshooting situation involves a staggering amount of decisions: repair or replace, pursue a long-term fix or a short-term hack, outsource or do the work yourself, purchase used parts or new, and on and on. Even routine maintenance involves opportunity costs: the time and money you allocate in order to prevent future problems cannot be spent elsewhere now.

The takeaway is: in order to make sure your resources are continually deployed in the most efficient manner possible, periodically ask yourself “What else could I be doing with my time and money?”

*** Questions? Comments? Have a related troubleshooting story that you’d like to share? Feel free to leave your feedback in the comments section below! ***

References

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2 thoughts on “The Economics Of Troubleshooting”

  1. I enjoyed your article on the LVMI Daily. I often explain to people that everything we do is an economic decision…everything! If you choose to take a drink of your beverage instead of contributing to the conversation…you have made an economic decision. Since time is limited or ‘finite’, you have made a decision involving scarcity. You made a decision to take a sip instead of making a point in the confabulation. This decision is no less an economic decision just because you did not consciously ‘decide’ it.

    Thank you for taking time to write an article and submitting it to the LVMI. I appreciate it.

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