Some businesses are not dumb at all. Google, for example, is an example of an innovative technology company making oodles of lovely money. You have to dig to find anything dumb in the Googleverse, although Google Sites may be close.
Some businesses seem smart, but when you look into them a little, you find seething pools of dumbness. Selling cars to Americans is a pretty way to get rich, but if you start rooting around, you find the Pontiac Aztek and the GM Job Bank.
Finally, some businesses are dumb right from the first look. Today I'm picking on book publishing.
First of all, book publishers don't test their products on anyone. Ever. In other words, the opinion of the editor and associate editors and the head of the publishing house determines what manuscripts make it into print.
Hollwood does it much the same way, and bungles it most of the time -- Universal passed on Star Wars, essentially turning down a license to print money, and every studio in town except Paramount turned down Raiders of the Lost Ark.
The literary geniuses at Knopf and Little Brown and others compound this error by paying advances to almost all their authors. An author delivers a couple chapters -- or most of a book if they are a first-timer -- and they get paid before the publishing house makes any money, or even knows if they will.
Then the publishing house spends money on editing, typesetting, designing covers, printing, publicity (if there is any) and distribution.This is all very expensive, and explains why fancy cookbooks with full color illustrations cost $9 million each.
The more books you print, the cheaper it gets per copy, but you can run into problems fast by overprinting. Read on.
Book stores must have won a bet or some kind of underground shadow-war against the publishers years ago, because they are allowed to take all the books on consignment. If they don't sell, the publisher has to take them back and refund the money.
If the book does sell and stores need more copies, the publisher has more problems. The second print run is a rush job and therefore costs more per copy. Its also probably smaller the your initial print run, and therefore costs more per copy.
If it doesn't get to the bookstores in time, the fickle reading public forgets all about you, and your chance for a bestseller evaporates. Just like the first print run, unsold books go back and the money is refunded.
Essentially, publishing houses take a royal asspounding from every single entity they do business with from the author to the bookstores to the printer. No wonder they depend on the big stars like James Patterson, Tom Clancy and Stephen King to subsidize all the other books and authors.
I suppose there are some reasons for optimism. The Amazon Kindle and Sony ebook reader with digital distribution, print on demand and market testing using a multivariant fractional factorial approach have the potential to change the industry, if applied right.
Its significant that the companies developing and distributing these tools and technologies are not book publishers, who could probably teach Luddites a thing or two about hating technology.
Which leaves me predicting that the publishers who got themselves into this mess will not have have the vision to get themselves out.