The Most Brilliant Moment In Business

The Most Brilliant Moment In Business

When Toyota recalled one of its car brands that I own, it sent me a notice of the recall, and provided a document for me to take the car to a dealer for it to be fixed at no cost to me. That is expected in the automobile industry: the makers of the cars are responsible for fixing major issues when the vehicles are under warranty.

If you go to a grocery shop, and buy food that later causes problems for you, you can easily get a trial lawyer to sue the shop in America and most parts of the advanced world. Advancement is used here in terms of maturity of legal institutions.

And when you have a smoke detector in your house, you expect it to do its job which is to detect smoke. But if that smoke detector malfunctions and the house burns down, and you can trace the fault to it, the makers are in trouble.

From one product to another, the makers are responsible when their products fail or severely malfunction. But except one product: software. Sure, there are minor cases as in radiology where a software update error can cause the wrong amount of dose leading to deaths. But even with that, it is the whole radiology equipment that is faulted and not necessarily the software.

So what happens is this: software can cause problems in the world, and the makers are not held responsible. When virus corrupts your files in your Windows laptop, Microsoft is not on the hook. When hackers break banks to steal money, the makers of faulty software that made that easy to happen are not charged. When hackers break into your firm to manipulate your data, you do not return to the software company, suing them for ever selling a product that made that possible.

So, all over the world, the software companies are never faulted. The focus is always on the hackers. There is nothing wrong going after the bad people, of course. The law enforcement will go after them. But no one remembers the person that sold a crappy software product that made that possible, to start with. I am not sure any major software company has been invited by the U.S. Congress to explain why they sell products which are easily hacked. Contrast that to the fire the Congress will send to Ford, GM and Toyota when people are crashing due to faulty cars.

You Never Own Software

Yes, software is one of those products you never own as a company. You have to keep paying licenses to continue to have the rights to use it. Any day you cease to pay the license, you will immediately lose the legal rights to use the product.

Yet, if you are paying and a problem arises like the product has been hacked and your company data stolen, you cannot sue the software firm. You simply rant about hackers. Technically, software ought to be easier to deal with since the users never own the rights. The rights are reserved to the makers. This is far different from cars, for example, where you own all the rights but when challenges come, you still go back to the car makers.

All Together

The most brilliant people in the world are those that architected the structure of pricing software. They elegantly made it possible that value comes to them and risks stay with their clients. Otherwise, there is no reason why the world has not challenged major software companies shipping products which are easily hacked. The makers are brilliant as they have cleverly deflected the burden of product quality with the narratives of hackers being evil.

Yes, take a closer look, and you will agree that the model is not supposed to be that way: if Ford takes the heat for faulty cars, software makers like Oracle should be held responsible for making hack-able software. But they are not responsible, and they are lucky.

The software men created an industry far superior (for themselves) than anything markets and industries have ever seen. They have made sure you never own what you bought and when you have problems, they are never to be blamed. They pioneered a clever narrative that their faulty products which continue to be hacked are never their faults. That has kept them away from the crosshairs of risks.

If you make and sell software, you better thank the legends that came before you. Why? If not the way they structured the business, trial lawyers would sue you if hackers break your software and inflict damages to their operations. Today, those lawyers cannot come after you, just as they go after Toyota and Ford for faulty cars. The software pioneers are peerless in business contracting innovation: head, they win; tail, they win.


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2 thoughts on “The Most Brilliant Moment In Business

  1. I’m a big fan of your content but i am highly disappointed in this article. Insinuating that software manufacturers should be liable for malicious hackers deliberately targeting their software is akin to saying that Toyota is liable anytime an “agbero” deliberately decides to damage your vehicle.

    Companies do not make “easily hackable software” as this puts them at a disadvantage vis-a-vis their competitors who fortify their products with security measures.

    Software companies should not be held liable for the unscrupulous actions of hackers and other cyber criminals.

    1. No issues – but the trajectory points to a future where that is possible. I do hope the software companies take action. Today, people that make pacemakers are liable when their heart sensors are hacked. That is why they do all to make sure it does not happen. If we continue this path, someone will use that doctrine to ask companies to improve. Google “hacked pacemakers sued” and see how they recall millions of pacemakers owing to hacking. That they are not recalling our gizmos is simply that it does not affect lives directly. But that does not mean if cannot happen in future.

      On the example you gave – that is not a good analogy. No one can sue when agbero deliberately breaks a car. It makes no sense. But Toyota can be sued if it makes it so easy for the agbero to control your steering when you are driving. Both are liberate but the court decides what it wants to pursue. In the former, you have to control to prevent a physical harm to the car. In the latter, you have control to prevent an electronic harm to the car.

      That is why we do not sue drug companies when a doctor gives overdose to a patient. But sue the drug company when the same drug does what it is not supposed to do. It is believed that the drug company cannot control the behavior of the doctor, but in the latter must have bounded its claims.

      Time will tell. But if the software makers do not step up, the future will be challenging. They will have to regulate software as they do on Radiology where software used in radiology equipment are regulated and approved by FDA before shipped to markets. If hacking continues in decades, they may decide to ask for that.


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