

The creepy capital efficiency of Goldman's cafeteria - pearkes
http://www.cnbc.com/id/101122292

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swombat
It doesn't sound capital efficient at all - instead they've got people
_deliberately_ milling about doing nothing while waiting for the "penalty
window" to lapse.

If anything, this is a brilliant example of how applying measurable incentives
can distort motivations and make people do stupid things to please whatever
metrics are being measured.

Left to their own devices, these very smart and ambitious people would no
doubt make up their own mind about the value of their time and ensure they
don't waste time milling about when they're busy, and so go to lunch early or
late or in the middle if they're not too busy anyway or want to chat with
someone in the queue. Instead, they're now forcing themselves to fit a stupid
"penalty window" to save a few bucks, because that's what the incentive system
in place dictates.

Measurements are a very, very dangerous beast. Apply with caution.

(Great book on the topic: [http://www.amazon.co.uk/Measuring-Managing-
Performance-Organ...](http://www.amazon.co.uk/Measuring-Managing-Performance-
Organizations-Robert/dp/0932633366) )

~~~
pbhjpbhj
>"they've got people deliberately milling about doing nothing" //

But that also means that those who need to get a quick lunch have a window
towards the end of the cost penalty period in which they can breeze through
the line and more easily get a table.

I like the idea in general, but presumably it's the employees own time they're
wasting.

Surprised it's not a graduated system, like a normal curve with a plateau over
the traditional dinner hour.

Do Goldman also allow staff to have flexibility in their work hours - that
would tend towards reducing choke points like this I imagine.

~~~
amirmc
> _But that also means that those who need to get a quick lunch have a window
> towards the end of the cost penalty period in which they can breeze through
> the line and more easily get a table_

Doesn't seem that way. From the article.

> _" If you find yourself in the cafeteria sometime around 1:20 pm, ... the
> cafeteria area between where the food is collected and where you pay is
> quite crowded. The Goldman lunchers are chatting with each other, waiting
> for the final minutes to tick down until they can save a dollar or two."_

In other words, if you want to breeze through the queue, you have to come
_after_ the 1:30pm queue for the cashiers has subsided. If you want to get a
table, you may have to come even later.

In general, I find this to be a bizarre and overly complicated solution to the
basic problem of 'time wasted in queues'. There are may other ways to tackle
this but it doesn't surprise me that an investment bank thinks manipulating
prices is the 'right' way to do it.

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saalweachter
So instead of a hump at 12:30, they've created two humps at 11:30 and 1:30?

Why not offer a continuous discount curve? If you show up at 1:25, you get 23%
off your meal, so there is only a 2% discount for dawdling 5 extra minutes in
the food line before paying.

~~~
jbert
Could do, but why tie to time? What you actually trying to minimise is time
spent queueing. So record when people arrive and apply a discount/surcharge
depending on how long they queued (or just based on the number of people ahead
of them in the queue).

Seemingly perversely, a long wait would imply a higher cost for the meal.

It's basically congestion charging based on queue length/time rather than time
of day.

~~~
saalweachter
The main advantage of tying it to time is that you can let people plan for it.
If you have dynamic pricing based on unpredictable conditions (how many people
are in the cafeteria right now?) you can't plan for it, and the best case
scenario is that employees get up, go to the cafeteria, see that the
demand/price is too high at the moment, go back to their desk, come back 10
minutes later, repeat until the price/demand is low enough.

------
aleyan
I have completely forgotten about the discount outside of rush hour at
Goldman. It just didn't figure much in my lunch time planning, and I loved
lunch.

The one remarkable thing about their cafeteria that stuck with me was the
cutlery. All disposable utensils outside of chopsticks were made out of
biodegradable corn and they were the best disposable utensils I have ever
used. The utensils were full sized and the right stiffness. There were no
sharp edges and the texture was slightly rough, much nicer than plastic.

Since leaving GS, the only thoughts I had about their cafeteria was why
haven't I encountered as nice disposable utensils as I had there.

~~~
nraynaud
I can't quite find the brand and google is drawing a blank, but I have
recently seen some disposable metal silverware (not coated plastic, real
metal). I guess some french luxury brand, like Starck or Degrenne.

~~~
JonnieCache
Just because you choose to throw something out and have it buried in the
ground does not make it disposable.

~~~
nraynaud
It was made and distributed as disposable.

I got the explanation by someone who decided to keep some instead of throwing
them.

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soneca
Meanwhile, very far from all of this, with no press, no hacker news front
page, no praise for their cleverness, street restaurants in Brazil located on
areas with high-density of corporate offices have been doing this for years.
No capital efficience fancy wording, they just realized that people were going
elsewhere because they had a very long line and did something about it.

Funny how hype and self-importance reinforce themselves. This is big news
about what looks like a fantastic idea from the incredible minds of insanely
clever bankers. If you are Goldman Sachs, whatever you do must be clever. If
you are CNBC whatever you talk about must be important.

~~~
crusso
It's a fluff story about a powerful company (local to CNBC and active in the
same circles) that does well with capitalism and efficiency using market
principles in everyday ways.

I don't think it was intended to be a "first ever in the world" slight against
Brazilian street restaurants.

Meh, slow news day overall what with the resolution of the End of the
World(tm) non-crisis over the debt ceiling.

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TallGuyShort
They did this because they're obsessed with avoiding queues and doing
everything efficiently, but have a culture where everyone will queue up for
10+ minutes waiting to avoid paying a couple dollars more? Seems silly the way
the author explains the motivations.

~~~
pbhjpbhj
Perhaps the implementer of the scheme likes to get lunch at 1:20pm? Jump the
queue, get what you want while the poor saps wait in line - now that sounds
like capitalism to me.

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Coffeewine
They're not taking this far enough, imposing a blanket 25% discount nothing
but autocratic perversion of what could be a functioning lunch time credit
market. They could maximize revenues and employee throughput in real time!
Sure, there'd be some overhead, but financialization axiomatically improves
efficiency. Perhaps there could even be a lunch time credit futures market for
people who occasionally work from home or on business trips?

How can you be trusted to manage bond traders if you can't even properly
manage a cafeteria?

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dllthomas
Gattaca, not Gattica. A, G, C, and T.

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svmegatron
As others have noted, this isn't efficient at all. They've incentivized some
of the highest-paid (ie. _most expensive_ ) employees in all of business to
waste their most valuable resource - time - in pursuit of a token savings.

The folks at GS are extremely smart people, which leads me to believe that
this isn't unintentional at all. Instead of achieving actual savings, they
have:

* An effective PR stunt. * A low-cost signaling mechanism for employees to show their dedication to Goldman's "cultural values"

Make no mistake, this has nothing to do with "capital efficiency" and
everything to do with "image"

~~~
iNate2000
It seems like this discussion has forgotten that there was an enormous line at
12:30 that was wasting more people's time.

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dllthomas
One concern I have here is I know my productivity is impacted when I'm hungry.
It's quite possible this is optimizing for time-at-desk at expense of worker
productivity.

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sac2171
A lot of people are mentioning the idea that this should actually be a
continuous curve... As someone who has used the cafeteria for a couple months,
I would say this is most likely an over optimization. You are creating a
complication for every transaction, and making it so now there is now set
points where you can save the most money, namely at the beginning/end of the
window. Which actually creates more of the two 'two hump system' swombat,
saalweachter, smickie and others have mentioned. Just like there is a natural
gradient to lunch from 12 to 1, you still get a gradient in the discounted
hours. 11:30 isn't a better time to eat lunch then 11:55, It's simply an
attempt to split up lunch times so that the cafeteria can effectively have 3
rush hour instead of 1. And since traffic effects aren't linear, you get a
much quicker overall experience as a result. "The people standing around" is
overplayed, Those are the people's elevator rides who were are little
shorter/longer than expected.

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im3w1l
They should use entry tickets, valid at a specific time and date. Sold at
auction. With a second hand market for when you change your mind.

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vidarh
"Creepy" would be if they had people test blood sugar levels and only admit
them into the cafeteria when their blood sugar starts dropping too much.

This is just mildly interesting. It's not like differentiated pricing for peak
periods if particularly unusual, though admittedly I haven't seen it at a
cafeteria.

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znowi
> Goldman beat estimates but many analysts say a driver of this was Goldman's
> ability to cut costs

If they ever cut costs somewhere, it's from the pockets of their clients.

[http://www.theguardian.com/business/2013/aug/01/fabulous-
fab...](http://www.theguardian.com/business/2013/aug/01/fabulous-fab-tourre-
guilty-fraud)

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Sagat
Am I a commie if I think Goldman Sachs is a bit creepy in itself?

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swalkergibson
So is there a derivatives market for the food purchased at a discount? Seems
like an opportunity for arbitrage. Corner the market on meatloaf!!!

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auggierose
I refuse to read an article that cannot even get its Sci-Fi references
straight.

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EGreg
As usual a technological solution would have saved more money. All Goldman
would have to do is let people reserve their place in the lunch line through
their cellphone or at their desk. When their number comes up, they can go
right to the front of the line and order. There would be a specific physical
way to access the front of the line when your number is up.

The people who don't use this policy would quickly learn to use it since the
others would be constantly skipping them. So that would push everyone to use
this system and avoid the physical line. The system could even show them
estimated time remaining via an app or webpage.

For that matter, Goldman could have its own app for its employees. So can many
other organizations. Lots of government inefficiency comes from this. The NY
DMV finally put forms up online!! Imagine how much more efficient it is to
fill out a form online than waste half a day standing on line (not online) to
get the right form, then fill it out and wait for your # to come up to finally
do something.

By the way, if you liked the above idea of organizations making apps for their
employees, reach out to me through
[http://qbix.com/about](http://qbix.com/about) . We spent about two years
building the technology for making such apps for organizations. We could
really use someone with good PR or Marketing experience to partner with us
though. And developers are always welcome (if you use Node or PHP.)

