Dec 19, 2010
What do Moody's and the patent office have in common? [0]

They're in the business of fielding complex applications from just about anybody. They can't just pick the best ones—they must accept or deny every last application.

This is a really bad situation to be in. To understand why, put yourself in the shoes of an employee at the patent office[1] who must judge these applications.


Each application you see has its own deep complexities and needs time and expertise to understand, perhaps even expertise you don't have and experts you must track down. But when you're done understanding one application you haven't learned anything that helps you process the next one faster. Your supervisor is shielded from these complexities and inevitably judges you on the basis of one metric: number of applications processed.

Inevitably, employees in this situation employ a heuristic: they try to race through the simple applications, and half-ass the complex ones. There's now an incentive for poor applicants to craft complex applications; if your idea stinks a simple application is certain to be denied, while a complex, weighty-looking application has some chance of randomly being granted. Meanwhile, genuinely complex applications now face more randomness and may be undeservedly denied.


Over time applicants complain, usually the deserving but complex ones. Every time you the employee catch heat for such a complaint you loosen your constraints. Complex applications get handled more and more perfunctorily.[2] Instead you spend more and more time with the simple applications, probing them intensely for weaknesses, ‘bike-shedding’ them in more and more adversarial fashion, looking for the vaguest of undeniable reasons to deny applications. After all, the acceptance rate is going up in that complex pile. The denials have to come from somewhere, lest you stand out in somebody's metrics.

Predator vs Prey

Over time applicants start to notice that even genuine applications have more chance of being granted if they are large and complex and seem weighty. As more and more applications grow complex, standards change. What was complex 10 years ago is now considered simple, and more likely to be denied. Nothing's being read in any sort of detail anymore. Every applicant wants to end up in the complex half of the pile. They aren't antagonistic to the application process anymore, but to each other. You the employee are now in a position of power, like a lion in the savannah, culling the herds of their weakest, least weighty-seeming applications. Your prey isn't trying to convince you of anything anymore, just to outgun some other application.

Red Queen

It starts being taken for granted that ‘you have to spend a month on the application,’ no matter how clear and deserving it is at the outset. “Standards” go up. You have to pay a lawyer to craft it. The number of lawyers, the expense of the lawyers, the armies of paralegals, everything's spiralling up, until not everybody can afford a patent anymore. Like the Red Queen, everybody is running as hard and as fast as they can just to stay in the same place.

Well, not everybody has managed to stay on the treadmill. The one thing that's been lost is the line in the sand showing a good patent application.

Zoom out

This dynamic has played out throughout history. It is how bureaucracies are created. To some extent it is inevitable; humans don't yet know a better way to deal with complexity. If you're planning an application process, be aware of these pitfalls. Consider ranking rather than judging, so that you don't have to grow your employees with the number of incoming applications. Consider some sort of limit on application length and complexity so that you don't have to grow your employees faster than the number of incoming applications. Think hard about how your employees will judge applications. Consider bounties for finding misjudged applications. Any of these ‘outs’ will help you avoid the worst-case scenario: high costs, which grow faster than incoming applications.


0. Thanks to Walter Chang for the conversation that got me to write this.

1. Two other examples: financial regulators and the US EB1 green card process.

2. Sure, processes will grow up around them, but less and less of the process will be devoted to actually reading them.


Comments gratefully appreciated. Please send them to me by any method of your choice and I'll include them here.

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