The High Price of Free Resources


I didn’t expect my trip to the criminal division of the San Francisco Supreme Court to result in a business epiphany – but it did.  I spent the last two weeks fulfilling my civic duty by serving as a juror on a criminal domestic violence case. Jury duty is almost always inconvenient – although so is living in a democracy. Its one of the prices we pay for living in a free society. I never served in the military or worked in the public sector so I was happy to volunteer my time as a juror and expected nothing in return. I did, however, walk away with a valuable and counter-intuitive business insight: free resources stifle innovation.

Before I go any further I want to clarify that my thoughts here are more of a critique on how we run our businesses rather than how we run our judicial system. Our judicial system, while inefficient, is incredibly thorough. I’m sure there is plenty of room to improve our legal system, but I’ll leave those suggestions to public policy experts.

Hidden costs

$73,327. That is the cost of selecting a fair jury for a basic domestic violence case in San Francisco. Taxpayers would consider it an abuse of funds if their government wrote a ~$70k check to select a jury for every single case that comes to trial. But nobody notices the cost because it is hidden. 120 civilians (including yours truly) showed up for jury duty. The judge and attorneys interviewed us over three days with the goal of eliminating people who they think may bias the trial. At the end of the three days they seated a dozen impartial jurors and the trial could begin. Selecting a fair jury for this one trial took 381 person days. 120 citizens plus the judge, two attorneys, a bailiff, a court reporter, an admin, and the defendant multiplied by three days equals 381 person days. According to public records the average wage of a San Francisco resident is $48,500 per year or $192.46 per business day. Multiply 381 days x $192.46 per day and you get a cost of $73,327. Of course the government doesn’t see it that way because it isn’t directly paying for people’s time. The government does pay for the attorneys and court personnel but their costs are viewed as sunk costs rather than incremental expenses. As a result, the government believes a 3-day jury selection process incurs no more cost than a 1-day jury selection process. Therefore, it has no incentive to find more effective and efficient ways of conducting jury selection. In business, as in our judicial system, we tend to ignore the costs we can’t see.

Want a breakthrough? Add a constraint

In my trial several potential jurors waited 2.5 days for their turn to be interviewed by the judge only to be immediately dismissed when the judge realized they had been victims of domestic violence. A simple pre-trial survey could have revealed that information before these individuals even showed up let alone after spending three days in the back of the courtroom. If the government had to pay each person his/her market wage for jury selection the process would look radically different. Instead of tying up 120 people for three days, the court could use an online survey and interview to identify and disqualify individuals with conflicts of interest before they show up to the courtroom. A simple web app could organize and schedule the remaining jurors for a final onsite interview with the judge and attorneys. The entire process would take less than a day and save ~$50k representing an incredible ROI. Paying for “free” resources leads to breakthrough innovations that can be more efficient and yield better outcomes. My simple jury selection survey and web app would save jurors time and control for biases that can be introduced by group dynamics.

We’re abusing “free” resources

As business people we are really good at making investments and optimizing our costs to yield profits. However, we aren’t very good at optimizing the use of resources that have hidden costs. Here are a couple examples:

Meetings – How many times do we call meetings to “just sync up?” If your company charged back the hourly costs of each meeting participant to your department you would change the way you conduct meetings. You’d only invite essential people to your meetings. Your meetings would have clear objectives and detailed agendas. Meeting participants would have pre-work and follow-up action items. You’d likely have fewer, more productive meetings. famously requires meeting organizers to prepare and distribute written memos prior to each meeting. Other companies have installed meeting cost calculators to remind people how expensive meetings are .

Email – What if email wasn’t free? Or what if email had a character limit like tweets do? We’d certainly have fewer email novels, which are often byproducts of lazy thinking. Historians credit Pascal with saying “I have made this longer than usual because I have not had time to make it shorter.” Perhaps we can modify the adage to say “if I realized the hidden costs of my emails I’d send fewer of them."

Slides – I think everyone in the world would welcome a $10 per slide tax on presentations. Most presenters would convey their messages more powerfully if they cut their number of slides by 75%.

In summary, if we step back and examine how we use free resources we will find ways to dramatically increase our productivity.

My jury duty service taught me a valuable lesson – things that are free can also be the most expensive.