Right Attitudes

Ideas for Impact

Archives for April 2019

Inspirational Quotations #786

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Silence is argument carried on by other means.
—Che Guevara (Argentine-Cuban Revolutionary)

I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.
—John D. Rockefeller (American Industrialist, Philanthropist)

Old age is like a plane flying through a storm. Once you’re aboard, there’s nothing you can do. You can’t stop the plane, you can’t stop the storm, you can’t stop time. So one might as well accept it calmly, wisely.
—Golda Meir (Israeli Head of State)

Music creates order out of chaos: for rhythm imposes unanimity upon the divergent, melody imposes continuity upon the disjointed, and harmony imposes compatibility upon the incongruous.
—Yehudi Menuhin (British Violinist)

The quality of one’s emotional life changes over the years, doesn’t it? But the basic instincts and desires, greed and hope, seem to remain constant. In the larger scope of things, there’s a sense of fulfillment to living a creative life. So I guess that’s what keeps me going.
—Tommy Lee Jones (American Actor)

Revolution is not something fixed in ideology, nor is it something fashioned to a particular decade. It is a perpetual process embedded in the human spirit.
—Abbie Hoffman (American Political Activist)

We’re flooding people with information. We need to feed it through a processor. A human must turn information into intelligence or knowledge. We’ve tended to forget that no computer will ever ask a new question.
—Grace Hopper (American Mathematician)

I leave this rule for others when I’m dead: Be always sure you’re right—THEN GO AHEAD!
—Davy Crockett (American Frontiersman, Politician)

I’ve dreamt in my life dreams that have stayed with me ever after, and changed my ideas; they’ve gone through and through me, like wine through water, and altered the color of my mind.
—Emily Bronte (English Novelist, Poet)

Man is fond of counting his troubles, but he does not count his joys. If he counted them up as he ought to, he would see that every lot has enough happiness provided for it.
—Fyodor Dostoyevsky (Russian Novelist)

The most regretful people on earth are those who felt the call to creative work, who felt their own creative power restive and uprising, and gave to it neither power nor time.
—Mary Oliver (American Poet)

Poets are like proverbs: you can always find one to contradict another.
—Jules Verne (French Novelist)

For mankind, speech with a capital S is especially meaningful and committing, more than the content communicated. The outcry of the newborn and the sound of the bells are fraught with mystery more than the baby’s woeful face or the venerable tower.
—Paul Goodman (American Novelist, Essayist)

3G Capital and the Fringes of Cost Management // Summary of Bob Fifer’s ‘How to Double Your Profits in 6 Months or Less’

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3G Capital’s Playbook: Look at EVERYTHING—There are No Sacred Cows in Cost-Cutting

Brazilian private equity firm 3G Capital's Playbook for Cost-Cutting: Zero-based Budgeting During the past decade, the achievements of the Brazil-based private equity group 3G Capital have drawn attention to the aggressive cost cutting methods outlined in management consultant Bob Fifer’s How to Double Your Profits in 6 Months or Less (1995.)

3G has raised the profitability of its acquired businesses by sacking thousands of workers, shutting down factories, simplifying operations—even using cheaper ingredients. In Israel, the 3G-controlled Heinz was forced to rebrand its iconic ketchup as “tomato seasoning” after a cost cutting-inspired shift to GMO-derived constituents. 3G’s playbook, however, encourages increasing budgets for strategically important business functions—for instance, Kraft Heinz has increasingly expanded spending on advertising and product improvement.

At every 3G-run company—Anheuser-Busch InBev, SABMiller, Heinz, Kraft Foods, Burger King, Tim Hortons, Popeyes,—the “zero-based budgeting” accounting tool forces managers to justify all claims on their organizations’ financial resources. As I noted in a previous article, this method forces managers to justify every line item on a team’s budget as if it were new a claim for an entirely new project, instead of merely being carried over from the prior year:

Zero-base budgeting advocates say that it detects inflated budgets and unearths cost savings by focusing on priorities rather than simply relying on the precedent. Managers secure a tighter focus on operations by justifying each line-item in their budgets, thereby reducing the money they allocate to the lowest level possible. Managers can also contrast competing claims on their ever-scarce financial resources and therefore shift funds to more impactful projects.

How to Double Your Profits has become a must-read for all managers affected by any 3G deal. This obscure book, purportedly written in just 15 hours, was also a favorite of such business luminaries as Sanford Weill (of Citigroup,) Bob Lipp (Travelers Insurance,) and Jack Welch (General Electric.)

3G’s methods have upended an entire industry known for characteristically lower profit margins. The specter of being acquired by 3G has forced Unilever, General Mills, J.M. Smucker, Nestle, Pilgrim’s Pride, Phillip Morris, and other consumer staples companies to implement sweeping cost cutting programs.

Every Expense is Evaluated to Be Cutback Unless It Contributes Directly to the Bottom Line

'Double your profits' by Robert M Fifer (ISBN 0963688804) How to Double Your Profits obsesses about cutting costs by any and all means possible. Every corporate resource is a cost-center that must be pared down to the bone—unless it’s a strategic function. When it comes to marketing, for example, the author recommends outspending the competition in both good and bad times.

Seventy-eight brief chapters (“steps”) deal with every possible drain on time, money, and people in the modern corporation: reducing layers of management, cutting the amount of time managers spend in meetings, shrinking corporate expense accounts, eliminating first-class air tickets, getting rid of pointless reports, and so on.

  • Focus on profits. “We’re here to make a profit. In fact, we’re here to make as much profit as we possibly can. Profit is the most accurate, most all-encompassing measure of whether we truly are the best. … Profits benefit all of us … when the profits slow down, we all suffer.”
  • Run a true meritocracy. Set expectations about how performance will be measured and what rewards will accrue to what levels of performance. “Within any level or group of employees, there must be wide disparities in salary, tied to demonstrable differences in performance and contribution to the bottom line.”
  • Avoid paralysis by analysis, make decisions faster. “Superb managers are instinctual, making the right decision most of the time based on limited data. The quantification that less-skilled managers insist upon is in fact illusory: They wind up making decisions based upon that which can be quantified rather than that which is important. Most of the critical variables in any business decision can only be judged and evaluated based on experience and instinct, not quantified.”

Much of the advice is effective, if predictable, but some suggestions are clearly crooked:

  • Step 24 / Declare Freezes and Cuts: “Send a letter declaring an across-the board 3% reduction to suppliers. Make sure the letter is from someone high up and intimidating….(after getting the bill) deduct 3% from the bill and say, ‘Didn’t you read my CEO’s letter? Are you trying to get me fired? “
  • Step 37 / Accounts Payable: “Never pay a bill until the supplier asks for it at least twice. You’ll be surprised: A few suppliers will take as much as two years before they finally get around to asking for their money.”

But Then Again, There is only so Much Fat to Cut out: The Crisis at Kraft Heinz

When discharged without due forethought, elements of Fifer’s cost-cutting mindset could lead to corporate myopia and an utter disregard for such intangible assets as human capital, brand value, and corporate philanthropy.

Certainly, in businesses with substantial cost inefficiencies and bloat, cost-cutting can produce considerable gains in profits, but even with these firms, gains will be time-limited, because there is only so much fat to cut out.

Cost Cutting and The Crisis at Kraft Heinz Aggressive cost-cutting has been blamed for the recent travails at Kraft Heinz. Over the last three years, Kraft Heinz’s fading return on invested capital and decreasing sales point toward a leadership team that has been giving precedence to near-term cash flows to the detriment of its long-term competitive position (“moat.”)

With the expansion of cut-price private-label brands, consumers are no longer remaining devoted to brands like they once did. Kraft Heinz’s roster of products is less appealing to customers than it used to be, and cost cutting hasn’t helped—Kraft Heinz has invested just 2%–3% of its sales on brand spending, as against 7%–9% at comparable consumer goods companies.

Recommendation: Fast Read ‘How to Double Your Profits’

Bob Fifer’s How to Double Your Profits in 6 Months or Less, even if out-of-date and brash in style, could help drive systematic cost-consciousness in large firms that have bloated cost structures in the hypercompetitive business environments.

Entrepreneurs, managers, and employees will find in How to Double Your Profits many ideas for establishing a culture where every employee feels liable for adding value to the organization’s bottom line. The key takeaway lessons are:

  • Determine which costs are strategic (costs that bring in business and improve the bottom line) and over-invest in those processes as long as they are effective, i.e. producing better results. “Place the burden of proof on justifying costs, not on eliminating them.”
  • Avoid over-quantifying and over-analyzing processes and results, particularly when the extra precision will not have any bearing on business decision-making.
  • Consider business processes as a means to an end—a focus on business results should trump a focus on business processes. In other words, focus single-mindedly on business results.

Complement with Francisco Souza Homem de Mello’s The 3G Way (2014) and Cristiane Correa’s Dream Big (2014)—informative books on 3G written by Brazilian business journalists who’ve covered 3G and its founders over the years. Warren Buffett, who regularly teams up with 3G Capital, recommends these books.

Wondering what to read next?

  1. Learning from Amazon: Getting Your House in Order
  2. Beware of Key-Person Dependency Risk
  3. Your Product May Be Excellent, But Is There A Market For It?
  4. Why Amazon Banned PowerPoint
  5. Use Zero-Base Budgeting to Build a Culture of Cost Management

Inspirational Quotations #785

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It’s the new management’s job to look at the world as it changes, and how do we look at change and take advantage of change, rather than put our head in the ground.
—Sanford I. Weill (American Financier, Philanthropist)

My dreams were all my own; I accounted for them to nobody; they were my refuge when annoyed—my dearest pleasure when free.
—Mary Shelley (English Novelist)

Two things are bad for the heart—running up stairs and running down people.
—Bernard M. Baruch (American Financier)

Let me give you the definition of ethics: it is good to maintain life and to further life. It is bad to damage and destroy life. And this ethic, profound and universal, has the significance of a religion. It is religion.
—Albert Schweitzer (French Theologian)

Obvious things escape attention because attention is drawn to what it wants to see, or what it thinks makes the biggest difference, which often isn’t the obvious things because obvious things are viewed as too simple to make a difference.
—Morgan Housel (American Financial Journalist, Investor)

If necessity is the mother of invention, discontent is the father of progress.
—David Rockefeller (American Businessman, Philanthropist)

I can live with doubt, and uncertainty, and not knowing. I think it’s much more interesting to live not knowing than to have answers which might be wrong.
—Richard Feynman (American Physicist)

Every day is a journey, and the journey itself is home.
—Matsuo Basho (Japanese Poet)

Ideally, travel broadens our perspectives personally, culturally, and politically. Suddenly, the palette with which we paint the story of our lives has more colors.
—Rick Steves (American Travel Writer, Entrepreneur)

The downside, of course, is that over time religions become encrusted with precepts and ideas that are the antithesis of soul, as each faith tries to protect its doctrines and institution instead of nurturing the evolution of consciousness. If one is not careful to distinguish the genuine insights of a religion from its irrelevant accretions, one can go through life following an inappropriate moral compass.
—Mihaly Csikszentmihalyi (Hungarian-American Psychologist)

Real leaders help us overcome the limitations of our own individual laziness and selfishness and weakness and fear and get us to do better, harder things than we can get ourselves to do on our own.
—David Foster Wallace (American Novelist, Essayist)

I am credited with being one of the hardest workers and perhaps I am, if thought is the equivalent of labor, for I have devoted to it almost all of my waking hours. But if work is interpreted to be a definite performance in a specified time according to a rigid rule, then I may be the worst of idlers.
—Nikola Tesla (Serbian-American Inventor)

Inspirational Quotations #784

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It is not as a means of procuring my own happiness that I give in charity, but I love charity that I may do good to the world.
—The Jataka Tales (Genre of Buddhist Literature)

There are three roads to ruin; women, gambling and technicians. The most pleasant is with women, the quickest is with gambling, but the surest is with technicians.
—Georges Pompidou (French Statesman)

The greatest gift a parent can give a child is unconditional love. As a child wanders and strays, finding his bearings, he needs a sense of absolute love from a parent. There’s nothing wrong with tough love, as long as the love is unconditional.
—George H. W. Bush (American Head of State)

A man in love is incomplete until he has married. Then he’s finished.
—Zsa Zsa Gabor (Hungarian-born Film Actress)

We may never be strong enough to be entirely nonviolent in thought, word and deed. But we must keep nonviolence as our goal and make strong progress towards it.
—Mohandas K. Gandhi (Indian Hindu Political leader)

Perseverance is failing nineteen times and succeeding the twentieth.
—Julie Andrews (British Actress, Singer)

I think that one can have luck if one tries to create an atmosphere of spontaneity.
—Federico Fellini (Italian Filmmaker)

The worst part of success is trying to find someone who is happy for you.
—Bette Midler (American Actress, Singer)

Every time I appoint someone to a vacant position, I make a hundred unhappy and one ungrateful.
—Louis XIV of France (King of France)

The salvation of this human world lies nowhere else than in the human heart, in the human power to reflect, in human meekness and human responsibility.
—Vaclav Havel (Czech Dramatist, Statesman)

A slave is one who waits for someone to come and free him.
—Ezra Pound (American Poet, Critic)

We must not always judge of the generality of the opinion by the noise of the acclamation.
—Edmund Burke (British Philosopher, Statesman )

Famous men have the whole earth as their memorial.
—Pericles (Athenian Statesman)

It is only those who have neither fired a shot nor heard the shrieks and groans of the wounded who cry aloud for blood, more vengeance, more desolation. War is hell.
—William Tecumseh Sherman (American Military General)

Failure really isn’t terrible if you can say to yourself, hey, I know I’m gonna be successful at what I want to do some day. Failure doesn’t become a big hangup then because it’s only temporary. If failure is absolute, then it would be a disaster, but as long as it’s only temporary you can just go and achieve almost anything.
—Jerry Della Femina (American Advertising Executive)

The last day of the old year was one of those bright, cold, dazzling winter days, which bombard us with their brilliancy, and command our admiration but never our love.
—Lucy Maud Montgomery (Canadian Novelist, Children’s Writer)

Inspirational Quotations #783

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Living is like working out a long addition sum, and if you make a mistake in the first two totals you will never find the right answer. It means involving oneself in a complicated chain of circumstances.
—Cesare Pavese (Italian Novelist, Poet)

But although denying that we have a special position in the natural world might seem becomingly modest in the eye of eternity, it might also be used as an excuse for evading our responsibilities. The fact is that no species has ever had such wholesale control over everything on earth, living or dead, as we now have. That lays upon us, whether we like it or not, an awesome responsibility. In our hands now lies not only our own future, but that of all living creatures with whom we share the earth.
—David Attenborough (English Naturalist, Broadcaster)

The number one benefit of information technology is that it empowers people to do what they want to do. It lets people be creative. It lets people be productive. It lets people learn things they didn’t think they could learn before, and so in a sense it is all about potential.
—Steve Ballmer (American Businessperson, Philantropist)

The lintel low enough to keep out pomp and pride; the threshold high enough to turn deceit aside; the door-band strong enough from robbers to defend: this door will open at a touch to welcome every friend.
—Henry van Dyke Jr. (American Author, Educator, Clergyman)

People are like stained glass windows—the true beauty can be seen only when there is light from within. The darker the night, the brighter the windows.
—Elisabeth Kubler-Ross (American Psychiatrist)

Birth is not the beginning of life—only of an individual awareness. Change into another state is not death—only the ending of this awareness.
—Hermes Trismegistus (Greek-Egyptian Author)

Marriage is about the most expensive way for the average man to get his laundry done.
—Burt Reynolds (American Actor)

Without cancer, I never would have won a single Tour de France. Cancer taught me a plan for more purposeful living, and that in turn taught me how to train and to win more purposefully. It taught me that pain has a reason, and that sometimes the experience of losing things—whether health or a car or an old sense of self—has its own value in the scheme of life. Pain and loss are great enhancers.
—Lance Armstrong (American Racing Cyclist )

No one would remember the Good Samaritan if he’d only had good intentions. He had money as well.
—Margaret Thatcher (British Head of State)

I am not so enamored of my own opinions that I disregard what others may think of them. … Yet I hold that completely erroneous views should be shunned.
—Nicolaus Copernicus (Polish Astronomer)