Sacrifice Is A Sustainable Strategy

By Dan Coughlin

My parents majored in sacrifice and minored in thrift. Every day for the first thirty years of my life I heard the word “sacrifice” as in, “We sacrificed a lot so you could be better off.” And they weren’t kidding. My mom wore the same winter coat for at least ten years. Going out to eat was a rare treat saved only for birthdays. A fancy dinner included my dad going up to McDonald’s and getting a dozen cheeseburgers and then going to the grocery store and buying a half gallon of vanilla ice cream. Then my parents, my five siblings and me sat around our kitchen table and ate it. At least 85% of all the clothes I wore in the first twenty-two years of my life were bought at garage sales.

Two Problems with Sacrifice
There were two problems with this approach.
Problem #1: Sacrifice was used like a jackhammer.

I heard the word sacrifice so many times that when I finally went on my own I was determined to go out to eat. I was determined to buy books and not go to the library. I was determined to enjoy today and not scrimp by every minute of my life. And there were these wonderful new inventions called credit cards.

Problem #2: My parents were right.

Despite all my frustrations with hearing that word over and over and over again, my parents were right and they are still right. The upside of sacrificing far outweighs the downside. A very high percentage of businesses and individuals in the U.S. have acted a lot like me for the past twenty five years. We all need to learn from my parents and make sacrifice a sustainable business strategy.

Stop Thinking About the Next Quarter, Start Thinking About the Next Decade
Beginning in the 1980s when the stock market began to grow exponentially, individuals and businesses began to obsess over quarterly returns. This obsession with short-term results caused executives and managers to think about what could be done today to make a good showing in ninety days. Think about how absurd this is. Over the course of ninety days, you might have seventy days of actual work. Imagine your results for last quarter weren’t very good so now you feel the pressure to produce great results this quarter. What will you do? You could slash your prices or come up with a hot promotion to get sales moving. You could dramatically cut costs to make the numbers look good. You could fire people or sell off assets. You could cheat and make up numbers to make the quarter look good. Or you could do something dramatically different: focus on improving the value your customers receive and remain patient over the long term.

Pixar Animation Studios didn’t overtake Disney Animation Studios overnight. They did it by remaining remarkably patient and steadily improving the quality of their films. Google didn’t become the best search engine in the world overnight. They steadily and patiently improved the quality of what they had to offer. Apple didn’t become the Most Admired Company in the World as named by Fortune magazine overnight. They steadily created more value for customers.

Stop focusing on making this quarter look good and start focusing on making the next decade truly remarkable. Ironically, as you focus on generating ten years of greatness you will steadily make the performance of each quarter better and better.

Use Credit Very, Very Carefully
Cash is annoying. First you have to have it, and second you have to have it with you. Credit cards are so much easier. You can just whip those puppies out and pay for everything from fast food to fur coats. The same is true in a business. Having a credit line makes everything so much easier. If you have a good product idea or marketing campaign, you can just plow ahead. You don’t have to think through whether or not you can really afford it. You can implement immediately because you know your good idea is going to generate a great return on investment. Except sometimes it doesn’t. Actually sometimes it generates a zero percent return on investment. That’s right. Some new products and some marketing campaigns deliver no revenue. None. Zippo. However, you do still have that little problem of the bill to pay.

My mom would search for extra pennies in the house at the end of each month to pay the bills, but she would never buy anything on credit, mainly because she was scared she wouldn’t be able to pay it off. However, being scared of credit turned out to be a very smart thing because it forced her to think through her purchases. It turns out that credit cards are a good thing, just like car loans and house mortgages and business credit lines are good things, as long as you pay them off on time.

The big problem with credit occurs when a person stops thinking through his or her purchases. Suddenly frivolous purchases seem mandatory. And paying them off today is annoying since tomorrow will always be a better day. Think long and hard before you make a purchase today that can be paid for tomorrow. Identify your margin of safety. Can you really afford it? Is there a reason why you’re not paying cash today?

Is that a Meeting or a Roman Festival?
I love a good business meeting. As a speaker, facilitator, or observer, I really get a kick out of a productive meeting where ideas are being generated, discussed, and selected for implementation. Having said that, I’m really confused by many meetings that I attend. If the attendees are going to be in the meeting room for 95% of their stay, why bother taking them to a fancy resort with expensive rooms and even more expensive food? Either go to a moderate hotel or give the attendees time to enjoy the surroundings. Some people argue that the surroundings are necessary to convey the message that the business is doing well. To which I have a very technical response: baloney! I’m writing this article on a desk my mom found at a garage sale twenty-five years ago for $20. Does my desk, which works just fine, make this article better or worse?

Get in Shape
This one is going to cut a little close to the bone. Folks, we’re out of shape. I know, I know, you might be in good shape, but the vast majority of Americans are not in good shape, including me. This concept of sacrificing goes beyond just financial waste. We eat like every meal is our last meal for the next thirty days. We need to get lean and hungry again. We need to eat right and exercise more. Isn’t it a strange dynamic that we fill our days with activities so we can’t exercise, but then we’re tired so we need to eat more to keep our energy up?

Imagine no money owed on past bills, savings in the bank, a trim waistline, and great personal energy.
Now imagine more bills than you think you will ever be able to pay off, no savings in the bank, a huge waistline, and very low personal energy.

Q: What’s the difference between these two scenarios?
A: Sacrifice.

Let me try that again.
Imagine a business with no money owed to anyone, employees who find purposefulness in their work, and great energy in the business for the long run.
Now imagine a business with stacks of unpaid bills, employees worried about keeping their jobs, and very low morale for the long run.

Q: What’s the difference between these two businesses?
A: Sacrifice.

Ok, I’ll add in one more word: patience. When you have to have results today and you have to try every idea today no matter the cost, then you have no patience. When you don’t have patience, you won’t be able to sacrifice. And if you don’t sacrifice today in order to improve tomorrow, then you will continually be in the second scenario.

Why Sacrificing People is a Really Bad Move
Firing people is suddenly the in-thing to do. Each month we read about hundreds of thousands of jobs being eliminated. This is an extraordinarily good move to cut costs in the short term and an extraordinarily bad move to improve profits in the long term. There are only a few resources that generate profits. Having money in reserve can improve a company’s ability to invest and generate more money. Of course, that theory hasn’t exactly worked out very well recently. Owning real estate is a good investment for the long term, although it hasn’t worked out very well recently either. And the other great value-generator is people.

But it’s not enough just to have employees; you actually have to tap into their minds to gain the ideas for profit generation. I suggest you gather employees together in groups of five to seven people and ask the following questions:
Without letting go of any of our employees, what ideas do you have on the following questions:

1.    What can we do to cut costs without decreasing value to our customers?
2.    What can we do to increase value to our customers without increasing our costs?

Let me encourage you one more time. Before you let go of any of your employees, gather them together in small groups and engage them in meaningful conversations. Just as executives and managers are too quick to spend frivolously in good times, I think they are too quick to fire employees in tough times. I’ve never met the executive or manager who had all the answers on any topic. The best ideas always come from group discussion followed by a single individual making the final decision. Gather your employees together and engage them in a meaningful discussion about how to cut costs without cutting value to your customers and how to increase value to your customers without increasing costs. And do this every quarter in every year regardless of whether the economy is doing great or doing badly.

Make Old-Fashioned a New Way of Life
As I’m writing this I feel old. It sounds so old to me to talk about sacrificing and being patient. Those were the words I heard from my mom and dad when I was growing up. It doesn’t feel hip or cool or young to talk about sacrificing and being patient. However, winning does sound cool. If you want to build a great career and be part of building a great business, then make old-fashioned a new way of live.

During really tough economic times like we’re living in right now, the word sacrifice gets used a lot. It’s easy to talk about sacrificing when you have no choice. Everybody has to sacrifice when the stock market falls by 45%, jobs are being eliminated, and cash flow is drying up. It’s also easy to lose weight when your doctor says, “Lose forty-five pounds or you will die.” The harder part is to sacrifice when times are great and to eat wisely and exercise when you’re in great shape.

To build truly great businesses and to get in truly great physical shape for the long term, we need to make old-fashioned a new way of life. We need to sustain our sacrifices for decades, not quarters. In doing so, I think we will all find that sacrifice creates freedom. When you choose not to buy something or eat something that you want right now, you enhance the belief that you are in control of your decisions, not someone else. That’s freedom. When you have to buy or eat something as soon as it appears, then you are not in control of your decisions. That’s lack of freedom.

My parents didn’t sacrifice for six months and then spend $10,000 on a lark. They were consistently frugal over a period of several decades. Decide on the value you want to deliver to your customers, and then consistently, patiently, and steadily sacrifice other options in order to build a great business for the long term. Be consistently frugal and you will be ready for the strategically rainy day. That’s the day when investing your carefully saved money can generate an extraordinary advantage for the business. But that advantage won’t happen if you’ve spent every dime you could borrow.

Sacrifice, be patient, and maintain that approach over and over and over. It’s actually an exciting and freeing experience.

About Dan Coughlin
Dan Coughlin works with executives and managers to improve their business momentum. He is a business keynote speaker, management consultant, and author of ACCELERATE: 20 Practical Lessons to Boost Business Momentum. Dan’s clients include Coca-Cola, Abbott, Toyota, Boeing, Marriott, McDonald’s, AT&T, American Bar Association, YPO, Vistage International, Roush Fenway Racing, and the St. Louis Cardinals. He speaks on leadership, branding, sales, and innovation. His next book, The Management 500: A High-Octane Formula for Business Success is due to be published in May 2009 by AMACOM.

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