Different Problems
Like all businesses, Permanent Equity has problems. As our CEO Brent and I were discussing what to do about one of those the other day, we realized that each of our proposed solutions risked creating a new, different problem that might have to be addressed in the future. This might be one of the reasons why it might sometimes feel like the world is trolling you. If solutions beget problems, then nothing ever stays solved. Entropy, as I’ve said before, is undefeated.
If you believe that’s true, then it's not about what you can fix, but what you can tolerate and how you might position yourself to tolerate it. For example, if you want to move fast, you have to tolerate mistakes. If you want fewer mistakes, you have to tolerate more process. If you want less process, you need to tolerate autonomy. And tolerating autonomy doesn’t sound so bad until you get uneven results and start introducing standards and expectations. Which also sounds great until you end up with bureaucracy.
3G Capital pioneered the concept of zero-based budgeting (and the cool acronym ZBB). This was the idea that rather than inherit a cost structure from a previous year and incrementally manage around it, you start over from scratch each year and justify each and every expense. In other words, nothing automatically renews.
While the approach hasn’t worked out so well at Kraft Heinz, it doesn’t mean it’s an idea without merit. But in addition to considering ZBB, maybe also think about zero-based structuring (ZBS…I just made that up). This might mean you also don’t inherit last year’s rules, responsibilities, or even org chart, but start from scratch and ask how might we organize ourselves knowing what we know now to accomplish our goals and solve our problems, if only temporarily.
– Tim
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