You Can Go Broke Trying to Make Money

A few years ago, I was at my wife’s family’s farm in East Texas for Thanksgiving. On that Black Friday, a bunch of folks were planning to grab some deals at a local store. My wife’s cousin commented on their excursion, saying “You know, my daddy always said, You can go broke trying to save money.”

She was making the point that, if you’re enamored with the monetary deal rather than the big picture, it sets you up to make poor decisions. 

This past week, I was thinking about the flip side to that statement: You can go broke trying to make money. 

Last week, ESPN published a story on Manchester United Football Club, which is one of the biggest and most successful clubs in the world. The article excoriated the club’s American owners who bought it in a debt-driven transaction in 2005 and have presided over a steady decline in their sporting fortunes ever since.

Seemingly, they’re running the business to generate cash flow and earnings, but at the expense of their on-field success. I once heard a commentator describe Manchester United as a brand marketing firm that occasionally plays football. And when one looks at the string of expensive, big-name player signings that didn’t work strategically because they didn’t fit a coherent theory of how to win at football, the line about the club being a brand marketing firm seems right.  

Recently, ESPN also ran a story about Chelsea Football Club, whose new owner, American investor Todd Boehly, overruled the decision of his professional football manager to let U.S. international Christian Pulisic exit the team—not for football reasons, but for marketing reasons.

The article explains: “There were various reasons for that decision, but losing someone of Pulisic's profile in the U.S.—much bigger than in England—was not thought preferable so close to the U.S. men's national team playing in a World Cup. Doubts began to grow on both sides that Boehly and Tuchel could work together effectively.” 

Shortly thereafter, Boehly fired Tuchel.

I see a similar pattern in that decision-making. It’s ultimately hard to go broke in professional sports, but these management decisions—made for the sake of business success—seem like the very ones that’ll harm the business down the line.

And that brings me to famed restaurateur Danny Meyer, creator of Union Square Cafe in New York City and Shake Shack. In his memoir, Setting the Table, Meyer describes his business philosophy of “enlightened hospitality,” which includes the concept of shared ownership with customers.

He writes: “Shared ownership develops when guests talk about a restaurant as if it’s theirs. They can’t wait to share it with friends, and what they’re really sharing, beyond the culinary experience, is the experience of feeling important and loved. That sense of affiliation builds trust and a sense of being accepted and appreciated, invariably leading to repeat business, a necessity for any company’s long-term survival.”

Put another way, a great business is a byproduct of creating meaningful experiences for customers and centering their needs in decision-making. It’s a human-to-human approach rather than a business-to-customer approach. In fact, Meyer uses the word “soul” 30 times in the book—not once referring to soul food directly—to describe what he’s trying to create.

That long-term approach certainly resonates with my thinking. For me, one of the worst things a business can do is try to run itself like a business. When it does so, it can drive everyone’s attention inward—and keep them focused on what’s good for us rather than what's good for the customer. 

In my experience and research, it’s really hard to have a truly great organization when the primary focus is on the inside rather than the people the organization serves—the most direct reason being that it makes the organization less likely to understand what customers want and how their needs are changing before they defect to providers who do. 

I was recently noodling on the villains of effective strategy for the “book” I’m writing on nonprofit strategic planning (this is the non-cooking adventure time project). And one of them, along with the multiple means we humans use to avoid looking stupid, weak, and powerless, is having an an excessively inward orientation. It’s one of the key impediments I’ve seen to doing strategy well.  

Finally, that brings me to Man’s Search for Meaning, a book by the late psychiatrist Victor Frankl that describes his time as a prisoner in German concentration camps during WWII. It was recommended to me by a friend, and by the luck of random timing of the public library queue, I read it this past week. 

Frankl uses his experiences to illustrate the vital importance of having a source of meaning in our lives that goes beyond ourselves. 

He writes about how critical it was to the prisoners. “...any attempt to restore a man’s inner strength in the camp had first to succeed in showing him some future goal. [...] Whenever there was an opportunity for it, one had to give them a why—an aim—for their lives, in order to strengthen them to bear the terrible how of their existence. Woe to him who saw no more sense in his life, no aim, no purpose, and therefore no point in carrying on. He was soon lost.” 

And in a statement that’s as relevant to our individual life strategies as it is to our organizations, Frankl writes:

“Don’t aim at success—the more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side-effect of one’s dedication to a cause greater than oneself or as the by-product of one’s surrender to a person other than oneself. Happiness must happen, and the same holds for success: you have to let it happen by not caring about it. I want you to listen to what your conscience commands you to do and go on to carry it out to the best of your knowledge. Then you will live to see that in the long run—in the long run, I say!—success will follow you precisely because you had forgotten to think of it.”

I’m sure he wasn’t applying that logic to strategy, but if you substitute “success” in the paragraph above for “profit,” “return on capital”, or whatever the relevant success metrics are for your organization, it’s an important statement about strategy.

Success comes from focusing on others rather than on ourselves. 

Leadership Wisdom

“Business, like life, is all about how you make people feel. It’s that simple, and it’s that hard.”

— Danny Meyer, in Setting the Table

“When you chase money, money will be chasing you.”

— Ella Hughes, the instructor for my food safety course this past weekend, on why it’s important to avoid cutting corners