The Art of Competitive Frugality 

Doing more with less isn’t an ideal. It’s a necessity.

 

By Bruce Piasecki 

 

 

Benjamin Franklin connects diligence with the elimination of distraction, waste, and self-harm. If our great competitors of tomorrow would keep Franklin in their cubicles, we’d have better products—and a better world. Every word of Franklin’s The Way to Wealth is relevant to CEOs and world leaders today. Franklin is artful, competitive, and clever; he is a master of the business of sportive seriousness. He was far more frugal than we tend to remember. He reminds us that the real purpose of money is social, and that we must be inventive to add value as we position for the future.

 

This is the art of competitive frugality. One way to get the definition of this in practice is by visiting www.allAfrica.com; here, you’ll find thousands of cases of women and men putting frustration behind them and discovering that you can deliver milk without the spillage of sachets. As all Africa reports: “The outcome of watching so much spilt milk is a ‘Clip It’ sachet jug. This is designed to hold a liter sachet of milk securely and at the exact angle needed for mess-free pouring.” Every African who is alert to this new frugal device is helping to prevent thousands of gallons of milk from being wasted every year, for very little. The great British economist E. F. Schumacher called these frugal ideas “technologies with a human face.” They are more valuable now than ever.

 

Another area of the world to explore is greater Asia. To get the definition of the art of competitive frugality in practice, go to www.nytimes.com and put in the word “frugality”; there you’ll find examples of productive thrift from India to Indonesia, from Malaysia to the immense continent of Australia. It is easy to see how this theory’s principles are global and universal for a variety of social needs.

 

The following paragraph by a New York Times reporter created a stampede of global replies on the creativity in frugality: “Every MBA graduate knows about ‘value investing,’ but only Indian homemakers apply the principles to peas. That’s right: Buy peas in winter, when they are plentiful and cheap. Freeze. Defrost and cook in the summer, when prices spike. . . . Indian companies think like Indian consumers. . . . With all their thrifty proclivities, it was inevitable that Indians would one day make the world’s cheapest car. But Tata Motors, based in Mumbai, did not revolutionize the car so much as squeeze $10 savings hundreds of times over.”

 

Part of the art of competitive frugality means that decision makers—from CEOs to the leaders of nations—are finding new ways to do more with less. This is not an academic distinction or discipline but a feature of contemporary social history. They are cherishing their seed corn, not spilling it. This is nearly biblical in its consequence, a return to our primal beliefs about stewardship and purpose in life. The reason is simple: There are many more of us—some 7 billion—in this smaller world, where we must share our health care, our milk, and our products. And since we all consume more than our grandfathers, there is a sense of urgency to this search for frugality.

 

In this smaller, 21st century world, we must all become like Franklin. Blending frugality and industriousness is more primal than engaging in technology for technology’s sake or doing science “because it can be done.” We must face the higher facts of scarcity and creativity head-on this century: the age of the consumer is giving way to a more creative age of restraint.

 

For years, experts measured how the world was muddling toward frugality in terms of gross domestic products, the health of economies, and our rate of consumption. Such studies are usually empirical and based on trends, and they do help frame our debate. But here we write about a set of higher facts that define the world in which we now live—whether rich or poor, industrialized or aspiring to be industrialized. This is the world of the near future. It is swift. It is severe. It is near.

 

These are the higher rules that enable a fully formed leader to be creative in newly constrained situations and downturns. They are also the rules that allow new-century beginners to take leaps forward when they rethink their future. These are the rules about frugality and competitiveness that define our new world of scarcity, where water and land and food and energy are more precious than ever. When we consider the decrease in arable land per person since World War II— and the scarcity this implies for energy and industrial production, as well as world needs—you begin to see this artful need.

 

This is why, in a nutshell, it pays to consider the rules of frugality as a set of higher facts. The world has become swift and severe; that is for sure. Most of my clients understand that as they start their days across the cities of this world.

 

Whether we are facing health risks, floods, or car accidents, we have the right to ask for help. And society has a job to offer that help. But much depends on our ability to surf this reality. We must recognize what we can control, build some reserves, and then protect what we have attained. Shakespeare has a lovely phrase that made me save: “...so shall I taste / At first the very worst of fortune’s might.” In other words, we have the responsibility to anticipate harm before it happens and set aside reserves so that we can manage it.

The physical push for doing more with less is born from corporate discipline and personal choice, more than from any kind of formal government policy. It is the corporations that have responded to the needs of today. If you look hard at poverty and disease, and the strains on water, land, and forests, you will see that governments and nonprofits frame the questions that corporations rise to answer. This has been the trend in the 21st century so far. I find this remarkably different from Roman times, or say from the times when America was getting its footing after the publication of the Federalist Papers.

 

This demand for competitive frugality did not come from national leaders; it is a newly extraordinary feature of advanced industrialism. Many Europeans and Americans mistakenly believe that when it comes to complex issues—from fossil fuels to immigration to healthcare—we can bring about the necessary changes through regulation alone. Since World War II, many nations act as if rulemaking trumped the shaping of money, and investments, and the direction of people.

 

But, in a carbon and capital-constrained world, regulation is not enough. Regulation alone provides less than half the pair of scissors needed to cut through the worldly problems. The corporations—at least the best ones—understand this. They reinvest in their people and reshape their spending as they continuously realign to social changes and market forces. Sure, rules are part of the grand mix that allows the flow of money and the rise or fall of people. History shows us that rules define the average, the floor, the base, and the mean. But to think rules are the only answer is to resist something fundamental in human nature. We’d rather find a fair and competitive answer to a problem than be told what to do.

 

Rules, in my experience, simply stabilize new sets of social facts, such as those about car emissions or the ones meant to protect us from drunk or speeding drivers. Contemplate this paradox: the corporate world, which is the leading force shaping social history today, is far more competitive than our best philosophies and time-honored beliefs. This might be why so many of our professional schools are decades behind the state of the art in companies.

 

This is why we need to become like Franklin, and, in the coming decades, become incredibly inventive in developing new forms of energy. We must also be incredibly frugal in our investments. As the BP oil spill in the Gulf of Mexico proves, a mistake in a swift world can cost a firm $20 billion. As we learned from watching Toyota respond to public scrutiny of its safety and quality issues, the public’s tolerance for knuckleheads in this new century is at an all-time low. You need to throw away those old business school myths and face the higher facts. The well-dressed ambassadors of frugality must offer this logic as the long sword of our politics, as the hymn of our workdays and our nights.

 

Bruce Piasecki is the author of Doing More With Less: The New Way to Wealth and the president of AHC Group, Inc.