“Spock would never have liked budget obsessed accountants!” – Futurist Jim Carroll
You will never successfully budget cut your way to the future. Ever. You’ll fail. Because you will have stopped innovating, changing, keeping up with faster trends.
The proof exists right now in the form of the massive sales and innovation failure evident with the Kraft/Heinz merger, and the relentless obsession on cost management by the Brazilian parent 3G.
Quite simply, in their obsession to cut and manage costs, they forget a very important rule.
The future happens. Things change. Innovation becomes critical.
They missed all that.
I’m in Phoenix this morning for a talk on food and grocery trends for some of the largest food companies in the world. I’ll have about 100 senior executives.
And this is what I will tell them: years past, Heinz invited me in for a senior level talk on fast paced consumer, food, packaging, grocery, retail and other trends. Their mindset was that they would need to relentlessly innovate to keep up with fast change – my message certainly ties into that. It is the soul of my message.
Fast forward: Heinz is bought by a company that is obsessed with zero-based budgeting, and are merged with Kraft. I got a call from the same senior executive last year – they needed some fresh insight into innovation strategies, but had big budget constraints. They couldn’t afford my usual fee – could I assist them anyways?
You could hear the pain in her voice.
Today? They missed the boat on the fast shift to fresh food and a move away from packaged, processed product. They really have not launched any new products of note. They were riding on the success of their past instead of making their way into the future.
The result? A write down in value of billions of dollars.
Companies that fail to innovate fail. That’s evident. But why do they do it?
Accountants? Misplaced perception as to what it takes to succeed?
I don’t want to beat up on accountants – matter of fact, I’m a professional CPA. But when an obsession with cost kills innovation, enough already!