Maintenance First, Growth Second

The idea that growth will solve all problems is one that gets more attention and tacit affirmation than thoughtful disagreement. This week, we stumbled across a podcast episode that highlights the other side of the coin that tends to be an afterthought in most people's personal lives and businesses: the importance of 'maintenance.'

In business as in life, when you fail to maintain the foundations, more growth can actually become an impediment to progress.

Just as it is easier to lose weight than to keep it off, it is easier to win a new customer than to keep them happy for a lifetime.

If a business owner fails to maintain current relationships with customers, employees, suppliers, and partners, churn is inevitable and new relationships only supplant the death of older, more stable ones.

Failing to maintain physical capital in a business may boost cash flows in the short term, but at what cost in the long term? What if capital expenditures become critical during a recession or in conjunction with other large financial outlays? Maintenance is a better bet in the long run.

Failing to maintain your current competitive position in one industry vertical while chasing after growth in a new vertical may result in disaster in both areas. It is the maintenance of one area that leads to success in others.

Finally, maintaining a strong balance sheet is far more important than growing assets at the expense of financial health. We've seen countless examples of what 'explosive' growth can do to a business (e.g. WeWork). You can't win the game, if you aren't in the game.

The ironic thing is that even though maintenance isn't sexy like 'growth' and 'innovation', it is critical to business survival and success. We love boring businesses who focus on maintaining their competitive position, their balance sheets, their businesses, and their relationships. Of course, growth is always a welcome objective, but growth for its own sake often comes at a greater cost. Businesses are built on maintenance first and growth second.

How McDonald's turned around its fast-food empire (The Hustle)
+ "According to a recent article from The Economist, Easterbrook, who took over in March 2015, rolled out a playbook built around simplicity:

• Refocus on franchises

• Pare back the menu"

In praise of maintenance in a world obsessed with innovation (The Art of Manliness)
+ "Humans like starting new things much more than taking care of older things. This is true on both an institutional and individual level: it’s more exciting to build a new road than to maintain it; more exciting to lose weight than to keep it off. There’s plenty of short-term pleasure and intrinsic motivation when it comes to pursuing something novel, but the effort to keep up unsexy maintenance on what we’ve already got takes real intent."

The green revolution has been won, says America’s new wind billionaire (Forbes)
+ "Even without tax breaks, wind and solar power are now cheaper than fossil fuels, a stunning turnabout in just the last decade. President-elect Joe Biden wants to renew soon-to-expire clean-energy tax credits. Plus, part of his $2 trillion climate plan is a pledge to install 60,000 wind turbines and 500 million solar panels over the next five years to achieve a carbon-free power grid by 2035. A Republican Senate would likely block most of that spending. No matter. With cities, states and corporations setting their own “net zero carbon” goals, the demand for industrial-scale solar and wind power, which now account for just 12% of domestic power supply, will continue to surge."

Going once, twice … Tribute Technology sold to Carlyle Group and Vista Equity (Connecting Directors)
+ "Just six weeks after placing Tribute Technology on the auction block, Providence Equity Partners has reportedly sold the funeral home software company for more than $1 billion. According to PE Hub, Carlyle Group will maintain a majority stake in Tribute, with Vista Equity holding a minority position. In September, Barron’s reported that Providence was shopping for buyers for Tribute Technology, which is a conglomeration of several deathcare companies including SRS Computing, Frazer Consultants, FrontRunner Professional, and AdPerfect. Providence’s 2018 spree of purchases of death-tech organizations led to widespread speculation about the equity firm’s intentions within the deathcare space."

Amazon isn't even that convenient anymore (Simon Pitt)
+ "More than that, I get this sinking feeling because finding things on Amazon, when you don’t know exactly what you want, is hard. I struggle to get a sense of which are good, which are overpriced, and which are drop-shipped from AliExpress to fund someone’s Tim Ferris-esque four-day workweek. Everything is either exploitatively expensive or suspiciously cheap."

In September 2020, for the first time in European history, registrations for electrified vehicles overtook diesel (JATO)
+ "Whilst overall the market posted a timid growth of a mere 1.2% in September, to almost 1.3 million passenger cars, the mix by fuel type signals big differences in growth rates. Demand for gasoline and diesel cars shows double-digit drops compared to September 2019 while the volume of EVs increased by 139% to 327,800 units – a record in terms of both volume and market share. This is the first time that EVs have broken the 300,000 units monthly mark, and only the second time that they have counted for more than 20% of registrations."

How Allbirds became Silicon Valley's favorite sneaker (Wall Street Journal)
+ "Four years after humbly launching its sneakers as an online-only disrupter product, the San Francisco-based Allbirds brand has gone relatively mainstream. It now has 22 stores in cities across the world, including Berlin, Shanghai and Auckland. Many people who wouldn’t know iOS from Intel own a pair of its $95 lace-up Wool Runners or $135 ankle-high Mizzles. Yet no one favors Allbirds more compulsively or reflexively than “tech bros”—a loose term for those digital zealots, male or female, who clock time at a startup or internet-focused company, clutching smartphones, begging for a Clubhouse invite and worshiping Elon Musk."

Telehealth is working for patients. But what about doctors? (Harvard Business Review)
+ "It has become almost cliché by now to note how Covid-19 has accelerated digital transformation in healthcare, with the number of Americans trying virtual care roughly doubling since the start of the pandemic. Although the pendulum has swung back in recent months – with in-person outpatient visits returning to pre-pandemic levels and some insurers pulling back on reimbursement – all indications are, as Seema Verma, the administrator of The Centers for Medicare and Medicaid Services (CMS), stated, that “the genie is out of the bottle on this one” and there’s no going back on telehealth."

The future of cities and remote work (Future of Cities Podcast)
+ "In this episode, hosts Eric Jaffe and Vanessa Quirk discuss how remote work is changing cities and interview professor of urban economics Richard Florida, Estonia’s digital transformation adviser Anett Numa, Tulsa Remote community manager Taylor Allen, and Topia’s Chief Product Officer Sten Tamkivi and Director of Product Management Chantel Rowe."

SpaceX’s riskiest business (The Atlantic)
+ "SpaceX is now responsible for astronaut safety to a degree no private business has ever experienced. And as the company moves toward a future of regular astronaut flights, the lessons of the space-shuttle era are at the forefront. SpaceX employees have received briefings about the aftermath of the two space-shuttle disasters, which killed 14 astronauts, as well as a launchpad fire during the Apollo program that killed three. They’ve heard from veteran NASA employees about the mistakes the agency made and how to avoid them. Jordan said that when new engineers joined the project, they were given a tour of a room at the Kennedy Space Center, closed to the public, where shuttle debris was displayed, so that they wouldn’t forget the perilous nature of their work."

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