Opinion: Optimization is for losers

Corporations need to change the way they plan, forecast, budget and ultimately spend money.

By Published on .

Credit: istock

I figured out one of the reasons—there are many—why corporations suck: it's the way you plan, forecast, budget and ultimately spend money.

You live in the particular circle of Dante's Inferno I call, "Death by a thousand budget cuts," which by the way is your just reward for an entire process that is horribly flawed, inept and borderline incompetent.

You begin the process around September and go into this trancelike planning dance which—somehow—is meant to predict accurately what the next 15 months are going to look like, when in reality you don't even know what the next 15 days, minutes or Presidential tweets are going to look like.

Serves you right when your blunt instrument of choice is the Upfront, Outfront, Newfront or whatever you want to call it nowadays.

Cue ZBB. Zero-based budgeting. The cure-all that theoretically promises so much but in reality delivers so little. The central premise behind ZBB is starting with a clean slate every year and fully justifying each and every spend request. It addresses the key problem of looking at what you did last year as a proxy of what you will do next year. Only it is a wolf in sheep's clothing; it is the bean counter's means of cutting the fat with a chainsaw. Here's a hint: you're going to take out flesh and bone as collateral damage.

ZBB might work if in fact marketers could request amounts that conceivably shatter a previous year's budget. We all know the sad outcome is a total budget that is less than the year before.

The main problem with budget setting is that when it comes to optimization, it is a zero sum game. We rob Peter to pay Paul. The only transition for big brands is from life to death. Companies are falling like flies.

Most recently, Payless.

As an illustration, Payless spent a ton of money at the end of 2018 to open up a fake store ("Palessi") to see how much people would pay for a $20 shoe. Perhaps they should have called the store "Pathessi" (as in Pathetic). The real challenge was that they couldn't get enough people to buy $20 shoes, which is why they filed for bankruptcy in February!

Advertising and traditional branding efforts are no longer viable to save these dying companies. Campaigns are nothing more than stays of execution. And optimization as we know it is essentially just moving the deckchairs on the Titanic.

My advice for companies that suck (which is pretty much most brands): forget ZBB. Cut your entire paid-media spend to zero and "optimize" this money (like Amazon once did) to your loyal customers.

Or if you can't think or act so radically, or what I would "heretically," then consider "new" budgets that come from "new" sources. Like an opportunistic or a speculative budget that can really get behind unplanned or unforeseen moments like Adam Levine's naked torso being compared to a Chipotle brown bag.

That's just the tip of the iceberg. What we need now more than ever is: to bring venture or investment budgets to the marketing table; the ability to invest in—or even acquire—young startups; the opportunity to leverage new technology that augments or supercharges the brand and helps it deliver on its promises by offering utility, service or experiences.

It's time to break out of the vicious cycle of incremental budget planning, and ultimately execution, that is predicated on protracted cycles that do not synchronize with the rate, pace and speed of life and change.

Until we really and truly can measure with accuracy and honesty, our optimization efforts are going to be nothing more than a dishonest misrepresentation of our misguided attempts to desperately hold onto our crumbling and declining equity and power in our organizations.

The key to success is to suck less. Optimize that!

Most Popular
In this article: