How Firestone failed with their 400 million dollar investment (Or the power of subtraction)

Cutting and chopping your way to success

Brothers Richard and Maurice were running a barbeque restaurant in Los Angeles, but it wasn’t doing very well. So they took a little break to decide what to do.

They audited their sales receipts to see which of their products were selling more. And in the middle of it, they decided: why don’t we just focus on these products that are doing well? Courageously, they slashed their menu from 25 items to mere 9!

That’s when “McDonalds Barbeque” actually started growing. By reducing their product line, the McDonalds brothers could improve their food and reduce their costs. And serve more customers per hour! That’s how Ray Kroc got interested in partnering with the brothers and franchising McDonalds!

The path to excellence

Legend has it that Michelangelo is asked about how he crafted his masterpiece and created the magnificent statue of David out of a blob of marble. He replies: “It’s simple. I just removed everything that is not David.”

Ask a good chef how to make the soup more flavourful and he’ll tell you to add a few more spices to it. But ask a great chef how to make the soup more flavourful and he will tell you to boil away excess water!

Ask any Pulitzer prize winning author and they will tell you that the art of editing is more important than the art of writing!

Subtraction is the key to excellence. But what makes it so?

Why does subtraction work?

As James Clear says: 

“There are two paths to improvement:

Option 1: Do more great work

Option 2: Do less bad work.”

And it’s just easier doing less bad work than doing more good work, isn’t it? Everyone knows about the 80/20 Pareto principle: 80% of the results occur from 20% of the effort. Then why not focus and double down on the 20%?

Doing less of what is not working intensifies our focus on doing more of what is working. And that is why subtraction helps us succeed faster. By subtracting the inessential, we enable the essential to shine through a lot brighter!

What happens when you don’t subtract?

Firestone tyre company had seen seven straight decades of growth! In 1970, it was the leading tyre manufacturer in America. But then, in 1972, Michelin – the tyre company from France – introduced radial tyres. These tyres were longer lasting and much more economical! 

Firestone didn’t waste any time and took swift action. They invested over 400 million dollars to build a huge new plant that would make radial tyres too!

But even then, Firestone was in deep financial problems by 1979. And within a decade, they were taken over by Bridgestone – their Japanese competitors! Why?

Because while Firestone was swift in adding a new plant, they were not that quick when it came to closing their old plants! They thought that as the whole car industry grows, people would still buy their old tyres too. And they didn’t want to close their old plants and fire all their loyal employees if it was unnecessary.

But this move meant that they were over producing tyres that were not selling. They had to rent warehouses just to store these tyres. By 1979, they had burnt through 200 million dollars just because they didn’t subtract.

Problems with subtraction

Adding is easier. Subtracting is not. And that’s because we are hardwired to add.

Leidy Klotz and his colleagues from the University of Virginia have conducted various experiments that prove that us humans are inclined towards addition. 

When the incoming University president asked for ideas to improve things on campus, only 11% of the suggestions involved getting rid of something. 89% of the results were all geared towards adding and doing new things!

When college students were asked to improve their essays and resubmit them, only 17% did so by removing parts of it. 83% of the essays had a higher word count!

Klotz performed one more experiment that gives us a solution to this and helps us start thinking about subtraction.

Students were given a lego structure and were told that they had to make it so that a brick could be balanced on it. The problem was that in the middle, the lego structure was supported with just a small single column lego piece. The participants were told that if they finished the task successfully, they would earn a dollar. But for each lego piece they added to the structure, 10 cents would be deducted.

59% of the participants added 2-3 more lego pieces to the structure. Only 41% removed the single column lego piece.

This number was raised by 20% by a simple measure. When the participants were reminded that adding a new lego piece would deduce 10 cents, but removing a piece would cost them nothing, 61% of them removed the single column lego piece!

Because our minds are biased towards addition, nudges are required to get us to subtract!

Action Summary:

  • Subtract the inessential to intensify your focus on what works best. 
  • Nudges are required for remembering to subtract. So add monthly reminders to your calendars with a prompt question: “what can I subtract from my projects to make it better? What inessential element am I focusing a lot of resources behind?”