There are moments in business that leave a lasting impression. For me, one of those moments was when Antonio Gracias challenged me in a board meeting. Antonio is the founder of Valor Equity and a board director at Tesla, SpaceX, and others. He’s world-class, and I admire him.
The board meeting was to align on financial targets. After discussing where we thought the business needed to go, Antonio questioned how we prioritized and justified investments, then asked us to run a zero-based budgeting process. With deep operating expertise in supply chain and manufacturing, he knew how to lean out the business.
I obliged, but from a career in consulting, I knew zero-based budgeting was a buzzy term that was insanely hard to execute. It’s a process of revisiting every expense line item to optimize what’s critical, then cut everything else. You go through this process for every budget.
It’s a nightmare exercise, but you realize the impact is limited when prior decisions are difficult or impossible to reverse. The work to optimize spending needs to be ongoing.
Theresa Amos describes it best by saying it’s not Zero-Based Budgeting … it’s Zero-Based Culture. In other words, it’s not an annual project. It’s a way of operating to always make good decisions.
In today’s world, zero-based culture isn’t an option, it’s a business imperative. Trace provides this out of the box. It’s the solution to the problem I faced – a way to prioritize, justify, and track every critical investment (people, purchases, and projects). Trace engrains operating excellence in the DNA of the business for years to come.
P.S. – Antonio shared one of the most powerful things I’ve heard in a podcast. Quote below, but the entire episode is must listen (link in comments).
Patrick: I ask everyone the same traditional closing question: what is the kindest thing that anyone's ever done for you?
Antonio: I've never actually told this story outside of a very, very close set of friends and colleagues. So I'll tell it to you and it's going to get me a little emotional, but I'll tell it to you. When my mother died, she died of a heart attack in a hospital and I was there. She was in an angio room, and I got to see her before they did the angiogram and she actually passed away. And I went in that room and she held my hand and she said to me in Spanish, “Te quiero”, and she said, “se valiente”, which means I love you and be courageous. And I think that's the kindest thing anyone has ever done for me. That at the end of her life, what she thought of was telling her son to be courageous, I think, knowing that she was going to die.
Patrick: Absolutely incredible. I think I've asked that question 400 times. Not sure I've heard one quite like that. It's very kind of you to share it. Amazing, incredible story and how simple and beautiful and lovely.
Antonio: Whenever I get into a situation where I'm not sure what to do or I ask myself what the right thing to do is, I think of her and I think of that moment in particular and it becomes very clear what I'm supposed to do. It's one of the reasons I'm on a mission to try to make the world better.