Gongol.com Archives: September 2021

Brian Gongol

September 17, 2021

Business and Finance The art of desirable constraints

Art may be in the eye of the beholder, but another definition tells something more: Art is in the constraints. What invests a work of art with resonance -- whether it's pointillism or poetry or even polka -- is what the artist is able to do within boundaries. Even Looney Tunes worked within a framework of rules, elevating Wile E. Coyote from mere entertainment into art. ■ We know the appeal of constraints intuitively, and it's why Auto-Tune sounds like cheating and photographers fight over retouching. To give up constraints is to wander away from the soul of art. But constraints can be beautiful outside of the arts. ■ Some of the best commercial enterprises obey certain constraints out of choice, and the practice has fascinating results. The Economist, for instance, publishes no bylines on its articles. This makes it distinctly different from most publications, where the bylines matter a great deal (at least among the publishing class). The Economist argues that its anonymity promotes cooperation, centers the publication on a consistent voice, and promotes "a belief that what is written is more important than who writes it." And, indeed, it's hard to find any publication with a more recognizable institutional voice than The Economist. The constraint facilitates the art. ■ Chick-fil-A serves no burgers. It's chicken and chicken only. And while the company may encounter political controversy related to its ownership, they're making more money than ever -- without any help from beef, pork, or fish. ■ Toyota's initial constraint wasn't chosen -- it simply didn't have enough money to pay for a lot of raw materials, so it had to turn them into finished goods quickly -- but that evolved into a chosen constraint: The Toyota Production System so widely recognized as "lean manufacturing" today. Its competitor, Honda, has stretched from small engines to business jets through the self-imposed constraints of trying to use people instead of machines wherever possible. Automation seems like an obvious way to save money, but Honda's approach permits quicker experimentation from the bottom-up, since people can be re-trained faster than robots can be re-programmed. Both approaches have been profitable, and both are forms of business art. ■ Desirable constraints are the secret behind many great institutions. Warren Buffett advised: "Recognize your limitations and your circle of competence. That will open up more options than it excludes." That advice built Berkshire Hathaway into one of the world's biggest conglomerates. It may sound like Buffett was advising to be aware strictly of one's own natural limitations, but he and his partner, Charlie Munger, loudly extol the virtues of choosing to stay bounded. Munger once quipped, ""We didn't know in the past that making decisions is tiring, and that you shouldn't make decisions while tired. We didn't know that caffeine and sugar would help people to make better decisions. We just tried to avoid work, but it turns out that we're operating optimally, based on modern psychological science." ■ Choosing a desirable constraint in a business is a multi-faceted decision: It helps to establish a corporate culture (What would Aldi be without its relentless attachment to "exclusive" house brands or the Wall Street Journal without its hedcuts?) while channeling the creativity of its people within agreed boundaries. Some companies go everywhere and try everything (see Google), but those experiments don't always work out (see the Google Graveyard). Unbounded creativity may sap a firm of its energy -- not to mention its cashflow. ■ Making choices that self-impose a sense of discipline can help to channel better outcomes. There are many reasons why students of business ought to have depth in the liberal arts, and perhaps more would take to the idea with vigor if they understood that adopting an artistic constraint like Ansel Adams could get them a few steps closer to making money like Warren Buffett.

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