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Nutshell: Essentialism by Greg McKeown

By Greg McKeown

Reviewed by Daniel Farber Huang

June 29, 2020

There’s a difference between being beaten and losing.

Being beaten means the other team was better than you. They are faster, stronger and more talented. Losing means you lost focus. It means you didn’t concentrate on what was essential.

Greg McKeown effectively cuts through the noise to give shape and form to the concept of essentialism, which discusses how to define one’s priorities more effectively.

Essentialism - The Disciplined Pursuit of Less lives up to its name as a fairly quick read at 272 pages. That’s a good sign that McKeown follows his own advice.

According to McKeown, essentialists see trade-offs as an inherent part of life, not as an inherently negative part of life. Instead of asking, “What do I have to give up?” they ask, “What do I want to go bid on?” The cumulative impact of recalibrating the way opportunities and their costs are viewed can be “profound” he claims.

Furthermore, by pausing to weigh the benefits of various options to determine the one that is closest to your core objectives, then the compelling but extraneous, diluting options may be eliminated more readily.

One example of not maintaining a focused strategy is “straddling,” where a company wants to keep doing what they are doing (their existing strategy) but feels the need to adopt a rival’s strategy to remain competitive. While it may seem the straddling company is just being responsive to developments in their market or industry, challenges may occur because the straddling company is not committing to either strategy but rather spreading its resources too broadly and not doing either one as well as possible.

Continental Airlines is a good example of this. Back in the 1990s, in addition to running its core business competing with the major airlines around the country, Continental was seeking ways to compete with low-cost carrier Southwest Airlines. It’s solution was introducing Continental Lite, a low-frills, lower-cost service that would compete directly with Southwest. Because this was an offshoot of its main business, Continental never committed wholeheartedly to the Lite brand and it never achieved the same cost savings Southwest Airlines enjoyed.

Fast forward two years after the Continental Lite launch. According to a New York Times article Continental had to close down Continental Lite, recognize a $140 million loss (which was a lot of money at the time) and have the unenviable task of painting over the Continental Lite logo on 100 airplanes.

"It was an awfully expensive experiment," Gordon M. Bethune, the airline's chief executive, said in the Times article. "It was something that started as a pilot project that should have been proven before it was expanded. But once this thing started rolling, it was awfully hard to turn it around."

According to the Times, Bethune said that shutting Lite down was necessary. "If we had let things go another six months, we could have lost the farm."

[On a personal note, I realized I need to pay better attention to details even before I opened this book. My wife, Theresa, was given Essentialism to read from her manager, enjoyed it and told me it was worthwhile for me to read. For months I thought the title was Existentialism, which I was probably curious about but it didn’t rise up on my reading list. Eventually I looked more closely at the cover (I cut out the noise for a brief moment) and realized what this book was actually about. I am glad I did.]

According to McKeown, zero-based budgeting is another way of cutting through the noise, preconceived notions and existing biases that surround us when crafting forward strategies. Because it is designed to ignore the status quo, zero-based budgeting is likely to be one of the harder but more surgical and objective approaches to planning. It will also likely receive the most pushback from the staff.

Typically when managers plan budgets they look at the current year as an indicator of what should be spent on the same projects next year. In both large and small organizations, based on my experience, this approach is the path of least resistance. “Okay, you spent $X dollars last year on marketing, let’s increase it by 10 percent” or “Your department cost this much last year, let’s keep it flat.”

Building on last month’s or last year’s starting point typically keeps things very close to where they were. Change or progress, by default, is anchored to the way things have been done in the past. That can often be a good thing, perhaps when organizations are supposed to stay where they are and not evolve (although it is hard to think of where that is a great thing).

Zero-based budgeting, on the other hand, starts all at, well, zero and then determines if each department, project or initiative warrants any money in the budget. Starting from the ground up every time a budget needs to be established forces people to re-evaluate what is worthwhile, what is working and what is not.

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