Forget Revenue – Just Fire All of Your Workers and Make a Fortune

As regular readers of this blog know, I am obsessed with revenue and the methodologies companies can use to generate more of it in a sustainable and profitable way.  But last week, I was hit over the head with a concept about expenses that knocked me for a loop.

It started at a Milken Institute lecture by serial entrepreneur and author Jerry Kaplan.  He spoke about using capital to replace labor – specifically investing in technology to replace certain types of workers.  “Computers aren’t usually designed to replace workers; they typically automate specific tasks, making a given worker more productive. But when an automated system can match the entire range of that worker’s talents, his or her services are no longer needed.”

He then referenced the fact that 100 years ago, over 90% of the U.S. labor force was engaged in agriculture.  Today, we produce much more food than then, but agriculture now employs less than 2% of the U.S. labor force. Most of those jobs were replaced by technology that eliminated the need for workers whose range of skillsets could be automated or substituted by technological improvements.

OK, we kind of knew that already.

But then, this information bomb hit my computer screen.

Stephen Colbert announced that his second night at The Late Show (September 9) would feature an appearance by Tesla founder Elon Musk and his third night would feature an appearance by Uber founder Travis Kalanick.

This is significant I learned, because in July, Uber (Kalanick) offered to buy 500,000 self-driving cars from Tesla (Musk) in 2020 – assuming they could be made.  Last month, Uber announced a partnership with The University of Arizona working on mapping and safety. And last year, Uber poached 40 driverless-car researchers and scientists from Carnegie Mellon.

Why is Uber so interested in driverless cars?  Because with driverless cars, Uber eliminates almost all of its labor costs

Once again, capital expenditures in technology are being used to replace recurring labor costs and drive ongoing efficiency and effectiveness.

Of course, nothing is that simple.  It sure seems that way in a 500-word blog, but in reality it requires you, the CEO, to have the ability to think boldly and broadly about your business.  It requires you to challenge the core assumptions about how your business is run, and take risks about how it should be run in the future.

It demands that you reassess the business you are truly in, and face a future in which you may need to define it differently.

To survive.  To grow.  And to prosper.

Jim Collins, in the book Good to Great, states that for a company to become great, it is “about ferocious resolve, an almost stoic determination to do whatever needs to be done to make the company great.”

The question for you, is do you have the ferocious resolve and stoic determination to boldly challenge those existing core assumptions about your business to become a great company?