Switch - Chip Heath [21]
In Chapter 1, we explained why what looks like resistance is often a lack of clarity. The citizens of two West Virginia communities, unhealthy in their eating habits, underwent a major change when a couple of professors coached them to buy 1% milk. They didn’t need a big-picture vision—no one needs convincing that “eating healthy” is an admirable goal. What they needed was someone who could bring a noble goal within the realm of everyday behavior, someone who could cut through the bewildering array of potentially healthy choices and suggest a good place to start.
Ambiguity is the enemy. Any successful change requires a translation of ambiguous goals into concrete behaviors. In short, to make a switch, you need to script the critical moves.
3.
In 1995, Brazilian president Fernando Henrique Cardoso decided to privatize Brazil’s railroads. He split the system into seven different branches (shades of Ma Bell) and auctioned off the rights to run them. Previous administrations had not invested much in the rail system, and at the time of the auction, it was a deteriorating mess. A study concluded that 50 percent of the network’s bridges needed repair and 20 percent of them were on the verge of collapse. The technologies used in Brazil were far behind those in other developed countries. In fact, the rail system was still using twenty locomotives powered by steam engines.
A private firm, GP Investimentos Limited, decided to bid for the branch known as the “southern line,” which ran through Brazil’s three southernmost states. GP was high bidder in the auction in December 1996. After an interim period of management, the firm put one of its own executives, Alexandre Behring, in charge of the company, which was later renamed America Latina Logistica (ALL). When Behring took charge, he was in his early 30s—just four years out of business school.
Behring didn’t have much to work with. ALL had only 30 million Brazilian reals in cash on its balance sheet. At one of Behring’s first meetings, a mid-level manager beseeched him for 5 million reals to repair a single bridge. Though sympathetic, Behring knew that fixing everything that was broken would require hundreds of millions of reals. The needs were profound, but he faced an unyielding constraint: ALL’s depleted bank account.
The railroad purchased by GP was in chaos, and when Behring and his team took charge, with new personnel and new priorities, more chaos was whipped into the preexisting chaos. The resulting decision paralysis should have been inescapable. And it likely would have been if Behring hadn’t made clear exactly what needed to be done.
His top priority was to lift ALL out of its precarious, cash-strapped financial state. To accomplish this, he and his 35-year-old CFO, Duilio Calciolari, developed four rules to govern the company’s investments:
Rule 1: Money would be invested only in projects that would allow ALL to earn more revenue in the short term.
Rule 2: The best solution to any problem was the one that would cost the least money up front—even if it ended up costing more in the long term, and even if it was a lower-quality solution.
Rule 3: Options that would fix a problem quickly were preferred to slower options that would provide superior long-term fixes.
Rule 4: Reusing or recycling existing materials was better than acquiring new materials.
The four rules were clear: (1) Unblock revenue. (2) Minimize up-front cash. (3) Faster is better than best. (4) Use what you’ve got. These rules, taken together, ensured that cash wouldn’t be consumed unless it was being used as bait for more cash. Spend a little, make a little more.
This is what we mean by “scripting” the critical moves. Change begins at the level of individual decisions and behaviors, but that’s a hard place to start because that’s where the friction is. Inertia and decision paralysis