Al Mulnick’s Personal Blog

April 20, 2017

Is Cost Avoidance Strategy The Only Strategy You Need?

Filed under: Uncategorized — amulnick @ 6:00 pm

Recently, I was engaged in a spirited conversation with a colleague regarding the real value of a cost avoidance strategy in a large company. His assertion is that cost avoidance would get you fired because the business leaders only care about cost savings. I’m looking for a more balanced approach.  I understand the concept of cost savings, but it makes me think – is there no value in cost avoidance?  Even more questions start to come to mind:

  • What happens if we only focus on cost savings year after year?
  • Are managers incented to budget for more and then ‘sandbag’ to show cost savings?
  • What’s the real story here? Why is everything so relative and interpreted in so many ways?
  • How does this approach line up with culture?
    • Does it impose a culture-add or culture-fit environment? Cause vs. effect?

An organization, much like your own body, is made up of parts that need to work together.  You emphasize certain aspects of your organization to achieve specific goals.  If you want to be a world-class runner, you need to emphasize running in your workouts.  A boxer?  The muscles needed to box should be emphasized.  A swimmer? Less running and more swimming, right? But much like a runner, a boxer or a swimmer, you should not just emphasize one thing or you’ll risk injury. We can view injury much like a quality issue in an organization – it may not kill you, but it can sidetrack your otherwise hold you back from your peak performance. Even Tiger Woods figured out that he needed more than just golf to succeed – he was an avid weight lifter in addition to his golf practice.

There are three types of costs we’re talking about:

  1. Cost-Savings
  2. Cost-Avoidance
  3. Opportunity Costs

Looked at another way, it is kind of a past, present and future look at your costs.

How do I see the problem? I view cost avoidance as an efficiency gain and as a way to strengthen other complimentary areas of your business.  Efficiency in economic terms as described by Investopedia, “Economic efficiency implies an economic state in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.” . When was the last time we ever saw perfect efficiency in any organization?  I never have.  I’ve seen waste in all kinds of environments and processes.  I’m paid to see that kind of waste and sometimes to address it.

Ok, so what is cost-savings in comparison?  Cost savings refers to a cost already incurred vs. one that you avoided. basically states that all the costs are related and relative.

In my experience, that’s accurate.

Does that approach scale in a multi-national, extra-large organization?  Or does that only apply in a small business where everyone knows what everyone else is doing and can complement those actions?  What’s the right approach?

That depends on what your goal is.  If your goal is organic growth in a least-cost sustainable way, you need balance.  If you intend to grow via acquisition methods, maybe you want to run your business units like small businesses that don’t share anything other than a name and tax number.

Focusing only on cost-saving is short-sighted and leads to huge and expensive quality issues later.  Sometimes that is really important, especially if you’re a very small organization with very little cash flow.

But consider this: if we only focus on cost savings in year 1, we would necessarily cut costs.  Sounds good right?  But in practice most people will cut costs by looking at it through the lens of what they can absolutely do as the bare minimum for their job.  They will limp along focused on cost ONLY and will miss the opportunity benefits that can come with healthy growth.  They are no longer focused on healthy growth, but rather on cost savings.  Now in year 2, the same thing happens.  Your focus is on cost savings and no longer on growth.  Year 3 comes along and you are running an emaciated organization.  For 3 years in a row you cut costs and never invested in quality and expansion.  I’ve seen this happen to the point of failure (injury) in several organizations.  It’s usually looked at as the problem with IT – you have 70% of your budget spent on maintenance before you even finish your budget.  It’s hard to innovate.

If this was your body and you focused on only cost-saving (think caloric intake), your short term gains would be to slim down. Goal achieved, right?  That’s cost saving.  But the long-term effect would be to fatten up the next time you had the access to additional calories. That’s quality issues.  The same happens in business when you myopically focus on just cost savings.  You enter into a see-saw of benefit and low-quality and then trying to fix the problem.  Rinse. Repeat.  As a side note, the diet business is a multi-billion dollar business for a reason.  A lot of people want short term gains over long term discipline.  They pay well for that convenience.

See what’s missing? The business leaders cannot see (nor should be expected to be able to see) how their choices impact the broader business and it stifles innovation.  So they cut year after year until they move to another line of business and do the same thing.  Meanwhile, that line of business they came from is sold or otherwise shuttered because they no longer are profitable and the business misses out on Opportunity Costs.

What does it all mean?  It means balance in business is important.  There are times that cost-savings are the absolute right answer.  There are times when you must become more efficient and emphasize cost-avoidance.  And never take your eye off the Opportunity Costs and benefits it may bring.


August 8, 2012

Olympics 2012 – August 8

Filed under: Uncategorized — amulnick @ 9:12 pm

August 8, 2012
Happy birthday, Ryan! Yesterday we spent some time sightseeing. River ride, natural museum of history and a train ride to the wrong location.

Lots of fun!
Today, Olympics!!! We went and saw the taekwondo quarterfinals and semi-finals. Very cool. After that, a walk on the tower bridge and dinner

on the bank.

All and all, a really good time was had by all. Now with mixed feelings, we’re getting ready to head back to the USA. I have to say this was a

great trip so far. we’ll have to see what the next leg of the journey has to offer. I’m sure it’ll be a great adventure though!



August 6, 2012

Olympics 2012 – August 6

Filed under: Uncategorized — amulnick @ 7:55 pm

August 6, 2012
Westminster.  Today we went to see Westminster Abbey.  Took the walking self tour.  They gave us little phone like devices to listen to various

historical facts.  For the Olympics, they also have groups of young folks putting on dances from around the world out on the lawn.  Kind of like

a carnival.  Really is a lot of fun. 
Before going, I bought some London Passes.  The London Pass gives us access to all kinds of attractions and discounts on others.  After looking

at it a little closer, we have access to the river tours.  Yay!  Tomorrow we’ll take the river tours and see if we can find the changing of the

guards or stop off for a spot of tea with the queen. 

Speaking of the queen, we saw some pictures of her at Westminster.  They had her life in pictures since she was 11.  She was very pretty as a

princess and England does love their royalty! 

We also took a detour.  Wrong direction on the tube.  Ended up on Carnaby Street.  Cool, but it was a lot like Rodeo Drive in Beverly Hills. 

Lots of little posh shops (notice the new use of the word; I’m learning the lingo, yeah?).  It was fun though.  Interesting to see. 

Hoping to take a river tour or two tomorrow and possibly to Harrod’s for tea if the queen is busy. 



August 5, 2012

Olympics 2012 – August 5

Filed under: Life, Personal — amulnick @ 7:05 pm

August 5th, 2012
There always seems to be a lesson somewhere.  Really? Today’s lesson was to ignore the online travel guides from London’s travel site that give

you a journey guide.  The journey guide tells you what route to take to get to your destination.  Right.  Shouldn’t have listened.  We went

WAYYYY out of our way to get to the Royal Arsenal.  Got there about an hour later than the start. 

As it turns out, that worked out perfectly.  The first event we saw was skeet shooting.  Fun, but we got there at the end of the qualifiers.  So

we went over to see the 50m men’s pistol.  Interesting.  They spend two hours, best of 60 shots.  At 150 feet, they have a 12 inch target and

they get scored based on how close (by cm) to the center.  Yikes.  It was actually more interesting to get there at the last half of that.  To

top that off, the IOC didn’t have enough spectators that bought finals tickets, so they let everyone there go in.  Good news for us since we got

to see the finals and medals ceremony.  Very nice.

We found our way back to Picadilly for a pint and a snack, then back to the hotel. 

All in all, a very nice time.  A little quieter today, but very nice. 

Oh, and I found out what Yorkshire pudding is.  Umm.. Ok.  The hotel we are staying at pride themselves on proper English food.  Lucky for us to

be here 🙂

Looking forward to sightseeing and popping over to tea with the Queen.  Hope she knows I’m too young for her 😉 


Olympics 2012 – August 4

Filed under: Life, Personal — amulnick @ 7:04 pm

August 4, 2012
We had a great day today.  Caught up with an old friend, Phani Nagella. Did the sightseeing, touristy stuff today.  Really a great time. London

Eye, Aquarium, Dungeon. 

Lots of walking.  Kind of a London thing I guess.  We’re getting better at navigating the London transport. Not great yet, but getting better. 

We ended the day at the King’s Head. Talked with a local, Simon for quite a bit of it while we watched Olympic Football.  Made for a great time. 

If it’s one thing I really enjoy, it’s the pub atmosphere.  Very different than American bars.  Very much a social thing vs. getting “pissed” and

stumbling home.  Not saying Londoner’s can’t drink.  They do like their drink.  But it’s much more social than American bars and I very much

enjoy it. 

Turns out Ryan really seems to like English tea.  Who knew? 🙂 

More tomorrow. Tired today and need some sleep so we can get up early and get to the first of our Olympic events – Shooting.


August 3, 2012

Olympics 2012 – August 3

Filed under: Uncategorized — Tags: — amulnick @ 8:30 pm

August 3rd, 2012
Today was interesting. We’re getting acclimated to the local environment. Learning. We spent the day in London, but we’re staying in

Carshalton. Carshalton is actually very nice, but it will mean we are going to have to head to the airport the night before most likely. Should

make for a tiring night that night. Turns out we did exactly the opposite of what my dad and I did when we were here 23 years ago.
Looking forward to tomorrow. Catching up with an old friend and doing some sightseeing.

London rocks!!!

Olympics 2012 – August 2

Filed under: Uncategorized — Tags: — amulnick @ 8:29 pm

August 2, 2012
Been a long time since I’ve blogged. A very long time.
A lot has happened since then, but not much of it very interesting. Certainly not enough to write about it.

This morning, Ryan and I are taking advantage of more than 8 months of planning for his birthday present – we’re in London for the Olympics! Ok, so not everything goes perfectly. Or does it? Like so many things I’ve gone through, especially some tough times in the past few years, I’ve come to realize that it’s never easy to tell what’s “good” or what’s “bad” until much later. For example, I was upset for a long time about family members that are angry at me and exclude me. Now that I’m in London, I can easily say, without a doubt that it’s worked out well. Ryan and I get to take advantage of having more available money and we’ll have a great time.

Another is that I booked the hotel months ago. I thought it was in the south of London not far from the Olympic park. Guess what? Nope. Turns out it is closer to Gatwick than to Heathrow. So what? I specifically chose Heathrow to fly in to. We took a different route to get here (via Newark) when Gatwick would have been a direct flight. Is that a bad thing? Two tube lines and a train ride later I think it’s still too early to tell, but it’s looking like this was a good thing. We’ll be outside the London craziness, but a few minutes from the train station.

I love the London transport system. Once you adjust to it, it’s incredibly convenient to get to anywhere in the London area. London is very large by the way. But with a very little effort, it’s very easy to get anywhere you want to go in London.

Ryan is helping me out. For some reason (lack of sleep is no excuse!) I seemed to be in a daze when I landed and it took me a few stops to “get sorted”. Ryan took over and is keeping me straight.

It’s still too early to tell if this is a good thing to have a hotel so far away (it’s about an hour or two), but honestly, it’s looking like it’ll be a great thing to have happened. We’ll know for sure when we go to fly out 🙂

And honestly, this time with Ryan for his birthday? Priceless!!!

More to come….


February 4, 2009

Don’t Give Up

Filed under: Uncategorized — amulnick @ 4:00 pm

I found this poem today. It reminds me of when I was a kid and my sister and I would fight.  Later she tells me that she remembers those fights and how she was just about to give up when I gave up.  That meant a lot to me later such as when in boot camp.  Many times, when I was just about to give up, I would remember her saying that and keep on. 

It always worked out somehow…


Whatever you do, don’t give up
When nothing in your life is going right, when problems
torment you and money worries surround you…
Rest if you need to, but whatever you do, don’t give up.

When too many mistakes have been committed, when your entire universe
threatens to crumble and, exhausted, you feel your confidence ebbing away…
Rest if you need to, but whatever you do, don’t give up.

You know, life is strange sometimes, with its share of surprises and unforeseen
events, and it is not given to us to know in advance how far we will have to
travel or how many obstacles we will have to overcome in order to achieve
happiness and success.

Think of how many people stopped fighting, when perhaps all it would have
taken was just one more tiny step to transform failure into success. And yet,
one step at a time is never that difficult.

So you must have the courage and the tenacity to take
that tiny step more, knowing that life is a great and powerful friend that is
always there by your side, ready to help.
You will soon find that this attitude will summon up, from the deepest part
of yourself, life forces that you never even suspected and that will help you to
achieve what you undertake.

But, first and foremost, remember:
When, in your life, difficult moments arise…
Rest if you need to, but whatever you do, don’t give up.

Anonymous Author

December 31, 2008

Life is Hard to Figure Out Sometimes

Filed under: Life, Personal — amulnick @ 8:03 pm

What’s it all about?  Great question. I’m glad you asked. Or that I did at any rate.

I think life is about learning to not hide from the difficult things in our lives.  Hey, it’s not all Polyanna-ish sunny days and puppy dogs tails!  Bad things happen. They happen for reasons we don’t even come close to understanding. We need to learn to thrive in adversity and find the beauty in each day of our short life. 

When I was growing up my father, when asked how he was doing, would reply, “I woke up breathing.”  I used think I understood that.  I do now.  It’s the basics.  If I wake up breathing, everything is possible.  If I’m not breathing, things are going to be much more difficult.

Or as I like to put it, if I wake up breathing, the rest is easy. 🙂

“Life is not about waiting for the storm to pass, it is about learning to dance in the rain.”

That says a lot to me.  I don’t want to hide from life.  I want to experience all of it. Every waking second. Every pleasure, every pain, every happiness, every sadness.  All of it.  I can’t get enough some days and secretly I sometimes get mad if I fall asleep.

As  the old year goes out and the new one comes in, I am stopping to reflect back on the past year…  I wouldn’t change a thing.  For that I am grateful.  For my God, for my health, for my family, for my friends I am even more grateful.  For the pain. The sorrow. The happy times and the frivolity of it all.  Not one second would I change.

Certainly there are some things in my life I might wish were different.  But that’s short-sighted and I know it. I think those low times will help me to more deeply appreciate the good times.

To date I have not been wrong about the highs and lows and the relationship they have with each other. I doubt I’ll be proven wrong.

To my God, my family, and my friends – THANK YOU! Thank you for all of it. I’m looking forward to the new year and all that it brings.

My your new year bring you the joys, sadnesses, and fulfillment of life.

November 23, 2008


Filed under: Management — Tags: — amulnick @ 11:49 am

Two silk worms had a race. They ended up in a tie.


            I’m often reminded that what is obvious to me is not always obvious to everyone else. Sometimes that is on purpose – somebody is trying to be clever or is trying to get me to commit to something in a sneaky way.  Sometimes its just because we take a different meaning from the same sentence. 

            One of my favorite truisms is that if you have a room of 10 technical people and ask them to give an opinion to solve a given problem, you’ll get 11 different answers.  Think about that for a second.  What I’ve noticed over the years is that there are many right answers in my business and that people that label themselves communicators don’t tend to communicate very well amongst themselves.  They don’t usually lack the passion though.  That’s a big plus.  

            So what’s my point?  My point is that effective managers are those that foster communication among their staff.  The best techs in the world are ineffective if they fight too much amongst themselves. 

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