Thursday, August 25, 2011

Why I almost tore up my diplomas and went to work for Frito-Lay....

Shortest De Todo blog ever, EVER! I've recently been downloading and listening to Econ Talk by Russ Roberts. There are some fascinating interviews of about one hour in length with some of the most important economists alive. The most recent interview was with a true economist, that is to say someone who actually practices economics instead of studies it. Russ Roberts interviews Brendan O'Donohoe(, a Frito-Lay mid-upper level manager about supply chain, marketing, competition, theory of the firm, innovation, and on and on. The entire conversation was impressive. Brendan knew everything about his market and basically everything I know about economics. At one point I felt like tearing up my two degrees in economics. Next time I think about needing an MBA, I'm just going to listen to this podcast again and save 100K.

One of the most poignant couple of minutes comes towards the end of the interview. Brendan talks about the tremendous pressure and culture to improve and innovate, despite being the top chip producer in the USA and the World. Competitive economic market pressure leaves Frito-Lay constantly fighting to stay on top by producing more with less, satisfying their customers in new ways, and finding new ways to process information...even though Frito-Lay is the best it never rests on its laurels. Amazing testimony to how capitalism improves our lives seen through a small example of something like chips/snacks.

The contrasts with the military, and really all government actions is so clear. Because we have no internal competitor, no pressure to slash costs, no pressure to do more with less, we are constantly seeking more resources. There is always something more we could buy, more people we could use, more expensive technology we order to do the mission. While Frito-Lay is figuring out how to maximize production and minimize costs, the military and the rest of the government do not have that later restraint. Instead we are only seeking to do the mission, maximize mission effectiveness, maximize security. We will take and ask for any and all resources available, regardless if the marginal benefit exceeds the marginal cost.