Breakfast of champions

Time Magazine profiles several “a little in, a lot out” (LILO) businesses. Nothing particularly new for those who spend a lot of time in the digital medium, but interesting enough in these thrifty times. Related: James Surowiecki talks about how companies that spent money in a recession to grow their business, like Kellogg’s and Chrysler (in the 1930s), managed to become much larger than those who did the conservative thing and conserved cash.

There’s definitely a common theme of ambition in hard times which I agree with — risk and reward are so strongly tied that it’s hard to imagine cost-cutting ever being as rewarding as opportunism in a recession — but neither article seems to spend much time profiling businesses that failed. It’s a typical blind spot that I’ve noticed even in books about traders, where a great deal of emphasis is put on why something goes right without seeing how, with slight tweaks, things can go wrong. Is Surowiecki’s claim really that testable, either? How can we be sure that Kellogg’s success was due in large part to their willingness to increase advertising in the Great Depression?