You can’t prevent an earthquake. But you can prepare your cost structure.

• You can’t prevent the earthquake. But you can prepare your cost structure.Have you ever experienced an “earthquake”? I have, in August 2016.

We were traveling in Rome with the kids (they were little back then). It was in the morning; we were finishing getting dressed at the hotel to go out, and suddenly everything started shaking.

It wasn’t strong or violent.

For a few seconds, the entire building seemed to shake, as if someone huge had picked it up and gently shaken it.

And the strangest thing wasn’t the movement itself, but the feeling it left you with afterward.

For a few seconds, you don’t know if something really happened or not.

Whether it was the building.

Whether it was your head.

If you just imagined it.

Until you realize that yes, it was real. That it was an earthquake, even if very far away.

The epicenter was about 300 kilometers away. In Rome, we only felt the aftershock, a slight sway. Nothing more.

But the feeling that lingers is something else: we are nobody. That there are things which, in seconds, can change everything.

And that, often, there is absolutely nothing you can do.

• Because an earthquake in your cost structure can’t be avoided, but you can prepare for the impact—and that’s what I’ll tell you about in the next few minutes.

When you’re not sure if something has happened, but it has.

That moment is very uncomfortable.

Because there’s no clear sign—nothing falls, no alarms go off, no one runs…

And yet, you know that something has shifted beneath your feet.

That is exactly what I see every day in many large companies when we talk about costs.

There is no visible crisis.

There is no fire to put out.

There is no financial collapse.

But something is stirring:

Margins are getting smaller and smaller

• Deviations are more common.
• And forecasts are no longer met so easily.
• And, as happened to me at that hotel, the reaction is usually doubt:
• Is something really happening, or is it just a feeling?
• Is it a structural problem or a one-off issue?
• Should I take action or wait?
• False reassurance is the greatest risk.There was no panic in Rome because the earthquake was distant, slow, and muted.

Nothing “serious” happened.

And precisely for that reason, it’s easy to downplay it.

The same is true for costs.

Large companies rarely collapse overnight.

What happens is much more subtle:

• small inefficiencies that become chronic;
• decisions that are repeated simply because they are;
• cost structures designed for a context that no longer exists.
• It’s a constant drain on resources that you can’t eliminate, only optimize.
• And the most dangerous thing is to think that, since nothing has happened yet, nothing will happen.

• There are things you can’t control. Others you can.

You can’t prevent an earthquake; it’s not up to you. You can worry or not, but that doesn’t change the situation.

At that moment, in that hotel, there was nothing I could do except accept that there are forces far greater than yourself.

But a company’s costs aren’t an earthquake—fortunately—or if they are, they can be minimized.

And this distinction is key for a CEO or a CFO.

The problem isn’t market uncertainty, inflation, geopolitics, or energy.

That would be the earthquake.

The problem is not having prepared for when the tremor hits, even if it’s mild.

• Because the companies that truly suffer aren’t the ones facing an external shock, but those that realize too late that their internal structure wasn’t prepared to absorb it.

Most companies react only after everything has already shifted.

Many organizations react only when:

• the budget no longer balances;
• the board starts asking questions;
• the deviations are too visible.
• And then they act quickly.
• Sometimes too quickly, because reacting is not the same as anticipating, and urgent decisions don’t distinguish between cost and value.
• That’s not optimization; it’s reaction.

• Optimizing costs isn’t about preventing an earthquake; it’s about designing the building well.

They are built on the assumption that there will be movement, and cost optimization should work the same way.

It’s not about spending less just for the sake of it, but about understanding:

• which costs are structural and which are inertia;
• which processes add real value and which just take up space;
• which decisions are made out of fear and which are made strategically.
• A well-optimized company is the one that holds up best when things change.

Most companies react only after everything has already shifted.

Many organizations react only when the budget no longer balances, the board starts asking questions, or the deviations become too visible. Reacting is not the same as anticipating.

• If you start early, the impact is less severe.The difference between a company that struggles and one that adapts well isn’t the magnitude of the earthquake, but when it began preparing.

If you start working on your cost structure now:

• you detect strains before they become painful;
• you can prioritize judiciously;
• you make decisions without urgency or noise.
• And when the aftershocks hit—because they always do—you won’t be caught off guard.
• Don’t wait for an earthquake—prepare for it.What’s clear is that there are things you can’t control and others you can, even if you’d rather not look at them yet.

When it comes to costs, looking ahead before something happens is being responsible.

Because true optimization begins when you decide to design a structure that can hold up, even when the ground shakes a little.

If you want to talk about how to build that structure in your company, just drop me a line.

Thanks for reading.

Feliz día.