Articles
The Importance of Slack
11.37am! That was the time of an apparently very important scheduled appointment in the early days of my career. As a junior stock analyst, I went to many meetings and visited so many office buildings around Manhattan that I could barely tell them apart. I thought that scheduled time was odd, to say the least. Apparently, it was the result of masterful scheduling efficiency. Living and working in New York City, I came across and embraced the ever-present affinity for efficiency, productivity, and busyness. Over time, I discovered that there are exceptions to that rule in life, business, and investing!
Warren Buffett sometimes humors his audience, saying how a day with a haircut on schedule is a busy day. Despite managing one of the largest investment vehicles in the world, he prides himself on having a lot of slack in his days. It’s his time to read and think. There aren’t many CEOs who would ever share anything like it with the public. Buffett does it with his usual disarming charm. I read many CEO and founder biographies over the years, and if they have anything in common it is the busyness of their everyday routines. Their every minute is accounted for. Only last week, I read an article praising an executive at a leading tech firm who holds 50-hours of meetings each week. How much time then is left to think?
As a junior analyst, I wasn’t the one to brag about any slack in my day. It was quite the opposite. Young research employees wanted to look as busy as possible. They would print stacks of papers, pile them up on their desks. Sticky notes would frame their multiple computer screens. There was hardly any slack in their day or even room for a cup of coffee on their desk. They didn’t discover anything new. They embraced a seemingly valuable life skill. Already thirty years ago, one of the leading Seinfeld’s characters (the 1990s American sitcom), George Costanza, shared his take on the importance of that particular life skill: looking busy at work.
I see now that even if with my desk setup, I might have been already more of a contrarian! My colleagues can attest how my desk looked different than most. I’d usually have a completely clean slate in front of me. I hardly ever had more than a single sheet of paper with a to-do list for the day. It’s still the case today, but it wasn’t always this way. There was a time when I misplaced some apparently important blue form under heaps of paper, and I thought that this was enough. That day, I scanned, filed, or shredded all. My desk never looked the same again.
I remember how now and then, someone would stop by, look around my office, and jokingly ask if I still work here. You could say that it may have backfired since I definitely got more than a fair share of last-minute requests and assignments at times. I didn’t mind; I think it actually helped me learn more and faster and try new things that my busier colleagues didn’t have the capacity for. I don’t know if this unconventional stance helped me get bigger raises or get promoted sooner. I did get my own office relatively early on. Maybe what you do, how well you do it, and NOT how busy you look matters more in the end?
I don’t think I had a name for it, and for a while, I don’t think I fully embraced the importance of it, but for lack of a better word, I have been a lifelong fan of slack in life, investing, and business. I credit Shane Parrish and his Farnam Street Blog post “Efficiency is the Enemy” for giving me the right term for my lifelong practice.
He explains: “Slack consists of excess resources. It might be time, money, people on a job, or even expectations. Slack is vital because it prevents us from getting locked into our current state, unable to respond or adapt because we just don’t have the capacity.” Shane Parrish’s inspiration for the article came from a 2002 book – Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency by Tom DeMarco.
Slack is not idle or wasted time, money, or resources; it’s the extra capacity that can be quickly deployed when needed. When it does get used, it’s usually used better than it would have been otherwise.
In life, slack to me means those extra hours to regroup, go for a walk, or read a book. In times like that, we gain a new perspective, and fresh ideas come to mind. For Megan and me, one of the biggest life-changing decisions of 2020 was picking up, leaving our city apartment, and moving to the woods and now a quaint seaside town. It helped us sleep, and eat better, and create a healthier, more sustainable work environment. Our revelation came on an evening walk along the waterfront looking at Manhattan during those hectic March 2020 days. Two police officers escorted us out of a small green patch, where we’d sit on the bench sometimes. It turned out that the park was off-limits due to the pandemic. Then in an empty street, someone screamed out of the window to social distance. I responded, saying that we live together. That slack time one hour walk gave us an opportunity to brainstorm about what could be next.
I learned the importance of slack all around in my life. When I fly little planes, the number one thing I always check is the fuel level. I want to carry enough to get to my destination and back and still have ample slack if plans change halfway. Trust me; I don’t mind the extra weight. When I go scuba diving, I check how much air I have in the tank. I never time it to the last breath; I want extra air if something doesn’t go according to plan. I’m happy to carry a larger, heavier tank. When I sail, I want some slack, ideally some spare lines (ropes), extra water on board, full tank of diesel. This extra load might slow me down, but at least I know I’ll get there. In many pursuits, slack is an obvious requirement; it’s necessary and sometimes could be lifesaving, but it’s a forgotten ideal elsewhere.
You might have noticed that at work, I always like to have very few scheduled items on the agenda for the day and for the week. I like to have ample time to think and read, take or make an unexpected call or write or answer an email. It’s those moments when I can check in on a client, help with some urgent request, take a call with a prospective client or a potential new friend that someone introduced me to. In those seemingly slack times, I can spend a few hours fact-checking some investment idea that surfaced in our investment universe. Those are the times when I feel the most effective. These are the unplanned, unscheduled, flexible hours of the day. I’m never bored; there is no hour that passes unused; the question is, though – how it gets used.
Investment portfolios live by a similar rule. Some investors like to be fully invested with no wiggle room left. When I see a portfolio, even that has hardly any idle cash left, I immediately think of holdings we can easily liquidate and use as a source of cash to pursue even better investment opportunities when those arise. I see the portfolio as a nimble sailboat ready to take a different tack and adjust the direction when the circumstances change.
The businesses we invest in need to have sufficient slack in their resources. We like to see cash on the balance sheet, financial flexibility. We appreciate sufficient profitability levels that, even with a downturn, can sustain the business through tough times. The most vulnerable businesses are those that are using their balance sheet to the limits, their margins are razor-thin, and any hiccup in the business or the economy can derail them, and with them, their shareholders. Last year’s experience reminded us that companies with extra resources could actually grow, take market share, and strengthen in difficult times.
Slack is something we don’t talk about much; slack is something very few would dare to praise. I remember walking into a grocery store in March of last year and seeing empty shelves where cleaning supplies used to be. It made me realize how our whole life, investments, businesses, and the economic reality are managed the same way as that 11.37am appointment, literally to the last minute, to the last roll of toilet paper. Hiccups, opportunities, surprises happen. I think it’s a good time to find some extra slack in our life, investments, and businesses. Slack has a peculiar quality. The more of it you create, the more of it you’ll have. In those slack hours, I find ways to be more effective and save more time: learn a new tool, test new software, find a new investment opportunity.
Maybe not today or tomorrow, but hopefully soon enough, the term slacking will have a more positive ring to it! I certainly hope so. Until then, I intend to never run out of fuel in the sky, air underwater, or cash to invest when opportunities arise.
Happy Slacking, Happy Investing!
Bogumil Baranowski
Published: 5/20/2021
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