In the book – The Snowball, Warren Buffett discussed Coca-Cola’s costly “Project Infinity,” criticized by Herbert Allen for excessive spending with unclear benefits.
Buffett, a board member, expressed frustration, noting that IT departments often pursue unnecessary projects. He believed the project wouldn’t boost Coca-Cola sales or reduce jobs, highlighting a broader issue in successful companies where prosperity leads to undisciplined spending.
Buffett lamented that controlling technology costs is a significant management challenge, especially when vendors force regular software and hardware updates. He contrasted this with his disciplined approach to managing his own business and finances.
Here’s an excerpt from the book:
Floating above it all like the Goodyear blimp was Coca-Cola’s millennially named Project Infinity. This “was one of those projects where everybody’s computer would be linked up to the men’s room so they’d know how much soap they were taking out of the dispensers,” says Allen.
Even the name, Project Infinity, seemed to refer to out-of-control spending in pursuit of ever-diminishing returns. It drove Allen nuts. He wanted to know what Coca-Cola was getting for its billion dollars. How was Infinity going to solve the company’s basic problems?
Buffett was displeased but resigned to being displeased. He had encountered this on some scale at almost every company where he sat on the board. Therefore, he sighed to himself:
“They all do it. The people who run information-technology departments always want the latest and greatest whiz-bang thing. No matter how smart you are, no matter how much you know, who can challenge them?
“We probably aren’t going to sell any more Coca-Cola because of some computer project, and we will add more people instead of cutting jobs. The vendors have it rigged to make us update the software and hardware every couple of years or the system will stop working. So it isn’t even a onetime expense.
“Controlling technology spending is one of the toughest problems in management. And it’s particularly hard at Coca-Cola because a successful company is like a rich family. When you’re prosperous, it’s very hard to instill discipline.”
Buffett, of course, did not run his own company—or his own rich family—that way.
You can find a copy of the book here:
The Snowball – Alice Schroeder
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