Find out how some of the most successful people and businesses are masters at doing more with less
Part of a wealthy mindset is learning how to do more with what you have, and Rice University management professor Scott Sonenshein spent years researching how this approach to resources can create astounding success. He documented the findings from his years of research in his book “Stretch: Unlock the Power of Less and Achieve More Than You Ever Imagined.” The book, released Feb. 7, 2017, chronicles the successes of both individuals and business owners who find creativity in constraints and abundance in limited resources. “Stretch” offers tips that anybody can learn to change the way they view their money and view consumption. He terms those who constantly feel the need for more as “chasers” and those who can create abundance from what seems like skimpy resources “stretchers.”Sonenshein shows us how a simple change of mindset creates innovation, fulfillment and a sense of wealth even for those who live humbly.
In this episode, professor Sonenshein talks about what it means to be a stretcher: How to change the way you view your resources and how to innovate and be more creative – thus achieving greater fulfillment – by mastering the tools of frugality, conservation and enjoyable constraints.
Jenny Hoff: Welcome to Charged Up, I’m Jenny Hoff, your host and a managing editor at CreditCards.com, where we get dozens of emails a day from people looking for answers on how to manage their debt, better their credits and create more wealth in their lives. Part of creating wealth though is using the resources you have as efficiently as possible, creating more with less.
Our guest today, professor Scott Sonenshein, author of the book “Stretch” is going to tell us how to do just that. He spent years researching individuals and businesses that found their success through creatively using the limited resources they had. He actually found that some businesses force obstacles on themselves once they become successful so they won’t lose their edge.
So, whether you’re a business owner or an individual who wants to know how to create more with what you already have, this podcast is for you. Let’s get charged up about mastering the art of stretching.
Thank you so much for joining us today.
Scott Sonenshein: Great Jenny, I’m glad to be here.
Hoff: Let’s talk a little bit about your book “Stretch.” Obviously I want to get to the points of how you can actually create more with less and the studies that you’ve found and the case studies that you’ve reviewed. But first I want to ask what sparked your research of how successful companies and people are able to do more with less? I know in your book you mentioned an experience that you had yourself in Silicon Valley.
Sonenshein: Right. I was out in Silicon Valley during the .com boom and the subsequent bust. And what you really saw out there were organizations that were trying to chase as many resources as they can. It was how much venture capital can they take in? How many employers can they hire each week? How many customers could they get even if those customers had no prospects of being profitable once?
And that works well when the resources keep flowing in but as we know from history things rarely work out that day. And when the venture capital stopped flowing in all of the inefficiencies that were masked by this free-flow of resources began to reveal themselves and a lot of companies went under.
And that really got me thinking well, you had all these smart people out there, all these hard-working people and they had so many resources and a lot of them ended up going belly up. So the question for me was what was it that makes people with so much unsuccessful sometimes? What were some of those traps? Whereas in other cases, you know, a lot of people can do a lot with very little and I wanted to look at that contrast.
Hoff: And I love that and I really want to get into that, delve into how you can do a lot with very little. Because a situation that we confront a lot at creditcards.com is people feel that they don’t have enough and they feel like there’s scarcity so they put a lot of products on their credit card and they’re buying a lot of things on their credit card thinking that’s going to make life easier. And as we know if you’re not paying that off every month it’s just going to make your life a lot harder. And really in your book you talk about changing your mindset altogether; stop thinking of scarcity and start thinking about what you do have and how to be resourceful with that.
And so I want to talk a little bit first about the concept of chasers versus stretchers which is what you talk about in the book. Can you describe what that is at both of an individual level and a business level?
Sonenshein: Right. Chasing is the idea that you need more to do more and I think your example of consumers who overburden themselves with debt is a really important example of chasing because the mindset of the chaser is that the more things that they have, the more that they can do, the more satisfied they’re going to be. And that’s usually not the case.
With stretchers which is the contrast to chasing, stretchers recognize that it really doesn’t matter what you have, it’s about how you use what you have. And it’s about a creatively engaging with whatever you have whether they be personal objects, immaterial concepts like relationships in ways that expand them.
So stretchers believe that what they have doesn’t have a fixed use. You can use – you know, you don’t have a hammer you want to bang a picture into the wall with a – get a nail in there you don’t need to go out and buy a hammer, just take the boot that you have in the closet. So it’s just that way of thinking of what’s around me and how can I put it to use in different ways? As opposed to that initial instinct and impulse being “Oh I don’t have it, I need it. I can’t get this job done without the right tool.”
Hoff: Yeah and I think that we can see that probably in our everyday lives, in both business and our personal lives. There are the people who always have excuses as to why something is not going to work because those resources aren’t there and then there are those people who always have answers. “Oh, that’s not a problem, we’ll make it work, we’ll think about it.”
So I want to ask first, and I think some of us, we might immediately know who we are. I think that you can look at yourself honestly and say, OK, am I person who is always making excuses or going to buy the product to make it easier or am I the person who thinks creatively of how to make it happen with what I have right now? Are we born that way from our studies or do you see that people actually – something happens in their life where they can psychologically flip the way that they think about money and resources?
Sonenshein: Yeah, I think that stretching and chasing is very much learned. I think there’s a lot of signals in our culture, especially around materialism that leads people down the path of chasing. And what really drives this is what psychologists call social comparisons which is simply looking around at what other people have and thinking that you need the same in order to succeed.
And the difficulty with social comparisons of course is there’s always going to be someone who has more. So I like to think of a metaphor as you’re on the treadmill. And so you have the treadmill and you get your more, you turn up the speed of the treadmill but you’re still not actually getting any further. You’re still on the treadmill going around in circles.
And that’s the same thing with social comparisons is what people tend to do is as they get more they elevate their comparison group to the person who has even more than them and then they feel they need to chase to catch up to them and it’s this never-ending pursuit. And that’s the real danger because you never going to be on top of that game. There’s always going to be someone with more.
So what I like to recommend is stop making those type of social comparisons because what really matters isn’t what people have, it’s what people are actually doing and who they are. And one of the things that stretchers recognize is that sometimes with scarcity, the answer to scarcity is not to go ahead and try and solve that scarcity by trying to get lots of things and especially taking debt on to get those things, the answer to scarcity is to become more resourceful and more creative.
And what was really fascinating as I was researching the book is some of these super successful people that I researched for the book started with very little and at a very early age it was instilled in them by their parents and by their circumstances that they had to make a lot out of whatever they had. But what really separated them and what I think led them to live not just very successful lives but also very meaningful lives is as they climbed up and became successful, had all of this money, they could do anything they wanted to do, they still embrace that resourcefulness. They sought out scarcity; they tried to put themselves in situations that didn’t overcome scarcity that imposed scarcity on them to get back into that mindset that they grew up with when they didn’t have a choice.
Hoff: And I think that probably a lot of people in their lives have experienced having to be resourceful at some point whether it was in school or whether it’s with your first job and you’re not making very much money. There was a point in your life where you probably had to be a little bit creative with how you were going to use your money in order to avoid debt but still have a good quality of life. And we may forget about that as we make more money and we have more responsibilities in life and yet there’s a satisfaction with really being able to make more with less, to really see how can I use this resource and do as much as possible.
Sonenshein: Yeah, I think that’s right Jenny becausewhat some of the research shows, it makes this very interesting distinction between being frugal and being cheap. So when you’re cheap you are psychologically pained from spending money. So that’s not a pass for well-being for most people.
But frugal people on the other hand, what’s different about their psychology is they actually take pleasure in using money wisely. So there’s this nice positive glow that they get when they know they might have gotten a good deal on something or they saved money because they had something that they already have at home that they were able to use in lots of different ways.
So the idea isn’t to just stop spending money, the idea is to recognize that there’s pleasure that comes from using money wisely. And I think that’s what really continues to propel many of the successful people in “Stretch” that I talk about is they get pleasure out of using money wisely. They don’t need to, they can afford to be extravagant, but they get a pleasure out of using it wisely and judiciously.
Hoff: I think I even read a study once that says that you actually get the same kind of pleasure benefits in your brain from figuring out how to save money as you do spending money. And so it’s really kind of just the same way of strategizing and kind of feeding some sort of need inside of you to be doing something with money that’s constructive.
I want to talk now about some of your tips that you have and go into those and also I want you to reference some of your case studies from the book and your own experiences with research.
Let’s talk about the idea of psychological ownership. And you say in the book that when you believe you can control your resources you’re actually much more creative with them.
So can you go into that a little bit and what is the key to getting there mentally where you say I’m controlling my resources, I’m not a victim of whoever is paying me my salary I’m the person who is controlling these resources and how do you get where you can be more creative with them?
Scott Sonenshein: Yes because I think we often tend to think of ownership as a legal concept. So at work I don’t own any of the resources, my organization does. But what I found in my research is when you make this simple shift in how you think about your resources, these are my resources, it unlocks your creativity for using them in more productive ways.
So in one example I researched this fast-growing chain of women fashion boutiques and I went all around the country meeting with store managers, all the way down to part time employees and the key term that I heard over and over again from these folks was “I own this store.” They had of course no direct ownership in the store but they had embraced this mindset that said I own the things in this store and it allowed them to do really creative things.
So in one example I was meeting with the most successful store manager and the company was asking let me know how were you actually able to pull this off because I look at your model and you have fewer resources than comparable stores, you have less staff, you seem to have less training and the size of your store is smaller. What is it that sets you apart?
What the store manager told me is it’s all about ownership and recognizing that when he is in this store, he owns the resources. One time he gets this dress and it wasn’t selling very well and no one wanted it, it was falling off the hangers, it was pretty cheaply made and he just looked at it and said “What can I do with it? How can I make this work?” He then literally took a pair of scissors, cut off the straps of the dress and then made a sign that said “beach wear” and it became a best-seller.
In a lot of organizations that might get you fired for damaging the goods but what this organization was able to do is foster a culture of resourcefulness that led people make responsible but also creative decisions to allow them to take whatever was in that store and make the most out of it.
Hoff: Right. And you talk about in the book how even the stores where they could not afford to pay the employees that much money but yet they gave that sense of ownership to the employees like you’re mentioning where there’s a sense of freedom and you need to take control and responsibility for some of these issues that made them want to work hard and made them want the place to succeed.
Sonenshein: Yeah, a lot of people, they have innate creativity. We tend to think of creativity as something reserved for artists but everyone, no matter what job they’re doing, has what we call a little creativity. It’s the creativity that allows us to get our jobs done and people really want to unleash that at work.
And oftentimes, we build and we lead organizations that restrict them from exercising that natural creativity. And when you unlock people’s creativity who are closest to your customers, closest to the front line, you’re going to get some really good ideas.
Hoff: And, did you ever see that in a case of an individual level? Instead of somebody feeling like “Well, this is all the money that I’m making and there’s not much I can do with that and I’m going to just struggle to get by” they actually change their mindset to feel ownership over what they were making and creating success from that?
Sonenshein: Yeah, you know, you see it all of the time because this organization that I was studying they were growing very fast, they would bring in employees from other retail companies that came from very confining environments and oftentimes they would come to this organization for less pay. But why they were there was this idea of just feeling like they could have ownership over what’s happening in that store and fully express themselves in ways that not just made them feel better, but that they could also see made the organization more successful.
Hoff: And how can we do that individually? Not in our company or not in our organization but in our own lives dealing with the salaries that we have and the resources we have right now?
Sonenshein: I think it comes back to this point of recognizing that there’s abundance and no matter what you have, if you approach it with the right set of eyes. It’s recognizing that when we have our backs against the wall, we might be just starting off a job and we might not have a lot of money, that type of scarcity is something that you can really turn into an input to be creative.
And there are actually studies that show that even simply reflecting on abundance or scarcity can change the ways that individuals go about coming up with good ideas. So when you reflect on growing up as a child and living with abundance you actually become less creative and innovative in the way that you think. Whereas when you reflect on a time when you were growing up with scarcity you become more creative and innovative.
So I think part of this is changing the cultural story that scarcity is really bad and that there’s no upside to it. Scarcity puts us in positions where we can sometimes do our best work because it really unleashes that creative potential we all have but often don’t feel permission to use.
Hoff: That’s great because that goes right into my next point that I wanted to talk about. In the book, you talk about constraints and you give a lot of examples of how individuals, when faced with constraints, whether it be medical or financial constraints, they actually were able to create more success. And there was something about facing obstacles and facing constraints that unleashed something in that human spirit to really be productive and to not be complacent. Can you talk about some of those individual examples you have?
Sonenshein: The issue that a lot of people have is recognizing that constraints are enabling.
I have this fascinating story in the book about a physician who is traveling on an airplane and that is the last place you would want someone to be having a life-threatening emergency.
So, the person is on the plane and he hears the call “Is there a doctor on board?” The doctor comes over and after some examination, he realizes he’s got to perform surgery on the plane. Now, for one, you’re in an environment where you’ve never performed surgery. Two; you’re in an environment that is far from the sterile environment you would have in an operating room. And third, he doesn’t have any tools.
And so he is a great stretcher because what he does is he says “Well, what do I have?” And he starts taking objects that are around him and transforming them into the tools that you can use for surgery. Brandy that’s served to first class customers becomes a sterilizer. A coat hanger becomes a surgical tool. He uses an Evian water bottle to help suck air out of the lung. The person had had a collapsed lung. The first class towels that you use to wash your face become sterile bandages. And he ends up saving this person’s life.
Now, I think a lot of people in that situation would have panicked and thought they didn’t have the tools and it was an awful environment to be doing this surgery. Instead, it sparked him to go ahead and just work with what he had and find ways of saving this person’s life in an environment that was very different.
Now, keep in mind, the surgery in many respects was the same. It followed the same type of procedure: Cutting open the patient, freeing the air in the collapsed lung, sterilizing stuff and so on. But, how he did it, with the materials he did it were very different from what he would have done on the ground. And it’s getting into that mindset that sometimes you don’t have everything that you might want to have to do something but that shouldn’t stop you from doing something. And you look around you and you find ways of making the most out of what you have.
Hoff: And that goes to our next point where you talk a lot about taking action and you actually use Robert Rodriguez before he was a famous director as an example of how sometimes you need to just go. Because if you keep waiting for the perfect opportunity with the perfect amount of resources, you can end up never doing anything. Can you talk about that example and how that can apply to all of us right now with our financial situations?
Sonenshein: Right. I mean so Robert Rodriguez in many cases was like a lot of us. He had a dream. He wanted to go ahead and make a movie but he didn’t have a lot of money. And he realized that if he tried to make the same type of movie as other people with multimillion dollar budgets he would have failed because he just didn’t have those resources.
So instead he looked around and said “Well, what do I have? Well, I have a friend who has a ranch that could make a really nice place to film. I know some people, some friends of mine who might be some good actors. Let’s choose them. I have some connections with the local police. I can maybe film in jail.” Instead of using expensive special effects he used condoms as a way of kind of making the fake blood come out.
So he kind of looked around and said “What do I have?” he ended up making his movie for about $7,000 whereas most Hollywood trailers cost $20,000 just to make a couple of minute clips. But what was remarkable isn’t that he just was able to get the job done with less; He was able to get the job done better because the constraints allowed him to think about doing things in unconventional ways that really set apart his movie making from other people.
One of the biggest expenses in making movies is the film. He couldn’t afford a lot of film so he had to be very creative with how he edited and cut and shot his film. Well, the result was that his movie style was very fast-paced which was really good for this genre and stood out from similar films. So, people not only said “Wow, you made that movie for less money but you actually ended up making a better film.”
And so his big \u2018aha’ was if I go ahead and follow the conventional path and do how everyone else makes movies with high budget films – one, that’s not possible – but two, I’m just going to be like everyone else. So, these constraints not only are something that he overcame but he used them in a way to stand out from people and do work that other people are trying to make big budget films couldn’t have possibly done.
Hoff: Wow. And so how do you think that applies to our everyday lives, of how we operate and how we think about our budgets and our incomes and what we can spend?
Sonenshein: So, what I think applies is don’t go over your budget. And in fact, one of the recommendations I have in “Stretch” is try and work with a more limited budget because it’s going to make you more creative. Don’t make a comparison and say “Well, my neighbor next door is making more money because he or she has a better job and I want to try and keep up with them.”
Live within your means and in fact, sometimes if you can, live beneath your means because it’s going to teach you to use what you have in more creative ways and in many cases end up doing better work just like Robert Rodriguez ended up making a better film. But I think it all really harks back to this idea of chasing and how strong it is in our culture. People look at less as something that’s not good and you don’t want to have less. But in the long term that’s going to making only full of debt, it’s going to make you less satisfied and then it also might make you less productive because you’re just following what everyone else is doing and you’re not standing out and doing things in more creative ways.
Hoff: I agree, and there’s so many opportunities now to bootstrap things. It used to be in the old days where if you wanted to start a business you needed to have a lot of capital because it was industrial. You needed to have a store front or you needed to have real estate. Now with online opportunities if you want to start your own business you can do that with very little capital upfront.
Sonenshein: Right. One of the research studies I just finished is looking at food trucks. And I think that’s a perfect example of what you’re talking about. Opening a food truck requires about 5-10 times less capital than opening up a brick and mortar restaurant. And so these are super resourceful organizations because they’ve recognized that before you’re going to invest in a lot of infrastructure, let’s try and test out the concept. Let’s see if people like my food. If they don’t like my food let’s tweak my menu. Let’s build up customers, a big following using tools like social media before I go ahead and open a big facility.
So what I’ve seen in my research is, some of the successful food trucks have built up these large followings and then they went ahead and opened restaurants. It’s been a nice way of bootstrapping your organization, getting it off the ground, showing proof of concept, building up a customer base and then expanding into a restaurant versus saying “I want to hit a home-run right away. I’m going to open the grandest, biggest restaurant I can possibly afford or find someone who will lend me money for it and then hope it works out.
Hoff: Absolutely. Let’s talk now about frugality. We touched on it in the beginning but it’s really a topic that I think is such a bad rap. When people think of frugal they think “Oh, you’re cheap, you’re stingy, you’re selfish.” But in reality frugality can be such a gift because it really allows you to be very creative and even have better experiences in the long run. Let’s just talk about travel. You can go stay at a resort where you’re closed off from the locals and you’re basically just experiencing an artificial environment or you can go and be around the local people and eat at local restaurants and have a much more frugal and enriching experience. So can you talk about frugality and how that mindset is something that we should embrace instead of trying to resist?
Sonenshein: Yeah, and I think there are some important distinctions that you brought up. One, remember, when you’re frugal you’re not cheap. Cheap means literally you’re pained from spending money. Frugal people spend money; it’s all about spending money wisely. The other myth is that frugal people are not selfish. Again, using money wisely might leave you with a lot of money to be able to give to other people.
And in fact, I profile in the book this really interesting gentleman by the name of Bob, who ran an organization which is a very large multibillion-dollar industrial supply company. And he grew up in very tough times and had this value of frugality instilled in him in childhood and that’s how he ran his company. He was also a very generous but anonymous in his generosity and was a donor to a lot of charitable causes. He could take the money that he saved and run his business and not only donate to these causes but also rewarded his employees with extra bonuses and stuff.
So I think we have to get over the taboo that frugal means you’re a bad person, it means you’re cheap, it means you’re selfish. No, frugal means you take pleasure in using things wisely, being a steward of a resource. I mean that’s a value that a lot of religious and secular cultures really value. So I don’t understand why there’s such stigma attached to it, I think it’s just this confusion of being frugal with being cheap.
Hoff: Yeah, absolutely and again, the difference; being pained by spending money versus finding joy in spending money wisely. I think that’s a great distinction. It’s something that we should keep in mind. And be proud if you can be frugal instead of feeling ashamed about it because frugality will lead to much more abundance later on.
Sonenshein: Yeah, but unfortunately what you see is sometimes because we get into this chasing mindset and we judge things by how much they cost for example, that we take the opposite approach. And this goes back to your resource example: “This was a great trip. I spent $2,000 on the best hotel.” And people see that as a marker of status and a signal of success.
I think when you’re stretching and you embrace frugality, you would say you probably could have gotten just as much pleasure out of staying somewhere for less money.
Hoff: Yeah, absolutely. I don’t have to suffer necessarily to not use these resources. It doesn’t necessarily mean joy and happiness versus suffering and misery. It’s just finding joy in different ways. And realizing that just showing off in front of your friends about how much you can afford doesn’t necessarily give you any joy.
I want to talk now about the concept of “you are what you expect.” I think this is crucial in every aspect of our lives. Let’s talk about your psychological research behind that and how it applies to our everyday lives.
Sonenshein: We know from a history of psychology, a lot of this research started in education, that what we expect out of people is exactly what we’re going to get. So if we expect someone to be a jerk, we’re going to interact with them in ways that make that a self-fulfilling prophecy. And that person will more likely act like a jerk.
In education, we see this a lot with children and in terms of how we label children. They tend to live up to these expectations.
So the idea is simply, we have to be very mindful of what we expect out of people. If we set high expectations, we can create what I call these positive prophecies which actually make people more productive and more valuable because we’re signaling to them that we expect more out of them and they’re going to have a greater tendency to live up to those expectations.
Hoff: And what about with ourselves? I think we can get into this mindset where we think “Oh I’m poor, I don’t have enough, I’m not successful enough. Or because I was poor growing up, I’m never going to reach this level when I’m older.” Do you see that a lot of these psychological expectations we put on ourselves and then again like you said fulfill those expectations.
Sonenshein: Yes and so I mean if you think you’re going to be poor, yes, you’re going to end up taking actions that are likely going to make you poor whether that means racking up excessive debt because you’re trying to fight that type of label that you have or doing other actions.
I think one of the fascinating parts about expectations is when you expect yourself to be able to do more, you end up doing more. So there is this great story in the book about this African-American entrepreneur who under really discriminatory Jim Crow laws, she was trying to start her business and no one would let her stay in hotels.
And she said “You know what? I have to go and make my own opportunities. No one’s going to create them for me.” She had this expectation despite coming from very little; she was extremely poor as many people were in that time because of these discriminatory and oppressive laws. But she told herself that could still be really successful, could run a great business and she would just have to go out and create her own opportunity and not wait for it to come to her.
So she got very active and she found creative ways. She went on the road to promote her business and she couldn’t stay in hotels so she would stay with local community leaders. Well, that turned out to be a really nice blessing for her because she was able to build up rapport and relationships with people who could then help bring her product and her message to those communities.
So I think when we’re just expecting us to not move anywhere and kind of resign ourselves to our circumstances, it’s really hard to get out of those circumstances. But when we set high expectations for us – and more importantly as the research tells us – we actually believe those expectations, we can elevate ourselves out of our circumstances.
Hoff: That’s wonderful. And I want to see what is your overall hope as a takeaway for people when they finish reading your book or when they finish listening to this podcast? What is the main takeaway you want them to walk away with?
Sonenshein: I want them to recognize that no matter how little or even how much they have, there’s a lot more that they can be doing with what they have. Don’t worry about constraints, don’t worry about overcoming scarcity, these are actually things that counterintuitively could make us more productive and more satisfied.
Hoff: And, finally our show is called Charged Up! What charges you up about teaching people how to make more with less?
Sonenshein: It’s unbelievable to see people who start with this belief that they can’t do it, they don’t have the right tools, they don’t have the right experience, they don’t have the right connections come back to me after thinking through these ideas and report back to me and say “You know what? You were right. I actually have a lot more than I realize. It’s just about how I think about it differently.”
Hoff: Wonderful. We had some great insights and a lot of wonderful tips and I really appreciate your time today.
Sonenshein: Great, thank you very much for having me.
Hoff: Thank you.