"Quien Paga Apaga"

September 29, 2023

While traveling recently, an interesting anecdote unfolded. An executive and his wife, who were my companions, noticed that the public lights in our rented abode were left burning all night. Reflectively, the executive looked at me and uttered a Spanish phrase, "Quien paga apaga", implying, "Whoever pays, turns the lights off."

It insinuates a natural reality: those who earn are more inclined to scrutinize expenses; conversely, those who spend without earning the resources needed for the spending, lack the same commitment to judicious expenditure. This explains to me the expression I heard in different countries, told differently but having the same meaning: in Mexico: Father businessman, son playboy, grandson beggar. In China: from peasant shoes to peasant shoes in three generations. In the USA: from shirtless to shirtless in three generations.

The second generation in a family business might not care as much about how resources are used. They did not sweat to earn them. Consider any family: Who is more likely to turn off unnecessary lights? The children, or the parents who work hard to pay the electricity bill?

Always strive to structure your organization to allow for profit accountability. Ensure that expenses and the revenues that these expenses generate are matched and managed by the same person.

We should not focus solely on task execution or mission realization within a company. It's crucial to consider the monetary flow within the structure, aligning costs, and expenses, with the revenue that these expenses produce. Someone should take ownership of profitability, maintaining vigilance over expenditures and their implications on revenues.

Written by
Dr. Ichak Adizes