The most costly phrase in a family business: “We’ve always done it this way.”

If we didn’t have any projects today – which ones would we launch tomorrow?

There is one phrase that can prove astonishingly costly in family businesses over the decades:

“We’ve always done it this way.”

Not because tradition is a bad thing.

Not because the previous generation’s decisions were wrong.

Nor is it because every existing project should be regularly called into question.

But because a good decision can eventually become a habit.

And a habit can

become

an investment that no one needs to reconsider.

That is the moment when the past begins to allocate future capital.

40 projects. But will 40 projects actually be approved?

Let’s imagine a company with 40 investment projects.

The available CAPEX budget amounts to EUR 100 million.

On paper, 40 projects are competing for this capital.

In reality, things may look different.

Ten projects are practically a foregone conclusion.

They have been ongoing for years.

They are located at established sites.

They relate to existing production lines.

They stem from earlier strategic decisions.

They have internal supporters.

Or they have simply become part of the annual planning process.

So the new round of investment does not actually start at EUR 100 million.

Perhaps it starts at EUR 70 million.

EUR 30 million has, in fact, already been allocated through past decisions.

History is not an investment criterion

Just because a project made sense yesterday does not automatically mean that it will continue to represent the best use of capital tomorrow.

Markets change.

Technologies change.

Cost structures change.

Customers change.

Strategies change.

And above all:

The alternatives change.

Perhaps the existing project remains attractive.

Perhaps even indispensable.

But this realisation should stem from a fresh decision – not solely from its history.

The most dangerous characteristic of an existing project

A new project must justify itself.

It needs a business case.

It is scrutinised.

It competes for budget.

It must explain why capital should be invested precisely there.

An established project, on the other hand, often has a psychological advantage:

It’s already there.

That changes the discussion.

Suddenly, the question is no longer:

‘Why should we fund this project?’

But

rather:

‘Why should we stop it?’

That sounds similar.

Economically and psychologically, it’s something completely different.

What if everything had to earn its place again?

Now let’s turn the perspective on its head.

For a moment, no project exists.

No historical budget commitment.

No preferential investment.

No project gets an advantage simply because it was already included in the previous investment plan.

We are putting all 40 projects back on the table.

With their current investments.

With their current expected value contributions.

With their resource requirements.

With their dependencies.

With their risks.

With their strategic criteria.

And with the conditions that actually apply today.

So let’s just ask one question:

If we had no projects today – which ones would we start tomorrow?

Zero-Based Capital Allocation

The principle is similar to the logic of a zero-based approach.

The existing portfolio does not automatically form the starting point for the decision.

The scope for decision-making is conceptually reopened.

Under current conditions

,

every project must once again earn its place in the portfolio.

This does not mean that existing projects are automatically scrapped.

On the contrary.

A good existing project should, following a new assessment, once again form part of a strong portfolio.

But now it is there for a different reason.

Not:

‘Because we’ve always done it that way

But rather:

“Because it continues to generate a return under current conditions

The past loses its special status

This is

precisely where mathematical portfolio optimisation becomes interesting.

StratePlan does not need to know which project the founder personally initiated 15 years ago.

It does not need to know which project is particularly popular internally.

It does not need to know which project has already featured in the investment plan three times.

What counts for the calculation are the defined data, objectives, dependencies and constraints.

History is only relevant if it has economic or strategic significance today and is reflected accordingly in the decision-making model.

As a result, existing projects lose their automatic psychological special status.

They revert to what they are in economic terms:

:

a potential use of scarce capital.

This does not mean: ‘back to square one’

Of course, a company cannot simply forget its entire investment portfolio every year.

There are ongoing commitments.

Regulatory requirements.

Contractual obligations.

Technical dependencies.

Investments already made.

Mandatory

projects.

Safety requirements.

And strategic decisions that were deliberately made with the

term in mind.

This reality does not disappear with zero-based capital allocation.

It becomes a constraint.

A project may be mandatory.

Another may depend on a project that has already started.

A location may be chosen for strategic reasons.

An investment may be necessary to meet regulatory requirements.

‘Zero-based’ therefore does not mean:

‘We ignore the past.’

It means:

‘We distinguish between genuine commitments and historical habits

The sunk-cost problem

The decision becomes particularly difficult when a great deal of capital, time or personal energy has already been invested in a project.

This quickly gives rise to the thought:

“We’ve already invested so much. Now we have to carry on.”

But capital already invested does not automatically answer the question of whether the next euro should also be invested there.

The crucial question is:

Under current conditions, where will the next available euro generate the greatest value for the company?

That is a completely different perspective.

The founder need not have been wrong in this regard

This point is particularly crucial in family businesses.

A new allocation of capital does not automatically imply criticism of earlier decisions.

Perhaps the founder’s investment was exactly the right move at the time.

Perhaps it financed the growth of an entire generation.

Perhaps, without it, the company would not be where it is today.

A good decision may have fulfilled its economic purpose.

That does not mean it must be perpetuated indefinitely.

The past deserves recognition.

Nevertheless, future capital requires a new rationale.

From annual budgeting to annual re-justification

This also changes the role of the annual CAPEX process.

The question is no longer solely:

“How do we allocate the new budget across our existing investment plans?”

But rather:

“Which combination of our current investment opportunities deserves this budget?””

That sounds like a minor change in wording.

In

fact, it changes the logic of capital allocation.

Because now it is not just new competing against new.

New is competing against existing.

Innovation is competing against continuation.

Expansion is competing against modernisation.

History is competing against future value contribution.

StratePlan: Reset the decision space

This is

precisely where StratePlan can recalculate the entire investment space.

Projects are assessed based on their current data, expected value contributions, budgets, resources, dependencies and constraints.

Mandatory projects can be defined.

Dependencies can be taken into account.

Strategic criteria can form part of the decision-making model.

And all projects that are actually available compete once again for the available capital.

It is not the past that determines the combination.

The objectives and conditions defined today determine the decision-making space.

The most interesting deviation

Perhaps, in the end, the mathematically optimised portfolio is not the most interesting piece of information at all.

Perhaps it is the difference compared to the existing portfolio.

Which projects remain?

Which ones will be phased out?

Which projects have been underfunded so far?

Which new projects are suddenly being added?

Which established investments are losing their place?

And above all:

Why?

This discrepancy highlights where history, internal priorities and mathematical capital allocation diverge.

And that is precisely where the management discussion begins.

Mathematics does not determine the value of tradition

A family business is not an anonymous portfolio.

Tradition can have economic value.

Long-term relationships can have economic value.

Locations can have strategic value.

Skills can have strategic value.

Corporate

identity can be relevant to owners, employees and customers.

All of these factors may form part of a decision.

But it should be a conscious part of the decision.

Not hidden behind the phrase: ‘That’s how we’ve always done it.’

The Owner’s Decision

Perhaps that is why every major CAPEX round in a family business should begin with a thought experiment.

Imagine that none of your projects existed today.

No historical budgets.

No internal favourites.

No habits.

Just the company.

Its strategy.

Its capital.

Its resources.

Its commitments.

And its future.

Then ask yourself a single question:

If we had no projects today – which ones would we start tomorrow?

The projects that remain in the portfolio afterwards have a good reason to be there.

For all the others, a discussion begins that may well have been long overdue.

The most expensive sentence in a family business:
“We’ve always done it this way.”

OWNER'S DECISIONS
The decisions you can't delegate.

RESET THE DECISION SPACE.

StratePlan can re-evaluate existing and new investment opportunities within a shared decision space and optimise them in line with the objectives and constraints defined today.

The past explains why a project exists. It should not be the sole factor in deciding why the next euro is invested in it.