How not to be successful – the cost of trade-offs

The opportunity costs of not making a conscious choice

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How not to be successful? I’ll just give you a spoiler upfront :). Do everything, be distracted and do not make a conscious choice with regards to the tasks you take on. Don’t think about the cost of trade-offs and opportunity costs of your choices.

But you’re not really reading this just to know how not to be successful, were you?

How are you currently making sure you’re at your highest level of contribution?

This post will help you to think about the choices you’re making and how they’re affecting your ability to achieve. This post is the sequel of my post about Essentialism. It’s about the power of deliberate choice.

Learned helplessness

Setting up the first experiment

In “Essentialism, The Disciplined Pursuit of Less”, Greg McKeown describes learned helplessness.

He describes the work of Seligman and Maier conducted research on German shepherds. Although I’m not sure I feel great about research on living animals, the outcome of their work is definitely worth noting in this context.

They administered shocks to the dogs in 3 control groups. One of these groups could stop the shocks by pressing a lever, one could not do anything about the shocks and one did not receive any shocks.  

Follow-up experiment

After this, they performed a second experiment in which the dogs could jump over a divider to evade the shocks. The dogs in the groups which could stop the shocks or which did not receive any shock at all, where able to jump over the divider. However, the dogs who could do nothing about the shocks, simply remained in the part of the box where they received the shocks. Sadly, they did not jump over the divider to the part of the box where no shocks were administered. Hence, Seligman and Maier discovered the phenomenon “learned helplessness”.

Parallels in organizations

Learned helplessness also occurs in organizations. People get too much requests, but they’ve never learned to make a conscious choice in trade-offs. Assessing the cost of trade-offs and the opportunity costs of choices is essential. However, many people in organizations tragically do not feel they have a choice and resemble the German shepherds who did not jump over the divider.

Do you make a deliberate choice in what work you take on?
Some work provides exponentially more added value than other work…

Working less, doing more: minimizing the costs of trade-offs

Vilfredo Pareto was an Italian (micro) Economist who became famous with his Pareto principle. He found that 20% of the work produced 80% of the results.

This again underlines the importance of choice and trade-offs. Granted, it can be difficult to identify the tasks that produce 80% of your results: not everyone works in functions that directly result in production or revenues or other output that can be easily measured. In indirect functions, such as Finance or IT, work cannot be measured as easily on these metrics. However, let me give you one example to illustrate that you can also identify your most important work even if this is not clearly linked to easily measured KPIs:

I worked as an Internal Auditor where I also had activities that provided exponentially more added value. Hold on now, don’t close your browser just because you found out I’ve worked as an auditor, you hate auditors and you now think I’m the antichrist. Bear with me :).

The most important part of my job was to help to improve the organization by delivering an independent opinion on existing processes. Of course, doing a thorough audit was important, but the report and the actions following from the report was what really added value to the organization. Therefore, it was essential for me to focus on the audit report and creating support to further improve the organization. This meant writing clearly and concisely, but also aligning this with the most important stakeholders. By doing this, I increased the chance that the proposed changes were actually executed.

Cost of trade-offs - Pareto Principle

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“For many events, roughly 80% of the effects come from 20% of the causes”
― Vilfredo Pareto

How do you deal with trade-offs and opportunity costs?

How do you handle opportunities and requests? Do you say yes to each request?

Saying yes to everything and being the go-to person at work may bring benefits at first. However, in the long run this will mean that you have to pass on the best opportunities, because you don’t have time. Also, the requests and tasks that you’ve accepted will nibble time away from your day. On certain days, this won’t even leave you with sufficient time to deliver what you have promised.

How economic theory is useful when dealing with trade-offs

This is where economic theory of trade-offs and opportunity costs come in. The definition of a trade-off in this context is the exchange of time between tasks that will bring a certain benefit to you or to the company you’re working for. Furthermore, opportunity costs are extensively documented in economic theories. These theories can be applied in a wide variety of circumstances. So not only investments in capital, but also to your own investments of time. To accurately assess the benefit of doing a certain task for yourself, you will also need to determine what the costs and benefits are of the foregone option.

This research paper suggests however, that we humans tend to be biased and ignore the opportunity costs when making decisions – in this case when the decision maker is confronted with setbacks. However,  this also applies to other situations.

When you make a decision to spend time on a task therefore, be aware that you’re also sacrificing another task. And with a decision, I also mean the things you do without thinking about it. That would be a decision by default, but a decision nonetheless. You’re always making trade-offs. Period.

Now ask yourself: Are the benefits of the other tasks you’re currently foregoing less than what you’re currently working on?

What can you start with tomorrow to improve your work and your life?

I sincerely hope this post helped you to reflect on your current tasks and if the trade-offs you’re currently making are worth it. Remember, consciously or unconsciously, you’re always making a choice and there are always costs of the trade-offs you make. If you don’t do this deliberately, someone else will make it for you. So, as the sub-heading already indicated, think about what you can change tomorrow that will set you on track to focus more on your highest point of contribution.

This post was part of a series about Essentialism. Also, you can find the first of the series in this page. In two weeks, I’ll issue the next article about Essentialism on my blog.

Thanks for reading this article. Make sure to hit the like and share button and I’ll see you back next week for the next post.

Further reads:

“Essentialism: The Disciplined Pursuit of Less” by Greg McKeown

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