The Art of Trade-offs

In business, much like in our personal lives, having choice is good but not easy … especially when the choice is between two or more alternatives that seem equally desirable!  Successful businessmen have an uncanny ability to crack this code and decide what they don’t want to do with the limited available resources. I call it the art of trade-offs

My economist dad would often talk about one of the most elegant definition of economics – the 1932 definition by Lionel Robinson: 

“Economics is the science, which studies the human behavior as a relationship between ends and scarce means which have alternative uses”. 

Thus, economic choices involve giving up some of our “ends” so that available “scarce means” can be focused towards more important priorities. In an article in Harvard Business Review about strategy, Michael Porter says, 

“trade-offs are frightening and making no choice is sometimes preferred to risking blame for bad choices”

All of us possess multiple aspirations – some of these aspirations arise from personal vision, thought, and analysis. But many others are driven by our desire to copy others who seem to be successful! In the same article on strategy, Porter says, “Companies imitate one another in some type of a herd behavior … each assuming rivals know something they do not”. 

Our aspirations draw actions from within our blissfully unaware brain, almost like how a magnet draws metal objects to it. It is as if our logical brain is rendered helpless! We act on all of our aspirations, whether or not those action make the best use of the scares means at our disposal! Successful business managers, however, don’t let such fatal attractions fool them. They give up some of their aspirations in favor of the ones that they feel have more chances of succeeding. In my earlier blog “Does an Idea come from a vacuum“, I had observed that five elements that transform an idea into reality are: Passion, Focus, Observation, Belief, and Association. Good trade-offs bring the much needed element of focus to an entrepreneur’s actions and enables optimal use of limited resources to maximize the gains. 

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