Prioritisation and opportunity cost – what Sun Tzu and a donkey can teach us about strategy…

“There is no higher and simpler law of strategy than keeping one’s forces concentrated.” Carl von Clausewitz, On War

“You gain more by finding a rich mine and mining it deeper, than by flitting from one shallow mine to another. Intensity defeats ‘extensity’ every time.”
Robert Greene, The 48 Laws Of Power

“There are roads which must not be followed, armies which must not be attacked, towns which must not be besieged, positions which must not be contested, commands of the sovereign which must not be obeyed.”
Sun Tzu, The Art Of War

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A tired donkey is standing in a field, exactly halfway between a tasty bale of hay and a thirst quenching bucket of water. He’s been working all day, and can’t wait to tuck into both.

But there’s a problem. 

The donkey can’t decide which treat he wants to tuck into first.

Equally hungry and thirsty, he tries to make his mind up.

Like a Wimbeldon fan watching a tennis match, he starts looking left and right, left and right incessantly. It’s a tough choice and he’s unable to decide between either.

Time passes.

Eventually, paralysed by choice, the donkey keels over and dies from starvation and thirst.

This is the tale of ‘Buridian’s Ass‘, a well worn fable that outlines the importance of being active and choosing a path.

And it’s a good metaphor for strategists to keep in mind.

Status Quo Bias

One of the most pervasive issues within business is not being deliberate enough. It results in the status quo bias.

It’s too easy to blindly accept and not question. So a lot of things just compound without much thought being put into why they’re done that way. Nobody shouts stop because everyone thinks someone else has made an active choice to do it this way. But often inertia is the sole reason.

But we must be active, mindful and specific when making strategic decisions, not passive and accepting of the status quo. That’s the crux of good strategy.

Strategic success is a result of intensity, concentration, single-mindedness and willpower. It’s focusing your energy and resources on the things that really matter.

Opportunity Cost

 

Therefore, one of the most important theories for a strategist to understand is the idea of ‘opportunity cost’. It means that for every single choice, whether implicit or explicit, there’s a best alternative foregone, another option that could’ve been taken.

As one of the most famous strategists of all time Michael Porter says:

“The essence of strategy is deciding what not to do”

To decide what not to do, we need to be aware that there’s an associated cost with everything we choose to do.

As strategists, we create value by focusing orienting businesses in a way that mitigates and lessens opportunity cost. We weigh up all the options and deliver a path forward in a concise, logical way.

An ineffective strategist is one who’s afraid to be decisive and to deliver a clear direction. Or at least doesn’t have the confidence, charisma and political savvy to sell their direction. All too often we blunt our thinking, when a major part of our job description is about sharp defined choices.

This concept applies to both life choices and business choices. We’d all love to have unlimited time, money and resources. If that were the case, we’d all be brilliant strategists. But constraints mean hard choices have to be made.

Even the largest companies must make explicit choices to compete in some places and not in others. Trade offs are an inherent part of life. They can’t be ignored, they should be embraced. The nettle must be grasped.

Prioritisation

Too often in modern business we wander from goal to goal. Short term scale and growth is the crack cocaine of the stock market. Businesses become addicted to chasing these things and spread themselves too thin. In marketing, we act like magpies, mistaking tactics for a clear strategy, and chasing after the shiny new tool to use.

But in business, what is dissapated and divided fails. What is concentrated and coherent succeeds.

The 80/20 principle tells us that certain efforts provide exponentially better results than others. Our job is to find out what those efforts are and focus on them.

If you’re fragmenting your resources, you’re probably doing nothing well. Good strategy is about actively making tough choices, avoiding the scourge of multitasking.

A choice to serve everyone is a losing choice.

Trying to be everything to everyone means you’re nothing.

If everything is a priority, nothing is.