Comparative Advantage

When I was in college I loved Economics. I considered majoring in it, but everyone I talked to suggested I would likely end up teaching High School economics, and the prospect of explaining Supply and Demand to a room of spitball shooting, foul-mouthed, smart asses somehow didn’t appeal. So I went into HR. Of course, the main difference now is that the only time I can call someone’s parents is if they are listed in their emergency contacts. Career prospects aside, one concept that I am fairly certain I learned in Econ 101 is Comparative Advantage. Now, perhaps you weren’t as enamored by the Dismal Science as I was, and so maybe you didn’t pay attention, Comparative Advantage is simply “the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.”

Why do I bring this up? Because if you are reading this you are pretty smart, and smart people often know how to do lots of stuff. Not only do smart people know how to do lots of stuff, but they usually can do that stuff pretty well. This can be challenging, though, because it can hinder our ability to effectively delegate since oftentimes we (the delegator) know how to do something better than anyone else. In these situations, it just seems that the best thing to do is not to delegate, but rather to just do it yourself – I mean the result will be better, right? Right? Again, you are reading this blog, so you are smart, so you know this isn’t true. The reason being, the time you are taking to do that task is taking away from other things that bring far greater value that you and only you can do, and I think that is something that we people managers tend to miss. I have worked with many CFOs in my career, and my experience has been consistent in that these are all very good numbers people! The thing is, I have yet to meet one who, when faced with a backlog in their accounting divisions, has rolled up a chair and started booking General Ledger entries. Why? Because it would take them away from far more important things that either they and they alone can do, or that they are by far the most qualified person to do. Strangely enough, this seems to be the exception (and I am including myself in this group).

So the moral of the story is simple: when you are looking at a task that needs to get done, it may be worth asking yourself: “by doing this, what am I not doing, and is the trade off worth it?” Yes, the task will probably be done better, but what’s being left behind?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s