It’s not a secret that emerging technologies have changed the way we live. However, there is a need to change not only how humanity works but also how opportunities are created. What is “opportunity cost” to your brand?
An opportunity cost is what any brand gives up as a result of the choices made. Moreover, opportunity cost always includes the cost of the second and third best choices.
For example, according to Peter Thiel, PayPal co-founder; technology is wrongly defined as ‘that which is changing fast.’” As a result of that definition, all the other things which are in that category are automatically filtered out.
On a serious note, he isn’t even dismissing the importance of digital gadgets like iPhones, laptops and social networks. Rather, he is frustrated that we’re living through an extended technological stagnation. Why is that an opportunity cost dilemma?
The decision for brands not to spend money on research & development implies that businesses forgo their chances in allocating resources wisely. Most brands make their choices in relation to non-cash assets, such as time and skills.
For instance, the choice to have a skilled technologist to upgrade the firm’s client payroll system may come at the opportunity cost of upgrading the firm’s payroll system. The costs for doing most of such IT projects may be in a particular currency.
However, opportunity costs fall into non-monetary and monetary categories. Such costs include time, cash, tools, labour and even people skills. No wonder, economists talk about explicit costs and implicit costs.
The latter has to do with an opportunity cost that does not require the outflow of cash; while the earlier one, requires an outflow of cash from the brand itself.
Opportunity costs come in many forms. They can be tangible, intangible and sometimes can be personalised: the choice to reinvest profits in the business could mean giving up the chance to do other important projects; which get stuck.
Some failed projects are lifelong passions, which could have led to increased happiness and a greater sense of well-being. Such additional factors when not prioritised leads to missed implicit opportunity costs.
Every choice made has a price. If your brand chooses to invest in people’s skills, instead of giving dividends to shareholders, the interest forsaken in making such a choice is the brand’s opportunity cost.
Opportunity cost is the key to making better decisions. Once we have figured out the value of the alternatives, we are ready to give up, and then we can be automatically simplifying the best plan of action. Our choice becomes smarter and much easier. Time is precious.
It is finite as we only get the next year, month, week, day, hour only once; and then it’s gone for good. So, the choices about how we spend or invest the time we have comes with really opportunity costs.
How can you possibly explain what your brand does with time and what it does with money are two different things? I haven’t figured that one for you yet! Technology can be used to perform some miracles specifically for some people.
Can you travel for a month while at the same time doing your job without any issues? Some people with the help of technology can do it. If you can’t, then you are still wrestling with opportunity cost.
In this digital economy era, the internet has raised the opportunity cost of time and mobility. Gold is getting old.
The New Rich is the life style design alternative which has time and mobility as its currencies.