Last week’s post on authenticity and embracing our uniqueness focused more on its importance from an individual/ personal standpoint.
Today’s will look at how this plays out in a broader sense, whether at work and how companies should be thinking about the diversity of their talent pool, within communities and even on a national level. Why encouraging individuality and playing on one’s strengths has a larger positive impact and why society’s intent to keep shepherding and forcing people into conformity is counterintuitive.
I will be using the economics concept of comparative advantage (like I hinted last week) and international trade to explain this.
A comparative advantage occurs when a country can produce a good or service at a lower opportunity cost than another country. An opportunity cost is the foregone benefits from choosing one alternative over others. I wrote about opportunity cost here. The summary is that when you decide to do something or buy something the other actions you didn't take or other things you couldn't buy is the opportunity cost of the decision you made.
Let's use the production of clothes and wine between France and the United States to illustrate comparative advantage. Imagine a worker in France can make 5 clothes in an hour or 10 bottles of wine but a worker in the United States can make 20 clothes in an hour or 20 bottles of wine.
The United States can produce more wines and more cloth than France by quantity but should they be producing both or should they pick the one that comparative to another country-France they are better off producing? Let me explain.
The US produces 20 bottles of wine versus France's 10. The difference is 10 bottles. The US produces 20 clothes versus France’s 5. The difference is 15 clothes. So looking at this The US should focus on making clothes and importing wine from France should focus on making wines and import cloths from US.
If that was a bit hard to understand, here is a simpler example;
Assume I’m a doctor and I have a cleaner. I’m better than my cleaner at being say a doctor and also clean somewhat better than the cleaner. Should I be working as a doctor and also cleaning my house because of this. Not really.
Imagine I earn $100 per hour as a doctor and could earn $20 per hour cleaning, but my cleaner earns $10 at work and $15 per hour cleaning. This means I have an absolute advantage at both tasks ($100 is more than $10 and $20 is more than $15). But, the difference between what my cleaner earns per hour cleaning and what I make is only $5 (my $20- her $15), compared to the huge $90 (my 100 - her paltry $10) difference between what we earn working as a doctor.
Comparatively, I’m a much better at being a doctor than I am at cleaning. Even though I’m still a better cleaner than my cleaner the difference in what we are paid isn't as much. She is “less bad” at being a cleaner in essence. So she has a comparative advantage in cleaning than me.
I’m better off focusing on being a doctor and paying her to do my cleaning better use of my time and she gets to keep a job.
Gains from trade are the added value we get from putting the skills are comparatively better at and exchanging the rest with others.
If we were to see everything through the mind of trade (I’m not saying we should only see people for what we can get from them) from a collaborative “I have skills that I’m better suited at doing more efficiently which I can give you, and you have skills which you can give me”, people are encouraged to be more themselves and to see the value they bring in a bigger picture way. They lean into their strengths instead of focusing too much on their weaknesses. Everyone is freer to explore their uniqueness for the benefit of everyone else.
I think it is the basic concept of division of labour but not in a homogenous way where the labour is identical but more from a strengths perspective.
What do you guys think of this analogy? I know I can push it sometimes but I hope this was too abstract.
Keep going,
Ije
This is the ultimate productivity hack. When we think about the opportunity cost of doing one thing vs the other we start to get more and more efficient during our days. One can easy have a very busy day but end up with no productivity at all just because we didn’t stop to appraise our duties