Master your preferences and career.
When you say yes to something, you are automatically saying “no” to other possibilities and their potential benefits. And this is called “Opportunity Cost“.
Most of us have heard of it or are aware of this concept to some degree in our subconscious. It is clear that we cannot do everything we want simultaneously. But the opportunity cost is much more important to your life and career than you might think. I have become more aware of this concept in recent years, and as a result, my career has improved significantly in this direction.
In this article, I want to tell you how you can use the concept of opportunity cost to make better decisions. But first, let’s talk about what opportunity cost is, shall we?
1| A Simple Definition of Opportunity Cost
This is an important concept in economics. Simply put, opportunity cost represents the potential benefits we miss out on by choosing one option over another.
There are two types of opportunity costs: Explicit and Implicit. Explicit costs, also called accounting costs, are often used in conjunction with business and economic terms. Here we will focus on the latter, the implicit one.
Implicit costs are often invisible. For example, time is an intangible cost. For example, I could create a YouTube video instead of writing this article. I have to decide: Which action will give me better results for my blog?
2| The Risks of Ignoring Opportunity Cost
It is easy to ignore the cost of hypothetical opportunities, as there is often no tangible cost involved. However, we are faced with these costs every day, even if we are not aware of it. If neglected, the opportunity cost negatively impacts our lives, careers, and relationships. There are two main risks at this point.
a) Working on Autopilot
A career on autopilot means you’re working without a goal. I went through this, and it made me feel hopeless at the end of the day. You put yourself out there, plan and execute your work hours, then go home and get your money. Rinse, wash, repeat. But in the end, you get nothing; in other words, you do not have any critical knowledge, experience, or assets.
Switching to autopilot can be tempting at this point because, at the end of the day, we all have to pay our bills. But at the end of the day, you want to have a career that gives you inner satisfaction, and it just can’t.
I always refer to Peter Drucker’s book “Managing Oneself” to remind myself what is essential. As it goes between the pages of the book:
“There is nothing quite as useless as doing something that should never be done with great efficiency.”
b) Missed Return On Investment (ROI)
Do you currently spend time on something more effective and useful, or something that doesn’t do you any good? Because many things do not give us a return on investment. Our time and resources are; Investments.
Reading the news repeatedly, surfing social media, checking emails, reviewing your website statistics for no particular reason, etc., all such actions are time-consuming.
You wake up to this trend, and you say that you are going to “you check something“, and before you know it, 2 hours have passed, and you are not doing anything productive.
Conclusion? Answer: You won’t get anything.
3| Prioritize Your Preferences
So what does all this mean? If you want to be more aware of the opportunity cost in your career, you need to start prioritizing the things that matter to your business.
Let’s take my own website. I always prioritize content over design. Of course, both content and design are essential. A messy blog site destroys the reading experience; however, unnecessary content does not arouse interest in any reader. You understand, don’t you? One is more important than the other. But that doesn’t mean I neglected the design of my website. I put more energy into working on my content because it is the main priority of my blog.
Prioritizing is as simple as making a list. Here is my priority list when it comes to my blog:
1. Publish quality articles once a week. This is the most important thing for my blog. If there is no article? There is no blog.
2. Offer quality products. Because my blog generates income by offering courses and books. If there is no income? There is no blog.
3. Get new information. I’m constantly learning new things. I cannot publish new articles, books, and courses without them.
4. Listen to the readers. This helps me stay connected with people reading my blog. Information and feedback from readers inspire me to keep improving.
5. Other things. My list is longer, but in terms of ranking, all but these top 4 are not that important. My prioritization is about knowing what is most important anyway.
If it makes more sense for your career, you can make a list of your top 5 priorities. However, I do not recommend creating a long list of 10 or more items. To be realistic, we can’t focus on too many things at once. And to be clear, the first four items of the list I listed in the example above are only about my career, not about my whole life.
If you want to try this strategy, make a list, keep it visible, and live by these priorities. And don’t waste your time chasing opportunities that don’t really contribute to your top priorities.
4| A Personal Example: Don’t Get In Front of Yourself
Let me give an example that will illustrate how difficult it is to master opportunity cost. Even though my priorities are right, I still come up with new ideas and start working on them right away. But meanwhile, I realized that I wasn’t keeping up with my top priorities. And then I could do something else.
When the Covid pandemic started, the idea for an online course on remote work came to my mind. I asked a few people what they thought and everyone was positive, so I immediately started creating the course. But I haven’t taken the time to listen to my readers.
Also, there was something else I forgot. I was also working on another course about starting an online business. This was digitalbusiness.school I’ve been pondering over this course for about a year. And it was something that many of my readers really wanted.
But because I got ahead of myself (i.e. forgot priority 4), I had to pause my studies at digitalbusiness.school for about three months. I could have finished and started my business course and made more profit from the remote work course.
That’s the opportunity cost here. But instead, I created a miniature course that didn’t produce the same results. In fact, digitalbusiness.school got a lot more attention than the remote work course.
5| Eliminate Preferences
Our first ideas are not always the best. Just like my decision to build one course on top of another. I should have weighed my choices more strategically before getting down to business. My priority as the determining factor “listening to the readers” should have in this case. I ignored this when creating the course on remote work. My readers actually wanted the business course more.
At any given time, you have many choices for spending your time. Should you go out for a drink with friends or stay home and finish your book on investing? Should you check your email in the morning or write in your diary? Should you spend less money and more time taking the bus to work, or should you buy a car?
We cannot do everything we want simultaneously, which is a fact. We must make a choice. The paradox of choice shows that more options are not always better. These days we are bombarded with various possibilities. So how do we know which one to choose?
Clarifying your priorities will help you rule out many possibilities. This is the secret to better decision-making.
There will always be different ideas or new opportunities knocking on our doors to excite us. It’s up to us to analyze these ideas and opportunities properly. Whenever faced with a decision, always ask yourself: “Does this opportunity really fit all of my priorities?” Because if you can confidently answer “Yes”, go after it.