Effective resource planning: a how-to guide

Setting up the problem

As mentioned in previous posts, I have developed a love for internet radio. It is a quick-fix cure for someone like me when the stimulus craving kicks in, especially when I have an anxious desire to multitask and do something else at the same time. Which happens. 

There is a particular show that I listen to regularly where a caller raised a very interesting point the other day. A young man dialled in and told the host that he is working his way through a college education which is very expensive because it is the best in the region. His field of study was accounting. The host told him that he was wasting his money as he could study accounting at many other universities for a lower fee and that it wouldn't make a difference to the eventual outcome, which is becoming an accountant.

Boom. Does he even know about the can he just opened? We are not just talking about university degrees now. Everything is coming into play. What are you paying for when you purchase a widget? What utility does the prestige price of the widget have and does it have a valid and measurable ROI? What other hidden costs are there in a price that make the widget completely arbitrary and bring the utility into focus?

Breaking down the problem

Okay, let's walk before we run here. Stay with the university degree story. I want to study accounting and I have several options. Out of my options there are several different prestige categories. Assume I am eligible to study at any university of my choice and that I can afford any of them, but want to make sure I still get the most value for the money that I spend. 

I rank my choices in terms of cost to get one list, prestige to get another, and outcome to get a final list. Outcome can again have two sub lists. The first would be the salary that I would get after obtaining the degree and the second would be the opportunity that I would be afforded with my particular degree. This is because some folks would probably sacrifice money for the opportunity to reach another goal.

You can see a system emerging with a very unique mid-section which needs to be taken into account, the ROI of prestige. The input would be the cost of the degree and the output would be the salary and opportunity. What needs to be considered is if paying more for prestige changes the output. 

To decide on this you would have to take a sample of accounting graduates from each university and see whether or not the salaries prove the theory right, and if so, how long until you break even with your initial investment. Would it really be worth it if the difference in median salaries was so small that it took you twenty years to break even? You can become even more clever here and see whether an expensive/prestigious education is more valuable at high school or university level, or whether it is a combination that yields the best outcome. For measuring opportunity it could be slightly tougher as this would be Boolean problem, measured by candidates who reached their goal and who did not, given their different choice of university.

After this a second question would have to be considered which challenges the assumption of eligibility and the candidates themselves. Do more prestigious institutions draw more ambitious candidates, perhaps with tougher entrance requirements? Would the students own hutzpah be the explanation for the higher salary and not the institution? Again you would have to take a sample of top performers at a few prestigious schools and some at less prestigious schools and see if the outcomes show a difference to determine causality. 

At this confusing stage, I personally feel challenged and, if I am honest, a bit duped. As consumers, when we make a purchase decision with the resources we have, how much do we over or under pay for the utility of the widget? More so, do I regularly consider my own value when I make a purchase to determine the value of the widget? Which one counts more or do the two factors energise each other to a logistic-equation-type of saturation point?

A problem of waste

Ultimately, this is probably a matter of waste reduction. A good way to look at waste reduction is to start at the end and then work your way backwards through the pipeline so you can identify your inputs within your parameters. 

What do you want? Pick a salary, a goal, a company you want to work for, a place you want to live, a function you want your widget to perform, a price you want the widget to sell at, etc.

Now when you look at the options you eliminate those that are not able to provide this outcome. Keep moving backwards step by step until you reach your short list of candidates that are able to get you to your predetermined outcome. At this stage the focus shifts towards your resources.

Rank the candidates by cost and rank by effort. In our previous example, we would consider a student with lower ambition/grades to be high on the effort list. Whip out the maths and find the optimal value for minimising cost and effort and you have your winner! Successfully you have eliminated wasting time on effort and money on cost. It goes without saying that if effort is all the same, then least cost wins, vice versa. 

An interesting parallel

Before I conclude, isn't it cool how the word parallel has a pair of parallel lines in it? There's should be a word for when this happens.

Malcolm Gladwell writes in one of his books (I think that it's Outliers?) that Nobel Prize winners are not always the most clever out of their group of peers in terms of IQ measurements, but that they were clever enough for the outcome of a certain Nobel-prize-worthy discovery, given the inputs of hard work and opportunity. Essentially, and rather humorously, a waste here would be extra IQ points, since they weren't necessary for the outcome. At least they don't cost anything!

To answer the question of school's, here is a great article that gives excellent insight into this specific problem. Take note, however, that for the spending of finite resources there is always an opportunity cost or trade off that has to be taken into account for a complete answer to the questions. 

Hindsight + Foresight = Insight

It was my 30th birthday yesterday. I have never been one for big parties, but deciding that it's a milestone, my wife and I organised a poker night for some close friends and ended up having an amazing time. 

I am listening to a second audiobook at the moment, "Start" by Jon Acuff. This is the same author that I had referenced in previous posts. His stuff was recommended to me by a friend. He has an engaging way of communicating, and even though the content is not life-changing, it is thought provoking enough to keep listening. 

His idea in this book is about following your dream... I think. He goes on about finding the thing you really enjoy and discovering that which brings meaning to your life and then how to pursue this life's purpose from beginner to expert level. 

Let me take a step back before I get to him, and get to what I want to talk about. 

I was driving in the car on the day before my birthday. I haven't had any depressing thoughts about being 30 until it dawned on me that I was on the last day of my 20's. I started to think about the last decade and realised that the me that I have got to know as a twenty-something is on the cusp of fading into history. Danie will never be a twenty-something again. That is a weird feeling. 

I was having this thought and was calmed by Jon who was babbling into my earphones that your twenty's are about learning. A time of your life where you would have done your studies and have jumped from one interest to another. You would have had a couple of jobs but you would have a better idea of what you are good at at the end. You have a whole bunch of experiences that you can sift through to find out what your talents are, what makes you happy, what makes you unhappy, what you suck at etc. 

He continued that the next phase of life is the editing phase. This means you that learning has brought you to a point where you know what the handful of things are that you can see yourself doing in life. Your passions. In the editing phase you hone in on these and start applying yourself more intentionally. You become better at the things you want to spend time on and you leave behind the things you have tried and just didn't fit.

This made me not feel so bad as I realised that I had undergone this process and that I'm now at a pretty decent jumping off point for the editing phase. I never wanted to believe that music would only be a hobby and not a profession. At 20 I refused to believe I wasn't going to be a career musician. At 30 I am extremely grateful that I am not a career musician. I have rediscovered an interest in mathematics and I had also realised that, as enjoyable as teaching was, I did not want to make a career out of education.

Thanks Jon. You saved me from not having an answer, or excuse, for myself as I sat thinking about this last day of 20's. 

Later that day I told my mom about this strange feeling, jokingly asking her if there is anything to do on the sunset of your 20's! Much later she told me that a friend of hers just found out that his wife had only 3 months left to live, and how this is so similar, but also has such a sad, sharp contrast to my feeling.

Wow. So terrible how jumping from "what do I do with the last day of my twenties' to "what do I do with the last three months of my life." 

I won't pretend that I know in any way what that it feels like to stare finality straight in the face like that. But with me looking back at my twenties and then having the realisation that life definitely is finite made me feel like I had a clear view for a moment of a person's journey. 

I haven't given it much more thought than that. I will be thinking of my mom's friends often though. Stories like that do something strange to me  and I keep thinking about how no one knows how they must feel, or at least very few do. This won't stop their story from playing out in public, and the group of people that they interact with taking part in their tragedy, whether they want it or not. Some onlookers will be empathetic and others insensitive, while others will just be human. Placeholders of the population, just like they should be. But the degree of suffering must be so great, hurt so much and make them feel so lonely. 

Back to the moment. 

Simply, we need to be the analyst (have hindsight) and the entrepreneur (have foresight) to have clarity in the moment (have insight). This is what I am discovering at work these days. My boss had some figures that the group had all decided were our targets for the financial year. They were great targets and they were very intelligently broken down into the different arms of the sales business where the money was going to come from. 

In the last week I spent some time working backwards from these targets, but I simultaneously played a numbers game where I looked at which metrics needed to change in order for these targets to be reached. I discovered that some drastic changes in the status quo were required. There was great tension between two specific figures. The numbers of transactions per month and the average transaction size. 

The assumption was made that the average transaction size was going to be larger. But how much larger is something that wasn't really addressed. If frequency of transactions increased, then the transaction size was relieved of some of the pressure. 

I shared this with our team and it felt like we were seeing things through new eyes. A new urgency hit our department of what needs to be done to make sure the targets are achieved. 

If we only have hindsight we will never dream. If we only have foresight we will only be dreamers. If we have both then we transform into exactly what the moment needs us to be. We have the wisdom of the past and the vision for the future. 

I think about the past. I hope it has taught me what I needed to learn. I am a natural analyst and I struggle to dream. I have to now start dreaming and then I will be able to edit my life and find more in the next decade than I expect at this moment in time. I hope that if I then find myself in the sad situation of my mothers friends, hopefully years from now, the tragedy will feel defeated by a story of purpose when I look back. It will still be sad and will still hurt. Death is mercilessly awkward and desperately cruel in its finality. I would like to think however, like a curtain drawn back to let some sunlight in, that I wouldn't have regrets in how I have loved and how I have lived. I hope that the warmth of loving relationships and living life with meaning will make that moment one where I don't feel like fate is bullying me, but one where I am standing in a room filled with souvenirs of a good life.