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This is an excellent thought process, and it's good to know about opportunity cost. Once you do, internalize it, and pack it away so it can never see the light

This is an excellent thought process, and it's good to know about opportunity cost. Once you do, internalize it, and pack it away so it can never see the light. As soon as you start treating people as the equivalent of the monetary value of their time, you're lost. You've gone too far. This way of thinking is powerful and dark. Please—use in moderation.

btilly 14y ago
Indeed. I know a company that made the mistake of putting an MBA type in charge of advertising, and therefore in charge of their affiliate program. She pushed always trying to figure out how much an affiliate was worth, before deciding if their stupid questions were worth the time that it took to answer them. She made two fundamental mistakes. The first is that the time it takes to figure out up front whether someone is worth her time leads to a bad interaction surprisingly often (so even the "worthwhile" ones get a worse experience than otherwise). The second is that she valued an affiliate at the profit on the business they brought in minus the amount they got paid, completely missing the fact that having them out there linking to you improves SEO, which helps bring additional free traffic. The result of her being penny-wise and pound-foolish, and that company's rapid growth trajectory turned flat and stagnated.
- jonbeerhalter 14y ago
  FYI,if you're being penny wise and pound foolish then you're not doing a very good job of calculating opportunity cost. And it also sounds like the "MBA type" wasn't doing a very good job of calculating value added, which is a separate problem from opportunity cost.
  - btilly 14y ago
    That would be my main point. There are a lot of hidden sources of value which are hard to quantify when it comes to anything like customer service. Therefore the errors that she was making are likely to be systemic in anyone who is trying to be economically efficient.
    - msellout 14y ago
      And even more likely to be systemic in anyone who is not trying to measure the world. Science works.
      - btilly 14y ago
        Actually not. People who do not try to measure what is going on make an entirely different set of systemic errors. Which set of errors matters more depends on what you're doing. For anything resembling quality customer service, measuring tends to lead to the worse errors. But a CFO who does not reflexively try to measure stuff would be a disaster.
- slantyyz 14y ago
  The "MBA type" is probably an idiot, or an idiot with an MBA. But it's not the MBA itself that makes a person an idiot.
  - calinet6 14y ago
    An MBA teaches you a lot of important facts about business and how to run it. There's nothing inherently wrong about an MBA. I believe there is, however, a striking tendency in those who seek it to be searching for the wrong path to success.
    - slantyyz 14y ago
      Don't know if anything has changed in the 20 years since I got my MBA, but "An MBA teaches you a lot of important facts about business and how to run it." is maybe only 60% true. You learn a lot of theories and do a lot of case studies, but the "how" part is definitely lacking. You are right about the types of people who enter MBA programs. I couldn't stand most of my peers. A lot of them were all about greed and status.

btilly 14y ago

Indeed. I know a company that made the mistake of putting an MBA type in charge of advertising, and therefore in charge of their affiliate program. She pushed always trying to figure out how much an affiliate was worth, before deciding if their stupid questions were worth the time that it took to answer them. She made two fundamental mistakes. The first is that the time it takes to figure out up front whether someone is worth her time leads to a bad interaction surprisingly often (so even the "worthwhile" ones get a worse experience than otherwise). The second is that she valued an affiliate at the profit on the business they brought in minus the amount they got paid, completely missing the fact that having them out there linking to you improves SEO, which helps bring additional free traffic. The result of her being penny-wise and pound-foolish, and that company's rapid growth trajectory turned flat and stagnated.

jonbeerhalter 14y ago
FYI,if you're being penny wise and pound foolish then you're not doing a very good job of calculating opportunity cost. And it also sounds like the "MBA type" wasn't doing a very good job of calculating value added, which is a separate problem from opportunity cost.
- btilly 14y ago
  That would be my main point. There are a lot of hidden sources of value which are hard to quantify when it comes to anything like customer service. Therefore the errors that she was making are likely to be systemic in anyone who is trying to be economically efficient.
  - msellout 14y ago
    And even more likely to be systemic in anyone who is not trying to measure the world. Science works.
    - btilly 14y ago
      Actually not. People who do not try to measure what is going on make an entirely different set of systemic errors. Which set of errors matters more depends on what you're doing. For anything resembling quality customer service, measuring tends to lead to the worse errors. But a CFO who does not reflexively try to measure stuff would be a disaster.
slantyyz 14y ago
The "MBA type" is probably an idiot, or an idiot with an MBA. But it's not the MBA itself that makes a person an idiot.
- calinet6 14y ago
  An MBA teaches you a lot of important facts about business and how to run it. There's nothing inherently wrong about an MBA. I believe there is, however, a striking tendency in those who seek it to be searching for the wrong path to success.
  - slantyyz 14y ago
    Don't know if anything has changed in the 20 years since I got my MBA, but "An MBA teaches you a lot of important facts about business and how to run it." is maybe only 60% true. You learn a lot of theories and do a lot of case studies, but the "how" part is definitely lacking. You are right about the types of people who enter MBA programs. I couldn't stand most of my peers. A lot of them were all about greed and status.