Ken MakovskyWednesday, August 14, 2019
You can’t judge a person by the numbers! It’s an old saying that often rang true, but not as much as it used to. Most of the time today, people want to cut to the chase and know the numbers. That’s why, for example, newspapers often graphically depict giant-sized stats such as revenues, number of employees, and other performance markers, on the business pages as an attention-grabber.
In social media numbers bring a different meaning: measuring your traffic numbers, bounce rate, number of comments and retweets on posts, the number of subscribers, likes and followers and loyalty, etc. And the beat goes on. Of course, we all recognize that numbers are critical in business where managing costs and maximizing returns are major factors.
Justin Wolfers, a professor of economics and public policy at the University of Michigan, noted in a recent New York Times article that he wants to inculcate this principle in students to make economics useful to what they do every day, making them “ protagonists (for this) on the economic playing field,” and enabling them to use their time and their money more efficiently . He introduces the theory of competitive advantage which is part and parcel of cost management. The theory is that “a group of people can produce more if each task is done by the person who can do it for the lowest cost.”
As he explains, this means the greatest expert may not be the one who should carry out a specific task at the lowest cost. The key is the opportunity cost, “which is not the number of hours a task takes you, but rather what you forego by not pursuing the best use of your time.” This explains, he says, why the dentist doesn’t clean your teeth (the hygienist does), or the vet rarely weighs your pup (the vet tech does). He illustrates this example further for students. You’re better off assigning the task of cooking dinner to whichever roommate doesn’t have a big paper due rather than to the best cook. The same is true in business. The best writer is not always the best one to write the paper if he or she can spend time closing the deal. The one chosen to write it is determined to do it at the lower cost.
So, judging by the numbers is a very, very good thing!