Opportunity Cost Definition: The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
Understand that every time we say “yes” to something we are always saying “no” to something else; this also applies to the other way around. How awesome it would be if we knew the outcome of each decision beforehand? In life and business unfortunately it just doesn’t work that way. Are we always so in tune to chasing opportunities that we are actually moving way too fast to look at things more clearly? Are we letting our ego move in the way of the potential unseen opportunity or opportunity cost that we may not be properly measuring?
Opportunity cost is all about making and not making certain choices. Examples could be the opportunity cost of investing four years of going to college to earn a degree, as opposed to the money you could have earned if you worked instead. On the other hand, you hope to earn more during your career, thanks to your education, to offset those lost wages.
Another example could be if a farmer decides to grow carrots. His or her opportunity cost is the alternative crop that might have been grown instead that could have reaped a greater harvest or monetary gain.
In both cases, a choice between two options must be made. It would be an easy decision if you knew the end outcome; however, the risk that you could achieve greater “benefits” (be they monetary or otherwise) with another option is the opportunity cost.
In business there are always Opportunities as well as Opportunity cost. Let’s explore a few questions; what is the Opportunity cost of not having an accountability partner or a coach? What is the Opportunity cost of not having a totally unbiased partner look at things in a different perspective? What is the Opportunity cost of not having someone to ask us the tough questions that no one else is willing to ask? What is the Opportunity cost of not having someone that sees more in you than you see in yourself and can show you how to capitalize on that vision? Those are the questions we should be asking ourselves.
Eric Schmidt CEO of Google mentioned that the best advice he ever received was to have a coach. “When I initially received this advice I resented it, because after all, I was a CEO. I was pretty experienced. Why would I need a coach? Am I doing something wrong? My argument was how could a coach advise me if I’m the best person in the world at this? But that’s not what a coach does. The coach doesn’t have to play the sport as well as you do. They have to watch you and get you to be your best. In the business context a coach is not a repetitious coach. A coach is somebody who looks at something with another set of eyes, describes it to you in his words, and discusses how to approach the problem.”
Another interesting advantage of having a coach is in a study that was done at Dominican University in California where it was revealed that writing down your goals contributed to a 42% increase in goal achievement. What’s most important is that those who translated their goals into actions, made a commitment to an accountability partner, and provided weekly progress reports increased goal achievement by 78%.
You must ask yourself, is a 78% increase in the probability of your success worth an accountability partner? Something to think about.
Inconclusion, realize that every decision we make has two potential outcomes. If you’re one that doesn’t have that trusted unbiased partner that you can bounce these decisions off, wouldn’t it then make sense to explore the Opportunities otherwise?