opportunity cost neglect – The Waiter's Pad

It’s not a terrible list of nine ideas, but it is a superficial one. The problem is that each of the ideas has to do with money, which isn’t really what gift buying is about.

#2, Set a budget. #4, Don’t go into debt to pay for gifts. #7, Don’t buy more online just to get free shipping. I violate #7 most years.

Gift giving is really about connection. It’s about our relationships with other people and symbolizing them. Gifts are a proxy. They’re an artifact. They mark something intangible as tangible.

Here’s what I would have written for Schwab.

It’s that time of year again. Last year, at this time of year, Americans spent $1,600 dollars on holiday gifts. There are work parties, family parties, white elephant, and fireplace stockings to stuff. There are kids, parents, parent’s kids (those dang sibling gift exchanges) and more.

It’s too much.

It’s okay to say it’s too much.

Because here’s the thing – it’s too much for them too.

Here’s a two-step plan for making this year a great season.

Step 1: Buy the gifts you’re excited for. Kids love presents. Dads love new socks. Teens love new hoodies. If you know the perfect gift for the perfect person – get it! That’s what this is all about.

Step 2: Share your priorities. When our money goes to one thing it doesn’t go to another. It’s the “opportunity cost”. We mostly understand that when it’s said but we forget when it’s not. So spend your money intentionally.

“Dear Mother-in-Law, here is some chocolate/coffee/flowers. We’re trying to spend a little less this year because we are saving up for a big family trip to Florida. We know the kids will love exploring the sand for shark’s teeth, soaking up the sunshine, and splashing in the waves.”

Instead of a vacation maybe it’s college or a new, more reliable, safer car for your spouse. Whatever it is, make sure it’s intentional. And make sure the gift receiver understands that it’s important.

“It’s better to give then receive”. That’s advice you don’t understand until you’ve gotten older. Then it’s obvious. By not getting someone something you’ve let them become the giver rather than receiver. Your in-laws have “given” you a slice of tuition, vacation, or locomotion. They’ve connected.

Some people won’t get it. But if you live intentionally and remove the frivolity from not just the gift-giving but the rest of your financial life, they’ll start to see it.

Happy Holidays from all of us at Schwab.

Happy Holidays.

Measure what matters book review

There are two aspects – contents and context – to John Doerr’s 2018 book, Measure What Matters, a book about OKRs (Objectives and Key Results).

Content.

Objectives are “what is to be achieved, no more and no less.” Grow the blog, lose weight, or strengthen important relationships.

Key Results are ways to “benchmark and monitor how we get the objective.” List ways to grow the blog, lose weight or build relationships. “It’s not a key result,” Marissa Mayer would say, “unless it has a number.”

Straightforward enough. Is this a book that could have been a blog post?

Maybe, but Doerr offers a trio of cautions.

Warning 1: OKRs are not a way to show activity, they are to focus attention and weigh the opportunity cost. Organizational achievements, not ego appeasements.

Warning 2: Sometimes incentives hijack the Key Results (Goodhart’s Law). An antidote is paired counterparts. In the Wells Fargo cross-selling scandal the Key Result of open accounts could have been paired with monthly active accounts.

Warning 3: OKRs are a tool to use not a dogma to follow. If objectives change then OKRs change too.

Context.

Context is a Bob Moesta word encompassing who, what, when, where, why, and how? Steak and hot dogs are ‘good for dinner’ within the right context. The same goes for OKRs.

Doerr is a venture capitalist at Kleiner Perkins. OKR adopters include Intel – where Doerr learned from Andy Grove – and Google among other technology firms.

The OKR system, Doerr wrote, “was a great impedance match, a seamless gene transcription into Google’s messenger RNA. OKRs were an elastic, data-driven apparatus for a freewheeling, data-worshipping enterprise.”

Google was a perfect match. But your business may not be.

OKRs, as Doerr presents them, requires a certain culture. Part of their effect is to argue well. Andy Grove set the Intel culture for OKRs because Andy Grove was at Intel. Once he left the culture changed from bettering to bullying.

Doerr has many examples, one of which is Zume Pizza, but they’ve gone out of business. What’s the right lesson in that? What’s the context?

OKRs are lightweight, malleable tools. But their usefulness varies. Will OKRs be OK for you?

Tag: opportunity cost neglect

Give the Gift of Gift Giving

Measure What Matters (book review)