How do you know if you're maximizing your resources?

Something we’ve been thinking about

In On War, Clausewitz keeps returning to one idea: “The best strategy is always to be very strong, first generally, then at the decisive point.” To him, a strategist’s work is to find the point where the outcome will be decided, and to concentrate strength there.

How we see it through leadership economics

When we talk about “optimal allocation,” people start to think about tools for managing tasks, time, or finances, or developing elaborate, detailed plans. How do you know if you’re maximizing everything you have available to you? It’s a big question that feels unanswerable.

Economics provides a heuristic that allows you to relax (at least, we think so). Whenever a resource is scarce, you are using it well when the next unit of it goes to its best available use. That holds for any scarce thing, in any setting: the next dollar you spend, the next hour, the next conversation you have, or the next person you assign to a project. Economists call this thinking at the margin, and it is the key economic principle that informs Allocation.

Stated that way, “optimizing your allocation” appears manageable. Maximizing your resources sounds like it should demand a flawless plan for the day, the month, and the year, every piece set in advance. But if each next choice goes to its best use, the whole is already allocated as well as it can be. Rather than scripting the whole battle from beginning to end, Clausewitz found the point that mattered and put his weight there.

One place this shows up now is attention, which is increasingly scarce. We have lowered the cost of communicating so far that it is tempting to send every update, request, and announcement the moment it occurs to us. The noise that results is itself a claim on everyone’s attention, and the best use of a team’s attention is rarely one more message. The leaders who guard it tend to treat each communication as a choice about where their team should look, rather than a free action.

Attention is only one example. Whatever your scarcest resource, the same test applies: whether the next use of it gives back more than any other use could. None of these choices is large on its own, and that is the point. Made well and often enough, they are what maximizing consists of.

A line we’re sitting with

The wisdom of life consists in the elimination of non-essentials.

Lin Yutang, The Importance of Living