Victus Spiritus


Coasting uphill is a bad plan

24 Mar 2010

Remember back to a time in your life when you pedalled a bike, or pushed a skateboard as fast as you could? Think back to how you felt at the moment when you got to the top of a huge hill, in expectation of coasting to the bottom. Sometimes you'd even pedal or push on the way down just to see how fast you could go.

What happens when you coast long enough on flat ground? You slow to a halt. Friction in all things erodes the momentum of coasting. We learn early on that we have no choice but to keep on pushing if we want to make it to our destination.

When it comes to decision making, there's a toll on the human spirit that needs to be confronted. We can't coast uphill to a better life for ourselves, our loved ones, and our friends. But the one option most often chosen (coasting) has the worst average payoff and security. We can't see beyond our own comfort zones, and we dare not risk our safety or the survival of those dear to us. I'll describe a couple of alternatives open to even the most conservative of decision makers. The only requirement is that practitioners critically examine their priorities and motivations, in an attempt to clear predispositions.

Cut your losses or double down

This decision method is the extreme solution to coasting. Coasting isn't an option, it's off the board. If an earlier choice is beyond hope* of turning around, sunk costs are ignored and the best option is to cut your losses. The upside is that if an earlier investment can be transformed into one we'd be willing to reinvest in, we should make every rationale effort to do so (weigh opportunity costs). If an investment is performing well or better than expected we should double down on our investment. At each decision boundary we're forced to either cut the fat or reinforce positive results.

Become a new gravity center

Instead of constantly pushing (cutting and reinvesting) we can strive to become a gravity well, effectively pulling in value by association. This decision making method appeals to my natural inclination to be a fat guy. Why move a mountain of pie one shovel at a time, when you host the worlds biggest pie eating contest instead.

Achieving the critical mass necessary to succeed at this tactic may require cutting losses, or doubling down in what works, but they are not requirements. Once enough network activity/interest becomes associated with your gravity well, it becomes self sustaining, taking on a life of it's own. The choice of what to cut and double down moves out of your hands.

Note: * determining when an investment is beyond hope is subject to experience and wisdom. Recognizing an impossible barrier or doomed venture takes guts.