In March of 2020, Massachusetts Governor Charlie Baker issued a state-wide shelter in place order due to the raging novel COVID-19 virus. Effectively, the order shut down the state and, in turn, shut down major parts of my business. Quickly on the heels of Massachusetts, Rhode Island issued their shelter in place order and my business took another major hit.
As a company that goes into tens of thousands homes and businesses each year, the shelter in place took away our opportunity to perform over 80% of our company’s work. Shortly following the state orders, our management team developed a plan to furlough half of our large work force, including 60% of our accounting staff.
There is something ironic about the furloughs. Even though people are not working, the work still needs to get done. So, with a sense of youthful exuberance I put myself behind the accounts payable desk and started to enter payables.
The order occurred on a Monday and we started the furloughs on Tuesday, but for accounts payable most of the work comes with a week delayed. Our company purchases goods or services from a vendor and within a reasonable period of time they send us an invoice to be paid. The invoice need to be entered into our system to record the charges and to accurately post where the expense belongs. Then, we file the invoice away until it is time to pay the invoice – usually in thirty days.
On Wednesdays, we select the invoices we are going to pay. On Thursdays we pay our invoices. On Fridays, we file away the invoices and checks.
The process seems easy. It was easy. Until it became the same in week 4 and week 5 and week 6 and week 7 and…please make it stop.
Welcome to Swimming in the Flood; a podcast where we develop the resilient leader’s mindset by navigating difficult currents in business. My name is Trent Theroux.
The economic definition of Comparative Advantage is “the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity. Countries, companies, individuals that have the ability to provide the most efficient use of resources have a comparative advantage.
Compare this with an Absolute Advantage which is the ability of an individual or group to carry out a particular activity more efficiently than another individual or group. I know. This sounds a whole lot like the definition of Comparative Advantage we just heard. Here’s the difference.
Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production diversification. It’s the opportunity cost that makes the difference here.
Here’s a quick example. According to a McKinsey report, South Korea’s comparative advantage lies in technology and design, not in resource-intensive heavy-manufacturing industries. The United States has an absolute advantage over South Korea. Should the U.S. wish, it could plow all of its resources into the technology and design of say televisions and out compete South Korean companies on both price and quality, but at what cost? What would the United States give up to beat South Korea?
South Korea has a comparative advantage because its resources are able to produce quality televisions at a competitive price leaving the United States the resources to produce higher quality products like The Real Housewives of Atlanta.
Let’s take this concept back to my accounts payable department. The two women who work in that department, they have since been recalled, process hundreds of thousands of pieces of data per year, with exceptional clerical speed and accuracy. These ladies have a comparative advantage. They are exceptionally efficient at what they do and produce.
I believe that I have an absolute advantage in this regard. Given the proper time and motivation, I believe that I could reduce the processing time for this department by a meaningful percentage. But, at what opportunity cost? What will my company give up by having me toil in the minutia of accounts payable? These great ladies are able to manage just fine. What do they really need me for?
How can we as Developing Resilient Leaders position ourselves to find comparative advantages in our organizations?
I am now going to give you my unscientific, non-peer reviewed, resilient leader theory on a comparative advantage. Are you ready? Got your pencils out? Here’s it is. Fill Your Sails. You heard it. Fill Your Sails.
The theory is simple. Here’s how it works. In nautical terms, you know we love nautical terms on Swimming in the Flood, the idiom Fill Your Sails references the point at which a sail boat is moving most efficiently. With less than full wind, sails flap noisily. The boat may get to its destination, but to ride will be much choppier.
I see this same idiom working in our businesses. The company’s sails are not full with me working in accounts payable. We got through the shelter in place orders, but at what cost?
Recently, we hired a young man in our Human Resources department to help shred sensitive documents. That’s his job. Shred documents. And, Franklin Okunola does a fantastic job of it. Franklin is a simple man, yet he approaches his work as if it is the most important job in the world. Franklin was brought to us by an organization named FedCap. FedCap is dedicated to changing the lives of people with disabilities and other barriers to employment.
To me, I don’t see that Franklin has a disability or a barrier – his sails are full we are enjoying our competitive advantage and getting necessary work completed at the same time.
I want to tell you one quick story about Franklin before we leave. Our Talent Acquisition Manager, Stephen Dolonich, hired Franklin at his previous company for very similar tasks. Franklin asked permission to watch videos on the computer during his lunch break, to which Stephen assented.
That day at lunch Stephen walked around to Franklin’s desk and Franklin guiltily minimized the video. Stephen asked Franklin what he was watching, but Franklin did not want to divulge. Stephen said, “It’s alright. You can show me.” Franklin opened the computer and showed Stephen….now I’m going to stop right here. Now, I know what you’re thinking. I know exactly what you’re thinking. Stephen asked again for Franklin to show him. Franklin clicked on the link and revealed that he was watching Sesame Street.
Maybe we have an absolute advantage with Franklin on our team?
Folks, thank you for listening to Swimming in the Flood. Resilient leaders face challenging currents and it is tough navigating, but with one tack or another, we can get there together.