Rule #10 - Switching Costs
On smooth sailing, switching directions and necessary evolution.
Welcome to the Happy Medium newsletter, this is part ten of a ten part series sharing the Happy Medium 10 Rules for Staying Lean (and Stress Free).
Switching costs you - Today!
Rule #10: Switching Costs You
Stick to the plan, OR have a very good reason for not doing so.
Imagine that your business is a boat. You might be working with a sailboat or a cruise liner but regardless you are the captain and you’re in charge of the direction.
Your boat is on a mission, heading in the direction of your North Star but every time you have to veer from your path, it costs you fuel, time and the energy of your crew.
Some diversions might be necessary, avoiding poor weather or stopping for supplies, but changing course too often wastes resources, feels chaotic and pulls us further from our desired goal.
Ideally we would have a straight line from start point to goal, but on the seas just like in real life, we need to be nimble enough to cope with the conditions as they present themselves. How do we balance staying on track with necessary evolution?
Have a plan
A good plan is one that works backwards from your north star. You can see where you are heading and all your daily tasks, projects and ventures are forging a path towards it. A plan that is aligned to the North Star won’t require you to switch as much.
The first, most important question when assessing a change is; “Is this aligned to my North Star?”
Commit to change
Going somewhere new will require evolution and you might not have everything you will need on your boat from day one.
Newness costs businesses a lot, but it should be an investment. Bringing on new staff, new equipment, new clients, new projects, etc. They all have a cost associated.
Being intentional about newness means committing to a change, giving you the best chance of recovering your investment. Acknowledging and planning for newness means you can go in eyes wide open, leaving a little extra time, some wiggle room in the budget or some additional support to give it the best chance of success.
Give things time
Sometimes things just aren’t working yet. New things take time and if you switch at the first sign of friction, you won’t give a new venture enough time to find it’s feet. Weigh up the cost and set a timeline for assessment - give it as long as you reasonably can but be decisive (see ‘Sunk cost fallacy’). Ask yourself “Have I given this venture enough time to find its feet?
Give things metrics
Being able to objectively measure success (and cost) takes the pressure off the judgement call as to whether something is working or not. Define success in numbers and have a simple way to measure it. Ask yourself “How will I know that this is working well?”
Like our boat analogy, we need instruments to tell us things are veering off course or when we can take advantage of fast winds. You make better decisions with good data.
Commit to incremental experiments
Where possible create smaller opportunities to test and learn. For example, launching a pop-up before committing to a lease gives you the opportunity to understand the realistic revenue potential of an area before you dive right in to a 12 month lease (plus fit out costs etc, etc). Ask yourself: “Is there an incremental way we can learn before we launch?”
Reset over redirect
Sometimes you need a break, not a change. Take a break, come back to a plan with fresh eyes. The time invested in taking a pause will be less than what it would take to turn the ship around. Ask yourself: Do I need a break or some fresh eyes on this?
Switching will cost you but change is the path to growth. The key is to commit to the plan as much as is practical but when it’s time for a change, be intentional and considered.
Keep your boat pointed to your North Star and keep moving; whether you’re paddling, steaming or sailing.
Further reading:
Communicating a north star, having everyone on the same page and providing enough time for it to be done correctly the first time will save you so much time and resource in your business. For a great example of how this plays out in the real world:
New people are often able to spot inefficiencies in a business very quickly. One reason for this is they didn’t set up the current processes so they have no personal, emotion or financial investment in the way things are. Sometimes it is hard to change because we are holding on to something that cost us a lot but is no longer serving the greater purpose. This is the Sunk Cost Fallacy.
Switching costs are not only relevant in the macro but in the micro. I’ll expand on this in future but switching as it relates to multitasking is a very well studied phenomena, check out the APA for a recap of key studies.
This is the last instalment of our 10 Rules for Staying Lean (and Stress Free)! If you’ve enjoyed this series or know someone who might, please feel free to give it a share!
10 Rules for Staying Lean (and Stress Free)
Lean means creating value with the fewest resources possible. What is means in our context is avoiding things that use up your time, energy and money so you can spend more time focused on the good stuff.
Running lean means creating freedom. Instead of dumping money back into a hungry business machine, you are pruning the non essentials, so that you have the freedom to choose where that extra money goes. Whether that’s reinvesting, saving for a rainy day or spending on something you care about, the choice is now yours.
Each rule is designed to save you headspace, time, money or all three and have been road-tested in companies large and small.
This really resonates. Staying flexible without constantly drifting off course is such a real tension, especially when life keeps changing the conditions.
How do you personally tell the difference between a necessary adjustment and a distraction pulling you away from your north star?
Really like the boat metaphor for thinking through switching costs. The point about setting metrics before commiting to change is spot-on, I've seen teams waste months on projects they should've cut earlier just because nobody defined success upfront. The incremental experiments idea is somethng we tried at my last job and it honestly saved us from a couple expensive mistakes.