Cost Is A Constraint, Not A Concern

Companies have to be careful about the costs that they incur. They have to in order to stay in business. This cost-consciousness, can be described in one of two ways, cost as a concern and cost as a constraint.

Imagine there are two development agencies up for consideration, one costs $30,000 and one costs $15,000. Which do you choose? Well, obviously there are a lot of variables, but this post is about one.

When groups are continually tasked with cutting costs, a thought winds up calcifying in the minds of everyone that cheaper, lower cost solutions are better. It becomes a habit to think this way. Whats worse, because it has become wrote behavior, people develop a certain fear or anxiety around higher cost alternatives. In this state of mind, people will choose the $15,000 option over the $30,000. The other very important variables that separate those two groups don’t even matter anymore. The decision is made so that the fear and anxiety around choosing a higher cost service can be removed. Breathe easy knowing that the cheaper alternative was chosen.

An alternative is to treat cost as a constraint. To define it rather simply, constraints act as immovable boundaries that can help guide decision making. Budgets happen to provide constraints when we talk about cost. Thinking through the budget, it helps to see where money can go, where it can’t, and what flexibility exists within it. This is far more powerful. Now, when looking at the two services, the constraints help to eliminate impossible choices, and allow for serious consideration to the alternatives that remain. Once a constraint is satisfied, all of the other variables can be considered from a healthy emotional place. Maybe the higher cost option actually does fit the constraint, and once that can be established, the focus then becomes into really investigating which of the options is better for the organization.

Thinking and working with constraints is a powerful tool that many organizations use to help give direction and focus. When used well they inspire creative and ingenious solutions to problems. So figure out what the constraints are. Try to make them non-arbitrary (Looking at you deadlines), and let the teams figure out how best to work within them.

To put it another way, if you say you are, “Worried about cost,” then you should be worried about results.