The Finite and Infinite

Like action, supply is finite. Like desire, demand is infinite.

Supply generates revenue. Demand generates cost.

Revenue is finite. Cost is infinite.

A finite resource requires resourcefulness. An infinite resource requires control.

Businesses go through boom and bust cycles partly because we forget the very nature of revenue and cost.

In the boom years, revenues seem infinite. This makes business leaders treat costs as a necessary trade-off for revenue and let it run out of control. They forget that costs will always overrun revenue if not kept under control.

In the bust years, costs seem finite. This makes business leaders treat resourcefulness in building revenue as a cost that needs to be avoided. They forget that without growing revenue, no matter how well you control costs, the business will still go bust.

When designing a business to be anti-fragile (a term popularized by Nassim Taleb when referring to things that benefit from disorder), business leaders have to be intentional about controlling costs in boom seasons and unleashing resourcefulness in bust seasons.

It reads like an antithesis but the greatest business leaders share the learning in different ways. You can call it healthy paranoia.

Andrew Stephen Grove, a former CEO of Intel, once said, “Only the paranoid survive.”

Warren Buffet, put it a little more mildly when he said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

– Osasu Oviawe

Leave a Reply