The argument is clear: to increase creativity I need to spend money on developing practices or upgrading my work-space. How do I know this will pay off?
You don’t know. In business and in life, you rarely know. That is why there is a whole field called Risk Management.
Many businesses – and I have seen this in the past – will do what they incorrectly consider the “safe” option and not spend money on tools and learning to increase creativity, productivity, efficiency, etc. The risk they perceive is that these things will end up costing more than they will make back through their various benefits. These businesses think that by removing these costs, they remove this risk.
This is a fallacy. These businesses are simply ignoring the risk not removing it. I want to put that statement in super-bold, underlined, red with flashing letters and a halo… but that would look terrible. This is because of something conceptualized as Opportunity Cost. Opportunity Cost is the loss of other alternatives when one alternative is chosen (read more here). In this scenario, this is the cost of the missed opportunity of not increasing the creative output of your business. Therefore, we can’t remove the risk of whether or not to spend money on improving a business. So, let’s apply some basic Risk Management to it.
As for any scenario regarding Risk Management, every situation is unique, but I will discuss here a general concept which describes the angle at which we should be looking at these scenarios. It is essentially this:
You can sit down and calculate the maximum you wish to to spend on improving your creative approach to business. You can not sit down and calculate the maximum benefit these improvements will make.
This is a very good risk scenario. Risks are about the unknowns – what could happen. You can be certain trying to improve your creative approach will only cost X dollars. This cost is bounded, whereas the benefits could be infinite. This is like placing a $100 bet on a roulette table where you can only lose that $100, but you could win anything from one thousand to a billion dollars. In this case, the uncertainty is on your side.
Let’s look at an example. A business realises that their office does not have a range of spaces and they realise that perhaps buying a couch to put in a corner where staff can take a little time to chill out may mean they come up with better solutions to project problems. The couch may cost $1000, they could reasonably expect (or allow) that employees spend X amount of time chilling out as opposed to doing “paid” work. The cost of the couch and the cost of lost productivity can easily be calculated. Adding a bit of breathing space to their office has relaxed employees and they are thinking better, working faster and coming up with better ideas (probably only slightly, it’s just a couch). This business has a figure for how much these better ideas have cost them (couch capital + employee time * hourly rate).
Whether this cost was worth it, is up to the business managers but regardless of whatever happens, the absolute worst most terrible case scenario, you just spent $1000 on a couch. Oh well. The absolute worst most terrible case scenario of not striving to make your business the best it can be in a competitive market? That’s something else entirely…
Feature image courtesy of Anton Pinchuck