When making decisions, do you struggle with cost-benefit anaylses? Well, here is motivation for you to improve that skill: According to ScienceDaily, “Crayfish make surprisingly complex, cost-benefit calculations.” The findings are from a University of Maryland study.
A crayfish has two defense mechanisms against predators: to freeze and hope the predator does not recognize it as a food source or to escape quickly by flipping its tail and swimming backwards. The Maryland study offered the crayfish “stark decisions — a choice between finding their next meal and becoming a meal for an apparent predator.” The crayfish could freeze and “remain close to a food source while at risk of being eaten by the predator” or it could flip its tail and escape the predator but put “critical distance” between it and its next meal.
How did the crayfish do when confronted with this clear cost-benefit dilemma?
The study concluded that crayfish are decisive decision-makers and adept at making trade-offs. “They carefully weighed the risk of attack against the expected reward” and took action “in a matter of milliseconds.” Their risk-benefit calculus was clear: when a predator was “moving too rapidly for escape,” the crayfish would not tail flip but freeze in order to remain close to the food source. On the other hand, when a threatening predator moved more slowly, the crayfish would tail flip to escape while sacrificing proximity to the food source.
Hey, if a crustacean can do it, we can do it! How do you calculate costs and benefits when making a decision? What is your decision calculus? Here’s a formula for you to consider:
Value = (Benefit – Cost)
When making decisions, you should always seek the highest value solution — that is, the solution that delivers the greatest benefit for its cost. Put simply, a good solution is worth more than it costs, and a bad solution costs more than it is worth. For example, let’s say you have three solutions to a challenge or opportunity:
- Solution A provides the greatest benefit at a cost of $X.
- Solution B provides 93% of the benefit but at 60% of the cost of Solution A.
- Solution C provides 60% of the benefit at 55% of the cost of Solution A.
What would you do? In this simple example, Solution B is the highest value option:
- Solution B provides 93% of the benefit but at 60% of the cost of Solution A.
- Solution B provides significantly greater benefit than Solution C at about the same cost.
Easy in concept; harder in execution. I know.
A future blog post will discuss the value formula above in greater detail. In the meantime, please see two current posts, Ben Franklin’s Trade-off Tool and The Matrix, for additional information on managing trade-offs and making cost-benefit decisions.