We behave as if money is the scarce resource and live our lives and run our businesses carefully controlling expenditure, planning cash flows and developing ideas and taking decisions to make more money, often forgetting that it is time that is the asset we are short of the most. Compared to our parents, and certainly our grandparents, we are cash rich and time poor and the pressure on our time seems to be getting worse.
In keeping with the Einstein theme I suggest that there is a theory of relativity at work when it comes to time and money. Both have certain laws that they appear to abide by and are commonly understood. Money follows the laws of arithmetic and economics. As we all know £1 is worth 100 pence and the purchasing power of £1 varies depending on the rate of inflation, rate of interest etc.
Time also appears to be constant in that it approaches at a consistent rate of 60 seconds every minute and 60 minutes every hour. Each week, in common with pretty much everyone else on the planet, we are given 168 hours to spend and there is nothing we can do to change that. It is however worth remembering that there will come a week when we are not given 168 hours, but until that time we can rely on this figure.
This is what our rational minds know to be true, but of course we have our emotions to consider as well.
Let’s look at money first.
It never ceases to amaze me how much emotion some people place on what is fundamentally a human construct designed to be a simple medium of exchange.
Bernoulli proposed a theory called ‘the concept of Utility’. His basic thesis states that ‘the utility resulting from any small increase in wealth will be inversely proportionate to the quantity of goods previously possessed.’
Put simply the value of a £1 to us varies depending on how much money we already have and how wealthy we feel at any point in time.
Time also varies depending on how we feel. A minute can seem like an eternity when we are bored or uncomfortable and of course time flies by when we are having fun. So as we can see, both time and money are governed by a version of the theory of relativity.
This needs to be remembered when we make decisions both in our personal life and at work. The tried and tested decision making models such as ROI and DCF help the rational minded finance professional to form a considered view, but I have yet to see a ROI or a DCF calculation overturn a decision a senior executive or business owner really wants to do. In such circumstances emotion wins every time and the numbers can go take a hike!
I think it is time to consider some other ratios. What about ROE return on energy, or ROT return on time, surely they start to count the things that are worth counting?
In my blog last year, http://www.senseiuke.com2014/09/tempus-fugit-time-to-stop-doing-good-work/ I discussed the need to stop doing ‘Good’ work in order to free up time to do ‘Great’ work and this remains a challenge as we rush around doing things that appear important and urgent, but are not future enhancing.
Some people live their lives like they are competitors in Monty Pythons famous sketch ‘the 100 yards dash for people with no sense of direction’ – doing things quickly and getting on is far more important than thinking and working out what really counts.
In my work as a coach I often find myself having to challenge prevailing thinking in order to get workaholic leaders and managers to realise that real wealth is having the discretionary time to spend with those you love and being able to afford whatever you want to do with it.
Some moments are precious and indeed priceless and these moments are the essence of what life is all about. I can say very few things with absolute certainty, but I can confidently predict that the day we all get summoned to meet our maker, we will have emails in our inbox. Makes you think…