Cumulative Marginal Advantages

A universal framework, as we read the gurus’ views on what matters both in the past year and the coming decade trumpets the success of those who strive for cumulative marginal advantages.  From sports to politics to business to technology; individuals and organizations appear to devote their focus on the gaining of, sometimes small, marginal advantages to advance their mission or personal goals.

Strategy, and hence risk, becomes operational when the focus is so tight.  Missing are the concepts of sustainability, or appropriateness (sorry to mention UDAAP), or long term, or economic considerations.  We find institutions and companies and individuals pursuing small marginal advantage simply for the sake of attaining that advantage no matter what or oblivious to the long term cost.

The conclusion that the tide has shifted to short term attainment of cumulative marginal comparative advantage derives from stories and articles and even research across all sorts of information sources.  Media can and does focus on the short term, and on the ‘winners’ no matter how small or pyrrhic the victory. Negative results, even many years later, are often attributed to events in a different time frame.  The costs or the consequences are seldom associated with the successes.

How did this operational/competitive focus emerge? I believe information speed combined with the talents of those well-schooled in marketing have been the leading light.  Add the prevalence of short termism or diminution of long term accountability and the picture becomes a bit clearer. The public view of everything seems short term, and the long form recedes.

This framework – identifying a concentration on cumulative marginal advantages – works for many analytic tasks.  Strategists can rejoice in short term gains.  Risk managers can watch their statistics improve.  Sports figures can achieve single year triumphs. Politicians in the US can win primaries. All we have to do is find a constituency not satisfied with the short term.