The Opportunity Cost of Communication

    November 17, 2003

So, why don’t we communicate more? I think we all agree that more quantity and higher quality both would be welcome. But, it never seems to happen, does it?

And, why doesn’t it happen? One reason is the opportunity cost’ of communication. The term opportunity cost’ comes from economics, and refers to the need to sacrifice one thing for another when our resources are limited.

If a cup of coffee costs a dollar and a newspaper costs a dollar, you can’t have both if you have only one dollar. If you buy a coffee, then your opportunity cost is a newspaper, and if you buy the paper, then the opportunity cost of that decision is the cup of coffee.

The communication case
In the communication case, the most common opportunity cost is time. If I take five minutes to send you a message, that’s five minutes I don’t have to do something else.

And, let’s face it, communication does take time. Whether you’re doing a video or simply an email message, you have to take time that could be used for something else.

That’s the obvious part, and, let’s face it, the obvious part needs to be repeated from time to time. Now, let’s go on and explore the idea in more detail.

Instruction vs. context
Usually, we do take time to communicate instructional information. Without it, nothing happens in organizations of more than person. Someone has to give instructions to someone else for anything to happen.

You’ll notice I didn’t say anything about the quality of this communication: Better instructions take more time, a higher opportunity cost. Still, the basic point is that we usually pay the cost for some form of instructional communication.

But, contextual information doesn’t get the same priority, because it’s usually less essential for day-to-day operations. In speaking of contextual information, I’m talking about the background information that helps us make sense of the instructions we receive.

Contextual information often fits the `nice to know, but not essential’ category. Of course, this big-picture information can make the difference between an outstanding organization and a mediocre one. But, in the short term, context is rarely as urgent as instructions, and that means we’re less likely to pay this opportunity cost. That takes us to the next point.

The long and the short of it
Communication for the short term differs in at least two important ways from communication for the long term. First, and as we discussed above, short term is often instructional and essential.

There is another important component we should explore, though: Longer term information tends to be more abstract, or less specific. Suppose, for example, you’re a sales manager. Giving your salespeople their quotas for the coming month or year is quite straightforward. Make this many calls, sell this many units, do this amount of dollar volume, and so on.

But if you try to communicate the organization’s strategy for the coming five years, you face a challenge. Now you’re trying to communicate ideas, which are abstractions, and always take more time — or opportunity cost — than specifics like numbers.

There are opportunity costs associated with all communication, which means we have to give up something else if we spend time doing it. Some forms of communication, such as instructional communication, require less time than others, such as contextual communication.

Perhaps a good strategy for any communication plan, whether formal or informal, is to recognize that communication costs us something, whether in time or some other scarce resource. Within that framework, you will likely want to address instructional issues first, and then move on contextual issues.

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