Optimization: Making The Most Of What You Have

Optimization is the selection of the best element from a set of available alternatives. Every discipline has forms of optimization, from computer science and engineering, to business management and operations. Think of it as finding the best solution for a situation. It’s a process of maximizing (e.g. selling more at higher profit margins) or minimizing (e.g. lowering customer acquisition cost) a particular function. Optimizing your life can ad litteram be translated to consistently choosing the best option for yourself according to your goals.

Let’s say you get two job offers. Job A pays 100,000 dollars per year, but comes with the probability of extra hours and possible conflict with family and leisure time. Job B pays 70,000 dollars per year, but comes with a flexible schedule that does not interfere with your free time. Which option, A or B, optimizes your outcomes? There’s no right answer. It depends on what you are optimizing for. If you are at the stage of your life where you feel being a high-earner to establish your career takes the stead, job A is more attractive. Whereas if family and balance are the first things on your mind, job B is the appealing alternative.

When it comes to decision-making, it’s important to compare options and choose the one that is most valuable. Here’s the kicker: there’s no objective definition for “valuable”. Before you can make “optimal” decisions, you have to define what “optimal” means to you. It explains how we misunderstand the word “priority”. “Priority” used to be singular for hundreds of years. We invented the plural “priorities” only just recently. This is because when you have many “priorities”, you have no clear “priority” whatsoever. “My priorities are productivity, time management, dedication to the family, radical candor, self-acceptance…” and the list goes on. You cannot “optimize” when you do not know what “optimal” is.

This is why having an endpoint in mind is critical before you make life-changing decisions — jobs, degrees, investments, marriages, mortgages. Without a definition for “optimal”, you lose sight of what “suboptimal” means. Hence countless people spin their wheels for decades. After, you can start optimizing: using available resources (time, money, materials, skills) in the most effective way. Working with limitations is essential to life and business. Resourcefulness is amongst the best skills you can develop.

Real-world examples of optimization:

• Business Operations: a retail company optimizes its inventory management. The goal is to reduce excess stock and promote cash flows. Implementing just-in-time inventory and data-driven forecasting results in lower storage costs and fresher products for customers.

• Personal Productivity: you use time management techniques to optimize your schedule. This way, high-priority tasks receive the focus they require. Techniques like the Pomodoro method and time-blocking maximize outputs during working hours. The breaks in-between prevent burnout.

• Manufacturing: a factory streamlines its production process by rearranging the assembly line, eliminating unneeded, and automating repetitive tasks. This results in higher output, less manual labor, reduced error rates, and lower operational costs. Effective optimization of resources in action.

• Software Development: a tech company refines its development process. It implements agile methodologies and continuous integration, continuous deployment (CICD) pipelines. Faster turnaround, improved code quality, and fast customer feedback result in a more competitive product.

How you might use optimization as a mental model: (1) define “optimal” — clearly define what you are optimizing for (e.g. cost, speed, quality, money, family, health) and your constraints (e.g. budget, time, resources); (2) see where progress slows — gather data around the current state of the system, utilizing metrics, benchmarks, and relevant performance indicators (e.g. by tracking your habits, expenditures, cash flows); (3) don’t stop adventuring — brainstorm possible improvements and list the trade-offs for each option (like job A and B, where the trade-offs were between money and leisure time); (4) take it for a test drive — launch a pilot project (e.g. try the habit for a week, launch a minimum-viable product) to see how changes look like in practice; (5) rinse and repeat — continuously measure your system and change based on new data so that you are always optimizing yourself according to evolving goals.