Good Trade / Bad Trade… The Importance of Knowing the Difference

In everything we do, we trade something we have for something we want.  This trade may take the form of  money, time, opportunity or leverage. In any sort of job, we inevitably trade time for money. The better we get at a certain task, the more money we charge for the same amount of time. In business, money isn’t just traded for time, but also for leverage and opportunity.  All our decisions involve some form of trade -be it good or bad.  

What is ‘Good’ and ‘Bad’ Trade?

In the business world, not all trade is created equal. There’s good trade… and there’s also bad.

Tweet: “In the business world, not all trade is created equal.” – @BizCoachRay

I would define good trade as a decision that has a clear, long-term orientation towards a business objective or intent. In contrast, bad trades often focus on immediate gratification at the expense of the business. This is especially true when the business could use the resource to maintain operations that increase its success in the long term.

Bad Trade – A Helpful Example 
BlackBerry made a decision to not introduce phones with touchscreen capabilities. At the time, they held a 20% share of phones shipped in quarter 2009, so perhaps they felt confident enough in their popularity to resist the growing trend for onscreen keypads.

They chose to maintain the ‘status quo’ by asserting that the corporate market would enable them to hold on to their market share in the future. In the short-term, it was a smart choice. They saved money through minimising additional R&D spend to develop new products. However, the long-term scenario proved to be very different.

The emerging younger generation of workers showed a distinct preference for onscreen keyboards and BlackBerry’s market share shrank from 20% to just 0.4% in 2015(1). It’s a classic example of a bad trade decision – in this instance of choosing not to innovate beyond the ‘comfort zone’. There may have been an initial benefit, but it was at the expense of the long-term profitability of the company.

Taking Risks in Business

Sometimes, good trade requires both courage and an element of risk. However, risk can be mitigated to an extent by taking proper strategic steps to address possible scenarios that may play out.

Getting the right perspective and advice on a good trade or opportunity is paramount when it comes to its success in your business. 





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