Penny wise, pound stupid

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February 20, 2017 by Kenneth Fisher

Growing up my mother used this phrase quite a bit. Penny wise, pound stupid. (In case you didn’t know the pound is the British equivalent of the dollar.) Basically, it means paying attention to the small stuff at the expense of the big stuff. My favorite example of this was a few jobs ago. Without any need to go into details, our coffee area was stocked with both 8oz and 16oz styrofoam cups. One day, one of the accountants decided that there was no point to the extra cups and got rid of the more expensive 16oz cups. Not really a big deal, but our morale was already disastrously low, so it had more impact that it might have otherwise. The most interesting part, though, was a memo that a co-worker sent out. Unfortunately, I don’t have it anymore so I’m going to have to do my best to re-create it.

The decision to remove the 16oz cups to save money looks reasonable on the surface. But let’s look at it a bit more closely. 8oz styrofoam cups cost about $25 per thousand, while the 16oz cups cost about $48 per thousand. This works out to a savings of 2.3 cents per cup, which can certainly add up over time. However, the average IT professional gets paid approximately $45,000 or more. This works out to about $20 an hour. (I’m rounding for convenience here by the way.) It takes approximately 15-30 minutes to get a cup of coffee, given conversations on the way there and back, time spent getting back into the project you were working on, etc. Now let’s say I was the type who got a 16oz cup of coffee, I would now have to go get a second cup. So instead of saving 2.3 cents it’s actually going to cost $5-10. Per person, per day. Oh, and I’ll probably get a clean cup so that’s an additional 2.5 cents.

You can see the accountant was looking at their small piece. On the surface, it made sense to get rid of the extra cups. They were more expensive and really un-needed. But when you look at it from a broader perspective you start to realize that maybe it’s not the best choice after all.

So what does that mean for us? Well, honestly this affects everyone. At work and at home. The DBA designing an HA solution for the databases of an application without noticing that the application servers will take several hours to be brought back up. The developer who builds a form without paying attention to how the users will actually be using it. The manager who decides that short cube walls are best for everyone because they cost less not thinking about how much less their employees will get done because they are distracted. The company that hires cheap contractors, because, well, they are cheap. (That last one is so popular you can find lots of blogs on the subject. See Robert Davis’s (b/t) new post The cost of hiring cheaper consultants or Andy Leonard’s (b/t) Value.)

The trick here is to try to think beyond your small area. To not get caught up in the piece of code you are working on, to talk to other related teams while working on your design. To look at the big picture and the small and not get so focused on one or the other that you lose perspective. It’s going to happen. The important thing is to minimize it.

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