The reason why trading goods, services and support creates value for all is simple – as long as there is a difference in abilities everyone wins…… A very simple example is where there are two things needed and two people need to have one of each. To make them:
- Ms A is ultra efficient, she can product ‘X’ in one day and product ‘Y’ in 3 days.
- Mr B is far less efficient but is good at ‘Y’. He can make ‘Y’ in 4 days but needs 6 days to produce ‘X’.
Overall to produce ‘X’ and ‘Y’ on their own Ms A would take 4 days and Mr B 10 days.
Now let’s introduce trade supported by specialisation. Ms A makes two ‘X’ and Mr B two ‘Y’, then they exchange one ‘X’ for one ‘Y’; so both end up with one each of the needed ‘X’ and ‘Y’.
The total time invested by Ms A becomes 2 days, a saving of two days and a 50% increase in efficiency.
The total time invested by Mr B becomes 8 days a saving of 2 days and an increase in efficiency of 25%.
Everyone is better off even before the advantages of specialisation are taken into account.
Archaeologists believe one of the key differentiators between Homo sapiens and Neanderthal man was Homo sapiens traded from very early in their evolutionary development, Neanderthals did not. Based on this simple example, collaboration can definitely pay dividends even in the 21st Century and may help you and your team avoid extinction.
Pat Weaver
Lynda Bourne
Aavssitedev's Blog