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Friday, March 12, 2010

Optimization or Maximization?

Last week we competed in the Amateur Rum Internationals in Nassau.

Went diving with a couple from England. Chris had been a dairy farmer for over twenty years, then ten years ago he looked at the economics of dairy farming in England and decided there weren’t any.

Took his buildings and converted them into “workshops.” Took two years to figure out the business, another couple of years to pay back the loans. Now he’s a prosperous landlord.

I asked him what was the best thing he had learned while changing his business so completely.

He answered right away. “The secret is optimization, not maximization.”

I was blank.

He grinned and continued, “It’s more important to keep the properties occupied than it is to get maximum payout on the occupied units. I concentrate on keeping my tenants.”


  1. As with business, it is always better to keep your longest clients. They provide your advertising by word of mouth and help you improve your products.

  2. Great point! Adds value to the post.
    When Chris said that, I knew there was a lot about his ideas I didn't yet understand. Thanks for adding to my understanding.
    BTW, Chris was 67, acted like he was 47.
    Boogie on!

  3. I like Chris' approach because it is both practical and resillient.

    By accepting a flexible, long-term relationship with his clients - and his business..! - Chris has greatly increased his chances for success.

    Now if we could only get our publicly-traded companies - and their investors - to look at the world this way, we could change business behavior from "How do we meet next quarter's numbers?!?" (which drives reactive small-sighted thinking) into "Look at how well we've positioned ourselves to be in business 5 years from now!"

  4. See, the more ways we describe what this means, the better it gets.

    Thanks, Matt!