“For by the ultimate velocity is meant that, with which the body is moved, neither before it arrives at its last place, when the motion ceases nor after but at the very instant when it arrives… the ultimate ratio of evanescent quantities is to be understood, the ratio of quantities not before they vanish, not after, but with which they vanish” –Principia Mathematica by Isaac Newton
I’m not a mathematician, but I’m not afraid of numbers. I’ve drifted through the standard high school and college math requirements, admittedly with curiosity. And I’ve hung around the hedge fund industry, software engineers, and actually trained mathematicians for long enough that math’s kind of rubbed off on me. Yet my skillset is probably best described as a mix of product and, more recently, delivery management with an academic foundation in accounting.
Over time, I’ve noticed that cost accounting and traditional/waterfall project management operate primarily on absolute values assuming they shouldn’t change. Especially with respect to budgets and time. In fact, variance or change is almost a dirty word in that context. Today’s markets, especially in the context of new product development, are different from the heyday of cost accounting in the 1950s. Back then, you could easily assume stable incremental growth in demand in many markets for 15-20 years. And actually be right. Usually you wanted to establish a budget to control unnecessary costs, because everything else was likely to stay the same.
Most choices in a big company don’t have the same implied cost of time. The value of time is assumed to be incalculable, more philosophical than practical. And it is, if you are stuck using “absolute” values.
Yet you can value time and derive implications for velocity if you are using finite difference methods. Thinking in relative terms enables you to think of relative profitability increases (in the moment) rather than always using an annual or quarterly budget yardstick determined much earlier, when you knew less and which is often likely to be out of date.
I am just discovering the outer edges of this at the moment. Please let me know if you have any suggestions or feedback, and sign up below if you’d like to follow me as I share more on this topic.
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