The Principle of Displacement
When people get into business for the first time, there is this tendency to over-examine things. They want to succeed and not end up wasting a lot of money on that fancy place over at the Denver Tech Center or in an office at the prime financial district of San Antonio. This leads to them looking at everything with a great deal of seriousness, acknowledging the fact that any mistakes or “bad plays” they make can ruin everything they’ve built. This is good, because it keeps them on their toes. However, it is also bad because it makes them forget a small element of business operations: the principle of displacement.
In its most basic form, the principle states that every action undertaken by a business closes off other actions. Everything that a company does creates the cost of something that it cannot do.
This can be problematic in the planning stages of the business, where people tend to either ignore the step completely or spend a bit too much time thinking it over. The former is a different problem entirely, but the latter plays right into the displacement conundrum. The new entrepreneur’s mind hasn’t come to terms with it yet and is still trying to accommodate everything into the plan, perhaps out of fear that not doing something will lead to failure. It is difficult to accept, but sooner or later, some opportunities and openings will have to be abandoned in favor of improving the focus of the plan.
The lesson of focus, of saying “no” to things, lies at the core of what it means to accept the principle of displacement. There are times when the number of new ideas and directions the company can take cripples the ability to think on how to improve what direction it’s already on. Some of these ideas might even be ridiculously profitable, which makes it tough to just shrug them off. However, sooner or later, a good businessman learns how to say “no,” no matter how painful it might be.
Yes, that sort of denial contradicts the opportunism that businesses seem to thrive on, but remember that displacement applies here too. For every opportunity to branch out that a company takes, it is closing off a chance to improve itself in what it already does. For every resource that is spent on attempting to break into a new market or push a new product, it is diverting those same resources away from improving existing products or strengthening its position with its customers.