Consider T.C.O. (Total cost of ownership) next time you’re trying to make a decision, part one

I’m writing this aboard a UN plane bound for Mogadishu, Somalia once again. I’ll be working there with a UN agency for most of the week, facilitating a multi-stakeholder meeting.

Fluffy white clouds obscure the drought below.  Soon we’ll be landing on a thin stretch of land between an arid desert and the crash of Indian Ocean waves.

In preparation, I’ve been reading a lot of background documents. And I came across this, new to me, concept of T.C.O., which made me think of you.

T.C.O. – Total Cost of Ownership – is a consideration when sourcing items

It’s the sum of all costs related to an item.

T.C.O. takes into account current costs, things like:

• Price
• Transport
• Customs (if it has to cross an international border)
• Storage (for example if it has to remain in inventory)

T.C.O. also takes into account ongoing costs, such as:

• Quality maintenance
• Repairs
• Disposal

And it hit me.

T.C.O. can be a simple, handy dandy tool when you’re stuck making a decision.

Along with the T.C.O. of U.N. things like P.P.E. (personal protective equipment), ammunition, fuel, medical supplies, and aviation equipment, I thought it would be intriguing to look at the T.C.O. of things that actually apply to you. (I’m assuming you haven’t been trying to source a plane lately!)

Do you know the T.C.O. of your work programs, services, your office, and/or goods you produce?

What about the T.C.O. of your personal belongings (yes, including and especially clutter)?

The next time you’re stuck making a decision, try applying the Total Cost of Ownership and see where it takes you.

What can you include, in terms of costs?  Anything you wish!

Costs don’t have to mean just time and money.  Your costs can include lots of things. It will depend greatly on what you’re tracking but consider things like:

Planning

How much time are you spending planning and what’s the cost of that time? Example: The T.C.O. of a program or service will be higher when it’s new and needs a ton more planning time to get off the ground.  Is that planning time worth it to you?

Tracking

What’s the cost (both time and money) of your time to track things, e.g. gathering data, and information?  Example: How much time are you spending gathering metrics for _______ (insert something relevant to you: your client hours, website metrics, supply chain related metrics, etc.)?  Do you need to change the T.C.O. for example by making the tracking process easier and more efficient?

Time

How much time are you spending overall and what’s the value of that time? Example: Maybe you’re trying to make a decision related to taking a new job.  In considering the T.C.O., how much of your time will you spend getting up to speed, actually working on the job, commuting, etc.?  These ‘costs,’ once you think about them, give you important data to help you make the best decision for you.

Performance management

If you need to manage others and this is related to a decision you’re trying to make, be sure to include that in your T.C.O. How much does it ‘cost’ you in terms of time, money, and other?  Example: Maybe you manage a large team and the performance management aspect of it is ‘costing’ you loads of stress.  By including that in your T.C.O. you have a bigger, broader picture from which to make your decision.

Upkeep

Upkeep can include everything from cleaning to web support.  Example: let’s say you’ve implemented a new computer system at work.  It was supposed to save you tons of time and money and be able to produce reports with a click of a button.  However, you’re finding that maintaining the system is having huge costs.  Calls to IT are daily.  Complaints from staff and customers are mounting.  These are all things to include in your T.C.O. to help you make your decision.

Space

Track the cost of space if that’s relevant e.g. office/building space.  Example: Last year let’s say you started a new hobby making felted crafts and you started selling your items online.  If you’re trying to make a decision about pricing, when calculating how much to charge for your art, your T.C.O. should include your office space, inventory space, art studio, etc.

Materials/supplies

Materials and supplies can be anything from office supplies, to a website. Example: in my in-person training workshops I always calculate space and time for what supplies I’ll need.  In the belly of the plane I’m currently onboard is a suitcase full of quirky items I’ll use to keep folks engaged and interested during the three-day retreat I’m facilitating.  The T.C.O. for my trainings needs to include not only the cost of my supplies but also refreshing my training materials.  I’m always on the lookout for intriguing things I can use to make a learning experience pop.

“Mental weight”

This is a unique one – take into account the “mental weight”  of the decision you’re trying to make, which includes your motivation/inspiration level, stress level, etc. Example: let’s say you have a conflict with a co-worker which you’re not looking forward to addressing.  Is the “mental weight” of not dealing with the conflict causing you more stress and affecting your motivation than if you were to plan a way to address the conflict?  Weigh your ‘mental weight’ costs for your T.C.O. when you’re figuring out what to do about the conflict.

T.C.O. sounds good right?  But maybe a little confusing still?  I’ll run through a more specific example based on my Learning and Development Roundtable in an upcoming post.

In the meantime, I encourage you to pick something you’re having some issues with / a decision that you’re having a tough time making and then pick the items that you can run through the Total Cost of Ownership of.  Whether those be planning, tracking, time, performance management, upkeep, space, materials/supplies, “mental weight” and/or other. Then voila!  Some new outta sight insight to help you.

Now go on and learn, laugh, and lead

Learn

• Again, pick something you’re having some issues with / a decision that you’re having a tough time making, and then pick the items that you can run through the Total Cost of Ownership of.  Then voila!  Enter new, outta sight insight for you.

Laugh

• Not calculating the T.C.O can leave you with regrets plus a bad taste in your mouth, like this unfortunate frog.

Lead

• Share this post with a friend and/or a colleague and do the T.C.O. exercise together.
• Sign up to become a member of the Learning and Development Roundtable (it’s free) and you’ll get all the monthly invites plus access to 9+ years of past Roundtables.