A common fallacy in business and life is to throw good money after bad.
For instance, an extremely common, extremely expensive, and extremely foolish business mistake many entrepreneurs make is to invest 90% or more of their limited time, money, and energy on the 10% worst performing parts of their business or investment portfolio. They keep draining the profits from the profitable aspects of their business portfolio to subsidize the worst or broke aspects of their business in a desperate bid to fix those broken aspects or get them up to speed.
To illustrate, imagine a business owner owns 10 different restaurants.
Now imagine that 8 of the restaurants are very profitable, some much more than others, but 1 of them is actually losing money, and the last one is slightly profitable but still not performing nearly as good as the top 80%.
It would be very common to see that business owner make the utterly foolish mistake of investing most of his time, money, and energy to do his best to prop up and improve those two worst performing restaurants. He would foolishly take the profits of the 8 good ones and invest that good money into the two bad restaurants. He would starve his 8 good performers to endlessly feed his insatiably broken 2 worst performers.
Despite how extremely common that would be, it is exactly the opposite of what would typically be the correct business move. (That is, correct in the sense of what business move would make the most money.)
In another example, imagine a manger (maybe not even an owner of a business but just some middle-manager) with 10 employees under his management. IT would be very common to seem that manager wasting most of his or her very limited time, energy, and resources on constantly re-training and coaching the 2-3 worst performers. But that is typically throwing good money after bad. Time is money, and money is time. One would typically get much better return on their investment throwing good money after good. Usually, the better business move is to spend more time, effort, energy, and money providing further training and promotions to the best performing staff than the least performing.
The good logic behind that terrible utterly foolish fallacy is the correct idea that often you are only as strong as your weakest link and that you don't want fix what isn't broken and instead want to fix what is broken. Those things are true, but they are often overemphasized and don't apply in situations where one would be throwing good money after bad. That's because in those situations, you typically can either remove the weak link entirely, or you have multiple different chains you can use or buy or invest in, some of which don't have a weak link at all.
Usually, your best bet is to simply cut out, liquidate, terminate, or throw out the worst performers.
Yes, you are as squeaky/weak as your squeakiest/weakest wheel. And, precisely for that reason, usually, your best is throw your squeakiest wheels in the garbage. Those are garbage wheels. If you put your oil in those wheels, you are putting into garbage.
The very common mistake is to give your very limited and extremely valuable and very limited oil to the squeaky wheels, which is typically effectively identical to pouring that valuable oil into the garbage. That's because the squeakier the wheel the closer it is to literal garbage, if isn't already effectively full-fledged garbage.
No, save your valuable oil (i.e. your very limited time, money, energy, and other resources). Save them and invest them in the highest-performing non-squeaky wheels that are furthest from being garbage.
Know when to cut your losses. Know when to fold. Be stingy with your time, money, energy, and resources, especially when it comes to squeaky wheels.
This ultra-common fallacy doesn't just happen in literal business and matters of money. Once you learn to spot it, you'll see it everywhere.
For example, consider someone who is morbidly obese and claims their goals is to lose a lot of fat.
Fat loss is incredibly easy. It is as easy for an obese person to lose fat as it is for an alcoholic to not drink or for a married person to not have an affair. To even call it easy is to overstate it's difficulty, like calling a bald man's hair short. A bald man's hair is infinitely short; and losing fat is infinitely easy.
Nonetheless, it's not uncommon to see that person spend hours per day researching fat loss techniques. It's not uncommon to see that person spending tons of money investing in all sorts of fancy new gym equipment, and expensive scales, and weight loss program paid subscriptions.
It's not uncommon see that person spend multiple hours in the gym each and every day working out very hard until they are soaked in sweat.
And after all that, it's not uncommon to see the person gain fat rather than lose fat.
They are doing the non-financial equivalent of putting more and more and more and more money into an investment that provides poor or even negative returns. They are metaphorically investing their money in an unprofitable business. They are pouring their valuable oil into the garbage.
Making tons of money and being extremely successful in business is typically as infinitely easy as losing fat or quitting alcohol or not cheating on a spouse. And, yet, the vast majority of humans utterly suck at all these things.
And one big reason for that is the habit of throwing good money after bad.
They invest a lot of money, time, energy, oil, and resources into that which provides the worst bang for the buck.
Instead of following my book's advice about doing less better, they do the opposite: They do more worse.
Imagine someone has a goal to lose fat, quit alcohol, and not cheat on their spouse.
If that person simply sits on their couch and does nothing at all, they would achieve all three of those goals.
If you sit on your couch and do nothing, you will lose a lot of fat very quickly. We're talking over a pound a day. And likewise you'll by definition have total sobriety and celibacy.
If those are your goals, the ROI for sitting on your couch is almost infinite.
And, yet, you will see these people invest way more time, money, energy, and oil on things that provide much worse ROI, or even worse a negative ROI. In other words, they invest their very limited time, money, energy, and oil on things that are far less profitable or, even worse, counter-productive.
Proverbially speaking, you always have three general options:
(1) invest your oil/money in your least-squeaky wheels, meaning throw good money after good
(2) save your oil/money
or
(3) waste your oil/money on your squeakiest wheels, which is effectively equivalent to our pouring your oil/money into the garbage, since the squeakier the wheel the more garbage-like it is
Either way, remember that it isn't just with business and money that people proverbially throw good money after bad (i.e. pour their very limited and extremely valuable oil into the garbage). People tend do that in all walks of life.
People making that extremely expensive and extremely foolish mistake is not the exception; it's the norm, by far.
By simply not doing that extremely common foolishness, you will be an extremely exceptional human that achieves exceptional results with what seems like supernatural ease and what seems like exceptionally good luck.
Achieving incredible results in matters of business, money, fitness, and really all walks of life is so incredibly easy that to even call it easy is like calling a bald man's hair short. Like his hair is shorter than short, so too is it that achieving exceptional results in business, finances, fitness, and all walks of life is easier than easy.
With love,
Eckhart Aurelius Hughes
a.k.a. Scott
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In addition to having authored his book, In It Together, Eckhart Aurelius Hughes (a.k.a. Scott) runs a mentoring program, with a free option, that guarantees success. Success is guaranteed for anyone who follows the program.
"The mind is a wonderful servant but a terrible master."
I believe spiritual freedom (a.k.a. self-discipline) manifests as bravery, confidence, grace, honesty, love, and inner peace.