Several years ago, I came across a little book that changed the way I view challenges in life. It helped me evaluate when I need to press forward and when I need to quit. This concept has all sorts of applications to life, business, and economic success.
The book is called The Dip, written by entrepreneur and marketing guru, Seth Godin. Throughout his career, Mr. Godin has written 18 best-selling books, founded a company that was acquired by Yahoo!, authors a blog with over a million readers, and was recently inducted into the Marketing Hall of Fame.
You may ask, why would an economist care about the writings of a marketing guy like Mr. Godin? The answer is curves. Economists love curves. We explain every market phenomenon with supply and demand curves. We even name our curves: the Phillips Curve, the Laffer Curve, the Yield Curve, and the Great Gatsby Curve. In The Dip, Mr. Godin writes about two universal curves that have application to life, business, and the economy. They are referred to as the dip and the cliff.
The Dip- When to Persevere To The Very End
The first curve is the dip. It shows the relationship between results on the vertical axis and effort on the horizontal axis. The curve conveys the universal truth that when a person first puts effort into an endeavor, they reap increasing rewards. Over time, however, the effort-reward relationship takes a dip downward. You can continue to put in the effort but the rewards subside. Godin points out that many people quit at this point, but it is exactly the wrong time to quit. If you continue to push forward and “lean into the curve” you will get through it, eventually achieving greater rewards.
The dip teaches that success involves setbacks. To succeed, you must persevere through the hard times and success happens when you survive the dip. Many people, however, quit in the midst of the dip, forgoing later rewards. Those who persist, succeed.
To understand what I mean, I find it helpful to explain the dip a college student might experience when enrolled in pre-med classes. For the first semester or two, the student puts in the necessary effort and gains a reward. The student is happy because she or he is on a path that will lead to a high and stable income. People respect them and praise their efforts. The initial reward is high.
Then something difficult happens. They enroll in organic chemistry. Suddenly, all of their studying doesn’t bring much of a reward. They worry they will fail. They struggle on the midterm. They are in the dip. This is when many people quit and decide to study history instead. Those who persevere get through the dip, finish their degree, and later get accepted to medical school.
You can think of similar dip-curve comparisons in learning a new instrument, starting a company, or developing an innovative idea. Sometimes you have to stick with it, be patient, and claim a reward after considerable effort. You have to “lean into” the curve.
The Cliff―When To Quit Before You Crash And Burn
The second universal curve―the cliff or cul-de-sac―has the same axes, but a different curve shape. Instead of a dip, the curve is shaped just like a ridge with a cliff at the end. Staying on this life curve leads to failure. When you are on this cliff, it’s not only okay to quit; it’s best to quit as soon as possible. That way you can get on a life curve that will lead to success. In this example, winners quit.
The US healthcare system is a good example of an industry on the cliff curve. We need to get off the curve of fee-for-service medicine and change to value-based care as quickly as we can. The longer we wait, the longer we rearrange deck chairs on the Titanic.
Alternatively, I think of global trade right now as suffering a dip of sorts. Open markets are still the right long-term path, we simply have to get through the dip created by ill-advised policies.
Think of the challenges you face personally, as a company, or in the public policy realm. Consider which curve you are on. The dip and the cliff provide a framework for measuring and forecasting tradeoffs. Evaluate your situation. Lean into it, and if it doesn’t feel right, it could be time to make a change. Quit the wrong stuff; stick with the right stuff―a lesson for the ages.