Managing Expectation Debt

This blog beautifully explains how the “Expectations debt” concept influences the fate of companies and individuals. At a personal level, we all know how purchasing things we don’t truly need, or even doing things we shouldn’t be doing, can potentially ruin everything over time.

It discusses Amazon’s journey in 2021, from its peak of success to a decline. How great life can be when a company is doing really well and everything is good. Everyone in the system is feeling happy, and successful, and would be riding the high life.

It shows how, in the past, Nikkei with high expectations led to a period of remarkable returns. However, the years that followed were spent repaying the excesses of that time.

Many recent startups that raised a lot of VC money. Almost every company was a winner, a unicorn. The extraordinary advertising expenditures and everything looked so amazing. Eventually, reality sets in. Layoffs happened, employee stock options lost value, and the companies were forced to cut costs. All of a sudden, everyone’s high hopes fell flat, leaving everyone feeling sad.

Most people ignore the importance of looking at the worst-case scenario. They don’t plan for when things go wrong while they’re having fun. They may live a comfortable life but fail to learn new skills or to adapt to changing times.

Do give it a read. It makes you understand the consequences of having unrealistic expectations. It points out the importance of aligning valuations, salaries, and lifestyles with what is fair and deserved.

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