Tiny MBA #8: Optionality… Or Who Do You Like?

Posted by

Welcome to today’s Tiny MBA topic: optionality.

Definition: Optionality

Optionality is a business term for ‘keeping your options open.’ Specifically, it means finessing a situation so you don’t unnecessarily close off future options.

Story: Who Do You Like?

Say you’re at school, and a friend asks if you ‘like’ another kid in your class. You know your answer today, but that could change, so you don’t want to tell your friend, because then everyone would know and you couldn’t change your mind later.

canvas (17)
Illustration by Madeleine Kelly

Rather than answer yes or no, or refuse to answer, you respond “yeah, sure, he’s alright” with an unconvincing shrug. You’ve thereby preserved your ‘optionality’… by answering, but not committing decisively.

If you’d answered yes or no, you would have picked a position, which you didn’t really want to do.

If you’d answered “I don’t want to say,” the other kids might have interpreted that as a yes or a no.

But by not seeming to care that much, and saying something mildly positive, your answer is vague and preserves your ‘optionality’ to decide later.

Preserving optionality is often important in business, because circumstances change, and you don’t want to close off options in the business world if you don’t absolutely need to.

Tiny MBA is my occasional series of short stories illustrating business concepts for kids.

Leave a Reply