Opportunity Cost

Opportunity cost refers to the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. In the context of product management, it often involves weighing the benefits of different projects or initiatives to determine which option provides the best return on investment.‍

Why It Matters

Opportunity cost is crucial in AI Product Management as it impacts decision-making and prioritization. Understanding opportunity costs helps managers make informed decisions about resource allocation, ensuring that the most valuable projects are prioritized.

- It provides clarity in decision-making by highlighting what is foregone when one project is selected over another.
- Its significance is evident in processes, workflows, and team dynamics, especially when resources are limited.‍

How It’s Used

Opportunity cost is used in various real-world scenarios, such as:

- In product roadmaps, where deciding which features to develop first can determine the product's competitive advantage.
- During sprints or team discussions, where team members discuss the potential gains of different projects.
- As part of AI workflows or analyses, evaluating which machine learning model to deploy based on potential outcomes.‍

Related Terms

- Risk Management
- Prioritization Matrix
- Product Roadmap‍

Additional Resources

- Opportunity Costs: A Crucial Prioritization Step
- What Is Opportunity Cost? A Guide for Product Managers
- The Product Management Dictionary: Opportunity Cost

AI Product Management Context

Revo aids Product Managers by providing data-driven insights that can help evaluate opportunity costs effectively, ensuring optimal resource allocation and prioritization of high-impact projects.