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Division of Labor by Comparative Advantage

What is Division of Labor by Comparative Advantage?

This is a principle that helps us decide who should be working on what. Determining this may seem straightforward, but it’s not. That’s because it’s not simply identifying what you do better than everyone else. You have a comparative advantage within a group when you work on the things that allow the team as a whole to create the greatest value.

Division of Labor by Comparative Advantage is highlighted in Virtue & Talents and Comparative Advantage Dimensions.

Why is this important?

Because we work in teams! We can organize people and work in many different ways. Division of Labor by Comparative Advantage prompts us to do this in a way that maximizes overall results.

Applying this principle helps:

  • Supervisors work with their employees to maximize what the team can accomplish, such that 1 + 1 + 1 > 3
  • Each team member pursue work they are good at, care about and maximizes their contribution relative to others
  • Employees think more broadly about how they might contribute across Koch (including taking on new roles)

Principle in Brief

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Examples

Understanding common misunderstandings about comparative advantage can help you avoid them.

Give it a Try

The power of these principles happens through application. There’s no substitute for learning as you apply.