Sometimes, to Optimize You Have to Compromise

In the asset pricing paradigm of modern portfolio theory, the goal is always to be maximizing. Companies are expected to "maximize shareholder value". Investors are expected to "maximize risk-adjusted returns".

To be successful at maximizing, you have to focus on one, single point of value. You can't maximize multiple things.

If you have multiple purposes you are trying to achieve, its better to be optimizing a balanced portfolio of achievements. Optimizing means sometimes accepting less than the maximum on one point of value, in order to realize a better overall experience across multiple points of value.

This is the case with the pursuit of sustainable prosperity, where "sustainable" means able to continue, and "prosperity" means having enough, and to spare.  Sustainable prosperity means being able to continue having enough and to spare. In order to maximize sustainability you have to establish and maintain the optimal balance of multiple competing objectives, and the right balance changes all the time. You have to adapt.

So, for sustainable prosperity in enterprise, we need to optimize the balance between multiple competing interests of suppliers, customers, workers, owners, investors, the community, etc.

For sustainable prosperity in stewardship investing, we need to optimize the ability protect principal for successive generations in order to continue paying benefits to successive generations, while managing costs to match benefits.

It's not about maximizing one thing. It's about optimizing the balance across many things.

Sometimes, that means a compromise.