If you haven’t heard the news, the U.S. government is phasing out the penny, which has been part of the U.S. economy for over 200 years. The Treasury Department recently announced that it will stop circulating new
pennies by early next year. Afterward, there will not be enough pennies for everyday cash transactions, and businesses will need to start rounding up or down to the nearest 5 cents.
This move is the culmination of a long bipartisan effort to eliminate the lowest-denomination unit of American currency, which has quietly become obsolete (it costs nearly three cents to produce a coin worth one cent!
While this may seem like a minor, almost comical issue, from a business acumen perspective, there are powerful lessons embedded in the decision. Here are five that every business leader should consider:
1) Obsolete Doesn't Mean Inexpensive
Just because something is small or "cheap" doesn't mean it's inexpensive. The penny’s slow fade mirrors how companies often cling to outdated products, processes, or metrics that appear low cost but quietly drain value. Good leaders regularly audit what no longer makes strategic sense and cut ruthlessly when it doesn’t fit anymore.
Business Acumen Questions: What’s the “penny” in your business? What are you overinvesting in that no longer returns value?
2) Cost-to-Value Ratio Is KingThe penny costs more to make than it’s worth, an exact inversion of business logic. In times of cost pressure, companies must challenge legacy assumptions and optimize for cost-to-value ratios, not just tradition or customer expectations.
Business Acumen Questions: Are you measuring value through the lens of your cost to deliver, not just revenue? What else are you giving up by focusing on the “pennies” in your portfolio?
3) Customer Behavior Will Adapt If You Drive It
Critics of eliminating the penny worry about customer frustration. However, international examples (Canada, Australia, and New Zealand) show that clear communication and trust smooth the path. Businesses must remember that customers are willing to change their behavior when guided by transparency and consistency.
Business Acumen Questions: Are your customers prepared for the next big change you need to lead? How will you communicate it openly and transparently? What will you do if they push back?
4) Margins Matter at the Edges
For businesses dealing in high-volume, low-margin transactions (like grocery or quick-serve retail), even rounding up or down could change profitability per transaction.
Innovative companies will run scenarios and set policies that protect the margin while maintaining fairness.
Business Acumen Questions: Are you modeling the ripple effects of micro-changes in your pricing or policies? What happens to $9.99 (one of the greatest business ideas ever imagined)?
5) Symbolism and Emotion Are Business Factors Too
The penny may be economically useless, but it’s emotionally powerful. It’s Abraham Lincoln. It’s tradition. It’s childhood piggy banks. Business decisions are never just rational; leaders must account for the emotional weight of change and manage messaging accordingly.
Business Acumen Questions: When you drive operational change, are you also managing the symbolic impact? Is there an “Abraham Lincoln-like” emotional connection to a product that should be cut, but you can’t because of that connection? Is there a dollar amount that can be connected to the emotion? If not, you have some serious thinking to do.
Summary
As businesses prepare for a future without the penny, the lesson is clear: nothing is too small to escape strategic scrutiny and hard business decision-making, even something worth just a penny.
