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What is The Risk of Doing Nothing?

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On January 27, 2021

In Pithy Posts

What is the risk of doing nothing?

We don’t ask this question often enough. Of course, there is a reason for this,

and it comes back to our assumptions.

We assume doing nothing risks nothing.

Oh boy, what a huge mistake this is to make. It is one we make repeatedly, as we live out our comfortable lives. Entropy ensures nothing stays the same, so either we change it, or others will force it upon us.

Consider the paint you patiently applied to the wall outside. Once it’s dry it won’t stay the same. The sun will warm it and dry it out, bleaching the colour and fading it over time. Then, the rain will fall, finding cracks for it to seep into. Once winter arrives the rainwater will freeze, splitting the dry crusty paint. The wall will never look the same, as it continues its battle with nature.

This is what happens when you do nothing.

We shouldn’t fool ourselves. Doing nothing is a myth and in the arena of making decisions, it is a thought we should hold onto with utmost effort. The question should supplement a statement; nothing stays the same, so what is the risk of doing nothing?

What would you prefer, having some semblance of control, or letting serendipity and entropy rule your life? Decisions come through choice; through the consideration of what lies in front of you. The past is the past. It won’t stay the same, it will change; accepting this will supercharge your judgments and help you make better decisions.

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How Will You Feel About This Decision Six Months from Now?

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On January 27, 2021

In Pithy Posts

You’re faced with a big decision, one which changes everything, and you don’t know what to do. Stuck, you become consumed with indecision. Rather than risk making the wrong choice, it’s easier to stay as you are, living in the status quo.

Hindsight will tell you you’ve made the wrong call. Hindsight will show you what you’ve missed by doing nothing. There is no denying it, we could all do with a crystal ball to help us see what hindsight will tell us in the future.

But we all have one unique power: our imaginations.

Imagine yourself six months from now; now you can see an unfamiliar perspective. It might be summer, or winter – who knows. Imagine you opted to make the decision and step into a new future. The outcome you dreamt of; it’s here with happiness in abundance.

But equally, you can imagine a life where you didn’t move. You stood still. Six months on, the regret might be palpable. Or maybe, the opportunity wasn’t quite the rose garden it appeared to be.

Perspective shifts are significant ways to rethink your decisions. It doesn’t have to be six months; it could be six weeks or six years. What matters is that you’re no longer thinking about now, but the future. By picturing the outcome of your decision in the future, you might be able to see downsides – or upsides previously unseen.

The question is how will you feel about this decision six months from now?

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What Do I Know to Be True?

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On January 25, 2021

In Pithy Posts

It is a brute of a question isn’t it; what do I know to be true?

Ray Dalio mentions the question in his book Principles. The question plays a key part in the steps he takes to make decisions. In the complex world of investing, having a rigorous process for making decisions is essential.

It separates the successful from the not so successful.

The question can – and should – play an equally critical role in our decision-making. Any decision, big or small needs a logical approach. Alas, we don’t tend to make decisions logically. Outcomes, no matter how outlandish blind us. Emotions do the same – and that’s all before we get to our walkway of biases looking to trip us up.

Of course, the outcome of your decision matters. But it shouldn’t blind you from using facts to make an informed choice. Often, choice brings a plethora of information. Most of it is incomplete information, which we use to form assumptions.

When we assume, we accept incomplete information as facts.

Therefore, asking what do I know to be true should be your first question. It allows you to challenge your assumptions, filtering out the truth from the hysteria, thus enabling you to see the facts. Emotions, biases, and assumptions have no place when seeking objectivity. And it is objectivity which facts provide, which in turn leads to a better decision.

It is why the first question you should ask yourself when faced with a decision is what do I know to be true?

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The Paradox of a Decision and Its Outcome

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On January 18, 2021

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A good decision doesn’t always lead to a good outcome. The paradox – and this is the killer – is an unwise decision doesn’t always end up with a bad outcome either.

This reality blinds us.

It creates the impression we don’t have any control. Outcomes are random, influenced by fate, lady luck, and whatever else is in the air. Often, we negate what we can control as well, making choices without consideration. When outcomes go against us, we blame others.

We absolve ourselves of responsibility.

Understanding the paradox of a decision and its outcome is the biggest difference between those who succeed in life – and those who don’t.

It begins with an understanding of what you can control – and what you can’t. You can control the questions you ask; you can control the way you consider your options; you can control your assessment of the information you have. You can control the choice you make.

You can’t control others; you can’t control mother nature; you can’t control chance. You can’t control the outcome.

Knowing this, accepting this, and remembering this will empower your decision-making. It will empower you as accept you can be deliberate in your actions and choices. Your self-awareness will increase as you take control of the things you can control – rather than leaving them to chance. Your quality of judgements will improve.

Your outcomes might not get any better, but the responsibility will be with you. This is the true paradox of a decision and its outcome.  

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Loyalty – Do You Mean it like the Bad Boys Mean it?

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On January 6, 2021

In Pithy Posts

Loyalty – Yep – the one word we think we understand, but we don’t. We delight in telling our bosses we are loyal to them, to the company we work for, but we’re not. Would you still be ‘loyal’ if your bank showed your salary payment was half what it normally is? Would you still put yourself through the grind of starting early and finishing late if the money dried up?

No, you wouldn’t.

Ask Mike Lowery what loyalty means, and you’ll find an altogether different answer. Mike is a police detective in Miami, working with his partner Marcus Burnett. One phrase sits between them, a statement of commitment and partnership which means so much to them both.

“We ride together, we die together. Bad boys for life”.

Bad Boys

Partnerships require trust, commitment, faith, – and togetherness – even more so in high-risk situations. All attributes best summarised in one word – loyalty. Loyalty in Mike and Marcus’s eyes is a deep understanding of their partnership. It feeds them – driving to take risks beyond the norm – such is their understanding of how they live and breathe together.

When your life is on the line, that’s loyalty. It isn’t kissing the company logo or declaring your loyal in a performance review. It is about having a bond of trust – one that flows both ways as it binds partners and colleagues together.

Ask yourself would you ride and die with the person or company you’re declaring your loyalty too as Mike and Marcus would?

That’s loyalty.

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Reflect and Renew – Upgrade your New Year Resolutions

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On January 4, 2021

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Reflect and renew is a great upgrade to the date act of a New Year’s Resolution. A resolution is a false promise of a new beginning – often crushed within a few days of the year commencing. Why? Because the act itself is flawed. A bold commitment to lose weight by eating less, or to stop consuming coffee by the gallon is whimsical and ill-thought-out.

But every year, with the changing of a digit we surrender ourselves to the aspiration of a new year resolution or two. The version in our heads of rarely matches reality. Instead, the outcome tends to look like the distorted reflection we see in a fairground mirror.

How can you change this outcome?

Two words spring to mind – reflect and renew. Two critical steps which, should always be a part of your decision-making process.

Reflecting on the year gone by, question the place you find yourself in today. What did you want to achieve at the beginning of the year? Have you achieved your goal? If you have – why and how did this happen? What works so you can repeat it?

If you didn’t achieve your goal – why not? What would have helped?

From this process of reflection, you will find some principles of behaviour. It is these you must renew and use as the platform for the year ahead as you adapt your goals for the year ahead.

Reflection and renewal will serve you far better than a new year’s resolution.

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Assumptions Need to be Challenged – It Will Help You Make Better Decisions

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On December 9, 2020

In Pithy Posts

Assumptions are the beliefs we carry in our heads – drawn from experiences of events or thoughts in our past. Each assumption comes loaded with risk because the present isn’t the past.

We assume what happened before will happen again.

Sometimes chance favours our assumption, and we get away with it. Where we come unstuck is, we don’t see it as ‘getting away with it’, we see it as good judgement, good luck, or simply great skill on our side.

Our confidence rises as we begin to believe we know better, as we puff our chests out and flex our shoulders. Of course, self-belief compounds the situation as we do not see the confirmation bias blinding our systems of judgement.

We can do no wrong.

And then, one of our assumptions fail. The chances are the failure occurred when we applied an assumption to a big decision. One where we need the outcome to go in our favour, but it doesn’t. We will bemoan luck or the unexpected as the reason, as we do not grasp the consequences of accepting an assumption.

Ray Dalio, in his book, Principles, uses one simple challenging question to every decision he faces. What do we know to be true?  

Assumptions aren’t facts. They are beliefs born from a moment when the facts aligned with the circumstances of the situation. Circumstance changes, life changes, luck changes – everything changes – which is why we must challenge our assumptions. We should always ask the same question Ray Dalio does.

Then we might be safe from our assumptions.

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Winning the Long Game of Life Is What We Want, but We Forget How to Play

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On December 8, 2020

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The long game, the long view, strategic thinking. They are all the same thing – a process of not living for the short term but looking for longer-term payoffs. And yet we don’t live like it. We live in ‘the moment’ – guided by our short-term urges as we become ignorant of the laws of life.

The law of large numbers is one such example of a law we know of, but don’t understand.

We see 1% as a small number but ignore the impact of it on an enormous number. Take the mortality rate of COVID-19. If it was 1% – well that’s okay, we tell ourselves. One percent of a population the size of the US – well that’s a vast number – over three million. That’s not okay.

Not grasping this insight from the law of large numbers is one of two points we don’t understand.  When we see summaries from vast sums of data, we naively believe the same dynamic applies to a smaller group. We think a 1% mortality rate won’t affect us, but the disease doesn’t take one from a family – it takes whole families.

We know this, but we don’t understand it.

We can’t grasp the risks; we can’t see the danger we have become ignorant of. We would rather go shopping on a busy high street to satisfy an urge for the joy of a day than stay safe by not.

We have forgotten the rules of playing the long game.

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Thinking from First Principles: Why You’ll Need a Mindset Shift to Think Like This

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On December 4, 2020

In Pithy Posts

Thinking from first principles requires a mindset shift which will challenge most of us. Often, we are too comfortable living with our assumptions to want to change.  

Assumptions litter our thinking. They define our beliefs, our behaviours, and often our outcomes. Guided by our earlier experiences we build assumptions – and live by them. We don’t grasp the consequence of luck, the impact of others, or entropy on future outcomes.  

When tasks before us are simple and repetitive – assumptions are fine. They make life easier to live. The problem comes when we apply old assumptions to new situations. We don’t expect the unexpected. So, when things go wrong, or the outcome isn’t to our liking – we rarely see it is our assumptions that have failed.

Thinking from first principles changes everything. Instead of living with assumptions, you go looking for them. You question them, you pull them apart – as you look to find the underlying elements of your assumptions. Now, you’re questioning everything. You’re asking questions as a child does; why, why, why?

Now you can see the horror of the ‘because it does’ answer parent deploys to their kids.

As you find them so you must challenge them with open questions, test your conclusions and then tweaking them and tuning them as you redefine what you know, by seeing what you don’t know.

Thinking from first principles is hard. Living by your assumptions is easy – it’s your choice.

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Why is Decision Making Important?

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On December 3, 2020

In Pithy Posts

Why is decision making important?  It is a question which forces us to pause as we consider the complexities of it. In business, it galvanizes energy – all in the pursuit of growth. On a personal level, we see it as a consideration of choices. It is often less urgent, and more emotional.

Decision making is selecting one from a series of choices we face. Each choice gives us options based on our current situation and offers a path for the future. It is the future we are concerned about. Although we live in the present, we imagine our futures and we dwell on our histories.

We can’t predicate our futures, but we can prepare for them. And therefore, the importance of decision making makes itself clear. Decisions for today affect today – but also tomorrow.

It is this grasp of the future we do not understand.  

We do not see beyond today. Only the present – and it leads to a sense of sadness when we reflect on our past. Each decision matters, but our weakness is how we see each possibility as binary – both in choice – and outcome. Life is a game of trial and error, of less certainty and more enquiry.

The importance of decision making isn’t the outcome, but the process. The correct process should be one of testing, seeing, learning, adapting, and repeating. Life is complex – too complex for a binary outcome.

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