Everything in Life Has an Opportunity Cost

“Opportunity cost is a huge filter in life. If you’ve got two suitors who are really eager to have you and one is way the hell better than the other, you do not have to spend much time with the other. And that’s the way we filter out buying opportunities.”
Charlie Munger, Investor

Everything in Life Has an Opportunity Cost

Doing One Thing Makes You Sacrifice the Opportunity to Do Something Else of Value

In economics, opportunity cost is the cost of not choosing the next best alternative for your money, time, or some other resource.

One of the foundational principles in economics is affirmed by the popular American aphorism, “There ain’t no such thing as a free lunch.” Resources are scarce. When resources (time, money, mindshare, autonomy, and all that) are scarce, selecting one opportunity necessitates forgoing other opportunities.

Life is all about values and priorities. You face trade-offs. Life requires of you to make choices among mutually exclusive alternatives. Every time you select something, you forfeit other alternatives and the concomitant benefits. The cost of something is what you will give up to get it. This is opportunity cost.

You Can Do Anything but Not Everything … What Will You Sacrifice When You Choose One Option Over the Others?

When mulling over multiple choices, the quality of any option cannot be assessed in isolation from its alternatives. The price you pay (or the sacrifice you make, or the benefits you give up) for doing what you’ve chosen to do instead of doing something else is the opportunity cost.

In sum, an opportunity cost is the cost of passing up the opportunities that a different option would have afforded.

Many costs are calculated in terms of money. However, just because you don’t have to spend money to do something does not imply that the options you face are without their costs. For example, you don’t have to spend money to go for a hike or watch a sunset, but there is an opportunity cost there too. You could have used that time to do something else you value—visiting a friend or reading a book, perhaps.

  • If you decide to invest two years and some $100,000 getting an MBA at a brand-name business school, there’s an opportunity cost; it costs you lost wages and all the things you could have pursued during that time and with that money. But you anticipate that getting your MBA will pay off by way of a better job in a better company with a better salary.
  • If you spend your weeklong vacation taking your parents to a beach destination in Florida, there’s the opportunity cost of not going to Paris with your spouse.
  • Opportunity Costs Apply to All Your Choices If you decide to wake up twenty minutes earlier in the mornings to leave home sooner to work and beat the horrendous traffic, there’s the opportunity cost of twenty minutes of extra snoozing.
  • When the refrigerator at home breaks down and needs replacement, you will have to give up buying that latest big-screen TV you’ve been coveting.
  • There’s an opportunity cost to even reading this article at this moment. You could have been watching TV, taking a nap, calling up a friend, or moving on to another article in the time you’re devoting to reading this article.

In a nutshell, even decisions that appear to be no-brainers carry the hidden costs of the options you will decline. Thinking about opportunity costs may not change the decision you make, but it will give you a more rational assessment of the full implications of your decision.

Opportunity Costs Apply to All Your Choices—Big and Small

Opportunity cost is a concept of great magnitude. It is one of those apparently simple concepts in social sciences that are difficult to master and tough to put into consistent practice. Tim Harford, the British author of The Undercover Economist offers a particularly instructive example of appreciating opportunity costs in his Financial Times column:

Consider the following puzzle, a variant of which was set by Paul J Ferraro and Laura O Taylor to economists at a major academic conference back in 2005. Imagine that you have a free ticket (which you cannot resell) to see Radiohead performing. But, by a staggering coincidence, you could also go to see Lady Gaga—there are tickets on sale for £40. You’d be willing to pay £50 to see Lady Gaga on any given night, and her concert is the best alternative to seeing Radiohead. Assume there are no other costs of seeing either gig. What is the opportunity cost of seeing Radiohead? (a) £0, (b) £10, (c) £40 or (d) £50.

Answer: Going to see Lady Gaga would cost £40 but you’re willing to pay £50 any time to see her; therefore the net benefit of seeing Gaga is £10. If you use your free Radiohead ticket instead, you’re giving up that benefit, so the opportunity cost of seeing Radiohead is £10.

Learn to Evaluate Life Choices Via the Lens of Opportunity Costs—The Stakes Become Clearer

Evaluate Life Choices Via the Lens of Opportunity Costs You live in a world of scarcity and must therefore make choices. You cannot avoid regret since there are opportunity costs for every choice you will make.

Everything in life is about opportunity costs. Every time you say “yes” to a choice, you are also saying “no” to everything else you may have accomplished with your time, money, and resources.

Opportunity cost is a commanding tool that you should be wise to apply to all decision-making. If you integrate this concept into your thought process, you will not only make judicious choices, but also better understand the world in which you live.

Idea for Impact: Whether you’re choosing graduate school, mulling over switching careers, starting a business, investing your money, buying a car, or frittering away your evening watching TV, considering the value of forgone alternatives will help you make better choices. Make the lens of opportunity costs the underpinning of your decision-making processes.

How to Guard Against Anger Erupting

The Destructive Effects of Anger are Easily Recognized

Most people who have problems managing their anger hate themselves for losing their temper but can’t bring themselves to prevent their flare-ups.

'The Dhammapada: Teachings of the Buddha' by Gil Fronsdal (ISBN 1590306066) Here’s an appropriate reading from Chapter 17, “Anger”, of the Dhammapada (trans. Gil Fronsdal), a profoundly insightful compilation of the historical Buddha‘s teachings:

Guard against anger erupting in your body;
Be restrained with your body.
Letting go of bodily misconduct,
Practice good conduct with your body.

Guard against anger erupting in your speech;
Be restrained with your speech.
Letting go of verbal misconduct,
Practice good conduct with your speech.

Guard against anger erupting in your mind;
Be restrained with your mind.
Letting go of mental misconduct,
Practice good conduct with your mind.

The wise are restrained in body,
Restrained in speech.
The wise are restrained in mind.
They are fully restrained.

Discover Ways to Work with Anger and Other Negative Emotions

In its many forms, anger can be extremely energetic. When even a mild annoyance arises due to some apparent injustice, it can quickly grow and overwhelm you. Your inner peace is lost instantly.

When anger surfaces, it usually takes you over by the time you come to observe it. Your mind gets infuriated under the direct influence of aggression and can tempt you to act impulsively through aggressive words or actions—which consecutively feed even more anger.

The mind’s furor intensifies until you are able to lash out like a cornered cat. Even if you can repress your emotions in the heat of the moment, anger can manifest as a subtle simmering of resentment that you carry along with you for some interval of time.

How to guard against anger erupting in your body, your speech, and your mind

How to Refrain from Erupting in Anger

The most effective way to deal with anger in yourself is by not disregarding or repressing it. Science and experience have shown how poorly “anger containment” strategies work.

When anger rises past a threshold, it requires a reasonable and pleasing expression—an outlet, if you will—to be diffused. The key to expelling anger in a way that must feel good and fair is to invoke your calm, wise self and put out some of the fire of the emotion before moving forward.

To prevent anger from flaring out of control, practice the following first-aid system.

  1. Make a list of what triggers your anger. Most people get angry under predictable circumstances—when faced with situations that they see as unpleasant and unfair. Record events that trigger your anger: being insulted, being blamed unjustly, deceit or laziness in others, anything. Commit them to memory.
  2. When you identify a trigger—when you start to feel angry at someone or at something—induce yourself to immediately take a few deep breaths. As the Founding Father and President Thomas Jefferson suggested, “when angry, count to ten before you speak. If very angry, count to one hundred.” Preferably, break away from the situation for a minute or two: step away, go get water, or go the bathroom. Removing yourself from the offending environment will buy you a few moments to decide how you want to respond.
  3. When you can separate yourself from the cause of anger, take a deep breath, and ask yourself if whatever you’re getting worked up over is a priority. Is the issue worth getting upset over? Put your irate-self wise by posing the following “5-5-5” questions:
    • Will this matter in 5 days?
    • Will this matter in 5 months?
    • Will this matter in 5 years?

The “5-5-5” questions will prevent you from being caught up in the little trivialities of life. Remind yourself how good you’ll feel if you respond as your best, wise self and how bad you’ll feel if you rashly fly off the handle.

Only when you’re feeling less agitated and more calm, only when your sensible mind is back, can you assess the triggers of anger rationally, and take action in an prudent way.

Idea for Impact: Guard Against Anger Erupting in Your Body, Your Speech, and Your Mind

The antidote to anger and aggression is patience. Patience has a great deal to do with being mindful about the storms of distress and refraining from doing or saying anything, no matter how strong the urge to do so may be. Reflect before you respond.

The more you can manage your emotions, the more effective you’ll be.

Our Vision of What Our Parents Achieved Influences Our Life Goals: The Psychic Contract

Understanding Others’ Motivations is a Key to Building Better Relationships

Psychic Contract Theory: Children are Programmed to Want to Do as Well as or Better Than Their Parents Understanding others’ deep-held motivations involves recognizing what drives them, why and how they want to work, work styles they may adopt in various circumstances, and what levers you have to motivate them.

Take for example Abraham Maslow’s Hierarchy of Needs, a motivation hypothesis used widely for several decades now. Represented as a pyramid, this hypothesis proposes that people are motivated to fulfill basic subconscious desires such as food and shelter before trying to fulfill higher-level needs such as affection and prestige. Even though academics have extensively debated its specifics, Maslow’s Hierarchy of Needs has provided a handy framework to value the multifaceted composition of human motivation and to understand how to engage others.

The Relationship between Your Own Vision of Success and Your Parental Influence

'The Anatomy of a Great Executive' by John Wareham (ISBN 0887305059) One less-known framework for understanding the provenance of people’s life goals—their deep-seated aspirations for want to achieve in life—is the “Psychic Contract” hypothesis, a concept that dominates The Anatomy of a Great Executive (1991) by John Wareham, a leadership psychologist from New Zealand.

According to Wareham, a psychic contract is a set of “deals” we subconsciously strike with our parents early in life. Our life-goals are defined primarily by our own vision of what our parents achieved—and what they failed to achieve:

As we grow we absorb the values of our parents, and are conditioned to improve (albeit marginally) upon their achievements. We strike a psychic contract with them whereby “success” in life is defined by the attainment of a similar social positioning, which we later embark upon attaining, sometimes very consciously, but often entirely unconsciously.

Throughout our lives, we unintentionally adhere to our psychic contracts, despite the limitations they place on us. We use our psychic contracts to not only define and approach our life goals but also think about how we measure success.

We consciously measure success in terms of milestones and standards instilled by our parents.

As a rule of thumb, about three quarters or more of people in westernized culture seek first to equal, then marginally to improve upon the lifestyle or status level perceived to exist in the childhood home.

Psychic Contract Theory: Children are Programmed to Want to Do as Well as or Better Than Their Parents

Our Vision of What Our Parents Achieved Influences Our Life Goals: The Psychic Contract In The Anatomy of a Great Executive, Wareham goes into depth explaining how we can know our own psychic contracts and how we can reset our goals to give ourselves permission to succeed. Here are some other prominent learning points:

  • Our psychic contract is based on our birth order, our parents’ birth order, and roles we play relative to our parents in our families.
  • The so-called “prime parental injunction” sits at the heart of our conscious. We go through our lives trying to become the people our parents wanted us to be. Even people who spend their lives trying to become exactly the opposite of what their parents wished are still influenced by this injunction.
  • Every person has a pre-programmed financial comfort level. Most of us strive to reach this level; but once there, we slow down—not because we are lazy, but because we have fulfilled our inner desires and don’t need more. Wareham cites the example of commission-based sales people who, after earning adequate commission to reach their financial comfort level, tend to be less aggressive in selling cars to customers for the rest of the month.

Idea for Impact: “Psychic Contract” is a handy and thought provoking—if unsubstantiated—hypothesis to understand how your and other people’s deep-seated life goals are established. It can give you one more data point in trying to figure people out.

Become a Smart, Restrained Communicator Like Benjamin Franklin

Benjamin Franklin, America’s founding father, statesman, and polymath, was a doyen of the self-improvement movement. His methods for self-mastery are worth taking a serious look at if you’re interested in getting better at anything in life.

In his wonderful Autobiography (1791,) Franklin discusses his once-foolish delight in spinning artful arguments and doggedly winning over his opponents.

Winning an Argument Aggressively is but a Short-term Ego Victory

'The Autobiography of Benjamin Franklin' by Benjamin Franklin (ISBN 1492720941) As a young man, Franklin had a habit of fervently arguing his case in all matters and alienating people around him. He frequently ensnared his challengers with hard-hitting rhetoric:

I found this method safest for myself and very embarrassing to those against whom I used it; therefore I took a delight in it, practis’d it continually, and grew very artful and expert in drawing people, even of superior knowledge, into concessions, the consequences of which they did not foresee, entangling them in difficulties out of which they could not extricate themselves, and so obtaining victories that neither myself nor my cause always deserved.

However, Franklin ultimately recognized that his take-no-prisoners approach of arguing was by no means endearing him to other people. His realized that his brash way of outwitting his challengers had been self-defeating.

Benjamin Franklin, Doyen of the Self-improvement Movement

Arguing, if it is to Be Constructive, Must Be Done Tactfully

In an attempt to develop amenable character traits, Franklin radically improved the way he interacted with others. He let go of all expressions of conceit and bold self-confidence. He stopped using words such as “certainly” and “undoubtedly” in his speaking and replaced them with phrases that signified personal opinions—for instance, “It appears to me, or I should think it so or so for such & such Reasons, or I imagine it to be so, or it is so if I am not mistaken.”

I continu’d this method some few years, but gradually left it, retaining only the habit of expressing myself in terms of modest diffidence; never using, when I advanced any thing that may possibly be disputed, the words certainly, undoubtedly, or any others that give the air of positiveness to an opinion; but rather say, I conceive or apprehend a thing to be so and so; it appears to me, or I should think it so or so, for such and such reasons; or I imagine it to be so; or it is so, if I am not mistaken. This habit, I believe, has been of great advantage to me when I have had occasion to inculcate my opinions, and persuade men into measures that I have been from time to time engag’d in promoting; and, as the chief ends of conversation are to inform or to be informed, to please or to persuade, I wish well-meaning, sensible men would not lessen their power of doing good by a positive, assuming manner, that seldom fails to disgust, tends to create opposition, and to defeat every one of those purposes for which speech was given to us, to wit, giving or receiving information or pleasure. For, if you would inform, a positive and dogmatical manner in advancing your sentiments may provoke contradiction and prevent a candid attention. If you wish information and improvement from the knowledge of others, and yet at the same time express yourself as firmly fix’d in your present opinions, modest, sensible men, who do not love disputation, will probably leave you undisturbed in the possession of your error. And by such a manner, you can seldom hope to recommend yourself in pleasing your hearers, or to persuade those whose concurrence you desire. [Alexander] Pope says, judiciously:

“Men should be taught as if you taught them not,
And things unknown propos’d as things forgot;”

farther recommending to us

“To speak, tho’ sure, with seeming diffidence.”

Learn to Resolve Important Issues through Sensible Discourse

'How to Win Friends & Influence People' by Dale Carnegie (ISBN 0671027034) Franklin realized that this measured conversation and gentler interactions was helpful in preventing conflicts and softening resistance in those he wanted to influence. He writes, “This Habit, I believe, has been of great Advantage to life, when I have had occasion to inculcate my Opinions & persuade Men into Measures I have been from time to time engag’d in promoting.”

This rule of skilful conversation and interpersonal relationships later became one of the foundational principles in Dale Carnegie‘s masterful self-help manual How to Win Friends and Influence People—specifically, that our ticket to success in life is the ability to make others feel good about themselves.

Persuasion is Not About Outmaneuvering Others and Proving Them Wrong

The ability to communicate effectively, plead your case, and influence others is one of the most useful skills for succeeding in the modern world.

  • Learn to resolve important issues through sensible and mindful discourse.
  • Be assertive where you must, but never aggressive.
  • Be open-minded, understand the other person’s perspective, and keep your emotions under control.
  • Never insult, disgrace, or cause the other person to lose face.

Views, opinions, and judgments can differ, and these can and should be discussed civilly. However, to debate such differences vigorously so as to cause bad feelings toward is not necessary and is almost always counterproductive.

Idea for Impact: Arguing for the sake of deciding a winner is never constructive. When an argument starts, persuasion stops.

Let Go of Sunk Costs

When people put their weight behind an idea or a belief, they become invested in it. They are likely to fight its corner rather than discard that idea or renounce their prior decision.

This tendency to throw good resources after bad, rather than cut losses, is the Sunk Cost Fallacy.

Quitting is Not Always Wrong

'Thinking, Fast and Slow' by Daniel Kahneman (ISBN 0374275637) People frequently become stuck with poor decisions that they keep holding on to in hopes that they will eventually prove their efforts worthwhile. Here’s Nobel laureate in economics Daniel Kahneman (author of Thinking, Fast and Slow, the bestselling exposition of human irrationality) in an interview with financial journalist Morgan Housel:

When I work I have no sunk costs. I like changing my mind. Some people really don’t like it but for me changing my mind is a thrill. It’s an indication that I’m learning something. So I have no sunk costs in the sense that I can walk away from an idea that I’ve worked on for a year if I can see a better idea. It’s a good attitude for a researcher. The main trap that young researchers fall into is sunk costs. They get to work on a project that doesn’t work and that is not promising but they keep at it. I think too much persistence can be bad for you in the intellectual world.

Don’t Become Biased Against Quitting

Sunk cost fallacy, also called the Concorde Effect Sunk cost fallacy is why people who have already wasted money on tickets to an awful movie continue to watch it to the end and waste their time instead of walking out of the cinema hall. It’s the urge to justify previous decisions using the next one—for example, when people force themselves to munch their way through an unsavory meal at a restaurant or when people waste time in dead-end romantic relationships because they’ve already devoted so much time to the relationships and irrationally hope things will improve someway.

Some leaders continue a project once an initial investment is made and found flawed because stopping the project would be tantamount to conceding that previously-allocated resources have been wasted. For this reason, the sunk cost fallacy is also called the ‘Concorde Effect’ after the Anglo-French supersonic jet. In the ’60s, even though there was never a sufficient demand from airlines for the Concorde, the British and French governments continued to subsidize the development and production of the Concorde instead of admitting that they had wasted billions on a non-viable undertaking. The airline industry had long understood that the economics of supersonic transport were dubious, which had forced Americans to abandon their preliminary studies of supersonic jets.

Idea for Impact: Let to Cut Your Losses When Something’s Not Working

Sunk cost fallacy - Know How to Cut Your Losses When Something's Not Working Sunk costs are backward-looking decisions. Don’t become excessively focused on a specific goal or outcome—you’ll become inflexible and unyielding. You’ll narrow your options and make yourself feel more limited and inhibited.

Don’t get attached to ideas and become affected by the sunk cost fallacy as your projects develop. Remain objective, identify the warning signs of losing propositions, and abandon lost causes where sensible. As the American cartoonist Charles Schulz of Peanuts fame once said, “No problem is so formidable that you cannot walk away from it.”

Rapoport’s Rules to Criticize Someone Constructively

'Intuition Pumps' by Daniel Dennett (ISBN 0393082067) In Intuition Pumps and Other Tools for Thinking, philosopher Daniel Dennett lists Anatol Rapoport‘s rules of constructive argument and debate:

Just how charitable are you supposed to be when criticizing the views of an opponent? If there are obvious contradictions in the opponent’s case, then you should point them out, forcefully. If there are somewhat hidden contradictions, you should carefully expose them to view—and then dump on them. But the search for hidden contradictions often crosses the line into nitpicking, sea-lawyering and outright parody. The thrill of the chase and the conviction that your opponent has to be harboring a confusion somewhere encourages uncharitable interpretation, which gives you an easy target to attack. But such easy targets are typically irrelevant to the real issues at stake and simply waste everybody’s time and patience, even if they give amusement to your supporters. The best antidote I know for this tendency to caricature one’s opponent is a list of rules promulgated many years ago by social psychologist and game theorist Anatol Rapoport (creator of the winning Tit-for-Tat strategy in Robert Axelrod’s legendary prisoner’s dilemma tournament).

How to compose a successful critical commentary:

  1. You should attempt to re-express your target’s position so clearly, vividly, and fairly that your target says, “Thanks, I wish I’d thought of putting it that way.”
  2. You should list any points of agreement (especially if they are not matters of general or widespread agreement).
  3. You should mention anything you have learned from your target.
  4. Only then are you permitted to say so much as a word of rebuttal or criticism.

One immediate effect of following these rules is that your targets will be a receptive audience for your criticism: you have already shown that you understand their positions as well as they do, and have demonstrated good judgment (you agree with them on some important matters and have even been persuaded by something they said).

This comports with the following sage advice gentle art of criticizing people effectively:

  • “If you disagree with somebody, you want to be able to state their case better than they can. And at that point you’ve earned the right to disagree with them. Otherwise you should keep quiet.”
    Charlie Munger, Warren Buffett’s business partner (see this article)
  • “The man who can hold forth on every matter under debate in two contradictory ways of pleading, or can argue for and against every proposition that can be laid down—such a man is the true, the complete, and the only orator.”
    —Roman Orator Cicero (see this article)
  • “I have yet to find a more efficient and reliable way to probe the depths of a person’s knowledge and seriousness about an issue than asking them to explain the other side’s perspective.”
    —Entrepreneur Ben Casnocha (see this article)
  • “If you can’t imagine how anyone could hold the view you are attacking, you just don’t understand it yet.”
    —Philosopher Anthony Weston in Rulebook for Arguments (see this article)
  • “When you think you can nail someone with your argument, take a breath & see if you can phrase it as a face-saving question.”
    —Career Coach Marty Nemko

Bad Customers Are Bad for Your Business

Herb Kelleher: “Dear Mrs. Crabapple, We will miss you.”

Herb Kelleher of Southwest AirlinesSouthwest Airlines is a paragon of superlative customer service. Southwest’s happy and engaged employees routinely go out of their way to delight their customers. In spite of such remarkable devotion to customer satisfaction, there have been times when Southwest had to decide that some customers were just wrong for their business.

In the very entertaining and enlightening Nuts!: Southwest Airlines’ Crazy Recipe for Business and Personal Success, authors Kevin and Jackie Freiberg narrate how Southwest had to let go of a customer who couldn’t be less satisfied with her travel experience. This customer relations-story is best appreciated in light of the fun-loving and gregarious nature of Southwest’s legendary founder and ex-Chairman/CEO Herb Kelleher.

'Nuts- Southwest Airlines' by Kevin and Jackie Freiberg (ISBN 0767901843) A woman who frequently flew on Southwest, was constantly disappointed with every aspect of the company’s operation. In fact, she became known as the “Pen Pal” because after every flight she wrote in with a complaint.

She didn’t like the fact that the company didn’t assign seats; she didn’t like the absence of a first-class section; she didn’t like not having a meal in flight; she didn’t like Southwest’s boarding procedure; she didn’t like the flight attendants’ sporty uniforms and the casual atmosphere.

Her last letter, reciting a litany of complaints, momentarily stumped Southwest’s customer relations people. They bumped it up to Herb’s desk, with a note: ‘This one’s yours.’

In sixty seconds, Kelleher wrote back and said, ‘Dear Mrs. Crabapple, We will miss you. Love, Herb.’

Bad Customers: Wrong for Your Business, Wrong for Your Employees

Bad Customers: Wrong for Your Business, Wrong for Your Employees

Customers are the lifeblood of any business. Customer satisfaction begets loyalty, and loyalty begets revenues and profits. Businesses can therefore never place too much emphasis on their customers.

However, with slogans like “the customer is always right,” many businesses fall into the trap—and the slippery slope—of trying to satisfy every customer’s every wish.

Although your business may need all its customers—even the irksome ones—the reality is that some customers can actually be bad for your business. You can’t sustainably run a business without trying to satisfy every customer—particularly those cranky, annoying, or unreasonable ones.

Be wary of customers that fall into these categories:

  • Customers who require high maintenance but cannot be charged more
  • Customers whose demand for price destroys your profitability
  • Customers who want a lot more (better product, better service, better schedule) but are tightfisted
  • Customers who require supplementary services or products (especially those that are not part of your business’s core competencies) and tailored solutions that you don’t provide and can’t profitably offer to the rest of your customer base
  • Customers who don’t subscribe into the future vision of your business or your industry, which they’ll need to strategically commit to as some point in the future
  • Customers who tend to be aggressive and hostile, and disrespectful to your employees, regardless of how well they serve the customers

Strategic Customer Management Involves Being Tough Minded with Some Customers

Strategic Customer ManagementConsidering your long-term business goals, sifting through who should and who shouldn’t be your customers is an important element of strategic leadership.

With every product or service you offer, focus on who you want your customer to be, what expectations they have of you, and what you can profitably provide to them. Once you have figured that out, customers who don’t fit well need to be managed judiciously and decisively.

Without strategic customer management, you run a risk of disrupting your ability to converge around the needs of your principal customer base.

Remember the notion of opportunity costevery ‘no’ is a ‘yes’ to something important.

Idea for Impact: Let Go of Some of Your Troublesome Customers

Sometimes, it may be better to lose certain customers by turning them down than to dilute your ability to serve other valuable customers profitably. Stop trying to delight every customer. Take a hard look at the past, current, and future of every customer and prioritize whom you can going to serve better and more successfully.

Good Questions Encourage Creative Thinking


Thought-provoking questions: potential game changers that are not asked nearly enough

Asking Questions to Encourage Creativity “To think creatively, we must be able to look afresh at what we normally take for granted,” wrote George F. Kneller (1909–1999), the American academic and pioneer in the field of philosophy of education, in Art and Science of Creativity (1965.) Many people don’t know how to probe their thought processes with questions that encourage creativity.

Consider a brainstorming meeting where a new idea was received with comments and judgments like, “this won’t work,” “we’ve never done it this way,” “the customer won’t like it,” or, “if this is such a great idea, why hasn’t it been done before?” Immediately, a dysfunctional pattern ensues. Defensiveness sets in and the meeting’s participants will resist making any more suggestions and will fail to explore those ideas that were previously made. (One of the key principles of “divergent thinking” for idea-generation is to defer judgment. Neuroscience has suggested that the human prefrontal cortex—the self-monitoring element of the brain—is less active when we’re most creative.)

Creative thinkers ask open-ended, accommodating, and exploratory lead-in questions such as,

  • “I wonder if/why/whether … “
  • “Perhaps we could … “
  • “That would work if/when … “
  • “In what ways can we … .” This favorite of mine was introduced by Edward de Bono, the lateral thinking pioneer and creator of the “Six Thinking Hats” method for group creativity. De Bono called this lead-in question the ‘IWW.’

Instead of declaring “we could never do this,” ask “IWW (in what ways) may people start to do this?” In practical terms, this rephrasing may seem a small thing, but it embodies a leap in unhindered, open-minded thinking. The former seems a categorical rejection; but the latter invites an exploration of possibilities and signals the beginning of the search for solutions to constraints.

Idea for Impact: The ability to pose meaningful—and often deceptively simple questions is the hallmark of creativity

Good Questions Encourage Creative Thinking Often, what leads a creative person to get fresh insight is the quality of questions he/she asks. Questions such as “I wonder if …” and “In what ways can we … ” ignite dialogues in your mind that can lead to creative insights and new discoveries.

The prospect for creative thinking expands when you can reframe restraining statements into creative questions. Consider the following examples:

  • Restraining statement: “We can’t possibly do that.”
    Creative question: “If it were possible, how would you do it?”
  • Restraining statement: “It’ll take too long.”
    Creative question: “If it’s time-consuming, how can I make it short?”
  • Restraining statement: “I can’t talk to her.”
    Creative question: “If you could talk to her, what would you say?”
  • Restraining statement: “I’m too busy to do this.”
    Creative question: “In what ways can we free up some time for you?”

During brainstorming, asking questions in a way that opens participants’ minds to newer possibilities can have a transformative shift in the creative atmosphere. When participants suspend their judgments, everyone in the brainstorming session will feel comfortable enough to explore creative solutions to constraints.

Don’t Be Interesting—Be Interested!

Management Guru Jim Collins’s “Golden Rule”

Jim Collins's 'Golden Rule': Don't Be Interesting---Be Interested! In the December 2005 issue of the now-discontinued Business 2.0 magazine, 30 business visionaries disclosed their “golden rules”—attitudes they swear by more than any other. Jim Collins, the renowned leadership consultant and author of such bestselling management books as Good to Great and Built to Last, recollected a lesson he learned from his mentor, the American intellectual and public servant John W. Gardner:

One day early in my faculty teaching career, John Gardner sat me down. “It occurs to me, Jim, that you spend too much time trying to be interesting,” he said. “Why don’t you invest more time being interested?”

If you want to have an interesting dinner conversation, be interested. If you want to have interesting things to write, be interested. If you want to meet interesting people, be interested in the people you meet—their lives, their history, their story. Where are they from? How did they get here? What have they learned? By practicing the art of being interested, the majority of people can become fascinating teachers; nearly everyone has an interesting story to tell.

I can’t say that I live this rule perfectly. When tired, I find that I spend more time trying to be interesting than exercising the discipline of asking genuine questions. But whenever I remember Gardner’s golden rule—whenever I come at any situation with an interested and curious mind—life becomes much more interesting for everyone at the table.

The Technique to Become the Most Interesting Person in the Room is to Find Others Interesting

Becoming likeable requires creating lasting impressions in others by becoming genuinely interested in them In the conduct of life, people tend to focus more on becoming more interesting—i.e., impressing others with their personae and their stories. While trying to become more interesting is a worthwhile pursuit, it is certainly not everything in becoming accepted and well-liked. Becoming likeable requires creating lasting impressions in others by becoming genuinely interested in them.

John Gardner’s advice (via Jim Collins) echoes self-improvement pioneer Dale Carnegie’s legendary advice that the ticket to one’s success in life is one’s ability to make others feel good about themselves. In his masterful manual on people skills, How to Win Friends & Influence People, Carnegie writes, “You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.”

It is a common fallacy to assume that you must just be an interesting person to get people to like you. Observe this human tendency in the next networking meeting or social gathering you attend. Most people tend to be absorbed in just one thing: being interesting themselves—blabbing “I did this … I did that … I like this … I’ve been there” and offering bits of information that nobody else but them really cares about.

How to Build a Bit of Intimacy, Even in a Brief Conversation

Become genuinely interested in others and make them like you Making others like you amounts to making them feel special about themselves—making them feel that you really “get” them. The next time you meet someone new at a social setting, try this easy technique to be more interested.

  • The key to become absorbed in a conversation is to focus on being curious about others. So, tell yourself repetitively, “This seems to the most interesting person in the world. Let me discover why.” Look for opportunities to connect.
  • When you meet someone new, make eye contact and smile. Introduce yourself with a simple “Hi, my name is Joanna Kovaleski. I am Megan’s real estate agent.”
  • Pay attention and make them feel like they are the only people in the room.
  • Ask a question or two about the person before talking about yourself. “How do you know Megan and Eric?” “Is this your first time in Chicago?” As I’ve written previously, chatting with somebody in socializing situations should be less about discerning the details of the other’s life and more about building a bit of familiarity to initiate stimulating conversations, debates, discussions, and exchange of ideas about topics of mutual interest. These prospects will all be missed if your initial interaction starts with annoying cross-examinations such as “What do you do for a living?”
  • Ask a follow-up question based on what they have just said. Try to understand who they are and why they are there. Learn about their interests and hobbies.
  • Say more about yourself. Use what you’ve just learned about the other person so far to selectively highlight anything you have in common.
  • Then, ask one question to bring the focus back to the other person.
  • People love to talk about themselves; so, make them. Everyone’s got a story to tell.
  • Don’t talk too much or too little. Try taking your focus off yourself.

Idea for Impact: Become Genuinely Interested in Others and Make Them Like You

'How to Win Friends & Influence People' by Dale Carnegie (ISBN 0671027034) To be interested in other people—and consequently get them interested in you—is a significant social skill you must develop and hone. But don’t feign. As Carnegie cautions in How to Win Friends & Influence People, “The principles … will work only when they come from the heart. I am not advocating a bag of tricks; I am talking about a new way of life.”

The following books have helped me with improve my socializing skills. Perhaps you’ll find them useful too.

How to Handle Conflict: Disagree and Commit [Lessons from Amazon & ‘The Bezos Way’]

How Amazon’s Jeff Bezos Propels Innovation

Entrepreneurial Lessons from Amazon Founder and CEO Jeff Bezos Amazon’s founder and CEO Jeff Bezos once remarked that it takes five to seven years before the innovation seeds that Amazon plants flourish enough to have a significant impact on the economics of the business.

Since its founding in 1994, Amazon has made endless investments in expanding its business models. It has successfully used its money-making ventures to bankroll explorations into peripheral lines of business. Many of its capital allocation decisions haven’t yielded strong profits; yet, Amazon has flourished beyond everyone’s expectations and its growth potential is undeniable.

Central to this innovation strategy has been Bezos and his leadership team’s foresight, early commitment, and stubborn confidence in the prospect of R&D. Under Bezos’s direction and long-term focus, Amazon still operates as a founder-driven start-up in several major areas.

Bezos has a compelling cultural influence and has institutionalized his distinctive entrepreneurial mindset across the company. His core values are codified as Amazon’s 14 Leadership Principles, one of which is “Have Backbone; Disagree and Commit”:

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

“Disagree and Commit”

Jeff Bezos’s latest short-but-compelling annual letter to his shareholders contains pearls of wisdom on leadership, management, and teamwork. Read the letter; it won’t take long.

Speaking about high-velocity decision making in an ingenious culture, Bezos says he encourages Amazon’s leaders and employees to use the phrase “disagree and commit” to disagree respectfully and experiment with ideas:

Use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.

This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time. We recently greenlit a particular Amazon Studios original. I told the team my view: debatable whether it would be interesting enough, complicated to produce, the business terms aren’t that good, and we have lots of other opportunities. They had a completely different opinion and wanted to go ahead. I wrote back right away with “I disagree and commit and hope it becomes the most watched thing we’ve ever made.” Consider how much slower this decision cycle would have been if the team had actually had to convince me rather than simply get my commitment.

Note what this example is not: it’s not me thinking to myself “well, these guys are wrong and missing the point, but this isn’t worth me chasing.” It’s a genuine disagreement of opinion, a candid expression of my view, a chance for the team to weigh my view, and a quick, sincere commitment to go their way. And given that this team has already brought home 11 Emmys, 6 Golden Globes, and 3 Oscars, I’m just glad they let me in the room at all!

Entrepreneurial Lessons from Amazon Founder and CEO Jeff Bezos: Disagree and Commit Bezos’s “fail-and-learn” refrain echoes what he wrote on risk-taking in Amazon’s first annual shareholder letter in 1997: “Given a 10 percent chance of a 100-times payout, you should take that bet every time … Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.” That letter has become Amazon’s manifesto on the benefits and methods to long-term thinking and Bezos quotes that letter in every year’s annual letter.

To “disagree and commit” compels people to step out of their comfort zones and to sincerely commit to a project’s success. There is no room for sabotage and disruption—neither can people wait in the wings to exclaim “I told you so.” To “disagree and commit” is to be willing to take prudent risks by acknowledging that others may have diverse beliefs, approaches, ideas, and styles.

Idea for Impact: Embrace Failure because it Leads to Innovation

Many people want to be curious, creative, and experimental—they like to take initiative and investigate new products and solutions. But, when facing difficult choices, they’re naturally afraid of what they don’t know. Self-doubt sets in. They resort to safe and predictable processes. This mindset stifles the very inventive approach they want to apply and foster.

Fear of failure and self-doubt are not usually rooted in facts. They’re emotional. Don’t let this emotion make you play it safe. Don’t overthink your way out of challenges. Understand the types and amounts of risks that are acceptable to you. When facing the prospect of failure, you’re more likely to get unstuck by trying low-risk actions. Experiment. Fail. Learn. Innovate.

Success may instill confidence, but failure imparts wisdom.