Warren Buffett’s Advice on How to Focus on Priorities and Subdue Distractions

If you persistently experience an overpowering sense of being besieged with tasks and responsibilities, perhaps a personal productivity transformation technique suggested by Warren Buffett may help.

Psychologist Angela Duckworth of the University of Pennsylvania shares a well-known anecdote about Buffett in her bestselling Grit: The Power of Passion and Perseverance:

The story goes like this: Buffett turns to his faithful pilot and says that he must have dreams greater than flying Buffett around to where he needs to go. The pilot confesses that, yes, he does. And then Buffett takes him through three steps.

First, you write down a list of twenty-five career goals.

Second, you do some soul-searching and circle the five highest-priority goals. Just five.

Third, you take a good hard look at the twenty goals you didn’t circle. These you avoid at all costs. They’re what distract you; they eat away time and energy, taking your eye from the goals that matter more.

As I’ve written before (see the world’s shortest course in time management, and detailed three-step course on time logging, time analysis, time budgeting,) the most effective time management practice involves eliminating the non-essentials—those numerous things you can and want to do—and focusing on the very few things you must do.

Idea for Impact: Success comes at a cost: the most time-effective folks I know are significantly better at dropping their second-rate objectives.

Turning a Minus Into a Plus … Constraints are Catalysts for Innovation

Creativity Thrives Best When Constrained

“Art consists in limitation,” as the English writer G. K. Chesterton remarked. Constraints are the sine qua non of creativity.

One of the great ironies of creative thinking is that it seems to benefit from constraints. At first blush, inventive thinking may seem to require a great degree of freedom and a lack of restrictions, but the reality of the creative process is that it is frequently entwined with many challenging constraints and intractable requirements. In the right light, demanding constraints can truly be blessings in disguise as the French poet Paul Valery observed, “A person is a poet if his imagination is stimulated by the difficulties inherent in his art and not if his imagination is dulled by them.”

Constraints can shape and focus problems and provide clear challenges to overcome. Constraints stimulate creativity because they not only invigorate inventive thinking but also reduce the complexity of the problem at hand. That is to say, constraints can make a problem more controllable, and possibly even more appealing.

Constraints and Challenge Can Actually Be Assets to the Creative Process

When you explore inventions that are creative, you’ll discover that the creators often exploited some core constraints that had characterized their domain in the past. Here are six examples of creativity that exploited a constraint to great advantage.

  • British Airways 'Go for it America' marketing campaign and Virgin Atlantic's Response In 1986, British Airways ran a “Go for it, America!” marketing campaign to give away 5,200 free seats—all seats on its scheduled flights between USA and UK on June 10, 1986. In response, the upstart Virgin Atlantic ran its own newspaper advertisements that declared, “It has always been Virgin’s policy to encourage you to fly to London for as little as possible. So on June 10 we encourage you to fly British Airways.” And in smaller type, the ad read, “As for the rest of the year, we look forward to seeing you aboard Virgin Atlantic. For the best service possible. At the lowest possible fare.” The British Airways giveaway generated a lot of publicity, but most of the news coverage also mentioned Virgin’s unexpected, witty response.
  • In October 1984, during the second presidential debate with challenger Walter Mondale, Henry Trewhitt of the Baltimore Sun questioned President Ronald Reagan about his age: “You already are the oldest President in history, and some of your staff say you were tired after your most recent encounter with Mr. Mondale. I recall, yes, that President Kennedy, who had to go for days on end with very little sleep during the Cuba missile crisis. Is there any doubt in your mind that you would be able to function in such circumstances?” Reagan famously replied, “Not at all, Mr. Trewhitt and I want you to know that also I will not make age an issue of this campaign. I am not going to exploit for political purposes my opponent’s youth and inexperience.” Tyrwhitt responded, “Mr. President, I’d like to head for the fence and try to catch that one before it goes over.” Mondale lost and Reagan got elected for his second term as President. [See YouTube clip of this debate.]
  • An determined young woman I knew was embarking on a career as a new architect. She had set her sights on a job with a prominent architectural firm, but her professors and career councilors urged her to gain experience at a smaller employer first, as no prestigious firm would take on an inexperienced, new graduate. Undeterred, the young woman applied to the firm she had set her sights for. When asked about her experience, she declared slickly, “I have no experience at all. You see, I want to learn this business at a top quality firm. Employ me and mentor me to suit your design practices. This way, I’ll not have to unlearn any of the second-rate skills I’d have learned in another place.” She got the job.
  • When YouTube launched in 2005, many of its upstart competitors examined each uploaded video for copyright infringement. However, unlike its competitors, YouTube calculatedly let users upload any content and waited for copyright owners to complain before taking down noncompliant videos. By choosing to put their business model at risk, YouTube rapidly grew in content and viewers. Its early rivals faded out, and YouTube got acquired by Google and went on to became the world’s leading video-sharing platform.
  • The Soup, 1902 by Pablo Picasso (from his Blue Period) Legend has it that one day, the Spanish painter Pablo Picasso (1881–1973) had only blue paint to work with. When he started toying with the effects of painting with one color, he discovered the potential to produce interesting paintings that conveyed a sense of melancholy. Picasso had just relocated to Paris and was deeply affected by a close friend and fellow artist’s suicide. Art historians believe this event marked the onset of Picasso’s Blue Period (1901–1904,) during which he produced many stoic and sentimental paintings in mostly monochromatic shades of blue and blue-green. In what would become the hallmark of this greatest artist of the 20th century, Picasso leveraged an apparent constraint into an unintended creative outcome.
  • When American sculptor Janet Echelman‘s art supplies never arrived to South India on a Fulbright scholarship trip, Echelman altered her plans and started working with bronze casts inspired by the local materials and culture of Mahabalipuram, fishing village famous for sculpture. However, she soon found the material too heavy and expensive for her Fulbright budget. While examining fishermen bundling their nets one evening, Echelman began speculating if nets could be a new approach to sculpture. However, the delicate surfaces of the fishnets revealed every ripple of wind. Echelman hoisted the fishnets onto poles and created sturdy volumetric forms without heavy, solid materials. Echelman’s building-sized constructed net art structures are now featured in many cities around the world. [See Janet Echelman’s TED talk.]

In each situation, the inventor reframed elements of his/her world that he/she couldn’t control.

When faced with an element of the situation that they cannot ignore or overcome, instead of tackling those problems head-on, creative folks tend to leverage their constraints in a creative way and reframe them into an exceptionally powerful problem-solving technique.

Idea for Impact: Constraints often stimulate creativity rather than suppress it.

The heart of many a problem lies in what seems to be a single, intractable element. When that’s the case, instead of asking, “how can I minimize this liability?” explore “how can I make the most of it?”

Presenting Facts Can Sometimes Backfire

Presenting Facts Can Sometimes Backfire People tend to have contempt for ideas that they disagree with. What’s worse is the possibility that some people, when presented with information that goes against their beliefs, may not only snub their challengers, but also double down on their original viewpoints. Cognitive psychologists call this the backfire effect.

For instance, voters have been shown to judge the political candidate they support even more favorably after the candidate is attacked by the other party. In the same way, parents opposed to vaccinations have been shown to become more convinced of their alleged apprehension that vaccination causes autism after reviewing studies showing that vaccinating their kids is the best course of action.

The backfire effect explains why, when people argue against conflicting information strongly enough, they wind up with more supportive arguments for their cause, which further aligns them with their preexisting positions.

The backfire effect is related to confirmation bias—the rampant propensity to seek, interpret, synthesize, and recall information in a way that substantiates one’s preconceptions. For instance, when people read an article that describes both sides of an issue, they tend to select that side that they happen to agree with—thus reinforcing their viewpoints.

See also: the phenomenon of group polarization explains why people who share opinions and beliefs get together in groups, they tend to be even more persuaded in their beliefs.

The Power of Counterintuitive Thinking

“The All-embracing quality of the great virtue follows alone from the Tao … Only with Tao can follow the right path,” wrote Laozi in Tao Te Ching.

Translated roughly as “the way of integrity,” the Tao Te Ching is mostly a work of maxims of varying length; but it frequently quotes traditional poems, songs, and hymns.

'Tao Te Ching' by Stephen Mitchell (ISBN 0061142662) While the normative meaning of the word ‘Tao’ is just “path” or “way,” the text’s dominant theme is the spirit or quality of mind one needs to cultivate.

Here’s a verse from Tao Te Ching that advocates the power of counterintuitive thinking:

A good soldier is never aggressive;
A good fighter is never angry.
 
The best way of conquering an enemy
Is to win him over by not antagonizing him.
 
The best way of employing a man
Is to serve under him.
 
This is called the virtue of non-striving!
This is called using the abilities of men!
This is called being wedded to Heaven as of old!

The Fermi Rule: Better be Approximately Right than Precisely Wrong

What’s the size of the market for razors in China? How many golf balls does it take to fill a Boeing 747 aircraft? How many piano tuners are there in the world?

Non-standard problems such as these are called “Fermi problems” after the distinguished Italian-American nuclear physicist Enrico Fermi (1901–54.) Fermi delighted not only in creating and solving them, but also in challenging his fellow scientists with similar problems.

The Fermi Rule: Better be Approximately Right than Precisely Wrong

Physicist Enrico Fermi Was a Master of Guesstimation

Fermi was celebrated for his ability to make fast, excellent approximate calculations with little or no concrete data. In one well-known example, when the first atomic bomb was detonated during the Manhattan Project, Fermi dropped a few scraps of paper as the shock wave from the detonation passed. After some coarse calculation, Fermi estimated the power of the blast from the motion of the scraps as they fell. Fermi’s guesstimate of 10 kilotons of TNT was remarkably close to the now-established value of 20 kilotons. Even though Fermi’s estimate appears 50% off, it was a reasonable order-of-magnitude estimate.

Fermi believed that the ability to guesstimate was an essential skill for physicists. A good way to solve physics problems—and complex problems in any line of work—is by coming up with simple shortcuts to make approximate, but meaningful, calculations.

Teaching Physics Students the Fermi Way of Contemplating Open, Non-Standard Problems

Based on Fermi’s technique, at the beginning of many physics courses, professors pose problems such as “how many piano tuners are there in Chicago?” Such questions require students to employ quick reasoning and unsophisticated numerical methods to attack problems without the knowledge of any core physics concepts.

The historical emphasis on the order-of-magnitude calculation was propelled by the lack of computing power available to solve complex problems. Such approximate calculations were considered necessary to decide if an onerous and lengthy full-blown calculation was required.

Classic Fermi Problem: Number of Piano Tuners in the City of Chicago

'Guesstimation' by Lawrence Weinstein (ISBN 069115080X) Fermi problems are typically restructured by breaking them up into smaller problems that are easier for the students to approach than the original problem.

The challenge of estimating the number of piano tuners in the city of Chicago is the classical example of a Fermi Problem. A problem-solver guesstimates the total population of Chicago, then the fraction of families in Chicago that may own a piano, and the frequency of piano-tuning, the time it takes to tune a piano, and so on. This sequence of thinking, accompanied by a few conversion factors, can lead to an adequate assessment of the number of piano tuners in Chicago.

Back-of-Envelope Calculations for Fermi Problems

The Fermi technique is so popular that math buffs organize competitions in Fermi’s honor. Contestants are asked to estimate unusual assessments (the fraction of the surface area of the United States that’s covered by automobiles, the number of cells in the human body, the number of pizzas ordered this year in the state of California, for example) as closely as they can.

One distinctive feature of Fermi problems is that precision is impossible to achieve quickly, but it’s easier to arrive at a fast estimate of the range for the right answer. Before investing a big effort to measure something with precision, problem-solvers can estimate the answer approximately—and only then determine if it’s sensible to do the extra steps to calculate the accurate answers.

The Ability to Guesstimate: A Key Problem-Solving Aptitude

The ability to reach first-order estimations is an important skill in daily life. In a world where we are continuously bombarded with qualitative and quantitative information (and disinformation,) acquiring a solid grounding in numeric literacy has almost become an important intellectual obligation.

'Street-Fighting Mathematics' by Sanjoy Mahajan (ISBN 026251429X) Many problems are too complicated for you to come up with an accurate answer immediate. In analyzing such problems, precision may be impossible, but you can quickly estimate a range for the right answer. Guesstimation enables anyone with basic math and science skills to estimate virtually anything quickly using realistic assumptions and elementary mathematics.

Microsoft, McKinsey Consulting, Google, Goldman Sachs, and many leading businesses use guesstimate questions in job interviews to judge the ability of the applicants’ intelligence, their flexibility to think on their feet, and to apply their numerical skills to real-world problems.

Idea for Impact: Use Effective Guesstimation Techniques Before Undertaking a More Complete and Formal Investigation

Learn to do a first approximation of value and then, if the problem merits, refine your estimate further for much nuanced decision-making. Before putting much effort into calculating anything with precision, make a rough estimate of the answer, then decide whether it’s worth investigating further.

In my line of work as an investor, for example, I use fund manager Eddy Elfenbein‘s “simple stock valuation measure”:

Growth Rate/2 + 8 = PE Ratio

Let me emphasize that this is simply a quick-and-dirty valuation tool and it shouldn’t be used as a precise measure of a stock’s value. But when I’m first looking at a stock and want to see roughly how it’s priced, this is what I’ll use.

For example, let’s look at Pfizer ($PFE). Wall Street expects the company to earn $2.34 per share next year. They also see the company’s 5-year growth rate at 2.79%. If we take half the growth rate and add 8, that gives us a fair value P/E Ratio of 9.40. Multiplying that by the $2.34 estimate gives us a fair price for Pfizer of $21.98. The current price for Pfizer is $22.98, so it’s about fairly priced.

Let’s look at IBM ($IBM) which has a higher growth rate. Wall Street sees IBM earning $16.61 next year. They peg the five-year growth rate at 10.58%. Our formula gives us a fair value multiple of 13.29, and that multiplied by $16.61 works out to a value of $220.75. IBM is currently at $201.71.

Recommended Resources for Guesstimation

If you’re interviewing with one of those companies that use guesstimate questions in job interviews, or if you’re interested in developing your ability to make rough, common-sense estimates starting from just a few basic facts, I recommend the following learning resources:

This is Yoga for the Brain: Multidisciplinary Learning

In Praise of Multidisciplinary Frameworks for Better Thinking You need a broad-based understanding to succeed in today’s increasingly complex world.

Modern scientific and technological advances are increasingly born at the frontiers of more than one science disciplines.

It’s impossible to know everything. However, if you work to understand the basics of the biggest, most important paradigms in the fields of science, humanities, and social sciences, you can progressively expand your decision-making process.

A multidisciplinary methodology entails drawing suitably from multiple disciplines to examine problems outside of their normal boundaries and reach solutions based on an understanding of complex situations.

Multidisciplinarity Leads to Better Internalization of Knowledge

Multidisciplinarity allows you can transform a perspective in one discipline to expand your thought-frameworks in other disciplines. The renowned venture capitalist Paul Graham, author of the bestselling Hackers & Painters: Big Ideas from the Computer Age, said this best when he once wrote,

Studying things from unrelated subjects (multidisciplinary learning) is a lot like yoga for brain. You don’t actually get anywhere when you do yoga. You stand in one place and bend yourself in various shapes. But it makes you more flexible, so when you go out and do walk around, you can walk better.

“Cross-Training for the Mind” à la Charlie Munger

'Poor Charlie's Almanack' by Charlie Munger (ISBN 1578645018) The great investor Charlie Munger, Vice-Chairman of Berkshire Hathaway, is a big proponent of multidisciplinary thinking. This distinguished beacon of rationality and wisdom coined the term “latticework of mental models” to enable the “cross-training for the mind.” Rather than silo your mind just in the narrow areas you tend to concentrate on at college and work, Munger advocates developing a broad, functional set of interdisciplinary knowledge about the world, which can serve you in all parts of life. According to the anthology Poor Charlie’s Almanack, Munger said at a 1998 talk at the Harvard Law School,

If A is a narrow professional, B consists of the big, extra-useful concepts from other disciplines, then, clearly, the professional possessing A plus B will usually be better off than the poor possessor of A alone. How could it be otherwise? And thus, the only rational excuse for not acquiring B is that it is not practical to do so, given the man’s need to A and the other urgent demands in his life. I will later try to demonstrate that this excuse for unidisciplinarity, at least for our most gifted people, is usually unsound.

Many of the world’s leading companies in science and technology are employing multidisciplinary people for managerial positions. These people understand a range of science principles and methods and can synthesize the works of domain-specific experts to invent creative solutions to problems.

Idea for Impact: Pursue Multidisciplinary Thinking

People who think very broadly and comprehend many different models from many different disciplines make better decisions.

Pursue multidisciplinary thinking. Open your mind to new ideas and new experiences. Make new friends, travel afar, read more, and discover new stories.

Interact with people who work in different disciplines and dabble with the arts and the media. Let the new sights, sounds, smells, languages, tastes, sensations, stories, and perspectives spark your creativity.

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.

One of the Tests of Leadership is the Ability to Sniff out a Fire Quickly

One of the tests of leadership is the ability to recognize a problem before it becomes a disaster

I’ve previously stressed the importance of problem-finding as an intellectual skill. I’ve also highlighted why risk analysis and risk reduction should be one of the primary goals of any intellectual process. In this article, I’ll write about being proactive in identifying problems before they evolve into crises.

How Wells Fargo Failed to Recognize a Problem and Address it before it Became a Bigger Problem

As the Wells Fargo accounts scandal unfolded, it was clear that Wells Fargo’s leadership was well aware of the burgeoning problems early on, but failed to act decisively and nip the problem in the bud.

Given impossible sales quotas to reach, Wells Fargo’s “high pressure sales culture” opened as many as two million bank and credit card accounts on behalf of its customers without their consent. Employees were rebuked or even fired for not meeting aggressive cross-selling targets.

Human nature is such that high-pressure demands can deplete the willpower people need to act morally and resist temptations. And such demanding circumstances encourage people to go into defensive mode, engage in self-interested behaviors, and consider only short term benefits and dangers.

Leadership Lessons from the Wells Fargo Accounts Scandal: “A Stitch in Time Indeed Saves Nine”

Leadership Lessons from the Wells Fargo Accounts Scandal Wells Fargo’s leadership reportedly had data about ethical breaches, but they ignored or misjudged the impact of the problem. Wells Fargo even held a two-day ethics workshop in 2014 unequivocally telling their employees not to do that. As per an internal review, managers knew that 1% of employees had been fired for “sales integrity” violations.

Wells Fargo’s leadership didn’t act quickly and decisively to mitigate the effects of the crisis. Warren Buffett, one of the Wells Fargo’s biggest investors, summarized this leadership inaction at the 2017 Berkshire Hathaway annual meeting:

There were three very significant mistakes, but there was one that was worse than all the others … The main problem was that they didn’t act when they learned about it … at some point if there’s a major problem, the CEO will get wind of it. And at that moment, that’s the key to everything, because the CEO has to act. It was a huge, huge, huge error if they were getting, and I’m sure they were getting, some communications and they ignored them or they just sent them back down to somebody down below.

Leadership: “Only the Paranoid Survive”

Andy Grove (1936–2016,) the illustrious cofounder and CEO of Intel, was a famous worrier. At Intel, the focal point of Grove’s leadership style was worry and skepticism. He believed that business success contains the seeds of its own destruction, and that in order for an organization to have longevity, it needs to continue to worry about the future.

'Only the Paranoid Survive' by Andrew S. Grove (ISBN 0385483821) Grove’s principle was immortalized in his famous proclamation, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” He eloquently explained his worrisome mantra in his bestselling corporate memoir, Only the Paranoid Survive (1996.) He wrote in the preface:

The things I tend to be paranoid about vary. I worry about products getting screwed up, and I worry about products getting introduced prematurely. I worry about factories not performing well, and I worry about having too many factories. I worry about hiring the right people, and I worry about morale slacking off. And, of course, I worry about competitors. I worry about other people figuring out how to do what we do better or cheaper, and displacing us with our customers.

At Intel, worrying about the future created a culture of triumph that propelled change and innovation. Grove never let Intel rest on its laurels and led the company to break boundaries in microprocessor innovation. During his tenure as CEO from 1987—98, Intel’s stock price rose 32% a year. Grove also said, “A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.”

Idea for Impact: Learn to Sniff out a Fire Better than Anyone Does

The principal tasks of leadership are (1) identifying the biggest risks and opportunities, and (2) allocating organizational resources. Therefore, one of the tests of leadership is the ability to recognize a problem before it becomes a disaster. If identified and addressed early, nearly any problem can be resolved in a way that is beneficial for everyone involved.

Many leaders tend to be reactionary—they claim, “why fix something that isn’t broken.” Even when they see an impending problem, they may assume that the problem “isn’t that big of a deal” and wish the problem will just go away. Alas, many problems never go away; they only get worse.

To become a good leader, be paranoid—always assume that “there’s no smoke without fire.” If, according to Murphy’s Law, everything that can go wrong will go wrong, the paranoid leader has an advantage.

Whenever you are doing anything, have your eyes on the possibility of potential problems and actively mitigate those risks. Never allow a problem to reach gigantic proportions because you can and must recognize and fix it in its early stages.

As the medieval French philosopher and logician Peter Abelard (1079–1142) wrote, “The beginning of wisdom is found in doubting; by doubting we come to the question, and by seeking we may come upon the truth.”

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.”

Enabling the Highest Degrees of Understanding: Book Summary of ‘The Unschooled Mind’

Traditional Schooling Fails to Teach Kids to Ask the Right Questions

'The Unschooled Mind' by Howard Gardner (ISBN 0465024386) In The Unschooled Mind (1991,) Harvard developmental psychologist Howard Gardner makes a persuasive case for why even the brightest students often lack a deep understanding of what traditional schooling purports to teach them.

According to Gardner, students (in elementary schools to graduate colleges) may take exams and earn degrees, but their supposed knowledge turns out deficient in situations that are at variance from the “text-to-test” framework in which they learnt it. To some extent, this disconnect is an outcome of teachers’ settling for “correct-answer compromises” whereby students take the rote repetition of facts, formulas, concepts, and theories for a real understanding of fundamental concepts.

Robust Forms of Intuitive Knowledge

Overall, Gardner argues that children tend to acquire well-established models for perceptive learning and intuitive thinking by the time they are five years old. They develop wide-ranging beliefs about the physical world and distinctive models of events and people.

Traditional Schooling Fails to Teach Kids to Ask the Right Questions Subsequently, when children begin their schooling, they are launched into pedagogic methods that often sidestep—even interfere with—the children’s entrenched patterns of learning and understanding. That is to say, children have to put up with a disagreeable dichotomy between their intuitive learning patterns and the academic learning:

In its theoretical resourcefulness and intuitions, [a 5-year old’s mind] is powerful; in its artistic endeavors, it can be creative and imaginative; in its adventurousness, it is exemplary. … Education that takes seriously the ideas and intuitions of the young child is far more likely to achieve success than education that ignores these views, either considering them to be unimportant or assuming that they will disappear on their own.

Experiential Learning, Supplanted by Critical Analysis and Synthesis, Can Enhance Students’ Points of View

The Unschooled Mind contends that far-reaching knowledge and appreciation of education can occur only when students are allowed to integrate their “prescholastic” learning modes with the scholastic and the disciplinary ways of traditional school education. “The problem is less a difficulty in school learning per se and more a problem in integrating the notational and conceptual knowledge featured in school with the robust forms of intuitive knowledge that have evolved spontaneously during the opening years of life.”

Gardner’s solution to this problem is to situate students in educational environments that pique their curiosity about the subject matter and, at the higher levels of education, challenge their preexisting assumptions. Educating children for the utmost degrees of understanding involves designing educational systems that help students synthesize these several patterns of learning.

Real Education Opens the Way to Thinking, Knowing, and Deeper Understanding

Real Education Opens the Way to Thinking, Knowing, and Deeper Understanding For real learning to occur, Gardner argues, students must have an opportunity to realize their own ignorance, and then ask and explore their own questions. Teachers must regularly expose students to “Christopherian encounters”—compelling personal discoveries of the inconsistencies between their various frames of reference—by approaching any subject matter through at least five instructive channels:

Gardner claims that traditional schooling should incorporate more apprenticing—apprenticeship programs build most effectively on the ways children learn—and schools should become more like children’s museums.

Recommendation: Read The Unschooled Mind by Howard Gardner, especially if you have a child in school. The key takeaway: to enable the highest degrees of understanding, any skills instruction must be systematically reinforced by instruction in which the deployment of the skills makes holistic sense.