Perfectionism

How to Banish Your Inner Perfectionist

January 21, 2021 By Nagesh Belludi Leave a Comment

How to Banish Your Inner Perfectionist

You have an enemy: a feisty, malign force working against you. It’s the internalized perfectionist. It’s the stream of subversive self-talk urging indecision, doubt, and fear.

The #1 hack to overcoming you perfectionist tendency is to accept that whatever you need to work on just needs to be an outline, first attempt, rough copy, version 0. It needn’t be perfect. You just need to get it to a little bit better shape than before. You can then consider the next baby step.

Idea for Impact: Many things in your life need not be done perfectly. They’re to be done … just done … done to spur more done … not to dwell to perfection.

Your goal now is not to be like a Picasso, Mozart, Steven King, Lebron James, Warren Buffett, or some superstar. All you have to do now is create, edit, fix, or process and get whatever it is you’re working on to the next milestone. Make this a rule.

A Bit of Insecurity Can Help You Be Your Best Self

December 3, 2020 By Nagesh Belludi 1 Comment

Self-confidence, so often peddled by the self-help genre as the panacea for low achievement, can indeed cause it. Beyond a moderate amount, self-confidence is destined to encourage complacency—even conceit. You’ll never reach anything better with that attitude.

Paradoxically, conceding your insecurities—and having a certain amount of humility about your capabilities—-is usually to your advantage.

Deep down, some of history’s greatest icons—from Abraham Lincoln to Mahatma Gandhi—regularly worried that they weren’t good enough. That’s what kept them striving harder.

A Bit of Insecurity Can Help You Be Your Best Self Face up to your self-judgment. Low self-esteem is present only when your self-appraisal is more acute than reality.

Channel that nagging voice in your head that keeps saying negative things about you. Don’t be self-defeatingly vulnerable. Don’t worry yourself into perfection, anxiety, or despair.

Engage that little “sweet spot” of insecurity to motivate yourself to exert the additional effort required to seek a better self. For example, ignore anyone who tries to calm your nerves by telling you to “just be yourself” or “who else could be better suited” before a job interview.

Idea for Impact: Satisfaction can be deadly. Lasting self-confidence derives from your ongoing effort, not by virtue.

The Costs of Perfectionism: A Case Study of A Two Michelin-Starred French Chef

March 30, 2020 By Nagesh Belludi Leave a Comment

Marc Veyrat, a top-rated French chef, sued the Michelin Guide in 2019 for downgrading his world-renowned restaurant in the French Alps from three to two stars. Just the previous year, Michelin had awarded Veyrat the highest ranking. That achievement had marked his comeback after he had given up cooking for several years following a skiing accident and a 2015 fire at his restaurant.

Just Excellent …

Marc Veyrat sued the Michelin Guide after Shock Downgrade In an infamous court case, now known as ‘Cheddargate,’ Veyrat speculated he was downgraded after an “incompetent” Michelin inspector with an unrefined palate mistook the ingredients.

Veyrat claimed the anonymous inspector thought Veyrat had used English Cheddar in place of French Reblochon, Beaufort, and Tomme cheese in one of his signature soufflé dishes. “I put saffron in it, and the gentleman who came thought it was cheddar because it was yellow,” Veyrat contended.

“It’s worse than a wound. It’s profoundly offensive. It’s worse than the loss of my parents, worse than anything. It gave me a depression.”

Michelin’s review had commended Veyrat for being “true to his reputation” and described his cuisine as a “pastoral symphony” that blends “woodland fragrances and Alpine herbs.” But Veyrat would have nothing less than three stars.

… Not Exceptional

At the court hearing, Veyrat demanded a symbolic €1 in damages. He asked for proof that the Michelin inspectors had even dined at his restaurant. He demanded to see their judging notes and clarify how they had come to their decisions. (The Michelin Guide’s evaluation criteria are perhaps the biggest trade secrets in the restaurant business.)

In reply, Michelin denied the Cheddar-related allegations and accused Veyrat of acting like a “narcissistic diva” suffering from “pathological egotism.”

Veyrat lost the court case.

Nobody Likes Rejection, Certainly Not a Perfectionist

Veyrat’s wounded pride is understandable. The Michelin Guide is arguably the world’s foremost arbiter of haute cuisine. Many chefs base their entire identity on getting three Michelin stars, the ultimate culinary accolade, and, in so doing, self-inflict extreme pressure to be labeled “exceptional.”

Chefs Face Extreme Pressure to Be Rated by the Michelin Guide The Michelin Guide is not without controversies. Michelin stars can bring significant prestige, but also intense pressure on chefs. The unrelenting psychological stress and the financial demands of producing ever more creative dishes have even led a few chefs to suicide. Over the last decade, several renowned chefs have also requested Michelin to revoke their stars and opted out of the system in a quest for better work-life balance.

In 2019, South Korean chef Eo Yun-gwon sued Michelin for including his restaurant in the Michelin Guide after he’d told them not to. He declared, “The Michelin Guide is a cruel system. It’s the cruelest test in the world. It forces the chefs to work around a year waiting for a test [and] they don’t know when it’s coming.” Some chefs closed their restaurants and launched lower-key eateries that still cater to discerning epicures.

Idea for Impact: Challenge the Perfectionist, “All-or-Nothing” Thinking

This Marc Veyrat-Michelin Guide episode is yet another reminder that being a perfectionist—and insisting on excellence at all costs—has a dark side. Perfectionism can cause adverse outcomes such as excessive procrastination, low self-esteem, depression, and anxiety.

Perfectionists tend to engage in “all-or-nothing thinking”—that they are either perfect or worthless. In reality, most of us operate on the continuum between these two extremes. We’re neither perfect nor worthless, just “good enough.”

If you’re struggling with perfectionism, it’s crucial to take in the concept of being and doing “good enough.”

Avoid Decision Fatigue: Don’t Let Small Decisions Destroy Your Productivity

January 20, 2020 By Nagesh Belludi Leave a Comment

Making some decisions depletes mental resources for making more important ones

Every decision you make impacts the quality of successive decisions you’ll have to make, even in unrelated situations.

That’s because, according to the much-debated “muscle metaphor” of willpower, your mental stamina is limited.

As Roy Baumeister and John Tierney explained in their bestselling book on Willpower: Rediscovering the Greatest Human Strength (2011; my summary), you have a finite strength of will for making prudent choices. As you go about your day, your willpower is depleted and “decision fatigue” sets in. Consequently, you’re likely to employ one of two cognitive shortcuts in decision-making: you avoid the act of deciding altogether or make a less-thoughtful, sub-optimal decision.

Don’t get overloaded with so many pointless decisions that your cognitive productivity ends up falling off a cliff.

President Barack Obama claimed that he makes deliberate efforts to avoid decision fatigue so that he can devote his mental energies to things that matter. Michael Lewis quotes Obama in the October 2012 issue of Vanity Fair,

You’ll see I wear only gray or blue suits … I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make. … You need to focus your decision-making energy. You need to routinize yourself. You can’t be going through the day distracted by trivia.

In the same way, Facebook founder Mark Zuckerberg sports a limited wardrobe. He has previously declared that doesn’t waste time and energy to pick his daily outfits: “I really want to clear my life to make it so that I have to make as few decisions as possible about anything except how to best serve the community.”

Avoid Decision Fatigue: Don't Let Small Decisions Destroy Your Productivity

Idea for Impact: Establish healthy routines that can eliminate unnecessary deliberation

Life is the total of all the mundane and momentous choices you make. Being monotonous in handling the former enables you to excel in the latter. Limit decision fatigue by

putting as much of your life as possible on autopilot using routines / rituals and checklists,
limiting the choices you have (read Barry Schwartz’s The Paradox of Choice: Why More Is Less), and
delegating decision-making where possible.

Good routines can provide structure to your day, protect you from your more effective negative impulses, and bring order and predictability to your life. Besides, according to renowned career coach Marty Nemko, “modern life, increasingly defined by unpredictability, can be anxiety-provoking, and routines provide an anchor of predictability.”

Do You Have an Unhealthy Obsession with Excellence?

September 10, 2019 By Nagesh Belludi Leave a Comment

Yes, you must develop the habit of excellence, even in little matters. However, the price of perfection can be prohibitive. A maniacal emphasis on excellence can lead to a blind obsession that can drain productivity.

If you’re a manager, insisting on perfection everywhere can hurt workplace morale, reduce employee engagement, and decrease opportunities for innovation and change.

Managers too often call for excellence in the small things because they’re unable to prioritize what matters most. These managers tend to be the ones who also struggle with delegation—given their exacting standards, it makes sense that they would have difficulty letting others do their job. And because monitoring people’s efforts is often time-consuming and difficult, perfectionist managers tend to just decide that it’s easier and quicker to do the job themselves.

Smart Managers Have the Self-Discipline to Turn Excellence On and Off

Do You Have an Unhealthy Obsession with Excellence and Perfectionism? The smart managers I know of accomplish great things because they often have a “sixth sense” that reminds them that some activities matter more than others do and therefore merit more attention.

They give themselves permission to produce second-rate work on the road to doing a first-rate job.

They are very selective about when they push their teams to the max—only when the stakes are big enough and when it’s entirely justified.

Idea for Impact: Be Excellent Occasionally

Expecting excellence in every detail uses up a lot of bandwidth.

Get comfortable with a little bit of lower quality now and then. Less-than-excellent is a satisfactory outcome. As the British novelist W. Somerset Maugham once warned, “only a mediocre person is always at his best.”

Making a conscious decision about where excellence matters and where it doesn’t is particularly pertinent to managerial success.

In the real world of limited resources, perfection is hard to achieve. The quest for excellence sucks up time, energy, and money that could generate better results elsewhere.

Managers, step back and look at the whole picture. You don’t have enough resources to do everything, so commit them where they’ll bring the greatest overall improvement (use the lens of opportunity costs.)

Have exacting standards, but don’t demand excellence in every idea.

The Simple Life, The Good Life // Book Summary of Greg Mckeown’s ‘Essentialism’

August 21, 2019 By Nagesh Belludi Leave a Comment

One of the great struggles of modern life is the intense complexity, chaos, and exhaustion of activity and reactivity. We have a tendency to take on too much, become accountable to too many people, and say ‘yes’ to too many demands on our time and our energy.

As I mentioned in my world’s shortest course on time management, the merits of ignoring the trivial many and focusing on the vital few is often overlooked. The need for essentialism—less responsibility, less fame, less money, fewer possessions, less mess—is something that’s easy to identify with, but requires abundant self-discipline to put into consistent action.

Business consultant Greg McKeown’s Essentialism: The Disciplined Pursuit of Less (2014) is an excellent reminder that a rich, meaningful life entails the elimination of the non-essential:

Essentialism is more than a time-management strategy or a productivity technique. It is a systematic discipline for discerning what is absolutely essential, then eliminating everything that is not, so we can make the highest possible contribution toward the things that really matter.

McKeown’s wide-ranging discussion covers insightful get-a-hold-of-your-life principles—frugality, sufficiency, moderation, restraint, minimalism, and mindfulness—reframed in the essential-avoidable dichotomy. Here are prominent insights from Essentialism:

Get to grips with selectivity—whenever you can, judiciously select which priorities, tasks, meetings, customers, ideas or steps to undertake and which to let go. “The basic value proposition of Essentialism [is,] only once you give yourself permission to stop trying to do it all, to stop saying yes to everyone, can you make your highest contribution towards the things that really matter.”
Most top performers have one thing in common: they accept fewer tasks and then fixate on getting them right. “Essentialism is not about how to get more things done; it’s about how to get the right things done. It doesn’t mean just doing less for the sake of less either. It is about making the wisest possible investment of your time and energy in order to operate at our highest point of contribution by doing only what is essential.”
If you don’t arrange your life, someone else will. “When we forget our ability to choose, we learn to be helpless. Drip by drip we allow our power to be taken away until we end up becoming a function of other people’s choices-or even a function of our own past choices. In turn, we surrender our power to choose. That is the path of the Nonessentialist. … The Essentialist doesn’t just recognize the power of choice, he celebrates it. The Essentialist knows that when we surrender our right to choose, we give others not just the power but also the explicit permission to choose for us.”
Pop out at least once a year to reflect and ask questions about what you’re doing and why. “The faster and busier things get, the more we need to build thinking time into our schedule. And the noisier things get, the more we need to build quiet reflection spaces in which we can truly focus.”
Pursue a well-lived, joyful, meaningful life. “The life of an Essentialist is a life lived without regret. If you have correctly identified what really matters, if you invest your time and energy in it, then it is difficult to regret the choices you make. You become proud of the life you have chosen to live.”

Recommendation: Speedread Greg McKeown’s Essentialism: The Disciplined Pursuit of Less. It will remind you of the wisdom to think through—and act upon—what really matters. Essentialism is chockfull of useful instructions on how to say ‘no’ gracefully, exercise your freedom to set boundaries, discover the power of small wins, and harness the power of routines to evade the pull of nonessential distractions that can subsume you easily.

Small Steps, Big Revolutions: The Kaizen Way // Summary of Robert Maurer’s ‘One Small Step Can Change Your Life’

June 18, 2019 By Nagesh Belludi Leave a Comment

Most intentions for change seek a transformative change—something significant to be achieved once and for all, in a short period. “Big, bold steps” is the mantra of many a self-help book or motivational guru du jour.

Real change, however, takes time and is difficult. You become overwhelmed with the magnitude of the effort and persistence required to lose twenty pounds, save up for retirement, change jobs, or stabilize a sinking relationship.

As with most New Year resolutions, you’ll meet with success temporarily, only to find yourself slipping back into our old ways as soon as the initial burst of enthusiasm fades out.

Gradual Improvement, Not Radical Change

UCLA clinical psychologist Dr. Robert Maurer’s One Small Step Can Change Your Life: The Kaizen Way (2004) conceives transformative change as an endless, continuous process of gradual improvements.

By breaking daunting tasks into absurdly little steps, you feel little resistance to change.

To initiate a worthwhile exercise regimen, for example, Maurer suggests that you start exercising by marching in front of the television for one minute for a day or two. Then, little by little, ask, “How could I incorporate a few more minutes of exercise into my daily routine?” Such modest questions help you seek the next proverbial baby step and “allow the brain to focus on problem-solving and action.”

To tidy up your home, pick an area of your home, set a timer for five minutes, and tidy up. Stop when the timer goes off. [This is similar to my ’10-Minute Dash’ technique to overcome procrastination.]

One small step leads to the next, which leads to one more, and so on—finally leading you to your goal of transformative change.

“Little Steps Add Up to Brilliant Acceleration”

Maurer relates this approach to Kaizen, the famed Japanese system of obsessive tinkering and continuous, incremental improvement. This idea is actually American in origin—it was brought over by American efficiency and quality experts such as W. Edwards Deming who were helping Japan rebuild its industrial strength after World War II.

Kaizen, the famed Japanese system of obsessive tinkering and continuous, incremental improvement Kaizen involves making continual, small adjustments to production techniques to not only improve speed and quality, but also save resources. That is to say, it is a relentless pursuit of perfection by breaking it down into incremental improvements.

At companies that have embraced Kaizen and other Total Quality Management (TQM) approaches, employees come to work every day determined to become a little better at whatever it is they are doing than they were the day before. Katsuaki Watanabe of Toyota, the poster-boy of TQM, has acknowledged,

There is no genius in our company. We just do whatever we believe is right, trying every day to improve every little bit and piece. But when 70 years of very small improvements accumulate, they become a revolution.

Small Kaizen questions help you determine the next baby step and allow the brain to focus on problem-solving and action

“Little and often” empowers you to “tiptoe past fear”—your brain stops putting up resistance because it is tricked into thinking that you’re embarking only on something minuscule.

All changes are scary, even positive ones. Attempts to reach goals through radical or revolutionary means often fail because they heighten fear. But the small steps of Kaizen disarm the brain’s fear response, stimulating rational thought and creative play.

You can thus triumph over fear and the subsequent inaction that fear causes.

Small steps rewire your nervous system, create new connections between neurons so that the brain enthusiastically takes over the process of change and you progress rapidly toward your goal.

Small Steps: Big Revolutions - Robert Maurer's One Small Step Can Change Your Life: The Kaizen Way

Minimalist, steady, incremental change helps your brain overcome the fear that impedes success and creativity

To avoid failure at keeping your resolutions despite your best intentions, don’t push yourself to somehow become different rapidly. Instead, pledge to achieve positive, enduring life changes one powerful baby step at a time.

Other prominent insights in Maurer’s One Small Step Can Change Your Life:

“Small actions satisfy your brain’s need to do something and soothe its distress.”
“If you are trying to reach a specific goal, ask yourself every day: What is one small step I could take toward reaching my goal?”
“Small actions are at the heart of Kaizen. By taking steps so tiny that they seem trivial or even laughable, you’ll sail calmly past obstacles that have defeated you before. Slowly—but painlessly!—you’ll cultivate an appetite for continued success and lay down a permanent new route to change.”
If you hit a wall of resistance, “don’t give up! Instead, try scaling back the size of your steps. Remember that your goal is to bypass fear—and to make the steps so small that you can barely notice an effort.”
When we face crises, “the only concrete steps available are small ones. When our lives are in great distress, even while we are feeling out of control or in emotional pain we can try to locate the smaller problems within the larger disaster … to help move us slowly in the direction of a solution. But if we are blind to the small, manageable problems, we are more likely to slip into despair.”

Recommendation: Speed-read One Small Step Can Change Your Life: The Kaizen Way. It will help if you or a loved one is stuck in the rut of goal failure.

Take really small steps towards every significant change you want to make. The cumulative benefits of small improvements do have the power to produce large, transformative change. Let Kaizen be a routine that is never done.

Stop Searching for the Best Productivity System

May 29, 2019 By Nagesh Belludi 1 Comment

One of the reasons many people are not as productive as they want to be is not because they haven’t found the right ideas that can help them take charge of their lives.

They can’t be productive because they keep looking for “better” ideas instead of settling on a “good enough” idea and then putting it into rigorous practice.

Looking for the Best Can Be Counterproductive

Stop Searching for the Best Productivity System This is comparable to weight-loss programs. People buy more and more books on dieting, but don’t lose weight by merely buying diet books. It’s easier to buy books than it is to go on a diet. Recognizing that most diet plans boil down to basic strategies—eat more fruits and veggies, keep portions under control, and stay physically active—and implementing these simple ideas purposely could be as effective a diet program as any out there.

Look, no productivity tool can fit all your requirements. The inadequacies of any productivity system you try out will drive you towards looking for a different tool. But this quest to define the best never ends.

Idea for Impact: Never underestimate the power of a simple idea that is well executed.

If you can identify a simple system and implement its key principles with discipline, you may not need the “best” system.

As Charlie Munger has stated in describing the simplicity of Warren Buffett’s philosophy at Berkshire Hathaway, “Our ideas are so simple that people keep asking us for mysteries when all we have are the most elementary ideas.”

Smart Folks are Most Susceptible to Overanalyzing and Overthinking

August 30, 2017 By Nagesh Belludi 4 Comments

Many High-IQ People Tend to Be Overthinkers: They Incessantly Overanalyze Everything

Smart Folks are Most Susceptible to Overanalyzing and Overthinking There’s this old Zen parable that relates how over-analysis is a common attribute of intelligent people.

A Zen master was resting with his quick-witted disciple. At one point, the master took a melon out of his bag and cut it in half for the two of them to eat.

In the middle of the meal, the enthusiastic disciple said, “My wise teacher, I know everything you do has a meaning. Sharing this melon with me may be a sign that you have something to teach me.”

The master continued eating in silence.

“I understand the mysterious question in your silence,” insisted the student. “I think it is this: the excellent taste of this melon that I am experiencing … is the taste on the melon or on my tongue …”

The master still said nothing. The disciple got a bit frustrated at his master’s apparent indifference.

The disciple continued, ” … and like everything in life, this too has meaning. I think I’m closer to the answer; the pleasure of the taste is an act of love and interdependence between the two, because without the melon there wouldn’t be an object of pleasure and without pleasure …”

“Enough!” exclaimed the master. “The biggest fools are those who consider themselves the most intelligent and seek an interpretation for everything! The melon is good; please let this be enough. Let me eat it in peace!”

Intelligence Can Sometimes Be a Curse

The tendency to reason and analyze is a part of human nature. It is a useful trait for discerning the many complexities of life. It’s only natural that you could go overboard some times and over-analyze a point or an issue to such a degree that the objective becomes all but moot.

Don’t get me wrong. Intelligence is indeed a gift. But intelligence can trick you into thinking you should be overthinking and calculating everything you do. The more intelligent you are, the more investigative you will be. The more your brain analyzes people and events, the more time it will spend on finding flaws in everything.

Intelligent People Overanalyze Everything, Even When it Doesn’t Matter

Intelligent People Overanalyze Everything, Even When it Doesn't Matter Many intelligent people tend to be perfectionists. Their overanalysis often cripples their productivity, especially by leading them to undesirable, frustrating, and low-probability conclusions that can limit their ability to understand reality and take meaningful risks.

Intelligent people are too hard on themselves and others—family, friends, and co-workers. They can’t settle for anything less than perfect. They tend to be less satisfied with their achievements, their relationships, and practically everything that has a place in their life. What is more, many people with speculative minds hold idealistic views of the world and lack a sound acumen about coping with the practical world.

Idea for Impact: Don’t Make Everything Seem Worse Than it Actually is!

Thinking too much about things isn’t just a nuisance for you and others around you; it can take a toll on your well-being and on your relationships.

Check your tendency to overthink and overanalyze everything. Don’t twist and turn every issue in your head until you’ve envisaged the issue from all perspectives.

Sometimes it does help to overthink and be cautious about potential risks and downfalls. But most times, it’s unnecessary to ruminate excessively. Don’t make everything seem worse than it actually is. Set limits and prioritize. Learn to let go and manage your expectations.

To avoid overthinking, use my 5-5-5 technique. Ask yourself if your decision will matter 5 weeks, 5 months, and 5 years in the future. If your answer is ‘no,’stop stressing yourself out!

Everything in Life Has an Opportunity Cost

August 8, 2017 By Nagesh Belludi Leave a Comment

“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.
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.

Charlie Munger’s Wisdom on Opportunity Cost

On the subject of making choices in life based on opportunity costs, Munger stated at a 2010 lecture at Harvard-Westlake preparatory school, “The right way to make decisions in practical life is based on your opportunity cost. When you get married, you have to choose the best spouse you can find that will have you. The rest of life is the same damn way.”
Explaining how Warren Buffett and Berkshire Hathaway use opportunity costs to make investment decisions, Munger detailed stated at the aforementioned Harvard-Westlake lecture, “Berkshire Hathaway is constantly kicking off ideas in about two seconds flat. We know we’ve got opportunity X, which is better than the new opportunity. Why do we want to waste two seconds thinking about the new opportunity? Many of you come from places that don’t do that. You’ve got to have one horse, one rabbit, one something or rather, and that rabbit is going to be thinking about something which would be ruled out immediately by an opportunity cost available generally to the place—but, it’s a different department. You have to be diversified and so on and so on. It’s easy to drift into this idea that opportunities don’t matter, you’ve got so many different ways of doing things that are better. It isn’t better.”
Putting the concept of opportunity cost into operation requires benchmarking any prospective decision to other available alternatives. At the 2006 Berkshire Hathaway annual meeting, Munger advised, “In the real world, you have to find something that you can understand that’s the best you have available. And once you’ve found the best thing, then you measure everything against that because it’s your opportunity cost. That’s the way small sums of money should be invested. And the trick, of course, is getting enough expertise that your opportunity cost—meaning your default option, which is still pretty good—is very high…. Most people aren’t going to find thousands of things that are equally good; they’re going to find a few things where one or two of them are way better than anything else they know. And the right way to think about investing is to act thinking about your best opportunity cost.”

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.

Perfectionism

Wondering what to read next?

Wondering what to read next?

Just Excellent …

… Not Exceptional

Nobody Likes Rejection, Certainly Not a Perfectionist

Idea for Impact: Challenge the Perfectionist, “All-or-Nothing” Thinking

Wondering what to read next?

Making some decisions depletes mental resources for making more important ones

Don’t get overloaded with so many pointless decisions that your cognitive productivity ends up falling off a cliff.

Idea for Impact: Establish healthy routines that can eliminate unnecessary deliberation

Wondering what to read next?

Smart Managers Have the Self-Discipline to Turn Excellence On and Off

Idea for Impact: Be Excellent Occasionally

Wondering what to read next?

Wondering what to read next?

Gradual Improvement, Not Radical Change

“Little Steps Add Up to Brilliant Acceleration”

Small Kaizen questions help you determine the next baby step and allow the brain to focus on problem-solving and action

Minimalist, steady, incremental change helps your brain overcome the fear that impedes success and creativity

Wondering what to read next?

Looking for the Best Can Be Counterproductive

Idea for Impact: Never underestimate the power of a simple idea that is well executed.

Wondering what to read next?

Many High-IQ People Tend to Be Overthinkers: They Incessantly Overanalyze Everything

Intelligence Can Sometimes Be a Curse

Intelligent People Overanalyze Everything, Even When it Doesn’t Matter

Idea for Impact: Don’t Make Everything Seem Worse Than it Actually is!

Wondering what to read next?

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

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

Opportunity Costs Apply to All Your Choices—Big and Small

Charlie Munger’s Wisdom on Opportunity Cost

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

Wondering what to read next?