Procrastination

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

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 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.

When Stress is Good

November 5, 2018 by Nagesh Belludi Leave a Comment

Stress and Anxiety Can Lead to Improved Performance

Why Some Stress Is Good for You Many people claim that they work best under pressure. There’s some truth to that. Stress is a natural response in highly competitive environments. Before an exam, important meeting, or contest, your heart rate rises and so does your blood pressure. You become more absorbed, alert, and efficient.

However, this favorable relationship applies only up to a certain level of stress. Past this level, stress impairs your performance—and eventually your heart.

In 1908, Harvard psychologists Robert Yerkes and John Dodson first described the beneficial and harmful effects of stress (“psychological arousal”) on performance in a graph the shape of an upside-down U. According to the Yerkes-Dodson Law, the ascendant curve reflects the energizing effect of arousal. The descendant curve reflects the negative effects of stress on thinking and learning, or performance in general.

Too Much Anxiety and Stress Impairs Performance, but so Does Too Little: The Yerkes-Dodson Law

Many physiological studies have demonstrated that stress enhances your performance by causing your brain to use more of its capabilities, improve memory and intelligence, and increase productivity. Without stress, athletes, performers, executives, and students are likely to underachieve.

There is an optimum level of arousal for every kind of task. So how do you find the right balance? How do you get yourself into the performance zone where stress is most helpful? How much stress is good? The answers depend on individual disposition, the types of stressors, the nature of the task itself, and perceptions of what is stressful to you.

When Stress is Good: The Yerkes-Dodson Law

Idea for Impact: Stress at Work May Be Inevitable but it Doesn’t Have to Be Detrimental

Stress can be a motivator. But don’t seek out stress—less of it is better. Make the stress you do have work for you. Becoming conscious of stress as a potential positive can reduce the harm it causes.

Develop an awareness of when you hit the limits beyond which working longer or harder is counter-productive (sportsmen tend to choke under intense pressure.) When you feel overwhelmed, look for ways to reduce or eliminate the stressors so you can become more productive again. Ask for help.
Performance deteriorates when your stress level is either too high or too low for a given task. Seek the optimal level of anxiety that can impel you forward without causing you to fight back or give up.

Idea for Impact: The Right Level of Anxiety Can Be a Positive Force for Driving Employees Forward

Anxiety and optimal performance is an individual affair. The Yerkes-Dodson Curve shifts as the performers become established and experienced with the undertaking.

Astute managers repeatedly assess and re-assess where their team members land on the Yerkes-Dodson Curve. Managers can identify over-stressed or under-motivated circumstances with employees and intervene quickly to tailor the level of stress.

That Burning “What If” Question

August 8, 2018 by Nagesh Belludi Leave a Comment

The Rightness of Past Choices Become Obvious in the Clarity of Future Hindsight

In the Czech novelist Milan Kundera’s philosophical novel, The Unbearable Lightness of Being (1984; film adaptation, 1988) the womanizing protagonist Tomáš deliberates if he wants to be single or with his eventual wife Tereza:

We can never know what to want, because, living only one life, we can neither compare it with our previous lives nor perfect it in our lives to come.

…

There is no means of testing which decision is better, because there is no basis for comparison. We live everything as it comes, without warning, like an actor going on cold. And what can life be worth if the first rehearsal for life is life itself? That is why life is always like a sketch. No, “sketch” is not quite the word, because a sketch is an outline of something, the groundwork for a picture, whereas the sketch that is our life is a sketch for nothing, an outline with no picture.

The Mournful “What If” is a Powerful and Emotional Inquiry about Alternative Lives You Could Have Lived

Oftentimes, when dealt with adverse circumstances, life’s self-criticism apparatus kicks in. Plagued with self-doubt, life asks the questions “Why did things turn out this way?” and “Why wasn’t this experience what I expected it to be?” Regrets gnaw in the back of the mind, “How would my life be different?” and “I never shouldn’t have done this.”

And when you cognize life in hindsight, your lived life doesn’t usually compare favorably with your imagined, could-have-been life.

And that’s why you should refrain from ruminating about those non-lived lives—such projections of your mind only instigate sorrow.

Idea for Impact: Sketch the Picture of Our Own Choosing

That Burning 'What If' Question One of the most effective ways of eliminating regrets is to eliminate the underlying ignorance that is the cause. The wise fancy what the past was once and appreciate how it is molded them. But they no longer desire to live there or evoke the choices of the life that could have been.

As the great Stoics taught, you must reject regret, appreciate that you are now the distillation of all your past choices and experiences, and take the next positive little step. Reflecting on “What do I want to make of all of this?” and “What am I looking forward to?” can clarify your potential.

As Viktor Frankl emphasized in his 1946 masterwork on positive approach to psychological treatment, “Live as if you were living already for the second time, and as if you had acted the first time as wrongly as you are about to act now!”

Who wants to lament the life not lived when you can do dive into the life you’re actually in and do so much good now?

Live this choice. Sketch the picture of our own choosing.

Writing To-Do Lists Can Help You Sleep

June 4, 2018 by Nagesh Belludi Leave a Comment

Sleeplessness Can Both Cause Anxiety and Be Caused by Anxiety

Writing To-Do Lists Can Help You Sleep - Zeigarnik Effect If you have recurrent difficulty with falling asleep or staying asleep, making a to-do list may help.

The authors of a Baylor University study suggest that not only can anxiety about unfinished tasks affect your sleep, but improving your sleep problem can also help symptoms of anxiety.

The authors’ experiment asked 57 students to spend a night in a sleep lab with no gadgets or distractions. Five minutes prior to an enforced sleep time, one half of the volunteers created a list of things they wanted to do over the upcoming days and the other half recorded tasks that they had completed during the previous few days. The researchers examined the participants’ brain activity during the night and established that those who wrote their to-do lists fell asleep nine minutes sooner on average.

How Ruminating about Unfinished Tasks Can Keep You Awake

The beneficial effects of a humble to-do list on your sleeplessness can be explained by the Zeigarnik Effect, the tendency for interrupted tasks and thoughts to be evoked better than completed tasks.

As I’ve written previously, Psychologist Bluma Zeigarnik, who studied this phenomenon, theorized that incomplete tasks can incite “psychic tension” and can inundate you with a constant stream of reminders. Just the modest act of capturing how you’re going to deal with the unresolved tasks in a to-do list can achieve a sense of completion and respite.

According to Michael Scullin, the lead researcher of the aforementioned Baylor study, “there’s something about the act of writing, physically writing something on paper, that helps us hit the Pause button.”

When you have a task that’s unfinished, it’s on your mind more than any task you have completed. If you test people’s memory for things that were unfinished versus things that were completed, people remember the things that were unfinished a lot better. It seems that unfinished tasks rest at what we call a heightened level of cognitive activation. We think that’s the key ingredient. With our day-to-day lives and work schedule, unfinished tasks pile on one another and create this cognitive activation that’s difficult to set aside—unless, of course, you write about it.

Idea for Impact: Write a to-do List Before Hitting the Sack Every Night

Some folks I know create a ‘brain dump’ just before bedtime—they not only jot down any worries or unfinished tasks from the day, but also create a plan for resolving their worries and stressors.

How to Elevate Timing from Art to Science: Book Summary of Daniel Pink’s ‘When: The Scientific Secrets of Perfect Timing’

May 29, 2018 by Nagesh Belludi Leave a Comment

Daniel Pink’s When: The Scientific Secrets of Perfect Timing (2018) explores how the quality of the decisions we make are correlated with their timing.

Pink is an expert on motivation and management, and an author of such best-selling books as Drive: The Surprising Truth About What Motivates Us (2009) and To Sell is Human: The Surprising Truth About Moving Others (2012.) He describes When as not so much a “how-to” guide for making the most of our lives, but as a “when-to” manual for individual and group work.

The Best Times of the Day to Make Optimum Decisions

Pink’s principal theme is chronobiology—the science of how the body’s biological clocks can influence our cognitive abilities, moods, and attentiveness.

Drawing on scientific research on the science of timing, Pink concludes that the mental acuity, creativity, productivity, temper, and frames of mind for most folks follow an identifiable “peak-trough-rebound” template. Most people get their best work done in the mornings, suffer a trough of mental weariness in the afternoon, and experience a late-evening burst:

Our cognitive abilities do not remain static over the course of a day. During the sixteen or so hours we’re awake, they change often in a regular, foreseeable manner. We are smarter, faster, dimmer, slower, more creative, and less creative in some parts of the day than others. … [R]esearch has shown that time-of-day effects can explain 20 percent of the variance in human performance on cognitive undertakings.

Needless to say, this “peak-trough-rebound” phenomenon is fairly universal but differs among individuals. There are “larks” who do remarkably well in the mornings and “owls” who tend to embrace their late night productivity habits.

Optimizing Your Day with Daily Rhythms

According to Pink, “peak-trough-rebound” is attributable to the body’s relatively low temperature when we wake up. The increasing body temperature gradually boosts our energy level and alertness, which consequently “enhances our executive functioning, our ability to concentrate, and our powers of deduction.” As the morning evolves, we become more focused and alert until we hit a peak. Then our energy level wanes and our alertness declines, only to be restored in early evening.

Pink concludes that mornings are good for decision-making and that errors increase in the afternoons. Studies recommend that we schedule surgery in the mornings when surgeons tend to make fewer mistakes and avoid petitioning a traffic ticket in the afternoons because judges tend to be less considerate than in the mornings.

“Breaks are Not a Sign of Sloth but a Sign of Strength”

Pink emphasizes the risks of clouded judgment that characterizes the afternoon “trough.” As an example, Pink speculates that the sinking of the RMS Lusitania in 1915 was about the time of day—it’s captain’s ill-fated decisions were made in the afternoon following a night of no sleep.

With case studies of error-reduction in hospital operating rooms, Pink suggests “vigilance breaks” (quick team huddles for reviewing checklists and verifying courses of action) and restorative breaks (naps, short physical activities, or mental diversions) during troughs to “recharge and replenish, whether we’re performing surgery or proofreading advertising copy.”

“Timing is Everything” and “Everything is Timing”

Based on the mentioned studies’ correlations and causations, Pink offers advice further than daily scheduling—from marriage to switching careers and sports:

The best time to perform a specific task depends on the nature of that task. Identify your chronotype (Pink offers an online survey,) understand your task, and decide on the most suitable time. Do not let mundane tasks sneak into your peak period. Additionally, if you’re a boss, understand your employees’ work patterns and “allow people to protect their peak.”
Tasks that need creativity and a flash of insight (rather than analytical perspicacity) are best done during the late-evening recovery period when the mind tends to be less inhibited and more open to inventive associations.
Harness the psychological power of beginnings—New Year’s Days, birthdays, and anniversaries are all natural times to make resolutions and start working on goals. Other opportunities for fresh starts include the first of the month, the beginning of the week, and the first day of spring.
“Lunch breaks offer an important recovery setting to promote occupational health and well-being”—especially for “employees in cognitively or emotionally demanding jobs.”
Afternoon coffee followed by 10- to 20-minute naps and leisurely daily walks are “not niceties, but necessities.” Drink a cup of coffee just before a nap—the 25 minutes it takes for the caffeine to kick in is the optimal length of a restorative siesta.
Morning workouts are best for people aiming to burn fat, lose weight, or build sustainable exercise habits. Folks trying to reach personal bests should seek out the afternoons, when physical performance tends to reach its zenith.
Studies suggest that people are most likely to run their first marathons at ages ending in 9—but those ages are also when people are most prone to cheating on their spouses.
According to one survey, switching jobs every three to five years in your early career can lead to the biggest pay increases.

Recommendation: Skim Daniel Pink’s ‘When’ for the Life Hacks

Daniel Pink’s When: The Scientific Secrets of Perfect Timing offers little fresh substance. Many of the cited studies’ implications, causations, and correlations are open to debate.

A speed-read of When, especially of the takeaway points at the end of each chapter, can offer some practical tips about when you are likely to be creative, focused, and least error-prone.

Parenthetically, the third and the final section on “Synching and Thinking” is out-of-place to Pink’s principal theme of timing, even if the case study of the synchronized effort that constitutes the Mumbai Dabbawala lunchbox delivery system is interesting. Pink explains that the importance of “syncing up” with people around you through a collective sense of identity and a shared purpose is “a powerful way to lift your physical and psychological well-being.”

Complement skimming Daniel Pink’s When with Michael Breus’s The Power of When (2016; Talk at Google.)

What Your Messy Desk Says About You

March 13, 2018 by Nagesh Belludi Leave a Comment

What Your Messy Desk Says About You

Appearances are Important

Your office and desk must seem organized. A messy office or a cluttered desk can not only impede your space and cramp your style, but also affect how your peers and superiors perceive you.

Clutter can drag you down, sap your energy, and reduce your efficiency. However, if clutter is your style, you should have every right to work the way you like to work.

A messy desk isn’t a professional flaw, but clutter may reflect of your competence. Untidiness can give an impression that your job may be too much for you to handle, or that you can’t get your thoughts and information organized.

How to Conquer Your Paperwork Crisis

As opposed to sorting through everything in your drawers, desktop, and filing systems, consider removing the whole lot somewhere else and only allowing the important things back.

Stephanie Winston, author of The Organized Executive, famously wrote that each clutter represents a decision not made. In this bestselling book, she recommends the “TRAF” system, a precursor to the “Inbox Zero” discipline that I’ve previously discussed on this blog. TRAF is an acronym for the four decisions you must make on each piece of paper that arrives at your desk. You can Toss it away, Refer or delegate it to someone else, Act on it, or File it if it absolutely deserves to be achieved. Don’t keep anything merely for reasons of habit or for sentimental reasons.
Don’t start tomorrow with today’s mess. Spending ten minutes at the end of your workday gearing your desk up for the next day can help you stay organized.

After you’ve taken steps to reorganize your office, sustain your system. Look for ways to further streamline and fine-tune your organization framework.

Idea for Impact: Don’t Let Clutter Spin Out of Control and Affect Other’s Perceptions

Taking too much time to organize can be just as ineffective—don’t end up spending so much time organizing that you don’t have the time to do anything else. (This is one of the shortcomings of David Allen’s Getting This Done system.) Learn to put things away as soon as you’re done working on them.

Being organized not only means less time wasted looking for things, but also rewards you with a greater sense of control and a favorable professional image.

How to Organize Your Inbox & Reduce Email Stress

January 19, 2018 by Nagesh Belludi Leave a Comment

The recipe for staying on top of your email is to be ruthless about what you send and receive, and to focus on how you process your inbox. Here are thirteen practices that may help you be in command of your inbox.

Turn off all new email notifications.
Limit the number of times you access your email.
Avoid checking your email during the first hour of the day. Work on something that requires your energy and focus.
Don’t have your email software opened … keep it closed until it’s time to “do” email.
When you “do” email, follow the “Process to Zero” technique. Merlin Mann, the productivity guru who popularized this technique, emphasized, “Never check your email without processing to zero.” Handle every email just once, and take one of these actions: delete or archive, delegate, respond, or defer.
If you can process an incoming email in a minute or two, act on that email immediately, using the Two-Minute “Do-it-now” Rule.
For any email that requires inputs or deliberation, start a reply email, and file it in the “Drafts” folder of your email software. Set aside a block of time to crank though all such draft emails.
Tell people with whom you communicate the most that you intend to check your email intermittently. Encourage them to telephone or drop by if they need a quick response.
If you’ve been dreading a large backlog of email, consider deleting everything that’s over three weeks old. If the contents of any of those emails were of any consequence, somebody would have appraised you of their substance.
Reduce the number of emails you send. Decrease the number of people you carbon-copy on emails. Consider meetings or telephone calls for more effective interaction.
Curb the number of email messages you receive. Ask to be removed from irrelevant newsgroups, and unsubscribe from marketing emails. Learn how to use the “filter” feature on your email software.
Don’t get sucked into replying to every email. Reply only to those that are of relevant to your priorities. Let other communicators follow up with you if they need a reply.
Empty your inbox by the end of the day and process every message.

Idea for Impact: Don’t let an overflowing inbox be a big distraction (read my article on the Zeigarnik Effect.)

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

December 8, 2017 by Nagesh Belludi Leave a Comment

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.

Think in Terms of Habits & Systems Rather Than Goals

September 18, 2017 by Nagesh Belludi Leave a Comment

Effective Goals Can Challenge, Motivate, and Energize

Most folks fail to understand how goals work: goals don’t stipulate behaviors.

Goals relate only to the outcomes and results of specific behaviors—they are not about the actions and behaviors that can bring about those results.

In other words, goals can only provide direction and can even impel you onward in the short-term, but ultimately, a well-designed system—when put into habitual practice—will always prevail.

Developing a system is what matters to discipline and self-control. Committing to the process is what makes the difference. As New York Times journalist Charles Duhigg wrote in his bestselling The Power of Habit: Why We Do What We Do in Life and Business (2012,) only a systematic approach works:

Habits are powerful, but delicate. They can emerge outside our consciousness or can be deliberately designed. They often occur without our permission but can be reshaped by fiddling with their parts. They shape our lives far more than we realize—they are so strong, in fact, that they cause our brains to cling to them at the exclusion of all else, including common sense.

An example of a goal: “I want to lose 10 pounds before my sister’s wedding.” A habit/system would be, “What dieting and exercising changes can I make with the aim of looking better at my sister’s wedding?”

Another example of a goal: “How do I amass $1 million before I turn 35?” A habit/system would be, “How do I develop financial disciplines and investment methods to get richer over time and achieve a net worth of $1 million by the time I’m 35?”

Idea for Impact: Only by creating habits and systems to achieve goals can you live more of the life you aspire to. As a creature of habit, when you are doing something that is routine, you don’t need to be deliberately engaged in the task in the same way as if you were doing something that is not habitual.

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.

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