Success Secrets: Best of the Year Part 3

I have been reviewing what success techniques have worked best for me in the past year. This is part 3. Part1 is here and Part 2 is here .


A few more techniques that improved my results this year:

Decision-making techniques

Decision trees, Expected Monetary Value, and pencil-and paper rough diagramming of solutions

My interest in decision-tree methodology got re-kindled when I read Charlie Munger’s statement that Warren Buffett thinks naturally in terms of decision trees (I have a lot of posts about Munger here). Thinking about future events, and assigning a probability and quantitative (or dollar) outcome (if possible) to each alternative branch has been a major factor in various trading and investing methodologies I have been following. I also found the various decision-making methods mentioned in Kepner and Tregoe’s The Rational Manager to be very effective.

In some cases all I needed to do was draw a very simple two-line diagram and think “one step” into the future. In my trading methods, I was able to double the efficiency of one of my methods by simply thinking about the results of two alternate hypotheses. In fact, just writing out possible outcomes rather than leaving them in my head made vast differences in my results this year.

Munger and Buffett’s "Circle of Competence"

Methodologies that succeed are to be cherished, reflected-upon, and improved. They should not be replaced unless other methodologies can be shown to be superior. This does not mean that new ideas should not be explored. Of course, new ideas and innovations are crucial. But Munger reminds us that many fortunes can be made with just a few, core insights. Those successful insights must not be changed or discarded on a whim. I found that I made great progress by improving on things that had quantitatively worked already, although it bruised my ego that these slight improvements often succeeded better than more “original” ideas. The more “mercilessly” I “interrogated” new procedures by comparing them to existing successful ones, the more powerful my “circle of competence” became. The circle is a small, charmed space, and not a lot gets in, but what does get in produces strong results.

GTD Techniques

In October 2006 I began assimilating Robert Allen’s Getting Things Done: The Art of Stress-Free Productivity . In particular, my initiation of the Weekly Review, a good filing and archiving system, and keeping a handy pocket notebook nearby have truly helped me “know what I’m doing”. My “Agendas” folder helps me collect thoughts I want to pursue with specific individuals, and my “Waiting For” folder helps me keep track of ongoing “trigger” events out into the future. Allen’s unique insights into how to stay organized allow the human mind to free itself from being a “to do list”, and to expand into the creativity and results-producing engine it can be. Once I began to “trust the system”, my productivity began to soar. Once you begin to feel the power of knowing that data is being sent to a trusted place, the feeling of relief is palpable. You never want to go back.

Final Thoughts on 12 months of results:

As Munger might say, “Me” is less important than “Results”
Follow the data
Entertain all new ideas, but put your “big money” on what works
Seek the highest opportunity cost possible
Trust and improve your Circle of Competence
Think on Paper
Walk through decision scenarios
View progress as an endless process