This post is going to be a different than my normal personal finance post. If you have been reading RWM, you’ll know that my financial system focuses across the spectrum of earning, saving, and investing. In order to increase the value of your time while actively earning, you need to pick up valuable skills/experiences.
As a result, I think it’s valuable to stop and identify what you consider your most important learnings at various points in your career.
So today I am going to distill my 4 most useful learnings after 3 years of consulting with Bain & Company.
Lesson 1: The Pareto Principle
This is as much a life lesson as it is a lesson on business. The Pareto Principle (sometimes referred to as “80/20”) says that for many outcomes, 80% of the consequences come from 20% of the causes. Put another way, 20% of the effort will often yield 80% of the result.
This is a fairly powerful framework for approaching business problems, work prioritization, and life itself. Let’s take some examples.
Business problems
I once worked with a company that was looking to massively reduce costs. We were tasked with identifying the cost saving opportunities and telling them which to implement.
We identified dozens of savings opportunities and ranked them by their potential for savings and complexity to implement. While we could have suggested they implement all of them, this would have required a massive expenditure of resources and redirected the company’s focus from several important growth initiatives. Instead we focused on the couple areas that were the largest savings drivers with the lowest complexity, and this helped them achieve their savings target.
*Illustrative charts
Life applications
I take this approach all the time in life…sometimes more successfully than others (My girlfriend gets mad when I apply it to household chores like cleaning…but otherwise it’s pretty useful).
In particular, I have found that taking this approach to learning new things is extremely helpful.
I tend to believe that ‘perfect is the enemy of good’. I like to learn new things / pick up new hobbies, but I want to spend my time making massive leaps in progress (on the 20% end of the curve) rather than spend exorbitant amounts of time on incremental progress (the 80% tail of the curve). In the long run, I think this will help me spend my time in the most efficient ways.
Lesson 2: Your intuition is right more than you’d expect
One of the biggest unlocks for me has been becoming far more hypothesis-oriented than I was before and gaining confidence in my ability to make decisions with limited information.
Unlike math problems that I did in school, most of the problems I have tackled since starting work haven’t had obvious or provable solutions (at least not in a reasonable amount of time). As a result, you learn to work backwards from a hypothesis. You take a very limited amount of information, come up with your potential solution, and work backwards to understand whether the answer is ‘good enough’. Remember, perfect is the enemy of good.
What has been particularly interesting is that over time you start to realize that your initial hypothesis frequently meets that threshold. And yes, sometimes you are 100% wrong, but that’s helpful to find out as well, as it’ll point you in the right direction.
Lesson 3: There Is Plenty of Opportunity
It’s relatively easy to look back over time and believe it was far easier to be successful in the past. Businesses were less efficient, information asymmetries were greater, and there was a lot less money chasing opportunities.
Hindsight is 20/20.
It would be a mistake, however, to think that all the low-hanging fruit has been taken, that the obvious market needs have been filled, and that most corporate inefficiency has been dealt with.
In the past 3 years I have seen countless examples of areas where we have been able to meaningfully help already successful companies improve further (through more effective pricing, a data driven approach to strategy, simply giving people a forum to voice opinions, etc.)
There is even more opportunity when it comes to new solutions. The past year has proven that individuals are more willing than ever to adopt new solutions to issues they never knew they had. DTC brands have taken off, teleconferencing needs have created new industries with everyone from Zoom to telehealth providers rapidly growing, crypto has paved the way to scores of adjacent businesses all providing solutions to problems that never existed until fairly recently.
The real challenge is identifying the areas that are going to drive the future and putting yourself in a spot to ride the wave. You could have probably been one of the worst performing employees that Google retained over the last 10 years and still been set for life*.
*At least on the engineering or corporate side
Lesson 4: Relationships Are Everything
As much as I’d like to believe that everyone makes rationale decisions, the evidence usually does not point there. Forming strong relationships (in personal and professional settings) gives you an edge. The most successful people I have seen at getting things done aren’t the ones that conduct the best analysis, but the ones that either had the right promoters, could get the right people in the room together, or were the most persuasive.
Forming relationships with others has just gotten more difficult with the virtual way in which many of us have spent the last year working, but its not impossible. It does take a bit more effort though.
Here are a few things I have seen people do that have worked well:
- Reference people by name
- Find areas of commonality and open discussions with that
- Remember personal details about others
- Set up recurring touchpoints with people you want to keep in touch with
- Ask people lots of questions about themselves / their background
- Keep people posted on things that are happening with you
- Find out what you can do to help others
There are plenty of other things I have learned over the last few years, but these were the 4 that stuck out the most.
This post may seem out of the blue, but at least for now, my flavor of personal finance has more to do with financial freedom rather than early retirement. In pursuit of that, developing a strong skillset and learning from your experiences is critical, because it will set you apart over time and exponentially increase the value of your time.
I would encourage you to take a few minutes to put together a list of your biggest learnings in your current role and write them down so you remember them.
RWM
