LET’S start with an unsettling truth: Change will never be over. People want all the loose ends in life to be tied up neatly like they are at the end of a movie.
In reality, life is more like a serial than a movie. The show is never over in the real world. You have to be ready to battle formidable competitors day after day without a break, and you will need to find ways to fix all flat tyres while moving!
Leaders often try to relieve stress by giving people the promise of calm after some reorganisation or restructuring. They then watch employees’ trust take a dive when the next change is announced. Instead, be honest. Tell them: “We are never going to be done. Be excited; you will never be bored again!”
While it is true that every improvement is the result of change, not every change is an improvement. The past has value, and it will continue to have value.
At the same time, you cannot cling to the past. You need to take the best from the past and the present to forge your way into the future.
In the struggle for the best strategy, you need to get the best out of those who advocate change and those who want to maintain status quo. Neither is completely correct, so don’t take sides!
In this changing world, experience is valued, but you cannot rest on your laurels. To do that is to guarantee obsolescence. In short, you have more tension.
Use your learning skills to master new competencies or lose out to those who are willing to do just that. Value what you know but keep investing 5 per cent of your time in your next career at all times. Choose lifelong learning.
In this age of constant change, the commitment to quality is no longer just an option; it is the entry ticket into the global economy.
But don’t wait too long to embrace change. Many companies are so concerned about doing things perfectly that they settle for perfecting outdated processes. In the pursuit of perfection, they create risk-averse environments.
Build in surprise and adventure to match your commitment to quality. The earlier you take risks and make errors, the sooner you can learn from the experience.
The most important task of any leader is to keep hope alive. Good leaders promote a healthy tension by balancing the hope of strategic success with a realistic assessment of the obstacles that must be overcome to reach it. They tell the truth – life is difficult but teams can collectively overcome the obstacles if they persevere. Sell the hope. Tell the truth. Believe in your people.
A finance department sign says: “Nothing inspires genius like a tight budget.” But people are tired of hearing about achieving more with less.
The old message was do more with less. Today, it is do less with less. Be focused, be flexible, and get everyone working smart on real priorities.
Friday, March 28, 2008
Smart organisation, smarter workers
THINKING critically is very important because it enables you to analyse, evaluate and restructure thoughts and ideas, decreasing the risk of thinking or acting irrationally.
However, even when a person uses his critical thinking skills, mistakes can still happen because his ego gets in the way or he does not have all the facts.
WHAT IS CRITICAL THINKING
Critical thinking is based on concepts and principles, not on hard and fast, or step-by-step, procedures.
Thinking analytically is important wherever the quality of thought significantly impacts the quality of life. For example, success in human life is tied to success in learning. Thus, reading, writing, speaking, and listening can all be done critically or uncritically.
A well-cultivated critical thinker
Raises vital questions and problems, formulating them clearly and precisely;
Gathers and assesses relevant information, using abstract ideas to interpret it effectively;
Arrives at well-reasoned conclusions and solutions, testing them against relevant criteria and standards;
Thinks open-mindedly, assessing assumptions, implications and practical consequences; and
Communicates effectively with others in figuring out solutions to complex problems.
CRITICAL THINKING IN AN ORGANISATION
The goal of critical thinking is to help an organisation’s employees behave more intelligently and adapt to reality quickly and effectively.
Such thinking must be an integral part of the organisation’s culture so that issues that require attention can be identified and resolved. One way to embed such thinking in the organisational culture is to create systems that require it.
A system in this context means a mandated series of concrete, observable steps performed by people in the organisation, as opposed to mental activities that cannot be observed and are completed at the discretion of an individual thinker. When critical thinking is embedded in the organisation, all the employees will adhere to the same system.
What an organisation asks of employees in order to navigate its formal system channels is to think in a particular direction, and know what is valued.
The right question leads a person to search for relevant information to find an answer. The thinker is made aware of relevant issues and is more alert to what additional information is needed.
The right question can also trigger the right type of analysis. For example, if you identify a problem and are then asked to name the cause of the problem, you will attempt to answer the question using the available information and the principles of cause and effect.
Training might expand your ability to answer cause-andeffect questions, but it is the system that triggers and supports the effort.
BASIC CRITICAL THINKING FRAMEWORK
The basic framework can be implemented in any learning setting to effectively move learners towards critical thinking. This interdisciplinary framework, which is built upon existing theories and best practices in cognitive development, effective learning environments and outcome-based assessment, provides coaches with a useful framework in which to guide people towards an active-learning environment.
STEP 1: DEFINE THE PURPOSE
Set specific behaviours in action
Determine a clear outcome
STEP 2: ENCOURAGE INTERACTIVE DISCUSSION
Develop appropriate questions
Employ questioning techniques
STEP 3: PRACTISE BEFORE ASSESSMENT
Select activities that promote active learning
Utilise all components of active learning
STEP 4: FEEDBACK AND ASSESSMENT OF LEARNING
Monitor group activities
Provide feedback for success
Most people unreservedly follow authority figures in the workplace. They don’t question, are not curious, and don’t challenge these people who claim special knowledge or insight.
In other words, they don’t think for themselves, but rely on others to think for them. Perhaps it is time they gave their thoughts a chance.
However, even when a person uses his critical thinking skills, mistakes can still happen because his ego gets in the way or he does not have all the facts.
WHAT IS CRITICAL THINKING
Critical thinking is based on concepts and principles, not on hard and fast, or step-by-step, procedures.
Thinking analytically is important wherever the quality of thought significantly impacts the quality of life. For example, success in human life is tied to success in learning. Thus, reading, writing, speaking, and listening can all be done critically or uncritically.
A well-cultivated critical thinker
Raises vital questions and problems, formulating them clearly and precisely;
Gathers and assesses relevant information, using abstract ideas to interpret it effectively;
Arrives at well-reasoned conclusions and solutions, testing them against relevant criteria and standards;
Thinks open-mindedly, assessing assumptions, implications and practical consequences; and
Communicates effectively with others in figuring out solutions to complex problems.
CRITICAL THINKING IN AN ORGANISATION
The goal of critical thinking is to help an organisation’s employees behave more intelligently and adapt to reality quickly and effectively.
Such thinking must be an integral part of the organisation’s culture so that issues that require attention can be identified and resolved. One way to embed such thinking in the organisational culture is to create systems that require it.
A system in this context means a mandated series of concrete, observable steps performed by people in the organisation, as opposed to mental activities that cannot be observed and are completed at the discretion of an individual thinker. When critical thinking is embedded in the organisation, all the employees will adhere to the same system.
What an organisation asks of employees in order to navigate its formal system channels is to think in a particular direction, and know what is valued.
The right question leads a person to search for relevant information to find an answer. The thinker is made aware of relevant issues and is more alert to what additional information is needed.
The right question can also trigger the right type of analysis. For example, if you identify a problem and are then asked to name the cause of the problem, you will attempt to answer the question using the available information and the principles of cause and effect.
Training might expand your ability to answer cause-andeffect questions, but it is the system that triggers and supports the effort.
BASIC CRITICAL THINKING FRAMEWORK
The basic framework can be implemented in any learning setting to effectively move learners towards critical thinking. This interdisciplinary framework, which is built upon existing theories and best practices in cognitive development, effective learning environments and outcome-based assessment, provides coaches with a useful framework in which to guide people towards an active-learning environment.
STEP 1: DEFINE THE PURPOSE
Set specific behaviours in action
Determine a clear outcome
STEP 2: ENCOURAGE INTERACTIVE DISCUSSION
Develop appropriate questions
Employ questioning techniques
STEP 3: PRACTISE BEFORE ASSESSMENT
Select activities that promote active learning
Utilise all components of active learning
STEP 4: FEEDBACK AND ASSESSMENT OF LEARNING
Monitor group activities
Provide feedback for success
Most people unreservedly follow authority figures in the workplace. They don’t question, are not curious, and don’t challenge these people who claim special knowledge or insight.
In other words, they don’t think for themselves, but rely on others to think for them. Perhaps it is time they gave their thoughts a chance.
Choose the right words
The wrong tone of voice and negative body language can cause problems when dealing with other people, particularly customers and staff.
However, using the wrong words can also be a source of trouble.
There are certain “trigger” words that cause people to become more difficult, especially in emotionally charged situations and they should be avoided. These include:
“Have to”, as in: “You’ll have to speak to the sales department yourself.”
The words “have to” sound very controlling and, if uttered in a tense situation, sound like an order. If you are a manager, your subordinate will resent you “bossing” him about. If it is said to a peer, he is likely to tell you to mind your own business – even if you are right.
Why not try: “Are you willing to ??” or just a straightforward “Will you ?.?”. The tone is neutral and implies that the person has a choice to do something.
“I can’t” or “You can’t”, as in: “I can’t do anything about that” or “You can’t do that”.
“Can’t” can be replaced with “I’m unable to because ?.”. It offers a reason and sounds less like a rejection.
“I’ll try”, as in: “I’ll try and speak to the finance department today.”
“I’ll try”, which is pretty wishy-washy, can be replaced with something more honest. “This is what I can do” or “This is what I’m unable to do” offers the enquirer a specific answer.
“But”, as in: “I agree with what you’re saying but ?”
“But” is a word that contradicts what was said before it. Replace it with “and” or “however” (which is a soft “but”). Instead of saying “but”, you could leave it out altogether.
For example, instead of saying, “I agree with what you’re saying but I can’t help you”, say, “I agree with what you’re saying. The reason I’m unable to help you is ?”
At the end of the day, the answer to a customer or one of your staff could still be “no”.
However, choosing your words more carefully will have a more positive affect on how he or she reacts and ultimately responds to you.
“Sorry”, as in: “I’m sorry about that.”
“Sorry” is one of the words to avoid because it is so overused. Think of the number of times you have complained or commented about something and you hear, “Sorry about that”.
You may find the remark insincere.
If you are going to use “sorry”, then you need to use it as part of a sentence that acknowledges a specific problem, as in: “I’m sorry you’ve been receiving so many complaints, Mary.”
Sometimes it is appropriate to use the word “apologise” instead of “sorry”, as in: “I apologise for not getting you that information sooner.”
For smoother interactions with others, watch the words you use.
However, using the wrong words can also be a source of trouble.
There are certain “trigger” words that cause people to become more difficult, especially in emotionally charged situations and they should be avoided. These include:
“Have to”, as in: “You’ll have to speak to the sales department yourself.”
The words “have to” sound very controlling and, if uttered in a tense situation, sound like an order. If you are a manager, your subordinate will resent you “bossing” him about. If it is said to a peer, he is likely to tell you to mind your own business – even if you are right.
Why not try: “Are you willing to ??” or just a straightforward “Will you ?.?”. The tone is neutral and implies that the person has a choice to do something.
“I can’t” or “You can’t”, as in: “I can’t do anything about that” or “You can’t do that”.
“Can’t” can be replaced with “I’m unable to because ?.”. It offers a reason and sounds less like a rejection.
“I’ll try”, as in: “I’ll try and speak to the finance department today.”
“I’ll try”, which is pretty wishy-washy, can be replaced with something more honest. “This is what I can do” or “This is what I’m unable to do” offers the enquirer a specific answer.
“But”, as in: “I agree with what you’re saying but ?”
“But” is a word that contradicts what was said before it. Replace it with “and” or “however” (which is a soft “but”). Instead of saying “but”, you could leave it out altogether.
For example, instead of saying, “I agree with what you’re saying but I can’t help you”, say, “I agree with what you’re saying. The reason I’m unable to help you is ?”
At the end of the day, the answer to a customer or one of your staff could still be “no”.
However, choosing your words more carefully will have a more positive affect on how he or she reacts and ultimately responds to you.
“Sorry”, as in: “I’m sorry about that.”
“Sorry” is one of the words to avoid because it is so overused. Think of the number of times you have complained or commented about something and you hear, “Sorry about that”.
You may find the remark insincere.
If you are going to use “sorry”, then you need to use it as part of a sentence that acknowledges a specific problem, as in: “I’m sorry you’ve been receiving so many complaints, Mary.”
Sometimes it is appropriate to use the word “apologise” instead of “sorry”, as in: “I apologise for not getting you that information sooner.”
For smoother interactions with others, watch the words you use.
Make a team effort
There is no fixed style of leadership to get things done. Leadership styles must suit the demands of the situation and bosses should be able to change their approach when required.
Remember, the way you achieve your results as a leader is not just by what you do, but rather by what your people do.
In this hyper-speed global economy, the relationship between bosses and employees has changed. Employees now must take personal responsibility for the company’s competitiveness.
They have to accept the reality that their future and the attractiveness of their jobs are directly tied to the company’s performance.
As a leader, you should gain the respect of your subordinates. You may not always be liked, because many decisions that effective leaders need to make may be unpopular with at least some of the people. Cultivate an ethical culture.
A few bad apples can very quickly bring your company to its knees, especially if your organisation depends on intellectual capital.
Every action you take must demonstrate your ethical values. Your team members will take the cue from you, even if you don’t think they are watching you.
It is important that you identify the strengths and weaknesses of every member of your team. You can slot them in one the following groups:
Water-walkers: This group consists of capable, intelligent and quick-thinking people. Take care of them. They can go right across the street and get paid more than what you are currently paying them.
Speed-breakers: Your speed-breakers are those who will readily give you the reasons why a new idea won’t work out without even exploring alternatives. They slow down the progress of the entire organisation. Move them away from departments such as corporate planning and product development.
Actors: These people put up a show in your presence and project themselves as performers, when actually they are not. The sooner you identify them, the better it is for group morale and productivity.
Routine specialists: They carry out all the routine, mundane activities and keep themselves occupied. They meticulously follow procedures. Use them for back-end jobs. But make sure they are efficient in what they do.
Apart from understanding what your employees are capable of, you should also keep the following guidelines in mind. They will help you to perform better as a leader.
Don’t let crisis manage you: You will be a more effective leader when you show that you can handle a crisis without losing control of the situation.
There is no room for gossip: Gossip is a destructive force and undermines other people in the workplace. Even listening to gossip creates a hostile environment.
Concentrate on the big picture: If a company wishes to create value and win additional business, then it is not a matter of whether to change. What is important is how fast and how often to do so. Leaders worry less about specific parts and more about the whole.
Watch your moods: Be aware of how your moods and emotions affect other people. Every word, every nuance, every gesture by the leader is interpreted by almost everyone. Every action you take as a leader almost always has an unintended side effect. How you feel is your choice. Don’t give that choice away.
Communicate core values: Make sure that your values are evident to all stakeholders. Align the organisation’s values and practices to those of the employees.
Don’t focus on negative things: Don’t use your mental energy to always look for the negative aspect of things. Always try to find the good in the bad.
Have a vision: Without a goal, there is no focus. Vision gives meaning to why you belong to an organisation. It answers the question, “Where are we going?” A mutual vision that states where you are headed gives your people responsibility for getting the organiastion to where you want it to be.
People in an organisation come together without any real sense of connection. They are in their own separate worlds with their own priorities. You have to bring them together by making them share a common vision. Leadership is a partnership and not a solo performance.
Remember, the way you achieve your results as a leader is not just by what you do, but rather by what your people do.
In this hyper-speed global economy, the relationship between bosses and employees has changed. Employees now must take personal responsibility for the company’s competitiveness.
They have to accept the reality that their future and the attractiveness of their jobs are directly tied to the company’s performance.
As a leader, you should gain the respect of your subordinates. You may not always be liked, because many decisions that effective leaders need to make may be unpopular with at least some of the people. Cultivate an ethical culture.
A few bad apples can very quickly bring your company to its knees, especially if your organisation depends on intellectual capital.
Every action you take must demonstrate your ethical values. Your team members will take the cue from you, even if you don’t think they are watching you.
It is important that you identify the strengths and weaknesses of every member of your team. You can slot them in one the following groups:
Water-walkers: This group consists of capable, intelligent and quick-thinking people. Take care of them. They can go right across the street and get paid more than what you are currently paying them.
Speed-breakers: Your speed-breakers are those who will readily give you the reasons why a new idea won’t work out without even exploring alternatives. They slow down the progress of the entire organisation. Move them away from departments such as corporate planning and product development.
Actors: These people put up a show in your presence and project themselves as performers, when actually they are not. The sooner you identify them, the better it is for group morale and productivity.
Routine specialists: They carry out all the routine, mundane activities and keep themselves occupied. They meticulously follow procedures. Use them for back-end jobs. But make sure they are efficient in what they do.
Apart from understanding what your employees are capable of, you should also keep the following guidelines in mind. They will help you to perform better as a leader.
Don’t let crisis manage you: You will be a more effective leader when you show that you can handle a crisis without losing control of the situation.
There is no room for gossip: Gossip is a destructive force and undermines other people in the workplace. Even listening to gossip creates a hostile environment.
Concentrate on the big picture: If a company wishes to create value and win additional business, then it is not a matter of whether to change. What is important is how fast and how often to do so. Leaders worry less about specific parts and more about the whole.
Watch your moods: Be aware of how your moods and emotions affect other people. Every word, every nuance, every gesture by the leader is interpreted by almost everyone. Every action you take as a leader almost always has an unintended side effect. How you feel is your choice. Don’t give that choice away.
Communicate core values: Make sure that your values are evident to all stakeholders. Align the organisation’s values and practices to those of the employees.
Don’t focus on negative things: Don’t use your mental energy to always look for the negative aspect of things. Always try to find the good in the bad.
Have a vision: Without a goal, there is no focus. Vision gives meaning to why you belong to an organisation. It answers the question, “Where are we going?” A mutual vision that states where you are headed gives your people responsibility for getting the organiastion to where you want it to be.
People in an organisation come together without any real sense of connection. They are in their own separate worlds with their own priorities. You have to bring them together by making them share a common vision. Leadership is a partnership and not a solo performance.
Same old company: Exciting new role
Moving to a new role within your organisation can often be as daunting as the prospect of moving to a whole different company. A new position within your organisation brings with it fresh opportunities, but also new expectations. It’s an opportunity to prove yourself again while building a fresh set of skills.
Role changes are not always simply a matter of promotion, but may come about through a company restructure, merger or the employee’s desire for a career change. Although different in nature to promotions, sideways moves are not always as easy as they first seem. A promotion brings with it the challenges of leadership, but often those who are promoted will find themselves working at a higher level within a team structure they are already familiar with. A sideways move on the other hand, can see employees outside of their comfort zone in an entirely new set of circumstances.
If it is a sideways move to a different department, not only will you have to deal with your new team’s set of procedures, but you will also have to accustom yourself to their perceptions and attitudes, and learn how to cope with them. Your relationships with colleagues will probably change slightly, especially if you have moved into a leadership role.
A particularly tough transition can be when you have to take a step back in the hierarchy in order to move into a new career. These moves are becoming more common in today’s workplace where we have more career changes than ever before. If you find yourself in this situation, don’t let it dishearten you – keep a positive, conscientious attitude by going back to the basics of focusing on your long-term goal and setting the small objectives you need to achieve along the way. When you feel discouraged, imagine yourself looking back on this time from a point in the future when you have achieved your goals. Most people would have been too scared to take the plunge; your courage is enviable!
Review and assess the skills that landed you in your new role in the first place and determine where your best transferable skills are. Think about what you have learnt in your career to date, that you can apply in this next phase – the experience you bring from a different field could give you an unexpected edge. Focus on the positives and remember that your company has taken a chance on you so prove to them it was worth it.
Make sure you are given a clear job description and speak to your manager so you have a clear understanding of expectations. Embrace feedback and solicit it as often as you can.
Above all, it is vital to remember that your career transition is a process, and sometimes what seems like a step backwards, can end up being a step on the way to your career goals.
Role changes are not always simply a matter of promotion, but may come about through a company restructure, merger or the employee’s desire for a career change. Although different in nature to promotions, sideways moves are not always as easy as they first seem. A promotion brings with it the challenges of leadership, but often those who are promoted will find themselves working at a higher level within a team structure they are already familiar with. A sideways move on the other hand, can see employees outside of their comfort zone in an entirely new set of circumstances.
If it is a sideways move to a different department, not only will you have to deal with your new team’s set of procedures, but you will also have to accustom yourself to their perceptions and attitudes, and learn how to cope with them. Your relationships with colleagues will probably change slightly, especially if you have moved into a leadership role.
A particularly tough transition can be when you have to take a step back in the hierarchy in order to move into a new career. These moves are becoming more common in today’s workplace where we have more career changes than ever before. If you find yourself in this situation, don’t let it dishearten you – keep a positive, conscientious attitude by going back to the basics of focusing on your long-term goal and setting the small objectives you need to achieve along the way. When you feel discouraged, imagine yourself looking back on this time from a point in the future when you have achieved your goals. Most people would have been too scared to take the plunge; your courage is enviable!
Review and assess the skills that landed you in your new role in the first place and determine where your best transferable skills are. Think about what you have learnt in your career to date, that you can apply in this next phase – the experience you bring from a different field could give you an unexpected edge. Focus on the positives and remember that your company has taken a chance on you so prove to them it was worth it.
Make sure you are given a clear job description and speak to your manager so you have a clear understanding of expectations. Embrace feedback and solicit it as often as you can.
Above all, it is vital to remember that your career transition is a process, and sometimes what seems like a step backwards, can end up being a step on the way to your career goals.
Manage your money better
HOW did your finances shape up at the end of the tax year? Are you in a better financial position now than 12 months ago? Have your assets increased in value? Are you earning more money?
If you answered “yes” to these questions, that is great.
If you answered “no”, then perhaps it is time to take stock of where you are financially and look at how you can enhance your current situation.
Put things in order
I am always amazed that so many people spend most of their lives at work and totally neglect their personal affairs.
Many of the business people I coach want their professional lives to be in order and admit that their personal affairs are in chaos.
They have no systems for handling this most important area. The household paperwork is disorganised, piled up in a corner of the house somewhere. They have no idea how they spend their money and often have no plans for their financial future.
If you do not organise your personal life, you will not have much of a future to look forward to. Avoid the excuses that you are too tired, do not have the time and do not know how.
Do it now
Here are several tips to get you started:
1 Set up a filing system to store your paperwork.
2 File your papers in categories: Bank, car, children, home, medical, insurance, investment, tax, utilities and so on.
3 Organise direct debits for regular bills.
4 Read, sort and action your snail mail and e-mail daily. This will avoid a big build-up.
5 Make a note in your diary when you need to remember to do things.
6 Check your bank accounts weekly via the ATM or the Internet to keep tabs on your money.
7 Allocate a particular day and time each week to review your personal affairs.
8 Get educated – attend seminars, read books and listen to information on wealth creation. Having knowledge will make it easier to make decisions and take action.
9 If you have a proactive accountant or financial adviser, ask him what you can do to make the most of your money.
10 Review all your insurance policies to ensure you have adequate cover and are getting the best value for your dollar.
11 Record your income and expenses in a spreadsheet to gain a true picture of where your money really goes.
Be proactive
Organising your financial future should be top priority. If you do nothing because it is too much effort, well, think about this.
What would happen if you lose your job or have an accident and receive no income for six months?
How would you and your family survive financially? Do you have your insurance policies in order?
Where will you be in the next five years? Maybe retired and on a pension? Or, perhaps, you have a retirement fund you hope will be enough to live on.
Unfortunately, too many people are under false illusions about how this money will be the answer for a secure retirement.
Hope is not enough. You have to be proactive and seek out people who can help you.
But be careful whom you take advice from and what the motivation is behind their “selling” you their ideas or financial products.
Educating yourself on how to make the most of your hard-earned money so you can create wealth should be a high priority.
After all, if you are not interested in securing your financial future, who is?
If you take control of your personal affairs, you will have peace of mind and can look forward to a secure future.
If you answered “yes” to these questions, that is great.
If you answered “no”, then perhaps it is time to take stock of where you are financially and look at how you can enhance your current situation.
Put things in order
I am always amazed that so many people spend most of their lives at work and totally neglect their personal affairs.
Many of the business people I coach want their professional lives to be in order and admit that their personal affairs are in chaos.
They have no systems for handling this most important area. The household paperwork is disorganised, piled up in a corner of the house somewhere. They have no idea how they spend their money and often have no plans for their financial future.
If you do not organise your personal life, you will not have much of a future to look forward to. Avoid the excuses that you are too tired, do not have the time and do not know how.
Do it now
Here are several tips to get you started:
1 Set up a filing system to store your paperwork.
2 File your papers in categories: Bank, car, children, home, medical, insurance, investment, tax, utilities and so on.
3 Organise direct debits for regular bills.
4 Read, sort and action your snail mail and e-mail daily. This will avoid a big build-up.
5 Make a note in your diary when you need to remember to do things.
6 Check your bank accounts weekly via the ATM or the Internet to keep tabs on your money.
7 Allocate a particular day and time each week to review your personal affairs.
8 Get educated – attend seminars, read books and listen to information on wealth creation. Having knowledge will make it easier to make decisions and take action.
9 If you have a proactive accountant or financial adviser, ask him what you can do to make the most of your money.
10 Review all your insurance policies to ensure you have adequate cover and are getting the best value for your dollar.
11 Record your income and expenses in a spreadsheet to gain a true picture of where your money really goes.
Be proactive
Organising your financial future should be top priority. If you do nothing because it is too much effort, well, think about this.
What would happen if you lose your job or have an accident and receive no income for six months?
How would you and your family survive financially? Do you have your insurance policies in order?
Where will you be in the next five years? Maybe retired and on a pension? Or, perhaps, you have a retirement fund you hope will be enough to live on.
Unfortunately, too many people are under false illusions about how this money will be the answer for a secure retirement.
Hope is not enough. You have to be proactive and seek out people who can help you.
But be careful whom you take advice from and what the motivation is behind their “selling” you their ideas or financial products.
Educating yourself on how to make the most of your hard-earned money so you can create wealth should be a high priority.
After all, if you are not interested in securing your financial future, who is?
If you take control of your personal affairs, you will have peace of mind and can look forward to a secure future.
Sunday, March 23, 2008
Using Your Inner Guidance System
You have incredible powers of mind and emotions that give you timely and accurate feedback in every area of your life.
In this newsletter, you learn how to "tune in" to yourself so you can make the right decision in every situation.
Using Your Inner Guidance System
We know that the body has a natural bias toward health and energy. It's designed to last for 100 years with proper care and maintenance. When something goes wrong with any part of our body, we experience it in the form of pain or discomfort of some kind.
We know that when our body is not functioning smoothly and painlessly, something is wrong, and we take action to correct it. We go to a doctor; we take pills; we undergo physical therapy, massage or chiropractic. We know that if we ignore pain or discomfort for any period of time, it could lead to something more serious.
How to Tell Right From Wrong
In the same sense, nature also gives us a way to tell emotionally what's right for us and what's wrong for us in life. Just as nature gives us physical pain to guide us to doing or not doing things in the physical realm, nature gives us emotional pain to guide us toward doing or not doing things in the emotional or mental realm. The wonderful thing is that you're constructed so that if you simply listen carefully to yourself-to your mind, your body and your emotions-and follow the guidance you're given, you can dramatically enhance the quality of your life.
Just as the natural physical state of your body is health and vitality, your natural emotional state is peace and happiness. Whenever you experience a deviation from peace and happiness, it's an indication that something is amiss. Something is wrong with what you're thinking, doing or saying. Your feeling of inner happiness is the best indicator you could ever have to tell you what you should be doing more of and what you should be doing less of.
The Messenger
Unhappiness is to your life as pain is to your body. It is sent as a messenger to tell you that what you're doing is wrong for you.
Very often, you'll suffer from what has been called "divine discontent." You'll feel fidgety and uneasy for a reason or reasons that are unclear to you. You'll be dissatisfied with the status quo. Sometimes, you'll be unable to sleep. Sometimes, you'll be angry or irritable. Very often, you'll get upset with things that have nothing to do with the real issue. You'll have a deep inner sense that something isn't as it should be, and you'll often feel like a fish on a hook, wriggling and squirming emotionally to get free.
Divine Discontent
And that is a good thing. Divine discontent always comes before a positive life change. If you were perfectly satisfied, you would never take any action to improve or change your circumstances. Only when you're dissatisfied for some reason do you have the inner motivation to engage in the outer behaviors that lead you onward and upward.
Listen to yourself. Trust your inner voice. Go with the flow of your own personality. Do the things that make you feel happy inside and you'll probably never make another mistake.
Action Exercises
Here are three steps you can take immediately to put these ideas into action.
First, listen to yourself and trust your own feelings. If there is a part of your life that causes you stress and unhappiness, resolve to deal with it.
Second, identify those areas of your life where you are dissatisfied or frustrated for any reason. What changes should you, could you make?
Third, remember that nature wants you to be happy, healthy, popular and prosperous. Any deviation from those conditions is a signal to you that action is necessary.
In this newsletter, you learn how to "tune in" to yourself so you can make the right decision in every situation.
Using Your Inner Guidance System
We know that the body has a natural bias toward health and energy. It's designed to last for 100 years with proper care and maintenance. When something goes wrong with any part of our body, we experience it in the form of pain or discomfort of some kind.
We know that when our body is not functioning smoothly and painlessly, something is wrong, and we take action to correct it. We go to a doctor; we take pills; we undergo physical therapy, massage or chiropractic. We know that if we ignore pain or discomfort for any period of time, it could lead to something more serious.
How to Tell Right From Wrong
In the same sense, nature also gives us a way to tell emotionally what's right for us and what's wrong for us in life. Just as nature gives us physical pain to guide us to doing or not doing things in the physical realm, nature gives us emotional pain to guide us toward doing or not doing things in the emotional or mental realm. The wonderful thing is that you're constructed so that if you simply listen carefully to yourself-to your mind, your body and your emotions-and follow the guidance you're given, you can dramatically enhance the quality of your life.
Just as the natural physical state of your body is health and vitality, your natural emotional state is peace and happiness. Whenever you experience a deviation from peace and happiness, it's an indication that something is amiss. Something is wrong with what you're thinking, doing or saying. Your feeling of inner happiness is the best indicator you could ever have to tell you what you should be doing more of and what you should be doing less of.
The Messenger
Unhappiness is to your life as pain is to your body. It is sent as a messenger to tell you that what you're doing is wrong for you.
Very often, you'll suffer from what has been called "divine discontent." You'll feel fidgety and uneasy for a reason or reasons that are unclear to you. You'll be dissatisfied with the status quo. Sometimes, you'll be unable to sleep. Sometimes, you'll be angry or irritable. Very often, you'll get upset with things that have nothing to do with the real issue. You'll have a deep inner sense that something isn't as it should be, and you'll often feel like a fish on a hook, wriggling and squirming emotionally to get free.
Divine Discontent
And that is a good thing. Divine discontent always comes before a positive life change. If you were perfectly satisfied, you would never take any action to improve or change your circumstances. Only when you're dissatisfied for some reason do you have the inner motivation to engage in the outer behaviors that lead you onward and upward.
Listen to yourself. Trust your inner voice. Go with the flow of your own personality. Do the things that make you feel happy inside and you'll probably never make another mistake.
Action Exercises
Here are three steps you can take immediately to put these ideas into action.
First, listen to yourself and trust your own feelings. If there is a part of your life that causes you stress and unhappiness, resolve to deal with it.
Second, identify those areas of your life where you are dissatisfied or frustrated for any reason. What changes should you, could you make?
Third, remember that nature wants you to be happy, healthy, popular and prosperous. Any deviation from those conditions is a signal to you that action is necessary.
The Two Qualities of Top Leaders
There are two essential qualities of leadership. Jack Welch, former CEO of General Electric says that the "Reality Principle" is the most important of all. What this means is the practice of realism in all things.
Practice Intellectual Honesty
Realism is a form of intellectual honesty. The realist insists upon seeing the world as it really is, not as he wishes it were. This objectivity, this refusal to engage in self-delusion, is a mark of the true leader.
Don't Trust to Luck
Those who exhibit the quality of realism do not trust to luck, hope for miracles, pray for exceptions to basic business principles, expect rewards without working or hope that problems will go away by themselves. These all are examples of self-delusion, of living in a fantasyland.
See Things As They Are
The motivational leader insists on seeing things exactly as they are and encourages others to look at life the same way. As a motivational leader, you get the facts, whatever they are. You deal with people honestly and tell them exactly what you perceive to be the truth. This doesn't mean that you will always be right, but you will always be expressing the truth in the best way you know how
Take Responsibility
The second key quality of motivational leadership is responsibility. This is perhaps the hardest of all to develop. The acceptance of responsibility means that, as Harry Truman said, "The buck stops here."
Win By A Narrow Margin
The game of life is very competitive. Sometimes, great success and great failure are separated by a very small distance. In watching the play-offs in basketball, baseball and football, we see that the winner can be decided by a single point, and that single point can rest on a single action, or inaction, on the part of a single team member at a critical part of the game.
Get the Winning Edge
Life is very much like competitive sports. Very small things that you do, or don't do, can either give you the edge that leads to victory or take away your edge at the critical moment. This principle is especially true with regard to accepting responsibility for yourself and for everything that happens to you.
Refuse to Make Excuses
The opposite of accepting responsibility is making excuses, blaming others and becoming upset, angry and resentful toward people for what they have done to you or not done for you.
Any one of these three behaviors can trip you up and be enough to cost you the game: If you run into an obstacle or setback and you make excuses rather than accept responsibility, it's a five-yard penalty. It can cost you a first down. It can cost you a touchdown. It can make the difference between success and failure.
If, when you face a problem or setback, and you both make excuses and blame someone else, you get a 10-yard penalty. In a tightly contested game, where the teams are just about even, a 10-yard penalty can cost you the game.
If, instead of accepting responsibility when things go wrong, you make excuses, blame someone else and simultaneously become angry and resentful and blow up, you get a 15-yard penalty. This may cost you the championship and your career as well if it continues.
Lead Yourself, Be A Role Model
Personal leadership and motivational leadership are very much the same. To lead others, you must first lead yourself. To be an example or a role model for others, you must first become an excellent person yourself.
Action Exercises
Here are two things you can do immediately to put these ideas into action.
First, be completely honest and realistic with yourself and every difficult situation in your life. Resolve to face the truth, whatever it is. Don't wish, hope, pray, ignore or play games with yourself.
Second, accept complete responsibility, especially when things go wrong. Refuse to blame others or make excuses. You can tell the strength of your character when you are under pressure. Be calm, controlled and constructive at all times.
Practice Intellectual Honesty
Realism is a form of intellectual honesty. The realist insists upon seeing the world as it really is, not as he wishes it were. This objectivity, this refusal to engage in self-delusion, is a mark of the true leader.
Don't Trust to Luck
Those who exhibit the quality of realism do not trust to luck, hope for miracles, pray for exceptions to basic business principles, expect rewards without working or hope that problems will go away by themselves. These all are examples of self-delusion, of living in a fantasyland.
See Things As They Are
The motivational leader insists on seeing things exactly as they are and encourages others to look at life the same way. As a motivational leader, you get the facts, whatever they are. You deal with people honestly and tell them exactly what you perceive to be the truth. This doesn't mean that you will always be right, but you will always be expressing the truth in the best way you know how
Take Responsibility
The second key quality of motivational leadership is responsibility. This is perhaps the hardest of all to develop. The acceptance of responsibility means that, as Harry Truman said, "The buck stops here."
Win By A Narrow Margin
The game of life is very competitive. Sometimes, great success and great failure are separated by a very small distance. In watching the play-offs in basketball, baseball and football, we see that the winner can be decided by a single point, and that single point can rest on a single action, or inaction, on the part of a single team member at a critical part of the game.
Get the Winning Edge
Life is very much like competitive sports. Very small things that you do, or don't do, can either give you the edge that leads to victory or take away your edge at the critical moment. This principle is especially true with regard to accepting responsibility for yourself and for everything that happens to you.
Refuse to Make Excuses
The opposite of accepting responsibility is making excuses, blaming others and becoming upset, angry and resentful toward people for what they have done to you or not done for you.
Any one of these three behaviors can trip you up and be enough to cost you the game: If you run into an obstacle or setback and you make excuses rather than accept responsibility, it's a five-yard penalty. It can cost you a first down. It can cost you a touchdown. It can make the difference between success and failure.
If, when you face a problem or setback, and you both make excuses and blame someone else, you get a 10-yard penalty. In a tightly contested game, where the teams are just about even, a 10-yard penalty can cost you the game.
If, instead of accepting responsibility when things go wrong, you make excuses, blame someone else and simultaneously become angry and resentful and blow up, you get a 15-yard penalty. This may cost you the championship and your career as well if it continues.
Lead Yourself, Be A Role Model
Personal leadership and motivational leadership are very much the same. To lead others, you must first lead yourself. To be an example or a role model for others, you must first become an excellent person yourself.
Action Exercises
Here are two things you can do immediately to put these ideas into action.
First, be completely honest and realistic with yourself and every difficult situation in your life. Resolve to face the truth, whatever it is. Don't wish, hope, pray, ignore or play games with yourself.
Second, accept complete responsibility, especially when things go wrong. Refuse to blame others or make excuses. You can tell the strength of your character when you are under pressure. Be calm, controlled and constructive at all times.
Get Smart!
Creativity is your key to the future. All progress comes about as the result of finding better, faster, cheaper, easier or different ways to do things and this requires the continual honing of your creative thinking skills.
Your Key Job At Work
One of the key functions of the executive is problem solving, which takes up as much as 50 percent of executive time. It can be said with some confidence that your ability to deal with problems creatively and effectively is the key determinant of your success as a manager. It would be hard to imagine an effective executive who could not solve problems and make decisions with a high level of competence.
Step On Your Own Acceleration
I've studied and lectured on creative thinking for years and I've come to the conclusion that there is virtually no problem you cannot solve, no goal you cannot achieve, no obstacle you cannot overcome if you know how to apply the creative powers of your mind, like a laser beam, to cut through every difficulty in your life and your work.
Earn More, Faster
The benefits of functioning with more creativity can be enormous. Each of us wants to earn more money, be promoted faster, and enjoy greater status, prestige and recognition. In most cases however, we can only earn more by producing more or of better quality or cheaper or faster - and this requires doing things differently, using creativity.
Step On Your Own Acceleration
The good news is that creativity is a skill and a talent that can be learned and developed through practice. With this skill, you can dramatically accelerate your personal and professional growth. By sharpening your thinking skills and exercising your natural creative powers, you can multiply the value of your efforts and rapidly increase the quantity and quality of your rewards.
Action Exercises
Here are two things you can do immediately to be more creative.
First, see yourself as a professional problem-solver and look upon every difficulty or challenge as an opportunity to develop your creative powers.
Second, look for problems you can solve and obstacles you can overcome. The more you seek for answers and ideas, the smarter and more creative you become.
Your Key Job At Work
One of the key functions of the executive is problem solving, which takes up as much as 50 percent of executive time. It can be said with some confidence that your ability to deal with problems creatively and effectively is the key determinant of your success as a manager. It would be hard to imagine an effective executive who could not solve problems and make decisions with a high level of competence.
Step On Your Own Acceleration
I've studied and lectured on creative thinking for years and I've come to the conclusion that there is virtually no problem you cannot solve, no goal you cannot achieve, no obstacle you cannot overcome if you know how to apply the creative powers of your mind, like a laser beam, to cut through every difficulty in your life and your work.
Earn More, Faster
The benefits of functioning with more creativity can be enormous. Each of us wants to earn more money, be promoted faster, and enjoy greater status, prestige and recognition. In most cases however, we can only earn more by producing more or of better quality or cheaper or faster - and this requires doing things differently, using creativity.
Step On Your Own Acceleration
The good news is that creativity is a skill and a talent that can be learned and developed through practice. With this skill, you can dramatically accelerate your personal and professional growth. By sharpening your thinking skills and exercising your natural creative powers, you can multiply the value of your efforts and rapidly increase the quantity and quality of your rewards.
Action Exercises
Here are two things you can do immediately to be more creative.
First, see yourself as a professional problem-solver and look upon every difficulty or challenge as an opportunity to develop your creative powers.
Second, look for problems you can solve and obstacles you can overcome. The more you seek for answers and ideas, the smarter and more creative you become.
The psychology of successful investing
In this article I'd like to focus on some of the psychological facets of investing and inquire into what it takes for somebody to be a successful long-term investor.
I think there's an interesting analogy between the way people drive and the way they invest money. Good driving schools teach "defensive driving" techniques. If you know what to look out for on the highway, you greatly improve your chances for reaching your destination in one piece. Likewise, I think a good investment newsletter ought to educate its readers about some techniques of defensive investing. If you know the pitfalls, you can guard against some of the roadblocks that sabotage most investors.
Impatient drivers in traffic jams often pay lots of attention to what lane they are in and how the other traffic lanes are doing compared to theirs. If the other lane looks like it is moving faster, they often will swerve over to cut in front of somebody else. Some people do this repeatedly, taking every opening they can find to get any slight advantage for themselves. Those drivers may indeed gain a few seconds. But in the process, they escalate the levels of danger and annoyance to them and everybody around them. In investment terms, they take on much more risk in return for uncertain (and possibly elusive) gains.
I think one of the greatest roadblocks to successful long-term investing is impatience, and this applies equally to buy-and-hold investors as well as those who use market timing. Impatient investors watch the market from day to day like a hawk. But except for market timing purposes, their time would be much better spent studying what's happening in society and the world, looking for investment opportunities over the next five to 10 years. Impatient investors are easy prey. They can be lured to change lanes, and change lanes again. In their zeal to always be "on top," these people rarely give any investment or strategy enough time to perform adequately. And they end up as road kill, often retreating to the sidelines with money market funds and Treasury bills while their more patient counterparts build their wealth in the slower lanes. Patient investors who make investments and stick with them for years or decades, with or without market timing, aren't likely to have exciting anecdotes to share at parties. But they are more likely to retire comfortably. And they are more likely to sleep well along the way and be able to devote their attention to other things in life. These people may seem unexciting, but I think they can be dubbed "Road Warriors Along The Investment Superhighway."
WHAT'S YOUR STYLE?
Whether you realize it or not, whenever you take the wheel of your car, you have a driving style that's all your own. There's a certain amount of risk you are willing to tolerate and a certain amount of frustration you are willing to tolerate. You may or may not have much patience for other drivers who don't behave as you think they should. These are all emotional factors. They have nothing to do with how you choose your destination and your route to get there. They are all descriptions of how you respond and react to external conditions, most of which you cannot control.
Likewise, you have your own style of investing. You can tolerate some level of risk, but you probably get quite nervous once you get past the boundaries of your personal comfort zone. How do you handle mistakes? Do you welcome them as an opportunity to learn more about yourself and about investing? Or, do you feel compelled to find somebody or something else to blame when something goes wrong? How quickly will you abandon the route you have chosen in search of something better? Some drivers will leave a clogged freeway in the hope they can find any alternative with less frustration, even if they can't actually see such an alternative route. Likewise, you may be quick to abandon an investment if it isn't performing up to snuff after a few years or even a few months or weeks. Perhaps you'll throw your money elsewhere purely to relieve your frustration. (This is what we call the "I Can't Stand It Anymore" method of market timing.)
INVESTING LOOKS CUT AND DRIED
On one level, investing is a rational, mechanical process that starts with some basic decisions like:
How much time do I have before retirement (or some other investment goal)?
What is my savings rate and my level of commitment to it?
How much money do I have now, and how much will I need to have at retirement?
What assumptions do I make about the rate of inflation before and after I retire?
From these, I can figure out the rate of return I will need to get from where I am to where I'm going. Then I can determine what type of asset will produce the return I need. All of this is pretty cut and dried. The calculations could be made by a computer.
BUT IT'S REALLY EMOTIONAL
But the next logical question is psychological: Can I tolerate the risks involved in the asset class that will take me where I am going? If the only way to achieve your goals is to speculate on commodities or "bet the farm" on your ability to sell stocks short just before the market goes down, you'd better have an awfully strong stomach and a Plan B for your retirement.
Another emotional question that frequently arises: Can you tolerate seeing somebody else's portfolio doing better than yours? You may recall early last year we laid out a careful plan for what we call a Worldwide Balanced Portfolio by splitting your investment assets into four equal categories: domestic equities, domestic bonds, international equities and international bonds. I recall a client for whom we set up such a portfolio last year after much discussion. Although the client is a very smart guy and understood completely what we were doing with the Worldwide Balanced Portfolio, he called me a few months ago, quite upset that his investments were under-performing the Dow Jones 30. I bit my tongue, but I couldn't help wondering what he expected. With only 25 percent of his assets invested in domestic equities, he could not rationally expect that portfolio to mirror the Dow. And in fact one reason we set up his account the way we did was to make sure that it did not match the Dow. On a purely emotional level, his anxiety is easy to understand. This has been a wonderful year for domestic equities (just as 1993 was an excellent year for international ones), and the media is heavily focused, as usual, on the Dow.
To this client, it felt as if he was missing out on the action. His reaction was akin to turning on your car radio when you're stopped cold on a freeway, and getting angry when you hear that several other freeways are wide open. It's an understandable reaction, but not very rational and not very useful.
OTHER INVESTING ROADBLOCKS
Here are some other emotional and psychological roadblocks to being a successful investor:
Focusing on hope (and sometimes hype) while ignoring risks. While managing risks is at the heart of successful investing, you'll almost never find an investment salesman who wants you to focus on risks or emotional problems you may encounter. They have learned that when people confront the emotions associated with losing money, most people will flee before a salesman can make a dime in commissions. The industry doesn't want to talk in terms of preparing for the bad times. The industry just wants to make money while there's money to be made. Unfortunately, emotional problems and pressures in a significant bear market can wash out investors just as easily as it washes out their portfolios.
Making emotional decisions instead of disciplined decisions. If you don't have a discipline, your moves are likely to be made randomly, on the basis of a whim or a conversation you had with somebody on an airplane, or emotionally, depending on whatever internal and external pressures you feel at any given moment. Either way, you will almost certainly be working against your own best interests. The key to successful investing is to have a discipline, even if it's as simple as dollar-cost-averaging, and to stick to it.
Being unclear about what you believe and how you intend to invest in the face of uncertainty. For any financial topic you can think of, I could find at least two learned and qualified experts who would take opposite positions on the meaning of any particular situation. The media like to find such experts and quote their views as if they were facts instead of just interpretations. Investors are often led astray. Is the market too high? I can find plenty of experts who can make a good case that it is. Likewise I can find experts who will tell you just as convincingly that the market is relatively low and now is a great time to buy. If you don't have a strategy, you're likely to pick one of these experts to believe and follow. You'll be likely to pick an investment strategy based on somebody's personality or charm or the emotional content of a point of view. Know what your strategy is. Know what you believe. Know what is important to you. Then you'll know how to listen to the experts and evaluate what they have to say.
Focusing excessively on individual components of your portfolio instead of the whole. Recall for a moment my client who was upset because his Worldwide Balanced Portfolio under-performed the Dow Jones Average. He was looking at immediate results instead of his real goals, which are long-term. We know from decades of experience that combining U.S. and international securities lowers investment risk and raises investment returns over long periods of time. But like many people who talk about their long-term focus, my client found himself being very judgmental about short-term performance. A tradition for many investors is looking up their stocks and funds every single day. Some supposedly long-term investors even call their brokers or look up stock prices electronically several times each trading day! This added information really does long-term investors no good and it makes it much harder to stick to a long-term focus.
Either being an active trader or being paralyzed in the face of an overwhelming variety of choices. As investors we can choose every day from thousands of mutual funds, thousands of managers, thousands of individual stocks and thousands of other products and plans. The industry makes it easy to be an instant, frequent trader. Wake up in the middle of the night with an investment idea or fear, and you can find a broker to execute a trade for you immediately on the Tokyo or London exchanges. The industry wants you to be a trader. Every single security salesperson wants you to change something. That's how they make a living. And everyone wants your business. If you have a stockbroker, even the other brokers in that office would be happy to have your broker move to another brokerage firm so they could legally solicit your business away from your present broker! All this adds stress to investors' lives. Some people handle the stress by becoming active traders, usually at the expense of their own portfolios. Others give in to paralysis, doing nothing for fear of doing the wrong thing. Often, standing pat is the right thing to do. But when you do it for an emotional reason, you are likely to go astray.
Taking too much risk. People with relatively small amounts of money tend to take too much risk, while those with large amounts take too little risk. At one extreme, people who have few assets feel they have little to lose and often spend their money on lottery tickets, thinking that is their only ticket to financial success. Some of them think they are "investing," while they are in fact gambling against overwhelming odds. A 20-year-old playing only $3 a week on the Lotto until age 65 will most likely wind up with nothing to show for the approximately $7,000 he will spend. That same $3 a week, invested for 45 years at 9 percent, could grow to almost $100,000.
Taking too little risk. On the other hand, many investors are too risk averse, especially those with 20 or more years before retirement. The majority of money in 401(k) retirement plans is invested in guaranteed interest contracts, bonds, money market funds and similar low-risk, low-return securities. The owners of those funds are likely to realize, probably too late, that they have shortchanged themselves, forfeiting the retirement they could have in order to gain illusive short-term security. And they will have squandered their greatest asset-time. If you are investing in an IRA or a 401(k) plan, it may seem quite important to avoid having your portfolio take a beating in the market in any given year. But that risk is tiny compared with the gains you are likely to give up by avoiding the equities markets.
Being unwilling to take a loss. If you want to avoid big market losses you must sometimes sell your holdings, even when that means you have to take a loss. This is one of the hardest things for investors to do. Many people think that if they don't sell at a loss, they don't really have the loss. And they think that taking a loss, even for strategic reasons, means they are failures. As a result, people hang on to sinking securities, often with the attitude that they will wait until they can break even, then sell and be done with it. Many early investors in Fidelity's Magellan Fund never got the benefits of that fund's impressive long-term track record because a couple of losing years in the 1970s convinced them that Magellan was a dog. Yet many of them stuck with Magellan over a period of years, just waiting for their investments to reach the break-even point. When that happened, they sold with relief, probably watching with bitterness as Magellan went on to rack up its huge subsequent gains.
Failing to manage your expectations. One of the best things you can do in investing is spend some time taming your expectations. Of course you'd like a piece of the action when things are going well, and if you follow a sound investment plan you will get some of that action. But you won't get it all the time and you probably won't get it right away. If you're not careful, your emotions can distort your perception, which can lead you to unwarranted conclusions and make it easier for a fast-talking salesman to reinvest your money to suit his purposes, but not necessarily your own. Do you expect to never have a down quarter or a down year? Do you expect you'll never have to suffer a loss? Think you'll always like what the numbers tell you at any given moment? In every case, you're setting yourself up for an upset. Some people are so competitive by nature that they can't stand to see others doing better than they do. Other people are rarely satisfied with anything, always looking over their shoulder, asking why they couldn't be doing better. These people are bound to be disappointed. And if they don't have a disciplined approach to investing, their emotional reactions will start dictating their investment moves. That's almost a surefire recipe for disaster and more disappointment.
WRAPPING IT UP
You can bet the professionals in the investment business understand these psychological hurdles, and many of them are willing and eager to take advantage of investors who don't. When it's your money at stake, you should be the one in the driver's seat, even if you take directions from someone else. The best way to keep your hands on the wheel is to have a plan that will work for you, then stick to it. Do that by understanding the difference between your financial needs and your emotional needs. A good investment plan will help you achieve the total return you need to meet your own financial goals and timetable. It will help you preserve your capital. And it will greatly improve your chances of being a "Road Warrior Along The Investment Superhighway."
I think there's an interesting analogy between the way people drive and the way they invest money. Good driving schools teach "defensive driving" techniques. If you know what to look out for on the highway, you greatly improve your chances for reaching your destination in one piece. Likewise, I think a good investment newsletter ought to educate its readers about some techniques of defensive investing. If you know the pitfalls, you can guard against some of the roadblocks that sabotage most investors.
Impatient drivers in traffic jams often pay lots of attention to what lane they are in and how the other traffic lanes are doing compared to theirs. If the other lane looks like it is moving faster, they often will swerve over to cut in front of somebody else. Some people do this repeatedly, taking every opening they can find to get any slight advantage for themselves. Those drivers may indeed gain a few seconds. But in the process, they escalate the levels of danger and annoyance to them and everybody around them. In investment terms, they take on much more risk in return for uncertain (and possibly elusive) gains.
I think one of the greatest roadblocks to successful long-term investing is impatience, and this applies equally to buy-and-hold investors as well as those who use market timing. Impatient investors watch the market from day to day like a hawk. But except for market timing purposes, their time would be much better spent studying what's happening in society and the world, looking for investment opportunities over the next five to 10 years. Impatient investors are easy prey. They can be lured to change lanes, and change lanes again. In their zeal to always be "on top," these people rarely give any investment or strategy enough time to perform adequately. And they end up as road kill, often retreating to the sidelines with money market funds and Treasury bills while their more patient counterparts build their wealth in the slower lanes. Patient investors who make investments and stick with them for years or decades, with or without market timing, aren't likely to have exciting anecdotes to share at parties. But they are more likely to retire comfortably. And they are more likely to sleep well along the way and be able to devote their attention to other things in life. These people may seem unexciting, but I think they can be dubbed "Road Warriors Along The Investment Superhighway."
WHAT'S YOUR STYLE?
Whether you realize it or not, whenever you take the wheel of your car, you have a driving style that's all your own. There's a certain amount of risk you are willing to tolerate and a certain amount of frustration you are willing to tolerate. You may or may not have much patience for other drivers who don't behave as you think they should. These are all emotional factors. They have nothing to do with how you choose your destination and your route to get there. They are all descriptions of how you respond and react to external conditions, most of which you cannot control.
Likewise, you have your own style of investing. You can tolerate some level of risk, but you probably get quite nervous once you get past the boundaries of your personal comfort zone. How do you handle mistakes? Do you welcome them as an opportunity to learn more about yourself and about investing? Or, do you feel compelled to find somebody or something else to blame when something goes wrong? How quickly will you abandon the route you have chosen in search of something better? Some drivers will leave a clogged freeway in the hope they can find any alternative with less frustration, even if they can't actually see such an alternative route. Likewise, you may be quick to abandon an investment if it isn't performing up to snuff after a few years or even a few months or weeks. Perhaps you'll throw your money elsewhere purely to relieve your frustration. (This is what we call the "I Can't Stand It Anymore" method of market timing.)
INVESTING LOOKS CUT AND DRIED
On one level, investing is a rational, mechanical process that starts with some basic decisions like:
How much time do I have before retirement (or some other investment goal)?
What is my savings rate and my level of commitment to it?
How much money do I have now, and how much will I need to have at retirement?
What assumptions do I make about the rate of inflation before and after I retire?
From these, I can figure out the rate of return I will need to get from where I am to where I'm going. Then I can determine what type of asset will produce the return I need. All of this is pretty cut and dried. The calculations could be made by a computer.
BUT IT'S REALLY EMOTIONAL
But the next logical question is psychological: Can I tolerate the risks involved in the asset class that will take me where I am going? If the only way to achieve your goals is to speculate on commodities or "bet the farm" on your ability to sell stocks short just before the market goes down, you'd better have an awfully strong stomach and a Plan B for your retirement.
Another emotional question that frequently arises: Can you tolerate seeing somebody else's portfolio doing better than yours? You may recall early last year we laid out a careful plan for what we call a Worldwide Balanced Portfolio by splitting your investment assets into four equal categories: domestic equities, domestic bonds, international equities and international bonds. I recall a client for whom we set up such a portfolio last year after much discussion. Although the client is a very smart guy and understood completely what we were doing with the Worldwide Balanced Portfolio, he called me a few months ago, quite upset that his investments were under-performing the Dow Jones 30. I bit my tongue, but I couldn't help wondering what he expected. With only 25 percent of his assets invested in domestic equities, he could not rationally expect that portfolio to mirror the Dow. And in fact one reason we set up his account the way we did was to make sure that it did not match the Dow. On a purely emotional level, his anxiety is easy to understand. This has been a wonderful year for domestic equities (just as 1993 was an excellent year for international ones), and the media is heavily focused, as usual, on the Dow.
To this client, it felt as if he was missing out on the action. His reaction was akin to turning on your car radio when you're stopped cold on a freeway, and getting angry when you hear that several other freeways are wide open. It's an understandable reaction, but not very rational and not very useful.
OTHER INVESTING ROADBLOCKS
Here are some other emotional and psychological roadblocks to being a successful investor:
Focusing on hope (and sometimes hype) while ignoring risks. While managing risks is at the heart of successful investing, you'll almost never find an investment salesman who wants you to focus on risks or emotional problems you may encounter. They have learned that when people confront the emotions associated with losing money, most people will flee before a salesman can make a dime in commissions. The industry doesn't want to talk in terms of preparing for the bad times. The industry just wants to make money while there's money to be made. Unfortunately, emotional problems and pressures in a significant bear market can wash out investors just as easily as it washes out their portfolios.
Making emotional decisions instead of disciplined decisions. If you don't have a discipline, your moves are likely to be made randomly, on the basis of a whim or a conversation you had with somebody on an airplane, or emotionally, depending on whatever internal and external pressures you feel at any given moment. Either way, you will almost certainly be working against your own best interests. The key to successful investing is to have a discipline, even if it's as simple as dollar-cost-averaging, and to stick to it.
Being unclear about what you believe and how you intend to invest in the face of uncertainty. For any financial topic you can think of, I could find at least two learned and qualified experts who would take opposite positions on the meaning of any particular situation. The media like to find such experts and quote their views as if they were facts instead of just interpretations. Investors are often led astray. Is the market too high? I can find plenty of experts who can make a good case that it is. Likewise I can find experts who will tell you just as convincingly that the market is relatively low and now is a great time to buy. If you don't have a strategy, you're likely to pick one of these experts to believe and follow. You'll be likely to pick an investment strategy based on somebody's personality or charm or the emotional content of a point of view. Know what your strategy is. Know what you believe. Know what is important to you. Then you'll know how to listen to the experts and evaluate what they have to say.
Focusing excessively on individual components of your portfolio instead of the whole. Recall for a moment my client who was upset because his Worldwide Balanced Portfolio under-performed the Dow Jones Average. He was looking at immediate results instead of his real goals, which are long-term. We know from decades of experience that combining U.S. and international securities lowers investment risk and raises investment returns over long periods of time. But like many people who talk about their long-term focus, my client found himself being very judgmental about short-term performance. A tradition for many investors is looking up their stocks and funds every single day. Some supposedly long-term investors even call their brokers or look up stock prices electronically several times each trading day! This added information really does long-term investors no good and it makes it much harder to stick to a long-term focus.
Either being an active trader or being paralyzed in the face of an overwhelming variety of choices. As investors we can choose every day from thousands of mutual funds, thousands of managers, thousands of individual stocks and thousands of other products and plans. The industry makes it easy to be an instant, frequent trader. Wake up in the middle of the night with an investment idea or fear, and you can find a broker to execute a trade for you immediately on the Tokyo or London exchanges. The industry wants you to be a trader. Every single security salesperson wants you to change something. That's how they make a living. And everyone wants your business. If you have a stockbroker, even the other brokers in that office would be happy to have your broker move to another brokerage firm so they could legally solicit your business away from your present broker! All this adds stress to investors' lives. Some people handle the stress by becoming active traders, usually at the expense of their own portfolios. Others give in to paralysis, doing nothing for fear of doing the wrong thing. Often, standing pat is the right thing to do. But when you do it for an emotional reason, you are likely to go astray.
Taking too much risk. People with relatively small amounts of money tend to take too much risk, while those with large amounts take too little risk. At one extreme, people who have few assets feel they have little to lose and often spend their money on lottery tickets, thinking that is their only ticket to financial success. Some of them think they are "investing," while they are in fact gambling against overwhelming odds. A 20-year-old playing only $3 a week on the Lotto until age 65 will most likely wind up with nothing to show for the approximately $7,000 he will spend. That same $3 a week, invested for 45 years at 9 percent, could grow to almost $100,000.
Taking too little risk. On the other hand, many investors are too risk averse, especially those with 20 or more years before retirement. The majority of money in 401(k) retirement plans is invested in guaranteed interest contracts, bonds, money market funds and similar low-risk, low-return securities. The owners of those funds are likely to realize, probably too late, that they have shortchanged themselves, forfeiting the retirement they could have in order to gain illusive short-term security. And they will have squandered their greatest asset-time. If you are investing in an IRA or a 401(k) plan, it may seem quite important to avoid having your portfolio take a beating in the market in any given year. But that risk is tiny compared with the gains you are likely to give up by avoiding the equities markets.
Being unwilling to take a loss. If you want to avoid big market losses you must sometimes sell your holdings, even when that means you have to take a loss. This is one of the hardest things for investors to do. Many people think that if they don't sell at a loss, they don't really have the loss. And they think that taking a loss, even for strategic reasons, means they are failures. As a result, people hang on to sinking securities, often with the attitude that they will wait until they can break even, then sell and be done with it. Many early investors in Fidelity's Magellan Fund never got the benefits of that fund's impressive long-term track record because a couple of losing years in the 1970s convinced them that Magellan was a dog. Yet many of them stuck with Magellan over a period of years, just waiting for their investments to reach the break-even point. When that happened, they sold with relief, probably watching with bitterness as Magellan went on to rack up its huge subsequent gains.
Failing to manage your expectations. One of the best things you can do in investing is spend some time taming your expectations. Of course you'd like a piece of the action when things are going well, and if you follow a sound investment plan you will get some of that action. But you won't get it all the time and you probably won't get it right away. If you're not careful, your emotions can distort your perception, which can lead you to unwarranted conclusions and make it easier for a fast-talking salesman to reinvest your money to suit his purposes, but not necessarily your own. Do you expect to never have a down quarter or a down year? Do you expect you'll never have to suffer a loss? Think you'll always like what the numbers tell you at any given moment? In every case, you're setting yourself up for an upset. Some people are so competitive by nature that they can't stand to see others doing better than they do. Other people are rarely satisfied with anything, always looking over their shoulder, asking why they couldn't be doing better. These people are bound to be disappointed. And if they don't have a disciplined approach to investing, their emotional reactions will start dictating their investment moves. That's almost a surefire recipe for disaster and more disappointment.
WRAPPING IT UP
You can bet the professionals in the investment business understand these psychological hurdles, and many of them are willing and eager to take advantage of investors who don't. When it's your money at stake, you should be the one in the driver's seat, even if you take directions from someone else. The best way to keep your hands on the wheel is to have a plan that will work for you, then stick to it. Do that by understanding the difference between your financial needs and your emotional needs. A good investment plan will help you achieve the total return you need to meet your own financial goals and timetable. It will help you preserve your capital. And it will greatly improve your chances of being a "Road Warrior Along The Investment Superhighway."
Sunday, March 16, 2008
Three Keys to Personal Power
There are three personality powers that top leaders use to increase their personal power and influence.
Your Emotions Are Contagious
The first power you can develop is enthusiasm. The more excited you are about accomplishing something that is important to you, the more excited others will be about helping you to do it. The fact is that emotions are contagious. The more passion you have for your life and your activities, the more charisma you will possess, and the more cooperation you will gain from others. Every great man or woman has been totally committed to a noble cause and, as a result, has attracted the support and encouragement of others in many cases, thousands or millions of others.
The Key to Charisma
The second personality power that you can develop is expertise, or competence. The more knowledgeable you are perceived to be in your field, the more charisma you will have among those who respect and admire that knowledge because of the impact it can have on their lives. This is also the power of excellence, of being recognized by others as an outstanding performer in your field. Men and women who do their jobs extremely well and who are recognized for the quality of their work are those who naturally attract the help and support of others. They have charisma.
Prepare Thoroughly for Every Event
The third power of personality that gives you charisma in the eyes of others is thorough preparation, detailed preparation, prior to undertaking any significant task. Whether you are calling on a prospect, meeting with your boss, giving a public talk or making any other kind of presentation, when you are well-prepared, it becomes clear to everyone. The careers of many young people are put onto the fast track as a result of their coming to an important meeting after having done all their homework.
Get on Top of Your Subject
Whether it takes you hours or even days, if an upcoming meeting or interaction is important, take the time to get on top of your subject. Be so thoroughly prepared that nothing can faze you. Think through and consider every possibility and every ramification. Often, this effort to be fully prepared will do more to generate the respect of others than anything else you can do.
Keep Good Notes
Remember that the power is always on the side of the person who has done the most preparation and has the best notes. Everything counts. Leave nothing to chance. When you do something related to your work or career, take the time to do it right the first time.
You are a work in progress. You are always growing and improving. Your job is to become the very best leader you can be, and you can - with regular and persistent practice of these personality powers.
Action Exercises
Here are two things you can do immediately to put these ideas into action.
First, get excited about your goals and your work if you want others to be excited. Express your belief and commitment to others at every opportunity.
Second, dedicate yourself to a lifelong process of getting better and better at what you do. Prepare thoroughly for every event. Set an example in everything you do.
Your Emotions Are Contagious
The first power you can develop is enthusiasm. The more excited you are about accomplishing something that is important to you, the more excited others will be about helping you to do it. The fact is that emotions are contagious. The more passion you have for your life and your activities, the more charisma you will possess, and the more cooperation you will gain from others. Every great man or woman has been totally committed to a noble cause and, as a result, has attracted the support and encouragement of others in many cases, thousands or millions of others.
The Key to Charisma
The second personality power that you can develop is expertise, or competence. The more knowledgeable you are perceived to be in your field, the more charisma you will have among those who respect and admire that knowledge because of the impact it can have on their lives. This is also the power of excellence, of being recognized by others as an outstanding performer in your field. Men and women who do their jobs extremely well and who are recognized for the quality of their work are those who naturally attract the help and support of others. They have charisma.
Prepare Thoroughly for Every Event
The third power of personality that gives you charisma in the eyes of others is thorough preparation, detailed preparation, prior to undertaking any significant task. Whether you are calling on a prospect, meeting with your boss, giving a public talk or making any other kind of presentation, when you are well-prepared, it becomes clear to everyone. The careers of many young people are put onto the fast track as a result of their coming to an important meeting after having done all their homework.
Get on Top of Your Subject
Whether it takes you hours or even days, if an upcoming meeting or interaction is important, take the time to get on top of your subject. Be so thoroughly prepared that nothing can faze you. Think through and consider every possibility and every ramification. Often, this effort to be fully prepared will do more to generate the respect of others than anything else you can do.
Keep Good Notes
Remember that the power is always on the side of the person who has done the most preparation and has the best notes. Everything counts. Leave nothing to chance. When you do something related to your work or career, take the time to do it right the first time.
You are a work in progress. You are always growing and improving. Your job is to become the very best leader you can be, and you can - with regular and persistent practice of these personality powers.
Action Exercises
Here are two things you can do immediately to put these ideas into action.
First, get excited about your goals and your work if you want others to be excited. Express your belief and commitment to others at every opportunity.
Second, dedicate yourself to a lifelong process of getting better and better at what you do. Prepare thoroughly for every event. Set an example in everything you do.
Be An Optimist at All Times
Everyone wants to be physically healthy. You want to be mentally healthy as well. The true measure of "mental fitness" is how optimistic you are about yourself and your life.
In this newsletter, you learn how to control your thinking in very specific ways so that you feel terrific about yourself and your situation, no matter what happens.
Control Your Reactions and Responses
There are three basic differences in the reactions of optimists and pessimists. The first difference is that the optimist sees a setback as temporary, while the pessimist sees it as permanent. The optimist sees an unfortunate event, such as an order that falls through or a sales call that fails, as a temporary event, something that is limited in time and that has no real impact on the future. The pessimist, on the other hand, sees negative events as permanent, as part of life and destiny.
Isolate the Incident
The second difference between the optimist and the pessimist is that the optimist sees difficulties as specific, while the pessimist sees them as pervasive. This means that when things go wrong for the optimist, he looks at the event as an isolated incident largely disconnected from other things that are going on in his life.
See Setbacks as Temporary Events
For example, if something you were counting on failed to materialize and you interpreted it to yourself as being an unfortunate event, but something that happens in the course of life and business, you would be reacting like an optimist. The pessimist, on the other hand, sees disappointments as being pervasive. That is, to him they are indications of a problem or shortcoming that pervades every area of life.
Don't Take Failure Personally
The third difference between optimists and pessimists is that optimists see events as external, while pessimists interpret events as personal. When things go wrong, the optimist will tend to see the setback as resulting from external factors over which one has little control.
If the optimist is cut off in traffic, for example, instead of getting angry or upset, he will simply downgrade the importance of the event by saying something like, "Oh, well, I guess that person is just having a bad day."
The pessimist on the other hand, has a tendency to take everything personally. If the pessimist is cut off in traffic, he will react as though the other driver has deliberately acted to upset and frustrate him.
Remain Calm and Objective
The hallmark of the fully mature, fully functioning, self-actualizing personality is the ability to be objective and unemotional when caught up in the inevitable storms of daily life. The superior person has the ability to continue talking to himself in a positive and optimistic way, keeping his mind calm, clear and completely under control. The mature personality is more relaxed and aware and capable of interpreting events more realistically and less emotionally than is the immature personality. As a result, the mature person exerts a far greater sense of control and influence over his environment, and is far less likely to be angry, upset, or distracted.
Take the Long View
Look upon the inevitable setbacks that you face as being temporary, specific and external. View the negative situation as a single event that is not connected to other potential events and that is caused largely by external factors over which you can have little control. Simply refuse to see the event as being in any way permanent, pervasive or indicative of personal incompetence of inability.
Resolve to think like an optimist, no matter what happens. You may not be able to control events but you can control the way you react to them.
Action Exercises
Now, here are three actions you can take immediately to put these ideas into action.
First, remind yourself continually that setbacks are only temporary, they will soon be past and nothing is as serious as you think it is.
Second, look upon each problem as a specific event, not connected to other events and not indicative of a pattern of any kind. Deal with it and get on with your life.
Third, recognize that when things go wrong, they are usually caused by a variety of external events. Say to yourself, "What can't be cured must be endured," and then get back to thinking about your goals.
In this newsletter, you learn how to control your thinking in very specific ways so that you feel terrific about yourself and your situation, no matter what happens.
Control Your Reactions and Responses
There are three basic differences in the reactions of optimists and pessimists. The first difference is that the optimist sees a setback as temporary, while the pessimist sees it as permanent. The optimist sees an unfortunate event, such as an order that falls through or a sales call that fails, as a temporary event, something that is limited in time and that has no real impact on the future. The pessimist, on the other hand, sees negative events as permanent, as part of life and destiny.
Isolate the Incident
The second difference between the optimist and the pessimist is that the optimist sees difficulties as specific, while the pessimist sees them as pervasive. This means that when things go wrong for the optimist, he looks at the event as an isolated incident largely disconnected from other things that are going on in his life.
See Setbacks as Temporary Events
For example, if something you were counting on failed to materialize and you interpreted it to yourself as being an unfortunate event, but something that happens in the course of life and business, you would be reacting like an optimist. The pessimist, on the other hand, sees disappointments as being pervasive. That is, to him they are indications of a problem or shortcoming that pervades every area of life.
Don't Take Failure Personally
The third difference between optimists and pessimists is that optimists see events as external, while pessimists interpret events as personal. When things go wrong, the optimist will tend to see the setback as resulting from external factors over which one has little control.
If the optimist is cut off in traffic, for example, instead of getting angry or upset, he will simply downgrade the importance of the event by saying something like, "Oh, well, I guess that person is just having a bad day."
The pessimist on the other hand, has a tendency to take everything personally. If the pessimist is cut off in traffic, he will react as though the other driver has deliberately acted to upset and frustrate him.
Remain Calm and Objective
The hallmark of the fully mature, fully functioning, self-actualizing personality is the ability to be objective and unemotional when caught up in the inevitable storms of daily life. The superior person has the ability to continue talking to himself in a positive and optimistic way, keeping his mind calm, clear and completely under control. The mature personality is more relaxed and aware and capable of interpreting events more realistically and less emotionally than is the immature personality. As a result, the mature person exerts a far greater sense of control and influence over his environment, and is far less likely to be angry, upset, or distracted.
Take the Long View
Look upon the inevitable setbacks that you face as being temporary, specific and external. View the negative situation as a single event that is not connected to other potential events and that is caused largely by external factors over which you can have little control. Simply refuse to see the event as being in any way permanent, pervasive or indicative of personal incompetence of inability.
Resolve to think like an optimist, no matter what happens. You may not be able to control events but you can control the way you react to them.
Action Exercises
Now, here are three actions you can take immediately to put these ideas into action.
First, remind yourself continually that setbacks are only temporary, they will soon be past and nothing is as serious as you think it is.
Second, look upon each problem as a specific event, not connected to other events and not indicative of a pattern of any kind. Deal with it and get on with your life.
Third, recognize that when things go wrong, they are usually caused by a variety of external events. Say to yourself, "What can't be cured must be endured," and then get back to thinking about your goals.
The Law of Accumulation
The Law of Accumulation: how your financial fortune accumulates slowly over time and then becomes enormous, like a snowball. The Law of Accumulation: Every great financial achievement is an accumulation of hundreds of small efforts and sacrifices that no one ever sees or appreciates.
Develop Discipline
The achievement of financial independence will require a tremendous number of small efforts on your part. To begin the process of accumulation, you must be disciplined and persistent. You must keep at it for a long, long time. Initially, you will see very little change or difference but gradually, your efforts will begin to bear fruit. You will begin to pull ahead of your peers. Your finances will improve and your debts will disappear. Your bank account will grow and your whole life will improve.
Build Up Momentum
The first corollary of the Law of Accumulation says: "As your savings accumulate, you develop a momentum that moves you more rapidly toward your financial goals."
It is hard to get started on a program of financial accumulation, but once you do get started, you find it easier and easier to keep at it. The "momentum principle" is one of the great success secrets. This principle says that it takes tremendous energy to overcome the initial inertia and resistance to financial accumulation and get started, but once started, it takes much less energy to keep moving.
Start Slow, Finish Fast
The second corollary of the Law of Accumulation says, "By the yard it's hard, but inch by inch, anything's a cinch."
When you begin thinking about saving 10 or 20 percent of your earnings, you will immediately think of all kinds of reasons that it is not possible. You might be up to your neck in debt. You might be spending every single penny that you earn today just to keep afloat.
If you do find yourself in this situation, instead of saving 10 percent, begin saving just 1 percent of your earnings in a special account, which you refuse to touch.
Increase As You Go Along
This small amount will begin to add up at a rate that will surprise you. As you become comfortable with saving 1 percent, increase your savings rate to 2 percent, then 3 percent, then 4 percent and 5 percent and so on. Within a year, you will find yourself getting out of debt and saving 10 percent, 15 percent and even 20 percent of your earnings without it really affecting your lifestyle.
Action Exercises
Here are two things you can do to apply this law immediately:
First, decide upon your long-term financial goals and then resolve to work toward them one step at a time. The first steps are the hardest and you must discipline yourself to avoid backsliding into old habits.
Second, practice the law of accumulation in other parts of your life as well. Resolve to master a subject one page at a time. Lose extra pounds one ounce at a time. Learn a language one lesson at a time. The cumulative effect can be enormous.
Develop Discipline
The achievement of financial independence will require a tremendous number of small efforts on your part. To begin the process of accumulation, you must be disciplined and persistent. You must keep at it for a long, long time. Initially, you will see very little change or difference but gradually, your efforts will begin to bear fruit. You will begin to pull ahead of your peers. Your finances will improve and your debts will disappear. Your bank account will grow and your whole life will improve.
Build Up Momentum
The first corollary of the Law of Accumulation says: "As your savings accumulate, you develop a momentum that moves you more rapidly toward your financial goals."
It is hard to get started on a program of financial accumulation, but once you do get started, you find it easier and easier to keep at it. The "momentum principle" is one of the great success secrets. This principle says that it takes tremendous energy to overcome the initial inertia and resistance to financial accumulation and get started, but once started, it takes much less energy to keep moving.
Start Slow, Finish Fast
The second corollary of the Law of Accumulation says, "By the yard it's hard, but inch by inch, anything's a cinch."
When you begin thinking about saving 10 or 20 percent of your earnings, you will immediately think of all kinds of reasons that it is not possible. You might be up to your neck in debt. You might be spending every single penny that you earn today just to keep afloat.
If you do find yourself in this situation, instead of saving 10 percent, begin saving just 1 percent of your earnings in a special account, which you refuse to touch.
Increase As You Go Along
This small amount will begin to add up at a rate that will surprise you. As you become comfortable with saving 1 percent, increase your savings rate to 2 percent, then 3 percent, then 4 percent and 5 percent and so on. Within a year, you will find yourself getting out of debt and saving 10 percent, 15 percent and even 20 percent of your earnings without it really affecting your lifestyle.
Action Exercises
Here are two things you can do to apply this law immediately:
First, decide upon your long-term financial goals and then resolve to work toward them one step at a time. The first steps are the hardest and you must discipline yourself to avoid backsliding into old habits.
Second, practice the law of accumulation in other parts of your life as well. Resolve to master a subject one page at a time. Lose extra pounds one ounce at a time. Learn a language one lesson at a time. The cumulative effect can be enormous.
Seven Steps to Success
Discipline yourself to do what you know you need to do to be the very best in your field. Perhaps the best definition of self discipline is this: "Self discipline is the ability to make yourself do what you should do when you should do it, whether you feel like it or not." It is easy to do something when you feel like it. It's when you don't feel like it and you force yourself to do it anyway that you move your life and career onto the fast track.
What decisions do you need to make today in order to start moving toward the top of your field? Whatever it is, either to get in or get out, make a decision today and then get started. This single act alone can change the whole direction of your life.
Seven Steps to Success
There is a powerful seven step formula that you can use to set and achieve your goals for the rest of your life. Every single successful person uses this formula or some variation of this formula to achieve vastly more than the average person. And so can you. Here it is:
Decide What You Want
Step number one, decide exactly what it is you want in each part of your life. Become a "meaningful specific" rather than a "wandering generality."
Write it Down
Second, write it down, clearly and in detail. Always think on paper. A goal that is not in writing is not a goal at all. It is merely a wish and it has no energy behind it.
Set a Deadline
Third, set a deadline for your goal. A deadline acts as a "forcing system" in your subconscious mind. It motivates you to do the things necessary to make your goal come true. If it is a big enough goal, set sub-deadlines as well. Don't leave this to chance.
Make a List
Fourth, make a list of everything that you can think of that you are going to have to do to achieve your goal. When you think of new tasks and activities, write them on your list until your list is complete.
Organize Your List
Fifth, organize your list into a plan. Decide what you will have to do first and what you will have to do second. Decide what is more important and what is less important. And then write out your plan on paper, the same way you would develop a blueprint to build your dream house.
Take Action
The sixth step is for you to take action on your plan. Do something. Do anything. But get busy. Get going.
Do Something Every Day
Do something every single day that moves you in the direction of your most important goal at the moment. Develop the discipline of doing something 365 days each year that is moving you forward. You will be absolutely astonished at how much you accomplish when you utilize this formula in your life every single day.
Action Exercises
Here are two things you can do to put these ideas into action immediately.
First, decide exactly what you want, write it down with a deadline, make a plan and take action - on at least one goal - today!
Second, determine the price you will have to pay to achieve this goal and then get busy paying that price - whatever it is.
What decisions do you need to make today in order to start moving toward the top of your field? Whatever it is, either to get in or get out, make a decision today and then get started. This single act alone can change the whole direction of your life.
Seven Steps to Success
There is a powerful seven step formula that you can use to set and achieve your goals for the rest of your life. Every single successful person uses this formula or some variation of this formula to achieve vastly more than the average person. And so can you. Here it is:
Decide What You Want
Step number one, decide exactly what it is you want in each part of your life. Become a "meaningful specific" rather than a "wandering generality."
Write it Down
Second, write it down, clearly and in detail. Always think on paper. A goal that is not in writing is not a goal at all. It is merely a wish and it has no energy behind it.
Set a Deadline
Third, set a deadline for your goal. A deadline acts as a "forcing system" in your subconscious mind. It motivates you to do the things necessary to make your goal come true. If it is a big enough goal, set sub-deadlines as well. Don't leave this to chance.
Make a List
Fourth, make a list of everything that you can think of that you are going to have to do to achieve your goal. When you think of new tasks and activities, write them on your list until your list is complete.
Organize Your List
Fifth, organize your list into a plan. Decide what you will have to do first and what you will have to do second. Decide what is more important and what is less important. And then write out your plan on paper, the same way you would develop a blueprint to build your dream house.
Take Action
The sixth step is for you to take action on your plan. Do something. Do anything. But get busy. Get going.
Do Something Every Day
Do something every single day that moves you in the direction of your most important goal at the moment. Develop the discipline of doing something 365 days each year that is moving you forward. You will be absolutely astonished at how much you accomplish when you utilize this formula in your life every single day.
Action Exercises
Here are two things you can do to put these ideas into action immediately.
First, decide exactly what you want, write it down with a deadline, make a plan and take action - on at least one goal - today!
Second, determine the price you will have to pay to achieve this goal and then get busy paying that price - whatever it is.
Sunday, March 09, 2008
Develop A Clear Vision
The one quality that all leaders have in common is that they have a clear and exciting vision for the future. This is something that only the leader can do. Only the leader can think about the future and plan for the future each day.
Take the Time to Think
Excellent leaders take the time to think through and develop a clear picture of where they want the organization to be in one, three and five years. Leaders have the ability to communicate this vision in such a way that others "buy in" and eventually see the vision as belonging to them.
Motivate People to Give of Their Best
It is the vision of the future possibilities, of what can be, that arouses emotion and motivates people to give of their best. The most powerful vision is always qualitative, aimed at and described in terms of values and mission rather than quantitative, which is described in terms of money and numbers.
Money is Important
Of course, money is important, but the decision and commitment to "be the best in the business" is far more exciting.
Keep Your Cool
Another key to leadership success is for you to "keep your cool." A study at Stanford Business School examined the qualities that companies look for in promoting young managers toward senior executive positions, especially the position of Chief Executive Officer. The study concluded that the two most important qualities required for great success were, first, the ability to put together and function as part of a team. Since all work is ultimately done by teams, and the managers' output is the output of the team, the ability to select team members, set objectives, delegate responsibility and finally, get the job done, was central to success in management.
Practice is Everything
The second quality required for rapid promotion was found to be the ability to function well under pressure, and especially in a crisis. Keeping your cool in a crisis means to practice patience and self-control under difficult or disappointing circumstances.
People Are Watching
The character and quality of a leader is often demonstrated in these critical moments under fire, when everyone is watching, observing and privately taking notes. As Rudyard Kipling once said, "If you can keep your head when all around you are losing theirs and blaming it on you, then the world is yours and all that's in it".
Your job as a leader is to have a clear vision of where you want to go and then to keep your cool when things go wrong, as they surely will.
Action Exercises
Here are two things you can do immediately to put these ideas into action:
First, project forward 3-5 years and imagine your ideal future vision. What does it look like? What steps can you take immediately to begin turning your future vision into your current reality?
Second, resolve in advance that, no matter what happens, you will remain calm and cool. You will not become upset or angry. You will take a deep breath and focus on the solution rather than on the problem.
Take the Time to Think
Excellent leaders take the time to think through and develop a clear picture of where they want the organization to be in one, three and five years. Leaders have the ability to communicate this vision in such a way that others "buy in" and eventually see the vision as belonging to them.
Motivate People to Give of Their Best
It is the vision of the future possibilities, of what can be, that arouses emotion and motivates people to give of their best. The most powerful vision is always qualitative, aimed at and described in terms of values and mission rather than quantitative, which is described in terms of money and numbers.
Money is Important
Of course, money is important, but the decision and commitment to "be the best in the business" is far more exciting.
Keep Your Cool
Another key to leadership success is for you to "keep your cool." A study at Stanford Business School examined the qualities that companies look for in promoting young managers toward senior executive positions, especially the position of Chief Executive Officer. The study concluded that the two most important qualities required for great success were, first, the ability to put together and function as part of a team. Since all work is ultimately done by teams, and the managers' output is the output of the team, the ability to select team members, set objectives, delegate responsibility and finally, get the job done, was central to success in management.
Practice is Everything
The second quality required for rapid promotion was found to be the ability to function well under pressure, and especially in a crisis. Keeping your cool in a crisis means to practice patience and self-control under difficult or disappointing circumstances.
People Are Watching
The character and quality of a leader is often demonstrated in these critical moments under fire, when everyone is watching, observing and privately taking notes. As Rudyard Kipling once said, "If you can keep your head when all around you are losing theirs and blaming it on you, then the world is yours and all that's in it".
Your job as a leader is to have a clear vision of where you want to go and then to keep your cool when things go wrong, as they surely will.
Action Exercises
Here are two things you can do immediately to put these ideas into action:
First, project forward 3-5 years and imagine your ideal future vision. What does it look like? What steps can you take immediately to begin turning your future vision into your current reality?
Second, resolve in advance that, no matter what happens, you will remain calm and cool. You will not become upset or angry. You will take a deep breath and focus on the solution rather than on the problem.
The Parable of Talents
The Parable of the Talents is the primary reason for wealth or poverty throughout history.
Reasons for Rich or Poor
Why do some people retire rich and most people retire poor? This subject has fascinated philosophers, thinkers, mystics and teachers throughout the ages. There have been so many cases of hundreds or thousands and even millions of men and women who have started with nothing and become financially independent that people are naturally curious to know why it happened and what are the common rules or principles that others can apply to become wealthy as well.
Why People Become Rich
One illustration of this key principle is called the parable of the talents. In the Bible, it says, "To him that hath, shall more be given, and he shall have abundance. But from him that hath not, even that which he hath shall be taken away."
Accumulation Leads to More Accumulation
What does it mean? In the modern world, we say "the rich get richer and the poor get poorer." The fact is that people who accumulate money tend to accumulate more and more. People who don't accumulate money seem to lose even that little bit of money which they have. Why should this happen? The great success principle, the single idea that explains human destiny is simple. It says that, "you become what you think about, most of the time."
Control Your Thoughts
And whatever you dwell upon, grows in your reality. You create your entire world by the things you choose to think about and how you choose to think about them.
It just so happens that wealthy, successful people fill their minds with thoughts, words, pictures and images of wealth, affluence, success, productivity and solutions to problems in the marketplace, most of the time. These thoughts trigger the reticular activating cortex, the part of the brain that makes you more alert and sensitive to things that you have decided are important to you.
Activate Your Reticular Cortex
For example, if you decide to invest in a mutual fund, you will start to see news and information about mutual funds everywhere. Mentions in newspapers and magazines will jump out at you. These notices have always been there but now you have sensitized your brain to pick them up and draw them to your attention with far greater frequency and vividness. This is the function and power of your reticular cortex.
Avoid Poverty Thinking
On the other hand, what do poor people think about most of the time? Unfortunately, poor people fill their minds with thoughts of scarcity, lack, poverty, being unable to afford things. They are always thinking and talking about how little money they have, how much things cost and how they wish things could be better financially. What they think about most of the time is how little money they have.
Think Like Wealthy People Think
Wealthy people from an early age think about how much they have, how much they want and all the different things they can do to acquire and earn the money and things they desire.
Find Out How Rich People Think
Here's a rule for you. If you want to become successful, find out what failures do and don't do it. If you want to be wealthy, find out what poor people think about, and avoid thinking in those ways. Instead, find out how wealthy people think. Find out what they read. Find out how they spend their time. Study their lives, read their stories and autobiographies and listen to their words when they are interviewed and on tape. The more you find out what financially successful people think and talk about most of the time, and do the same things, the more rapidly you will enjoy the same rewards that they do.
Action Exercises
Here are two things you can do to put this parable of the talents into action:
First, make a decision today that from now on you will think and talk only about the financial success that you desire. At the same time, you will refuse to talk about or dwell upon your financial problems.
Second, instead of saying, "I can't afford it," instead ask the question, "How can I afford it?" When you think of something that you want or need that you don't have the money for at the time, the only question you ask is, "How?" How can you get it? What can you do to achieve it? What are your options? How can you get from where you are to where you want to go? This type of attitude will change your life
Reasons for Rich or Poor
Why do some people retire rich and most people retire poor? This subject has fascinated philosophers, thinkers, mystics and teachers throughout the ages. There have been so many cases of hundreds or thousands and even millions of men and women who have started with nothing and become financially independent that people are naturally curious to know why it happened and what are the common rules or principles that others can apply to become wealthy as well.
Why People Become Rich
One illustration of this key principle is called the parable of the talents. In the Bible, it says, "To him that hath, shall more be given, and he shall have abundance. But from him that hath not, even that which he hath shall be taken away."
Accumulation Leads to More Accumulation
What does it mean? In the modern world, we say "the rich get richer and the poor get poorer." The fact is that people who accumulate money tend to accumulate more and more. People who don't accumulate money seem to lose even that little bit of money which they have. Why should this happen? The great success principle, the single idea that explains human destiny is simple. It says that, "you become what you think about, most of the time."
Control Your Thoughts
And whatever you dwell upon, grows in your reality. You create your entire world by the things you choose to think about and how you choose to think about them.
It just so happens that wealthy, successful people fill their minds with thoughts, words, pictures and images of wealth, affluence, success, productivity and solutions to problems in the marketplace, most of the time. These thoughts trigger the reticular activating cortex, the part of the brain that makes you more alert and sensitive to things that you have decided are important to you.
Activate Your Reticular Cortex
For example, if you decide to invest in a mutual fund, you will start to see news and information about mutual funds everywhere. Mentions in newspapers and magazines will jump out at you. These notices have always been there but now you have sensitized your brain to pick them up and draw them to your attention with far greater frequency and vividness. This is the function and power of your reticular cortex.
Avoid Poverty Thinking
On the other hand, what do poor people think about most of the time? Unfortunately, poor people fill their minds with thoughts of scarcity, lack, poverty, being unable to afford things. They are always thinking and talking about how little money they have, how much things cost and how they wish things could be better financially. What they think about most of the time is how little money they have.
Think Like Wealthy People Think
Wealthy people from an early age think about how much they have, how much they want and all the different things they can do to acquire and earn the money and things they desire.
Find Out How Rich People Think
Here's a rule for you. If you want to become successful, find out what failures do and don't do it. If you want to be wealthy, find out what poor people think about, and avoid thinking in those ways. Instead, find out how wealthy people think. Find out what they read. Find out how they spend their time. Study their lives, read their stories and autobiographies and listen to their words when they are interviewed and on tape. The more you find out what financially successful people think and talk about most of the time, and do the same things, the more rapidly you will enjoy the same rewards that they do.
Action Exercises
Here are two things you can do to put this parable of the talents into action:
First, make a decision today that from now on you will think and talk only about the financial success that you desire. At the same time, you will refuse to talk about or dwell upon your financial problems.
Second, instead of saying, "I can't afford it," instead ask the question, "How can I afford it?" When you think of something that you want or need that you don't have the money for at the time, the only question you ask is, "How?" How can you get it? What can you do to achieve it? What are your options? How can you get from where you are to where you want to go? This type of attitude will change your life
Neutralizing Worry Situations
Your job is to organize your life and work so as to minimize surprises and problems. However, this is not always possible, in spite of your best efforts.
Use the Worry Buster
If you are already facing a fear- or worry-inducing situation, here are the four steps of what we refer to as the "worry buster."
Clarity is Everything
Step Number One: Define the worry situation clearly in writing - fully half of all problems can be solved just by clearly defining them. Remember, "Accurate diagnosis is half the cure."
Determine the Worst
Step Number Two: Determine the worst possible outcome of the situation. What is the absolute worst that can happen?
Be Willing to Have it So
Step Number Three: Resolve to accept the worst should it occur. The first step in dealing with any negative situation is to be willing to have it so. Once you resolve to accept the worst, your mind will become calm and clear and you'll be ready to take some constructive action.
Take Action
Step Number Four: The final step is to immediately begin doing everything you possibly can to improve upon the worst.
The Real Antidote to Worry
Remember, worry is merely a sustained form of fear caused by indecision. The only real antidote to worry is purposeful action. Get so busy doing something about your situation that you don't have time to worry. As you take action, your confidence, courage and sense of control will return and wipe away your fears.
Action Exercises
Here are two things you can do to get rid of your worries:
First, make a list, down one side of a page, of all the situations causing you any stress or worry at the moment.
Second, on the other side of the page, write out the worst possible thing that could happen as a result. You'll be amazed to see much of your worry disappear with this exercise.
Use the Worry Buster
If you are already facing a fear- or worry-inducing situation, here are the four steps of what we refer to as the "worry buster."
Clarity is Everything
Step Number One: Define the worry situation clearly in writing - fully half of all problems can be solved just by clearly defining them. Remember, "Accurate diagnosis is half the cure."
Determine the Worst
Step Number Two: Determine the worst possible outcome of the situation. What is the absolute worst that can happen?
Be Willing to Have it So
Step Number Three: Resolve to accept the worst should it occur. The first step in dealing with any negative situation is to be willing to have it so. Once you resolve to accept the worst, your mind will become calm and clear and you'll be ready to take some constructive action.
Take Action
Step Number Four: The final step is to immediately begin doing everything you possibly can to improve upon the worst.
The Real Antidote to Worry
Remember, worry is merely a sustained form of fear caused by indecision. The only real antidote to worry is purposeful action. Get so busy doing something about your situation that you don't have time to worry. As you take action, your confidence, courage and sense of control will return and wipe away your fears.
Action Exercises
Here are two things you can do to get rid of your worries:
First, make a list, down one side of a page, of all the situations causing you any stress or worry at the moment.
Second, on the other side of the page, write out the worst possible thing that could happen as a result. You'll be amazed to see much of your worry disappear with this exercise.
The Key to Happiness
Your ability to achieve your own happiness is the key measure of your success, of how well you are doing as a person.
You learn the key to happiness that has been the same through all of history. You learn how to dispel the two myths that may be holding you back and how to achieve more happiness in everything you do.
Dedicate Yourself to Your Best Talents
The key to happiness is this: dedicate yourself to the development of your natural talents and abilities by doing what you love to do, and doing it better and better in the service of a cause that is greater than yourself.
This is a big statement and a big commitment. Being happy requires that you define your life in your own terms and then throw your whole heart into living your life to the fullest. In a way, happiness requires that you be perfectly selfish in order to develop yourself to a point where you can be unselfish for the rest of your life.
Imagine if you could become a millionaire today!
Your life would be easier and more fun. You could be taking more vacations, and spending the kind of time with your family that you really want.
If you're like me you want financial success, and you want to know the secrets of how all these millionaires made their money.
Please Yourself First
In Edmond Rostand's play Cyrano de Bergerac, Cyrano is asked why he is so intensely individualistic and unconcerned with the opinions and judgments of others. He replies with these wonderful words: "I am what I am because early in life I decided that I would please at least myself in all things."
Your happiness likewise depends upon your ability to please at least yourself in all things. You can be happy only when you are living your life in the very best way possible. No one can define happiness for you. Only you know what makes you happy. Happiness is an inside job.
Your Happiness is Up to You
The biggest myth about happiness is when people say that it is not legitimate or correct for you to put your happiness ahead of everyone else's. Throughout my life, I've met people who have said that it is more important to make other people happy than it is to make yourself happy. This is nonsense.
The fact is that you can't give away to anyone else what you don't have for yourself. Just as you can't give money to the poor if you don't have any, you can't make someone else happy if you yourself are miserable.
The very best way to assure the happiness of others is to be happy yourself and then to share your happiness with them. Suffering and self-sacrifice merely depress and discourage other people. If you want to make others happy, start by living the kind of life and doing the kind of things that make you happy.
Action Exercises
Here are three steps you can take immediately to put these ideas into action.
First, define for yourself the activities that you really love and enjoy, at home and work, and then organize your life so you do more of them.
Second, believe in yourself and trust your own feelings. Then, please at least yourself in all things.
Third, determine what it is that you do that brings the most happiness to others and then organize your life so that you can do more of it.
You learn the key to happiness that has been the same through all of history. You learn how to dispel the two myths that may be holding you back and how to achieve more happiness in everything you do.
Dedicate Yourself to Your Best Talents
The key to happiness is this: dedicate yourself to the development of your natural talents and abilities by doing what you love to do, and doing it better and better in the service of a cause that is greater than yourself.
This is a big statement and a big commitment. Being happy requires that you define your life in your own terms and then throw your whole heart into living your life to the fullest. In a way, happiness requires that you be perfectly selfish in order to develop yourself to a point where you can be unselfish for the rest of your life.
Imagine if you could become a millionaire today!
Your life would be easier and more fun. You could be taking more vacations, and spending the kind of time with your family that you really want.
If you're like me you want financial success, and you want to know the secrets of how all these millionaires made their money.
Please Yourself First
In Edmond Rostand's play Cyrano de Bergerac, Cyrano is asked why he is so intensely individualistic and unconcerned with the opinions and judgments of others. He replies with these wonderful words: "I am what I am because early in life I decided that I would please at least myself in all things."
Your happiness likewise depends upon your ability to please at least yourself in all things. You can be happy only when you are living your life in the very best way possible. No one can define happiness for you. Only you know what makes you happy. Happiness is an inside job.
Your Happiness is Up to You
The biggest myth about happiness is when people say that it is not legitimate or correct for you to put your happiness ahead of everyone else's. Throughout my life, I've met people who have said that it is more important to make other people happy than it is to make yourself happy. This is nonsense.
The fact is that you can't give away to anyone else what you don't have for yourself. Just as you can't give money to the poor if you don't have any, you can't make someone else happy if you yourself are miserable.
The very best way to assure the happiness of others is to be happy yourself and then to share your happiness with them. Suffering and self-sacrifice merely depress and discourage other people. If you want to make others happy, start by living the kind of life and doing the kind of things that make you happy.
Action Exercises
Here are three steps you can take immediately to put these ideas into action.
First, define for yourself the activities that you really love and enjoy, at home and work, and then organize your life so you do more of them.
Second, believe in yourself and trust your own feelings. Then, please at least yourself in all things.
Third, determine what it is that you do that brings the most happiness to others and then organize your life so that you can do more of it.
Monday, March 03, 2008
Two Principles for Financial Success
The Two Great Principles for Success
There are two great principles for achieving financial success. The first Principle is what we call the law of attraction. The law of attraction says that you are a living magnet. It says that your thoughts create a force field of energy that radiates out from you and attracts back into your life people and circumstances in harmony with them. Any thought you have, combined with an emotion, positive or negative, radiates out from you and attracts back into your life the people, circumstances, ideas and opportunities consistent with it.
How to Attract the Success You Desire
Many people feel that this is perhaps the most important of all mental laws. It says that if you have a very clear idea in your mind of your desired goal, to become wealthy, and you can hold that idea in your mind on a continuing basis, you will inevitably draw into your life the resources that you need in order to achieve it. Every person who has become wealthy or successful has become wealthy and successful as a result of holding the idea of wealth and success in their mind long enough and hard enough, until they drew into their lives the resources they needed to accomplish it.
Your World Reflects Your Thoughts
The second principle is called the law of correspondence. This mental law is very powerful. It says, "as within, so without." It says that your outer world is like a mirror that reflects back to you what is going on in your inner world. And this law of correspondence says that everything that happens outside of you corresponds to something that's going on inside of you. When we say that your outer world is a reflection of your inner world, we mean both at a conscious and at a subconscious level.
Visualize Your Goals Clearly
If you consciously believe that you have the ability to achieve your goals and you can hold a picture of those goals clearly in your mind long enough and hard enough, eventually your outer world will correspond with it.
Three Reflections of Success
There are three places where we see this law of correspondence. First of all, your outer world of people will correspond exactly with your own attitude. You will always see your attitude reflected back to you in the faces and the behaviors of the people around you. If you have a positive, optimistic attitude, people will respond to you almost immediately, even before you open your mouth, in a positive and cheerful way.
Relationships Show You Who You Are
The second area where we see the law of correspondence is in your relationships. Your relationships will always mirror back to you exactly the kind of a person you are. When you are happy and optimistic and at peace, your relationships will be happy and harmonious and loving. But when your thinking is disrupted or negative for any reason, consciously or unconsciously, this will be immediately reflected in your relationships.
Inner and Outer Wealth
The third place you see the law of correspondence is with regard to your wealth. Your external world of wealth and financial accomplishment will be a mirror image of your inner world of preparation. The only part of the equation that you can control is your conscious thoughts, and if you can keep your conscious thoughts on what you want, on your images of wealth and affluence, eventually your external world of reality and experiences will reflect it back to you.
Action Exercises
Here are two things you can do to apply these principles in your financial life:
First, guard your thoughts carefully. Whatever you think about, combined with the emotions of desire or fear, you will attract into your life. Be sure that you are attracting what you want by continuing to think only about what you want.
Second, keep feeding your mind with new information, ideas and pictures of the person you want to be and the life you want to live. By creating this inner attitude of mind, you change the outer aspects of your reality.
There are two great principles for achieving financial success. The first Principle is what we call the law of attraction. The law of attraction says that you are a living magnet. It says that your thoughts create a force field of energy that radiates out from you and attracts back into your life people and circumstances in harmony with them. Any thought you have, combined with an emotion, positive or negative, radiates out from you and attracts back into your life the people, circumstances, ideas and opportunities consistent with it.
How to Attract the Success You Desire
Many people feel that this is perhaps the most important of all mental laws. It says that if you have a very clear idea in your mind of your desired goal, to become wealthy, and you can hold that idea in your mind on a continuing basis, you will inevitably draw into your life the resources that you need in order to achieve it. Every person who has become wealthy or successful has become wealthy and successful as a result of holding the idea of wealth and success in their mind long enough and hard enough, until they drew into their lives the resources they needed to accomplish it.
Your World Reflects Your Thoughts
The second principle is called the law of correspondence. This mental law is very powerful. It says, "as within, so without." It says that your outer world is like a mirror that reflects back to you what is going on in your inner world. And this law of correspondence says that everything that happens outside of you corresponds to something that's going on inside of you. When we say that your outer world is a reflection of your inner world, we mean both at a conscious and at a subconscious level.
Visualize Your Goals Clearly
If you consciously believe that you have the ability to achieve your goals and you can hold a picture of those goals clearly in your mind long enough and hard enough, eventually your outer world will correspond with it.
Three Reflections of Success
There are three places where we see this law of correspondence. First of all, your outer world of people will correspond exactly with your own attitude. You will always see your attitude reflected back to you in the faces and the behaviors of the people around you. If you have a positive, optimistic attitude, people will respond to you almost immediately, even before you open your mouth, in a positive and cheerful way.
Relationships Show You Who You Are
The second area where we see the law of correspondence is in your relationships. Your relationships will always mirror back to you exactly the kind of a person you are. When you are happy and optimistic and at peace, your relationships will be happy and harmonious and loving. But when your thinking is disrupted or negative for any reason, consciously or unconsciously, this will be immediately reflected in your relationships.
Inner and Outer Wealth
The third place you see the law of correspondence is with regard to your wealth. Your external world of wealth and financial accomplishment will be a mirror image of your inner world of preparation. The only part of the equation that you can control is your conscious thoughts, and if you can keep your conscious thoughts on what you want, on your images of wealth and affluence, eventually your external world of reality and experiences will reflect it back to you.
Action Exercises
Here are two things you can do to apply these principles in your financial life:
First, guard your thoughts carefully. Whatever you think about, combined with the emotions of desire or fear, you will attract into your life. Be sure that you are attracting what you want by continuing to think only about what you want.
Second, keep feeding your mind with new information, ideas and pictures of the person you want to be and the life you want to live. By creating this inner attitude of mind, you change the outer aspects of your reality.
Look on the bright side
TODAY’S winners in the game of life are known for flexible optimism and resourcefulness in the face of adversity and constant change.
Unfortunately, too many people today are falling victim to learned helplessness: “Nothing I can do is going to make any difference in what happens to me, so why try?”
To help you claim your own optimism advantage, here are seven practical tips for you to try out:
1 Be adventurous
Cultivate a continual sense of adventure that takes advantage of opportunities. Victors make the best of opportunities while victims whine about how few they have.
Failure to make choices doesn’t prevent failure; it just turns life into a slow death. Never be paralysed by limitless choices; do something one choice at a time! As Yogi Berra would say: “When you come to a fork in the road, take it.”
2 Keep learning
Build a history of lifelong learning instead of settling for obsolescence. You become an old dog when you stop doing new and improved tricks. Invest 5 per cent of your time in education to stay a recyclable asset. If you hate your job, raise that to 10 per cent.
Search for what you enjoy and have the gifts to do. Optimism is easier when you have a job that gives you passion, fulfilment and energy.
3 Appreciate yourself
Manage your motivation by catching yourself being effective. You are probably tougher on yourself than on any other person. Instead of taking yourself for granted, love yourself the way you love others you care about.
If you cannot see how effective you are, you may be winning and not know it because you are not keeping score. Ask yourself daily: “What did I do today that made a difference?” Use your calendar to write down one success every day.
4 Learn from mistakes
See mistakes as valued lessons on the way to success. Life is like a moving vehicle with no brakes — if you spend too much time looking in the rear-view mirror, you may hit a tree near the front window. Use self-criticism as course correction feedback on the road to success.
Victims say: “I’ll never be able to succeed.” Optimists perceive failures as temporary setbacks, rather than final verdicts. Build an expectation of success through hard work.
5 Be with positive people
Spend time with other optimistic friends. Mark Twain said it well: “Keep away from people who try to belittle your ambitions. Small people always do that but the really great make you feel that you, too, can become great.” The company you keep can bring you up or bring you down. Pick your friends and associates wisely.
6 Learn to laugh
Have a sense of humour. It provides perspective that breaks the stress cycle and invites a more positive attitude. If you know that some day you will laugh at a problem, don’t wait — laugh as quickly as you can!
Take your job and life seriously, but yourself lightly. Never forget that some days you are the bug, and some days you are the windshield. That’s a perspective worth remembering in these challenging times.
7 Be happy
Finally, experience the power of gratitude. Unrealistic expectations are a sure road to disappointment. Optimists hope for more, but are not thrown by less. Start counting your blessings instead of your problems.
Choose to be happy now instead of being unhappy until something makes you happy. Appreciate the words of theologian Reinhold Niebuhr: “God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”
Unfortunately, too many people today are falling victim to learned helplessness: “Nothing I can do is going to make any difference in what happens to me, so why try?”
To help you claim your own optimism advantage, here are seven practical tips for you to try out:
1 Be adventurous
Cultivate a continual sense of adventure that takes advantage of opportunities. Victors make the best of opportunities while victims whine about how few they have.
Failure to make choices doesn’t prevent failure; it just turns life into a slow death. Never be paralysed by limitless choices; do something one choice at a time! As Yogi Berra would say: “When you come to a fork in the road, take it.”
2 Keep learning
Build a history of lifelong learning instead of settling for obsolescence. You become an old dog when you stop doing new and improved tricks. Invest 5 per cent of your time in education to stay a recyclable asset. If you hate your job, raise that to 10 per cent.
Search for what you enjoy and have the gifts to do. Optimism is easier when you have a job that gives you passion, fulfilment and energy.
3 Appreciate yourself
Manage your motivation by catching yourself being effective. You are probably tougher on yourself than on any other person. Instead of taking yourself for granted, love yourself the way you love others you care about.
If you cannot see how effective you are, you may be winning and not know it because you are not keeping score. Ask yourself daily: “What did I do today that made a difference?” Use your calendar to write down one success every day.
4 Learn from mistakes
See mistakes as valued lessons on the way to success. Life is like a moving vehicle with no brakes — if you spend too much time looking in the rear-view mirror, you may hit a tree near the front window. Use self-criticism as course correction feedback on the road to success.
Victims say: “I’ll never be able to succeed.” Optimists perceive failures as temporary setbacks, rather than final verdicts. Build an expectation of success through hard work.
5 Be with positive people
Spend time with other optimistic friends. Mark Twain said it well: “Keep away from people who try to belittle your ambitions. Small people always do that but the really great make you feel that you, too, can become great.” The company you keep can bring you up or bring you down. Pick your friends and associates wisely.
6 Learn to laugh
Have a sense of humour. It provides perspective that breaks the stress cycle and invites a more positive attitude. If you know that some day you will laugh at a problem, don’t wait — laugh as quickly as you can!
Take your job and life seriously, but yourself lightly. Never forget that some days you are the bug, and some days you are the windshield. That’s a perspective worth remembering in these challenging times.
7 Be happy
Finally, experience the power of gratitude. Unrealistic expectations are a sure road to disappointment. Optimists hope for more, but are not thrown by less. Start counting your blessings instead of your problems.
Choose to be happy now instead of being unhappy until something makes you happy. Appreciate the words of theologian Reinhold Niebuhr: “God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”
Why perceptions matter
WHY won’t the people in our lives see life as you and I do? That is because everyone sees life differently. Everyone looks through their own set of personal narrow filters.
As you survey your relationships with employees, customers, friends and relatives, it becomes apparent that there are degrees of conflict everywhere. People fight about beliefs, actions and even unrealised expectations.
It has been said that perceptions become reality in the minds of people.
Much of the metaphysical writings of the past 2,000 years as well as an increasing body of recent medical and scientific research have shed new light on belief patterns and their consequences on behaviour. I have observed a great deal of human behaviour over the past 30 years and I believe that if people are to live with balance, peace and harmony, they must look squarely at how they perceive and interpret life, and how they act upon what they see.
Each person brings unique knowledge and experience to every relationship and situation. Truth for you is what works for you as you move down the highway of life. Truth is no respecter of opinions, fads, arrogance or ignorance. You do not manipulate truth to fit your own values or beliefs. Whether you choose to see it or not does not deny its existence.
An employee believes that he is underpaid, a customer believes he has been treated poorly, your spouse believes you don’t spend enough time with her, your child feels you are being too strict, a stockholder believes you have acted unwisely ... All of these are perceptions in the minds of these people. True or false, it doesn’t matter. If they believe it, it is true for them.
Many times I have had members of an audience come up to me and comment that they really agreed with what I said even though I never said anything close to what they claimed I said. They heard what they wanted to hear because it was consistent with a dominant belief pattern in their consciousness.
In my early speaking career I hadn’t learned yet that not everyone agrees with me. My ego, my arrogance or my ignorance made me try to change their mind. I needed to learn that people will believe what they want to believe because it is comfortable for them at their current stage of personal development.
We are all on a personal development path. Some of us are further down the path than others.
Let me give you a simple example. People believed for centuries that the world was flat. Their belief didn’t alter reality. The world was round during those hundreds of years despite their attitudes to the contrary. Columbus believed the world was round but he had no proof. After he proved that the world was, in fact, round, many people still refused to change their perception or belief.
People cannot see gravity but it exists despite the fact that no one can see, touch or smell it and if someone chooses to defy or refuses to accept it, he does so at his own peril.
Walk outside and it would appear as if the earth is stationary but the truth is that it is spinning rapidly and racing through space. Reality can fool you into thinking that what appears to be true is not.
What does all of this have to do with a balanced life?
I would like you to look at people or circumstances that contribute to your stress or frustration in life. What is it about certain people that triggers your anxiety, fear or whatever emotion you feel when you are with them? Why do people disappoint you? Why does life reward or punish you?
You will tend to feel most out of balance when there is conflict in some area of your life. Your body will give you warning signs when something is out of harmony, whether it is a physical issue or an emotional one.
The key is to listen to your body to determine when there is something in your life that needs attention. Your perceptions, if they are accurate or in line with truth, will contribute to a sense of peace and inner knowledge. If they are not in line, you will experience an uncertainty that will create an inner conflict that you can choose to ignore or heed
As you survey your relationships with employees, customers, friends and relatives, it becomes apparent that there are degrees of conflict everywhere. People fight about beliefs, actions and even unrealised expectations.
It has been said that perceptions become reality in the minds of people.
Much of the metaphysical writings of the past 2,000 years as well as an increasing body of recent medical and scientific research have shed new light on belief patterns and their consequences on behaviour. I have observed a great deal of human behaviour over the past 30 years and I believe that if people are to live with balance, peace and harmony, they must look squarely at how they perceive and interpret life, and how they act upon what they see.
Each person brings unique knowledge and experience to every relationship and situation. Truth for you is what works for you as you move down the highway of life. Truth is no respecter of opinions, fads, arrogance or ignorance. You do not manipulate truth to fit your own values or beliefs. Whether you choose to see it or not does not deny its existence.
An employee believes that he is underpaid, a customer believes he has been treated poorly, your spouse believes you don’t spend enough time with her, your child feels you are being too strict, a stockholder believes you have acted unwisely ... All of these are perceptions in the minds of these people. True or false, it doesn’t matter. If they believe it, it is true for them.
Many times I have had members of an audience come up to me and comment that they really agreed with what I said even though I never said anything close to what they claimed I said. They heard what they wanted to hear because it was consistent with a dominant belief pattern in their consciousness.
In my early speaking career I hadn’t learned yet that not everyone agrees with me. My ego, my arrogance or my ignorance made me try to change their mind. I needed to learn that people will believe what they want to believe because it is comfortable for them at their current stage of personal development.
We are all on a personal development path. Some of us are further down the path than others.
Let me give you a simple example. People believed for centuries that the world was flat. Their belief didn’t alter reality. The world was round during those hundreds of years despite their attitudes to the contrary. Columbus believed the world was round but he had no proof. After he proved that the world was, in fact, round, many people still refused to change their perception or belief.
People cannot see gravity but it exists despite the fact that no one can see, touch or smell it and if someone chooses to defy or refuses to accept it, he does so at his own peril.
Walk outside and it would appear as if the earth is stationary but the truth is that it is spinning rapidly and racing through space. Reality can fool you into thinking that what appears to be true is not.
What does all of this have to do with a balanced life?
I would like you to look at people or circumstances that contribute to your stress or frustration in life. What is it about certain people that triggers your anxiety, fear or whatever emotion you feel when you are with them? Why do people disappoint you? Why does life reward or punish you?
You will tend to feel most out of balance when there is conflict in some area of your life. Your body will give you warning signs when something is out of harmony, whether it is a physical issue or an emotional one.
The key is to listen to your body to determine when there is something in your life that needs attention. Your perceptions, if they are accurate or in line with truth, will contribute to a sense of peace and inner knowledge. If they are not in line, you will experience an uncertainty that will create an inner conflict that you can choose to ignore or heed
Build up emotional strength
WHEN you face uncertainties in life and your career, you are never sure how long the situation will last. Life sometimes throws challenges at you that do not have a quick-fix formula. If you are not careful, it can drag you down into a rut.
It is these kinds of situations that you need to prepare for by developing your emotional fitness (EF).
Emotional fitness is the ability to develop a sustained capacity to thrive when the going gets tough. Just as you need to be physically fit to run a very long race, you need emotional fitness when you have to handle a crisis or some prolonged challenging situation that confronts and confounds you.
In these circumstances, it takes tremendous emotional energy to remain motivated. However, your ability to ride this wave of uncertainty is what makes you an outstanding person.
To achieve emotional fitness, you need to develop four personal qualities that will help you cope with challenges that come your way.
1 Be patient
This is perhaps the most important quality for emotional fitness. There are some problems that cannot be solved overnight.
If you hit the gym every day and hope to have a body like Arnold Schwarzenegger in a week, it is just not going to happen. Some people look for quick fixes like taking muscle enhancement medication. But there may be side effects that may not be a good thing for your body in the long run.
Similarly, if you have a recurrent problematic situation that saps your emotional energy, be patient and work towards the best solution — even if it takes a longer time. There is an ancient Chinese saying that says: “It takes many droplets to make the mighty ocean.”
Break your problem into small achievable steps and enjoy the little victories every time you solve a small aspect of the problem. These little victories will help you stay focused and motivate you towards handling the larger problem objectively and effectively.
2 Develop a spiritual centre
This means accepting who you are and what you can do. In the consumer- driven society that we live in, we often want things that other people have. We are discontented and unhappy if we are unable to “keep up” with neighbours, friends and relatives.
If you can afford a big car, then go for it! But if you want the big car because your neighbour or colleague has got one and you want to compete with him, stop and examine your priorities and values.
You may realise that you don’t need the car or that you are going to have a tough time servicing the loan. This financial burden will distract you from other things you consider important in your life, such as spending more time with your family or doing volunteer work.
Part of the process of developing selfesteem is to do things that make you feel good about yourself. Try writing down all your strong points as well as your weaknesses.
You will appreciate your own talents and be better able to start working on your weak points. You may even be motivated enough to get help for your “problem” areas.
3 Make a paradigm shift
In his book, Principle-centered Leadership, Stephen R. Covey mentions that if you want to make minor improvements, work on your attitudes and behaviour.
But to make major improvements in your life, he suggests that you work on paradigms. A paradigm is a way of thinking. Sometimes we feel emotionally sapped because of the way we think. If something is not working for you, it could be that you are trapped in a certain way of thinking.
Try looking at the challenge from a different perspective. Talk to someone you trust to see how he might handle the situation. For all you know, he may have a solution that is right for you. As inspirational speaker Richard L. Evans said: “Don’t let life discourage you; everyone who got where he is had to begin where he was.”
4 Engage in positive self-reflection
Learn to always see yourself as a positive and successful person. There may be things you did that you are not proud of or you may have had a failed relationship or a troubled past. Not forgiving yourself for things that have already happened is not going to change the past. You need to acknowledge what has happened to you, where or why things went wrong and look to the future.
Try to think of the many times you were successful and feel heartened by them. You will not be able to identify potential solutions to your problems by dwelling on the past.
Take a cue from Henry Ford, who once said: “Life is a series of experiences, each one of which makes us bigger, even though it is hard to realise this. For the world was built to develop character, and we must learn that the setbacks and grief which we endure help us in marching onwards.”
It is these kinds of situations that you need to prepare for by developing your emotional fitness (EF).
Emotional fitness is the ability to develop a sustained capacity to thrive when the going gets tough. Just as you need to be physically fit to run a very long race, you need emotional fitness when you have to handle a crisis or some prolonged challenging situation that confronts and confounds you.
In these circumstances, it takes tremendous emotional energy to remain motivated. However, your ability to ride this wave of uncertainty is what makes you an outstanding person.
To achieve emotional fitness, you need to develop four personal qualities that will help you cope with challenges that come your way.
1 Be patient
This is perhaps the most important quality for emotional fitness. There are some problems that cannot be solved overnight.
If you hit the gym every day and hope to have a body like Arnold Schwarzenegger in a week, it is just not going to happen. Some people look for quick fixes like taking muscle enhancement medication. But there may be side effects that may not be a good thing for your body in the long run.
Similarly, if you have a recurrent problematic situation that saps your emotional energy, be patient and work towards the best solution — even if it takes a longer time. There is an ancient Chinese saying that says: “It takes many droplets to make the mighty ocean.”
Break your problem into small achievable steps and enjoy the little victories every time you solve a small aspect of the problem. These little victories will help you stay focused and motivate you towards handling the larger problem objectively and effectively.
2 Develop a spiritual centre
This means accepting who you are and what you can do. In the consumer- driven society that we live in, we often want things that other people have. We are discontented and unhappy if we are unable to “keep up” with neighbours, friends and relatives.
If you can afford a big car, then go for it! But if you want the big car because your neighbour or colleague has got one and you want to compete with him, stop and examine your priorities and values.
You may realise that you don’t need the car or that you are going to have a tough time servicing the loan. This financial burden will distract you from other things you consider important in your life, such as spending more time with your family or doing volunteer work.
Part of the process of developing selfesteem is to do things that make you feel good about yourself. Try writing down all your strong points as well as your weaknesses.
You will appreciate your own talents and be better able to start working on your weak points. You may even be motivated enough to get help for your “problem” areas.
3 Make a paradigm shift
In his book, Principle-centered Leadership, Stephen R. Covey mentions that if you want to make minor improvements, work on your attitudes and behaviour.
But to make major improvements in your life, he suggests that you work on paradigms. A paradigm is a way of thinking. Sometimes we feel emotionally sapped because of the way we think. If something is not working for you, it could be that you are trapped in a certain way of thinking.
Try looking at the challenge from a different perspective. Talk to someone you trust to see how he might handle the situation. For all you know, he may have a solution that is right for you. As inspirational speaker Richard L. Evans said: “Don’t let life discourage you; everyone who got where he is had to begin where he was.”
4 Engage in positive self-reflection
Learn to always see yourself as a positive and successful person. There may be things you did that you are not proud of or you may have had a failed relationship or a troubled past. Not forgiving yourself for things that have already happened is not going to change the past. You need to acknowledge what has happened to you, where or why things went wrong and look to the future.
Try to think of the many times you were successful and feel heartened by them. You will not be able to identify potential solutions to your problems by dwelling on the past.
Take a cue from Henry Ford, who once said: “Life is a series of experiences, each one of which makes us bigger, even though it is hard to realise this. For the world was built to develop character, and we must learn that the setbacks and grief which we endure help us in marching onwards.”
Deliver on what you promise
How many people promise to get back to you with that quote, order, report or anything else for that matter and actually do it?
Many people do not deliver on their promises. They do not realise that they lose people’s trust and their credibility goes down the drain. This leads to the loss of goodwill too. Would you refer business to them and feel confident that they can look after an important client or be responsible for finalising a special project?
Smooth sailing
A few months ago, I decided to finally buy a home entertainment system. I don’t like to waste time visiting the relevant stores and having to sift through conflicting opinions as to what would suit my needs. So I rang a local retailer and asked if he knew someone who could come to my home and then make suitable recommendations.
I was referred to an installer who regularly purchased goods from the store. He wasn’t contracted to this company, but the manager had his business card.
Normally this could be risky as the retailer could not tell me whether this man was either good or bad. However, I decided to call John anyway.
I was pleasantly surprised. John was easy to deal with and he acted very professionally. Here is what made him stand out:
He answered his phone in a professional and friendly manner.
He spoke with confidence.
He arrived at my home at the agreed time.
He was dressed appropriately.
His mobile phone was switched off. John obviously realised the most important person at that time was me and being interrupted by calls would take his attention away from me, his prospective customer.
He listened to what I said and understood what I wanted.
He was knowledgeable about the products available.
He promised to contact me the next day with his recommendations.
And to top it all off, he produced a diary and wrote everything in it. I was impressed. I knew at that point he wouldn’t let me down.
True to his word, John contacted me. In fact, he sent me an e-mail listing all his recommendations and costs. He also suggested I look at the equipment first.
Now that I had the recommendation with me, I headed off to the local retailer, and was able to check out the specific equipment. I confidently made the decision to purchase everything from John.
I also checked out similar equipment to ensure I was getting the best deal. It was easy to do now that I had a specific list of my requirements. All it took was a couple of phone calls.
I rang John and confirmed my order and had my new system installed without a hitch.
Broken promises
Next, I wanted to update my mobile phone and spoke to Jason who ran his own business. He promised to contact me with suitable recommendations.
That was a month ago and I never heard from him. I happened to run into him recently and he promised to get back to me. Again, he let me down. What a contrast to John!
On both occasions, Jason didn’t write anything down. So guess what happened? He has forgotten, and unfortunately for him, he has lost a sale.
If someone needs a mobile phone, I wouldn’t refer him to Jason. If he is this unreliable before you even strike a deal, how good will he be when something goes wrong with the phone?
Jason works long hours and for the time he spends in his business, he’s not achieving the results he wants. It’s easy to see why.
Write it down
From what I observe, people make promises verbally and then do not write the details down immediately in their diary so they can remember to follow up. As long as they look in their diary and take action, there’s no chance of them forgetting!
It’s as simple as that. Research shows that we have between 50,000 to 60,000 thoughts running through our brain each day! How can you remember everything? You have to write it down.
For those of you who love technology, you can still follow the same rules as using a paper diary.
John made it easy for me to buy from him. He did what he said he would do. Although I knew nothing about him, the way he presented himself gave me confidence in his ability.
Of course I’ll refer him to everyone who needs to set up and install a home entertainment system.
It doesn’t take much effort to stand out from the crowd. Just keep your promises and gain a good reputation. Do what you promise, otherwise why bother in the first place?
Many people do not deliver on their promises. They do not realise that they lose people’s trust and their credibility goes down the drain. This leads to the loss of goodwill too. Would you refer business to them and feel confident that they can look after an important client or be responsible for finalising a special project?
Smooth sailing
A few months ago, I decided to finally buy a home entertainment system. I don’t like to waste time visiting the relevant stores and having to sift through conflicting opinions as to what would suit my needs. So I rang a local retailer and asked if he knew someone who could come to my home and then make suitable recommendations.
I was referred to an installer who regularly purchased goods from the store. He wasn’t contracted to this company, but the manager had his business card.
Normally this could be risky as the retailer could not tell me whether this man was either good or bad. However, I decided to call John anyway.
I was pleasantly surprised. John was easy to deal with and he acted very professionally. Here is what made him stand out:
He answered his phone in a professional and friendly manner.
He spoke with confidence.
He arrived at my home at the agreed time.
He was dressed appropriately.
His mobile phone was switched off. John obviously realised the most important person at that time was me and being interrupted by calls would take his attention away from me, his prospective customer.
He listened to what I said and understood what I wanted.
He was knowledgeable about the products available.
He promised to contact me the next day with his recommendations.
And to top it all off, he produced a diary and wrote everything in it. I was impressed. I knew at that point he wouldn’t let me down.
True to his word, John contacted me. In fact, he sent me an e-mail listing all his recommendations and costs. He also suggested I look at the equipment first.
Now that I had the recommendation with me, I headed off to the local retailer, and was able to check out the specific equipment. I confidently made the decision to purchase everything from John.
I also checked out similar equipment to ensure I was getting the best deal. It was easy to do now that I had a specific list of my requirements. All it took was a couple of phone calls.
I rang John and confirmed my order and had my new system installed without a hitch.
Broken promises
Next, I wanted to update my mobile phone and spoke to Jason who ran his own business. He promised to contact me with suitable recommendations.
That was a month ago and I never heard from him. I happened to run into him recently and he promised to get back to me. Again, he let me down. What a contrast to John!
On both occasions, Jason didn’t write anything down. So guess what happened? He has forgotten, and unfortunately for him, he has lost a sale.
If someone needs a mobile phone, I wouldn’t refer him to Jason. If he is this unreliable before you even strike a deal, how good will he be when something goes wrong with the phone?
Jason works long hours and for the time he spends in his business, he’s not achieving the results he wants. It’s easy to see why.
Write it down
From what I observe, people make promises verbally and then do not write the details down immediately in their diary so they can remember to follow up. As long as they look in their diary and take action, there’s no chance of them forgetting!
It’s as simple as that. Research shows that we have between 50,000 to 60,000 thoughts running through our brain each day! How can you remember everything? You have to write it down.
For those of you who love technology, you can still follow the same rules as using a paper diary.
John made it easy for me to buy from him. He did what he said he would do. Although I knew nothing about him, the way he presented himself gave me confidence in his ability.
Of course I’ll refer him to everyone who needs to set up and install a home entertainment system.
It doesn’t take much effort to stand out from the crowd. Just keep your promises and gain a good reputation. Do what you promise, otherwise why bother in the first place?
Overlooking the obvious
Well known CEO says incredible mistakes are made by the most senior people and the largest organisations.
IT'S incredible how wrong we humans can be sometimes. We make big and small mistakes - errors of judgment that are so obvious when we look back days or years later. Some are of the kind: “Well, I did not know better and this was the best I could do.” Some are more ... : “I just can’t believe I did that or thought so!”
In the business world, we often see unfathomable decisions being made. Well, at least unfathomable in retrospect but still?
I can take an example from my own industry - the mobile operators. Let’s say you are in year 1999, 2001 or 2003, even 2005. You are a big mobile boss and you say to yourself: “Hmmm, now I’m going to lie back on the office sofa and think about some big trends.”
Thought 1: Mobile phones seem to be a really good thing. It’s incredible how people from all social levels view this wireless device as an absolute integral part of their daily lives.
Thought 2: Asia is emerging. It is economically developing in all ways and it’s likely that most Asians will also want to use the phone. Then you lie even further back on your sofa and easily reach your conclusion - to invest in mobile operators in so-called emerging markets might not be such a dumb idea.
Do you think most European/American operators did just that, in lieu of the 100% likelihood that their own markets would be fully mature soon? No, nearly no one did so. Some did try but left soon afterwards.
They all fully focused on their home markets and then they all got the same idea of crowding in to compete in Germany or something.
Incredible value was obviously created in mobile operations in emerging markets. And we had to wait until very recently to read about western companies wanting to invest in emerging markets, now that the door is all but closed for any of them.
Oh, there are so many of these gigantic mistakes. I must use 120 words of my allotted 900 in this column on the incredible hype and fall of the value of so-called 3G mobile spectrum. The payment from mobile operators to governments for the right to use airwaves is called the biggest transfer ever of resources from private to public wealth. What was the killer application? Video-telephony.
Big corporate CEOs in very dark suits were explaining how this would change the entire world. Think about it. If you hold your phone to your ear, you cannot see the person on the screen (though the other person might get a good look at your ear). And if you are holding your hand out to look at the screen, it will be very difficult for any of you to hear each other. The hopelessness seems obvious now but this little belief and hype drove a whole industry in Europe to massive debt and the brink of self-destruction.
There are so many causes for management blindness. I just want to mention five that came to me as I was writing the introduction that you just read in this column.
Pressure for short-term performance. Think the CEO is almighty? Think again. Think about the pressure from the shareholders, the board, the media commentators, the peer group and the key employees. They all want growth, profit and bonuses and they want them now. What room do you think you would have that creates for longer-term ambitions?
Lack of diversity in management team. There is a clear and understandable tendency to hire people who mirror yourself, people with whom you share the outlook of the world. “Great minds think alike” is a slogan from a luxury clothes brand. For me, it’s rather a recipe for uninventive thinking and predictable action.
Overestimation of change ability. It’s actually very, very hard to make a lot of people change their behaviour. To change how people interact, buy and pay and so on is an extraordinary effort. Face it, as an example, after countless efforts, endless hype and a decade of years, an overwhelming part of the three billion mobile users is still using only voice and SMS. It’s hard (though possible) to change a mass market’s established routines.
Too bound by mission. Companies have their strategy and they stick to it in good and bad times as if this is their given place in life. In many cases, this probably makes sense but just think about all the opportunities lost in the self-enforced belief in sticking to your core. What would Nokia (and Finland) be if they stayed on their previous core of focusing on paper, cables and rubber?
Following mainstream. It’s so alluring to follow mainstream thinking because nobody will be fired for doing what everybody is doing. But I believe a company needs to be cautious when everybody is going in one direction because it might be hard to create value by doing the same as everyone else.
So, incredible mistakes are made by the most senior people and the largest organisations. Psychological traps await all of us. How do we avoid them? I have no idea. There is no such thing as one recipe (if I had one, I would publish a colourful airport book entitled 'Five Great Ways to Avoid Unfathomable Mistakes'). But I can suggest some values that might reduce the likelihood of stooping into blind alleys:
The importance of diversity. We should not just have management teams that are composed in a diverse way. We also need the decision-makers to stimulate an environment that is really open-minded for energetic proposals and equally energetic opposing viewpoints.
Embracing opportunities. Sticking to the core business and focusing on committing no mistakes is probably alright as a survival strategy but an open-minded culture will run away with the big-ticket rewards.
Pragmatism and agility. Strategies are good for a company’s focus in the long-term but when dramatic changes happen, a pragmatic attitude will help the company to grab opportunities and turn fast when needed.
So in the end, it’s all about mindset. Every day, companies are seizing big opportunities (or not) and making big regrettable decisions, all driven by the management’s mindset. With all the possible psychological traps lurking, it’s imperative to heighten the awareness of your organisation’s corporate mindset because that is what sets you up to win or lose out.
IT'S incredible how wrong we humans can be sometimes. We make big and small mistakes - errors of judgment that are so obvious when we look back days or years later. Some are of the kind: “Well, I did not know better and this was the best I could do.” Some are more ... : “I just can’t believe I did that or thought so!”
In the business world, we often see unfathomable decisions being made. Well, at least unfathomable in retrospect but still?
I can take an example from my own industry - the mobile operators. Let’s say you are in year 1999, 2001 or 2003, even 2005. You are a big mobile boss and you say to yourself: “Hmmm, now I’m going to lie back on the office sofa and think about some big trends.”
Thought 1: Mobile phones seem to be a really good thing. It’s incredible how people from all social levels view this wireless device as an absolute integral part of their daily lives.
Thought 2: Asia is emerging. It is economically developing in all ways and it’s likely that most Asians will also want to use the phone. Then you lie even further back on your sofa and easily reach your conclusion - to invest in mobile operators in so-called emerging markets might not be such a dumb idea.
Do you think most European/American operators did just that, in lieu of the 100% likelihood that their own markets would be fully mature soon? No, nearly no one did so. Some did try but left soon afterwards.
They all fully focused on their home markets and then they all got the same idea of crowding in to compete in Germany or something.
Incredible value was obviously created in mobile operations in emerging markets. And we had to wait until very recently to read about western companies wanting to invest in emerging markets, now that the door is all but closed for any of them.
Oh, there are so many of these gigantic mistakes. I must use 120 words of my allotted 900 in this column on the incredible hype and fall of the value of so-called 3G mobile spectrum. The payment from mobile operators to governments for the right to use airwaves is called the biggest transfer ever of resources from private to public wealth. What was the killer application? Video-telephony.
Big corporate CEOs in very dark suits were explaining how this would change the entire world. Think about it. If you hold your phone to your ear, you cannot see the person on the screen (though the other person might get a good look at your ear). And if you are holding your hand out to look at the screen, it will be very difficult for any of you to hear each other. The hopelessness seems obvious now but this little belief and hype drove a whole industry in Europe to massive debt and the brink of self-destruction.
There are so many causes for management blindness. I just want to mention five that came to me as I was writing the introduction that you just read in this column.
Pressure for short-term performance. Think the CEO is almighty? Think again. Think about the pressure from the shareholders, the board, the media commentators, the peer group and the key employees. They all want growth, profit and bonuses and they want them now. What room do you think you would have that creates for longer-term ambitions?
Lack of diversity in management team. There is a clear and understandable tendency to hire people who mirror yourself, people with whom you share the outlook of the world. “Great minds think alike” is a slogan from a luxury clothes brand. For me, it’s rather a recipe for uninventive thinking and predictable action.
Overestimation of change ability. It’s actually very, very hard to make a lot of people change their behaviour. To change how people interact, buy and pay and so on is an extraordinary effort. Face it, as an example, after countless efforts, endless hype and a decade of years, an overwhelming part of the three billion mobile users is still using only voice and SMS. It’s hard (though possible) to change a mass market’s established routines.
Too bound by mission. Companies have their strategy and they stick to it in good and bad times as if this is their given place in life. In many cases, this probably makes sense but just think about all the opportunities lost in the self-enforced belief in sticking to your core. What would Nokia (and Finland) be if they stayed on their previous core of focusing on paper, cables and rubber?
Following mainstream. It’s so alluring to follow mainstream thinking because nobody will be fired for doing what everybody is doing. But I believe a company needs to be cautious when everybody is going in one direction because it might be hard to create value by doing the same as everyone else.
So, incredible mistakes are made by the most senior people and the largest organisations. Psychological traps await all of us. How do we avoid them? I have no idea. There is no such thing as one recipe (if I had one, I would publish a colourful airport book entitled 'Five Great Ways to Avoid Unfathomable Mistakes'). But I can suggest some values that might reduce the likelihood of stooping into blind alleys:
The importance of diversity. We should not just have management teams that are composed in a diverse way. We also need the decision-makers to stimulate an environment that is really open-minded for energetic proposals and equally energetic opposing viewpoints.
Embracing opportunities. Sticking to the core business and focusing on committing no mistakes is probably alright as a survival strategy but an open-minded culture will run away with the big-ticket rewards.
Pragmatism and agility. Strategies are good for a company’s focus in the long-term but when dramatic changes happen, a pragmatic attitude will help the company to grab opportunities and turn fast when needed.
So in the end, it’s all about mindset. Every day, companies are seizing big opportunities (or not) and making big regrettable decisions, all driven by the management’s mindset. With all the possible psychological traps lurking, it’s imperative to heighten the awareness of your organisation’s corporate mindset because that is what sets you up to win or lose out.
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