Just make a move!

I wrote a piece about the 80/20 rule: how 80% of the people do nothing. I then broke the remaining 20% who do ‘something’ into two sub-groups:

– The 19% who save, pay down debt, etc.

– The 1% who will strive for – and perhaps reach – the top of the financial totem-pole.

And, I believe that the difference between all of these groups boils down to one thing: propensity to take action.

Josh‘s question sums it up quite nicely:

I guess you don’t want to be one of those people who contract “paralysis by analysis”. I’m thinking the key here is to just make a move, even though it may not be most perfect move?

Most people fail because they either take too much action or not enough!

Too much action can be a problem, for example, when you chase the market and switch investments a lot; as the Dalbar study found:

During the greatest bull market of all time from 1984 to December 2002 the study came up with an annualized return of 2.57% [for market timers, who move in/out of investments chasing better returns] compared to 12.22% for those who bought and held an S&P500 index fund.

But, how much did those who took NO action make?


Clearly, taking some action is preferable to none … but, what of Josh’s second point: taking action even if “it may not be most perfect move”?

Life rarely presents us with a Final Choice Option …

…. when we take an action, we are usually free to take another! If you make a mistake, back-out as best you can and try something else.

I think of life in terms of a branching structure: at many stages – every day, hour, minute – we are standing at some sort of fork in the road and we have to take the left branch or the right. Somehow, we find a way to choose one:

a) If it seems to carry us to where we want to go. Fine. We stick with it (at least for a while).

b) If it seems to carry us away from where we want to go, we simply wait for the next branching opportunity and try something different.

For example, if an investment works we (should) stick with it. If not, we can always exit for a (hopefully) small’ish loss and try another … if we don’t the loss might increase and take us to zero (how about Enron?).

Of course, this is where it helps to have an overall destination in mind; it helps us understand what does represent the ‘right direction’ for each of us: sometimes, more than one branch appears to be sensible.

But, if you have a clear idea of your Life’s Purpose, all of a sudden only one of the branches may start to make more sense than another.

This helps to explain: where your Life’s Purpose goes, your finances will eventually and surely follow … either by direct route, or meandering, you will eventually find the road to what you deem to be success.

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0 thoughts on “Just make a move!

  1. I was told that the military keeps track of how much information they have on any situation. In a heated battle, once that number reaches 60% they stop collecting information and they start acting. They found that failure to act NOW will cost them more men and time because the enemy would have more time to build up than it would to wait and collect more info then take it easy.

    The thing that stops most people from acting is the fact that they have not broken the task down into bit size chunks. They look at it like a huge elephant with no idea how they will tackle it. I have been trying to use threes. I break down the idea into three main sections. Then I take the first one, and break that down into three main section, I do that until it is small enough where I can put it on my to do list and get it done in under a day. Now I can fill up my days with chucks of the work. Like today I needed to update some web pages, and revise some documents all so that I can get ready to make phone calls tomorrow to customers.

    I go one step farther and break things down to things that must be done during business hours, and the things that can be done anytime. I try to do the anytime things at night when I am not distracted.

    Jason Dragon

  2. I totally agree with this idea. Life is about learning, and the only way we can learn is by doing. Otherwise what do we do with the knowledge we consume? I think knowledge is powerful, it can help us make an informed decision, and prevent us from being simply naive (see credit crisis). However, a decision to act or not to act, implementing what we have learned makes life more challenging and rewarding.

  3. @ Jason – wow! Great idea … I break my ideas up into 10 steps, then do none of them :))

    @ Randy – for me, the key is to have a clear idea of the DESTINATION …. then if you make a couple of steps too far to the left, you can make your next couple to the right (metaphorically speaking) and you eventually end up closer to your destination that you otherwise might have.

  4. Thanks for the indepth reply AJC, and thanks Jason for the interesting military info. That makes perfect sense.

  5. Josh – Great points! I’m in the military and can attest to the value of making a decision earlier on less information rather than waiting for a 100% solution. I’ll also add that a timely, yet less than perfect decision is better than a perfect decision made too late.

    It’s an old cliche that says you learn more from the bad leaders than you do from the good ones. This is a lesson learned from working for the bad.

    I’ve had a boss or two who have been the 100% types. Their decision making process was agonizingly slow for the ENTIRE ORGANIZATION. The resulting paralysis is even worse, because no longer is it one person who becomes paralyzed. It’s now a couple hundred people.

    I strive to be around a 70-75% type. The cost we bear to get the last 25% or so is just not worth it.

    Since we’re talking about decision-making I’d like to add that consistency is just as important as making a decision. This is magnified as you become a leader and are making choices that affect many people. I’ve had a boss that would make a decision that my team and I would begin to support and put into action only to have him turn and do a 180 shortly after we begin to develop momentum. Talk about frustration!!

    AJ – The last two posts have made for some great critical thinking.

    Thanks again,
    I’m Minding My Own Business, are you minding yours?

  6. Interesting post and comments, all. Jason, I think you heard partly correct – but think of this: How can the military know when it’s reached 60% of its information? You’re right that they have learned not to sit and wait – I think that was learned from one or more of the battles in Kuwait. The military is also inundated with information in this “information age” and is learning how to prevent the deluge of “too much information.”

    The particular field I’m working in at this time is one that suffers from the paralysis by analysis at times; looking for someone to help me was quite a challenge, but thankfully some of the candidates gave away clues.

    AJC – I like what you said about know that we can “beat a retreat” if we enter into the wrong thing for us. It reminds me that sometimes first experiences are not always true indicators of what something is really like…in other words, beat a retreat today and come back to fight again another day, perhaps another battle.

  7. @ Jeff – It’s one reason why I don’t like partners: almost by definition, one is ready to act before the other, then precious time can be wasted collecting more ‘information’ so that the other can catch up with your way of thinking … sometimes, it’s just all too late.

    @ Di – I had the same question about the quantification (60% for Jason and 75% for Jeff), although I agree with the principle.

  8. AJ/DI – Great questions about the 75%. And maybe calling it “having 75% of the avialable information” causes some confusion.

    I guess a better description of the “percentage principle” (I’ll call it that for lack of a better term) is that it is an indicator of your level of confidence. How confident are you that this course of action is better than another? How confident are you that the risk is acceptable? How confident are you of the resulting success?

    It’s actually more of a gut feeling rather than a truly measureable state.

    When you’re deciding for yourself, I think it’s easier to quickly reach high levels of confidence in a decision. After all, only one person is bearing the consequences…You! As long as you can deal with the downside, then the decision may be easy.

    When you’re making decisions that have a broader impact on greater numbers of people, high levels of confidence in the decision are harder to reach. “Harder to reach” means not just more difficult but also means that it takes more time. There are many more variables involved in this scenario.

    This is where the value of the percentage principle comes into play. It helps alleviate some (but not all) of the difficulty in making bigger decisions. It makes use of your gained experience, lessons learned and judgement abilities to make a good decision in a timely manner.

    I know that’s a wishy washy answer. But for me, it has taken time and experience making decisions (I’ve been practicing for 16 years now) that affect not only myself but a large group of others as well. I haven’t always been good at it, and still have much to learn and improve upon in this role.

    But when it works and you get on a role….Look out! There’s nothing you can’t do!

    I’m Minding My Own Business, are you minding yours?

  9. @ Jeff – No, it’s a GREAT answer … when you talk ‘confidence level’ I think we all understand what you mean; that FEELS like something we can assess. I feel another post coming on 😉

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