Business Thoughts: Make Better Decisions Using Zero Based Thinking
I learned an amazing thinking technique a few years ago thanks to Brian Tracy.
It’s called Zero Based Thinking.
Most of your decisions in life will be wrong. That’s how life works. We take action, we make mistakes, and we keep moving forward.
The question is, how do we know we’ve made a mistake? Unfortunately we have these things called “emotions” that can cloud our judgements.
You won’t recognize mistakes until much, much later. Even if you do recognize a mistake, emotions can make everything so much more difficult to. That’s why you’re probably amazing at giving advice to your friends, but aren’t that great at making decisions.
That’s where zero based thinking comes in.
It means “Knowing what I do now, would I still make the same decision?”
If the answer’s no, then it’s time to get out asap.
The easiest way to explain this would be by using a few examples.
Many of my friends are at that stage of their relationships.
They’re in their late 20’s, and have been with their girlfriend for 2+ years. On one hand, their significant other is pressuring them for possibly marriage, but they’re not sure if they’re ready to settle down.
If they asked me for advice, I tell them about zero based thinking. “If she wasn’t your girlfriend, would you get into a relationship with her again?”
I’m not encouraging people to end relationships. I’m just telling you to think deeper.
If you’re a boss, then sooner or later you’re going to make a bad hire. No one bats 100%.
How do you know if you should let someone go?
Well imagine if this person wasn’t working for you. Think about how they fit into your company and all the work they’ve done in the past. Would you hire them again?
If the answer’s no, then you should let them go.
It happens. Maybe they were a GREAT employee in the past, but they can’t keep up with the company’s growth. Or maybe they’ve gotten lazy the past few months.
I’ve let go of employees before and it wasn’t easy. To tell you the truth, it doesn’t get easier the more you do it.
The New Year is coming up and I have too much “stuff.” (I blame it on Amazon prime). It’s so hard to be a minimalist when you love gadgets and technology.
It’s hard to throw things out because we spent money on it, or because we have memories associated.
I’m going to ask myself, “Would I buy this again?” Go through your closet and ask this question for each pair of clothing you bought. Whatever you wouldn’t buy again, give it to charity.
You’ll be more organized, cleaner, and the Salvation army will have a bunch of shitty t-shirts that affiliate networks give away at conferences.
A friend of mine developed an iPhone app.
He poured tons of money into it, and spend over half a year developing it. It never took off.
A tremendous job opportunity came in and he had to make the decision, should he keep focusing on the app or take the job?
Deep down he knew it was time to call it quits but he couldn’t do it. He put in too much time into the project – it was his baby. Also how he feel if he quit?
I taught him zero based thinking. “You pursued the app and gave it your all. If we could go back in time, would you start the app again?”
He said no. He killed the app and took the job offer.
Is he a quitter? Hell no. Sometimes quitting is the best decision you can make. Now he has cash coming in, and is working on another app in his spare time.
You’re not a quitter because you stopped a failing project. You’re a quitter when you stop pursuing your dreams.
Sunk Cost Bias
If you study psychology, you can see that Zero Based Thinking is similar to sunk cost bias.
A sunk cost is a cost that you’ve paid already, and you can’t recover it. You now shouldn’t let the cost affect future decisions.
I was in Vietnam last year and I bought non-refundable tickets / hotels to Bangkok. I was ready to go, but I got sick the night before. I wanted to force myself to go because I already spent $600 on the hotels / tickets. If I didn’t go then I would “waste” my money.
That $600 is gone. I can’t get it back no matter what. I realize that it’s a sunk cost.
Now I had to make the best decision now. I’m sick, should I go to Bangkok? I didn’t go. I didn’t feel like it, and I’d lose way more than $600 if I traveled and made my sickness worse.
This is why some people are such horrible gamblers. They’ll be down some money, and insist to keep playing in order to “get their money back.” The money’s gone.
Using Zero Based Thinking to Improve Your Decisions
Don’t be tied down to decisions you made before. Life changes. You become smarter. You gain more wisdom. And sometimes that wisdom will tell you that you made a mistake.
We can’t change the past, but we can make better decisions for our future.