But that doesn’t mean we don’t want to improve.
At the end of last year, I asked a small number of thoughtful investors what one aspect of how they work they would like to change in the approaching new year.
Their answers were varied, and there were plenty to do with improved investment decision-making (our area of expertise at Essentia). But there was one clear recurring theme which can be paraphrased as:
“I want to be more focused on fewer things.”
We’ve all read about, and in many cases, experienced fleetingly, the benefits of taking time to focus deeply on one thing that really matters. It makes sense that we want to find ways to do more of this on an ongoing basis.
And yet, we could have (and may well have) made the same resolutions at the start of 2016, and the start of 2015, and every year that came before it – and we didn’t actually follow through.
I have some theories. One is that when we structure our resolutions as rules, rather than iterative processes, many of us are doomed to break them.
As Gretchen Rubin’s research on habit-forming points out, there are some people who respond well to rules at face value, whilst there are others who need more than that to make them change their behavior. I know I’m the latter, and I suspect the same can be said of most senior finance professionals.
One reason for that might be because our resolutions err on the side of radical. No matter what our “habit nature” (to steal a phrase from Rubin), our brains are universally wired to resist radical change. Radical change evokes fear, which causes us to start sabotaging our chances of success.
We’ve explored before how, in a work context, it can be difficult for senior managers trying to implement change within a team; there are virtues in starting out with the smallest possible change we can make in aid of our goal, measuring the impact of that change, reflecting on the data on that impact, and iterating. In other words, applying the concept of Kaizen.
In the same way – and at a personal level – treating your resolution as an iterative process toward a goal (and perhaps abandoning the word “resolution” altogether), has a whole different vibe.
In an iterative process, you know going in that the first version is probably not the ultimate solution. And in an iterative process, failure is a learning experience, not a humiliation.
When it comes to the goal of being “more focused on fewer things,” there are a lot of ideas out there worth considering for that smallest starting point – this podcast interview with “The Organized Mind” author Dr. Daniel Levitin contains some useful ideas.
But there’s one behavior that I can vouch for personally, and that I have observed works for Essentia’s portfolio manager clients, too:
2 minutes of daily reflection
Reflection is both the most underrated and the most valuable part of any learning process. Academic research, such as the 2015 study by DiStefano et al, supports the theory that people and organisations with reflection built into their processes get better results: