“An investment in self-development pays the highest dividends.”Debasish Mridha
In Part 1 of this series, found here, I discussed the outdated notions of efficiency-based productivity. Having the goal of doing more things, faster, in an attempt to be more productive is based on the hangover from the First and Second Industrial Revolutions. I made the argument that producing work that is more effective, as opposed to more efficient, should be of greater concern when one is desiring to improve their “productivity”. I then outlined the two general skills that I believe will increase in value as we progress into the future, being critical thinking and the ability to concentrate. This is because they help with understanding the reality of any situation and seeing the opportunities within it, as well as developing the skills and producing the output required to be valuable, respectively.
In Part 2, found here, I attempted to provide a justification for these skills from a different vantage point. I introduced Peter Thiel’s concept that Competition is for Losers and made the point that looking for new problems to solve or niche markets to provide for, was a more productive use of one’s time than simply trying to outcompete someone else and “win” that way. My intention here was to highlight that the ability to think critically would also support this. In the second half of the article I made the connection between concentration and creativity. I discussed that the abstract insight that is stereotypical of artists is not in opposition to paying precise attention and having the ability to concentrate. Effective creativity is actually a component of, and can be supported by, having sufficient control over one’s attention. In my conception, these different views of the same problem still lend support to the idea that critical thinking and concentration are the foundation of producing valuable work.
In this instalment I will focus purely on the critical thinking aspect, but again attempt to highlight its necessity through a novel lens.
If you don’t care about your own future, who will?
Productivity is the term we give to the effective and efficient use of resources—with a heavy bias towards time as the limiting resource.
This disposition towards time—the only true finite resource—is what makes efficiency the primary focal point in conversations regarding efficiency.
While warranted, this time-centric approach leads to a misconstruing of the actual problem. While time is without a doubt the bottleneck in regard to producing, it does not follow that we need to therefore work faster in order to satisfy the problem.
The argument I will make today actually supports the opposing position. This argument is aligned with the general argument I have been making throughout this series, in that where you allocate time (undertaking effective tasks) is generally more important than the efficiency of its use.
I believe this to be true, because in order for something to be productive, it must serve a need. Importantly though, if something serves a greater need, the productivity is magnified exponentially in comparison to incremental efficiency-based improvements.
For this reason, the suggestion I will offer today is to consider longer-term needs.
When it comes to your own productivity, lift your eyes a little. Whenever you’re trying to get somewhere, you’re better served looking more towards the horizon, and less time looking at your feet.
I’m speaking metaphorically here, but what I mean by this is, you should consider the future to a more significant extent and not just the needs of the current moment.
Far too often we get sucked into ticking off short-term tasks, and subsequently getting hooked on the neurotransmitter induced pleasure of task completion—irrespective of how instrumental that task will be to providing us with long-term benefits.
Now, of course, you need to take care of the immediate issues in the present, in order to have a future. However, I tend to think that the hyper-efficiency philosophy of modern-day work creates a self-propagating vortex where the faster you work, the less effective you work, and the faster you therefore have to work in order to continue producing value at the requisite pace.
I am a big fan in the way Warren Buffet thinks about things, and he made a similar point when he stated: “You only have to do a very few things right in your life so long as you don’t do too many things wrong.”
Far too often people find themselves time-pressed because they have spent exorbitant amounts of time working on things that serve minimal long-term purpose. The more wrong things you do, the more right ones you have to do in order to tip the equation back in your favour.
In sport science there is a simple axiom that “speed kills”.
However, in regard to knowledge work related productivity, I think the connotations are different. In my opinion, speed kills effectiveness—which is the most pivotal factor in the productivity equation.
Speaking both metaphorically and literally, the faster you run, the less clearly you can see things. The same is true of the work you do. The more efficiency focused you are, the less you can analyse what you should actually be doing.
I believe this analysis of your own behaviour to be crucial. In particular regarding its impact on the long-term.
The reason I lean so heavily on the importance of a long-term view, is because most of us, by default, place extremely low value in the future—even with the high degree of probability that we will survive long enough to experience it.
This phenomenon is known in behavioural economics as hyperbolic discounting.
This observation highlights how rapidly we discount (reduce the value of) the future. We will pay a disproportionately greater cost, or forgo substantially higher future gains, in order to obtain something we want immediately to satisfy a short-term desire.
This model of human behaviour is evident in many realms of our existence, but a common one is overnight or express shipping.
I mean, why wait 3-4 days when you can have something shipped to you immediately at a much higher price? Even if you have lived without this product for a significant amount of time now already, you certainly couldn’t survive another 72 hours without it… That would be unbearable.
In order to justify this, people will often say things like “well, time is money”.
Unfortunately, this is really just a way of saying something that sounds wise, but actually just allows you to rationalise whatever you please—the exact opposite of having wisdom. As Eliezer Yudkowsky stated: if you can invent an equally persuasive explanation for any outcome, then you have zero knowledge.
What I mean by this is, if you state “time is money” in order to justify paying a higher price for obtaining something sooner, then this is almost certainly a rationalisation, because on deeper analysis there are evident contradictions.
The contradictions occur because the phrase “time is money” states that time and money are exchangeable and implies that time (by associating it with money) is valuable.
So far this is true, and I have no qualms with these premises. The issue is the conclusion that people draw from them though. If time and money are both valuable, and exchangeable, then your actions should appropriately reflect that—yet they very often don’t.
The theories of behavioural economics teach us that we could save or acquire disproportionately more money (or some other form of value), if we were willing to wait a slightly longer amount of time. Unfortunately, as impatient, immediate-gratification-needing, greed-driven human-beings, quite simple, we do not.
So next time someone says “time is money” in order to justify having something sooner, ask to see their equations. Because almost always, this saying is used to justify saving themselves some waiting-time, but at a significant financial cost to themselves, which only benefits someone else’s money.
Without getting too far off track, the point I’m trying to make here is that we will often opt for the self-serving, short-term option, then attempt to find a wise sounding rationale to justify it to ourselves and others. Another frequently used one is “business is business” (where the idea is to prioritise short-term financial gain, even if it comes with the cost of ethically questionable action, which can have moderate-to-dire long-term consequences).
All of this is because the evolutionary process has geared us to prioritise short-term gain over long-term gain. To some degree this is fine, however, a problem arises because this means we not only opt for short-term options when the longer-term approach would have paid off more significantly, but even opt for short-term gain when it may actually cause a long-term loss/pain.
Examples of this kind are not just limited to shipping options but also how we cheat on our partners, or on our diet, how we spend what we should save, the fact we procrastinate or stay up too late, or have that extra beer on a weeknight when we know we shouldn’t…
The list goes on.
Keep this general concept in mind as we return to the notion that for something to be productive, it must serve a need.
What I want you to consider though, is not only your current needs, but your future ones also. We can be more productive, if we can address more needs, by working with more substantial time horizons.
If you can do something that is valuable today, or something else that will be valuable for days, weeks or years to come—even if it isn’t as immediately valuable today—I know what I would consider to be the more productive task.
To help explain this concept, let’s use business valuation as an analogy.
Productivity & Cashflow
Simply speaking, the current value of any business is the amount of cash it is expected to generate in the future—not its previous or current profits. Sure, current or previous profits play a role in the calculation of future profits, but as they say: past performance is not a reliable indicator of future performance.
A common example of a situation like this is the contrast between a traditional print media company and a technology start-up.
If you took the previous profits—and maybe even current ones—of a company that made newspapers and magazines, you might find they have generated substantial amounts of revenue for the last 60+ years (as a reference, the New York Times was founded in 1851).
Compare this to a small team of entrepreneurs who have developed software that serves a similar purpose, but with a substantial amount of the process, irrelevant content and financial overheads cut out.
Let’s say this software monitors all major news websites and streaming platforms and it also scans Twitter for various hashtags such as #BreakingNews, while weighting various reputable journalists more highly. It then uses a team of proprietary algorithms to extract key facts from various sources and reconstruct them into a short and coherent synopsis of the story. It then integrates the user’s Google search history and social media activity to determine if the story is of interest to the app user. If the story satisfies the relevance threshold, the app user will receive a notification of the news. The user can then read the synopsis, and if they so desire, to follow the various links to more direct sources.
For the sake of argument, let’s say the app development is coming along well. The algorithms—the key aspect of its success—are an order of magnitude more superior than any other app like it, yet it is still 12-18 months off being released due to the user interface needing to be made more aesthetically pleasing, as well as the software’s durability needing to be improved, for when it may be accessed by substantial amounts of people at any one time.
If we were to read the financial history of these two companies, we would see that the print media company has had significant profit margin for multiple decades, whereas the software start-up is probably running at a loss currently—and may continue to for another 3-5 years.
The point I am getting at though, is if you were to take an investor who had a casual half a million dollars that was just smouldering away in their pocket, they would almost certainly put the money in the company that was running a current loss—the tech start-up.
This is because the print media company appears to be a dying breed, and the investor only cares about future returns, not previous ones. Even if the app-developers are yet to reach the black, the intrinsic—as opposed to market—value of the company is substantially higher and is projected to bring in exponential profits in the future.
This is the mindset I want you to try and engage before deciding what task you will work on, rather than just mindlessly investing your time in tasks that have paid off in the past.
As a more concrete example for the above, Peter Thiel mentions in his book Zero To One that he forecast the majority of his company’s profits to be coming 10 years in the future:
“In March 2001, PayPal had yet to make a profit but our revenues were growing 100% year-over-year. When I projected our future cash flows, I found that 75% of the company’s present value would come from profits generated in 2011 and beyond—hard to believe for a company that had been in business for only 27 months. But even that turned out to be an underestimation. Today, PayPal continues to grow at about 15% annually, and the discount rate is lower than a decade ago. It now appears that most of the company’s value will come from 2020 and beyond.”
Elsewhere in the book, a more concise summary of Thiel’s mindset is evident when he says:
“If you focus on near-term growth above all else, you miss the most important question you should be asking: will this business still be around a decade from now?”
Again, this is what you should be thinking when you decide what you’re going to spend your time doing. What you end up doing is itself an investment—and one that can pay off massively, or one that leaves you working well beyond retirement age.
In order to be the most productive you can be, you need to consider how what you are doing interacts with the future. Just as a company’s value is determined by its future cashflow, the productivity of your time is determined by how effectively it will allow you to serve a need in the future.
A simple example is being organised.
Organising yourself doesn’t achieve much in the short term, but it does aid you in allowing yourself to be more productive in the future—a worthwhile investment.
For the above reasons, I believe this to be the most effective way of orienting your direction in the present. A long-term focus is the only way to allow for maximum productivity.
If you’re busy looking at your feet and patting yourself on the back for how fast they are moving (while avoiding looking at the horizon because its changes seem imperceptible and don’t satisfy your need for gratification), don’t be surprised if you end up running yourself into a dead-end. With minimal vision and forethought, you can only be minimally productive, no matter how fast you do it.
You must constantly assess whether what you are doing is the most effective way to serve your current, and future needs. Yes, there must be a balance, but remember hyperbolic discounting, your psychology will lean one way, so you will likely need to put conscious effort into investing in the long term.
To do this, you must think critically.
Critical thinking entails constant assessment of the fault of any information or situation. Do not simply stand by passively and pat yourself on the back. Look for the flaws in your own process and be wary that what you are doing may not be the most profitable activity to be undertaking.
Determining what a more profitable activity to undertake may be is also a skill that requires critical thinking. In order to think accurately about the future, and what you can do now that would produce value in it, you need to have an accurate model of the past and present.
In this article we discussed the value of considering productivity over longer time horizons, and the more substantial future benefits that can be obtained by undertaking tasks that have a long-term pay-off.
Rather that reiterate my points, I will once again leave you with a Warren Buffett quote. If a wiser man than I said it first, I may as well step out of the way and let him do the talking…
“Every day, in countless ways, the competitive position of each of our businesses grows either weaker or stronger. If we are delighting customers, eliminating unnecessary costs and improving our products and services, we gain strength. But if we treat customers with indifference or tolerate bloat, our businesses will wither. On a daily basis, the effects of our actions are imperceptible; cumulatively, though, their consequences are enormous.
When our long-term competitive position improves as a result of these almost unnoticeable actions, we describe the phenomenon as ‘widening the moat.’ And doing that is essential if we are to have the kind of business we want a decade or two from now. We always, of course, hope to earn more money in the short-term. But when short-term and long-term conflict, widening the moat must take precedence.