Making Smart Decisions Like Warren Buffett By Applying The 10/10/10 Method
You need to understand the importance of high-level thinking to make smart decisions.
Making decisions is an essential skill. Why? Simply because we make decisions all the time because we are constantly confronted with an abundance of options that can lead us in contradictory directions. This makes it difficult to make the right decisions and choices in life.
Short-Term Thinking Is Inherited From The Hunter-Gatherer Era
At a time when humans were mainly hunter-gatherers, our short-term impulses took over. This made sense because the world was full of danger and humans had to be able to react quickly by being guided by their primary instincts of fear or anger. Of course, this is no longer the case today in our modern society where decisions made only in the short term tend not to be optimal.
Yet our short-term brain patterns continue to largely dominate the way we interact with the world. In some cases, this may be welcome. I am thinking here of everything to do with love, for example. Nevertheless, we must know how to balance things out and not let ourselves be constantly guided by our emotions.
What we feel in the present moment is not always the best guide because it does not bode well for what we will feel in the future. So the things we focus on today and tomorrow may not really be the most important ones. It is therefore important to step back to see the big picture.
This is how you can make better decisions. To do this, I suggest that you take inspiration from the famous billionaire investor Warren Buffet and the successful American investor Ray Dalio, who is also a famous best-selling author.
You Can See Further With High-Level Thinking
Today, we are no longer hunter-gatherers. It is therefore essential to adapt and seeing further when making decisions. You must not be one of those who align actions and decisions in an almost robotic way without really considering what they want.
What will allow you to make a difference is the high-level thinking of which Ray Dalio is one of the great advocates. He says as follows:
“People who overestimate the first-order consequences of their decisions and ignore the effects that second-order and subsequent consequences will have on their objectives rarely achieve their objectives.”
— Ray Dalio
Considered one of the greatest investors of all time, Warren Buffett often raises this issue with Charlie Munger, his eternal partner at Berkshire Hathaway.
For Warren Buffett, it is essential to be able to step back from the immediate in order to make decisions that have an impact on the long term. In order to be able to make this type of decision, he also advises high-level thinking. You must be able to assess the effects of your actions and decisions beyond the simple cause and effect relationship initially visible.
It is an indispensable quality and it is the way people who succeed in life make their decisions.
The 10/10/10 Method
Of course, it is not easy to switch to high-level thinking when you are used to making short-term decisions for many years.
To help you in your change, your path will go through the implementation of the 10/10/10 method that has been highlighted by Chip Heath, a famous American professor. The idea behind the method is simple: every time you feel doubt before making a decision or taking action, you will have to step back and ask the following 3 questions:
- How will I feel in 10 minutes if I make this decision?
- How will I feel in 10 months if I make this decision?
- How will I feel in 10 years if I make this decision?
Asking these 3 questions will allow you to evaluate your decisions or actions in the short, medium and long term. Thus, something that is a priority in 10 minutes will not necessarily be a priority in 10 months. Similarly, something non-essential in 10 months may be in 10 years.
By thinking in this way, your decisions will benefit from high-level thinking. Your choices will therefore take into account all the temporal dimensions and be all the more relevant.
The 10/10/10 Method Will Allow You To Make Smart Decisions
You must understand that you will not be able to apply the 10/10/10 method perfectly overnight. Nevertheless, after a few weeks of practice, you will wonder how you managed to do without it.
Indeed, you will then realize that the quality of your daily decisions greatly influences your quality of life quite simply. Making better decisions every day will instantly improve your life. In the medium and long term, you will also benefit gradually.
As you progress, you will become accustomed to applying the 10/10/10 method and your brain will be trained to automatically analyze the second- and third-order consequences of your different actions. For Ray Dalio, it is one of the most powerful mental advantages.
Finally, if you still doubt the effectiveness of the 10/10/10 method, just look at Warren Buffett and Charlie Munger. All the investments they have made over the past 60 years have been made using this high-level thinking. It allows them to calibrate their decision-making process according to the results they want in the medium and long term.
The Berkshire Hathaway empire they drove to the moon should be enough to convince you switching to the 10/10/10 method.