Soon after arriving to work today, my boss talked me through what could have been a stressful client situation he dealt with while traveling the day before. He was on the road prepping for Client 1 meeting when Client2 called requesting him to run a few new scenarios in our excel model and revert with results in the next 20 min.
While he trusted his team to accurately run the requested analysis, he still had to understand the key drivers that impact the outcome of each scenario and then be able to discuss results with Client2. So while the team ran the scenario in excel, my boss, as he’s done for years, ran the calcs by hand so that he could estimate the results, and then confirm / ask questions after reviewing the excel output.
The situation described above would normally be stressful for many of my colleagues. But it wasn’t for my boss because he’s been approaching every analysis with this process for the past 8 years.
I think the estimate / confirm process has wide spread applications as it’s an excellent way to continue to learn and hone a skillset.
Estimate / confirm process / steps:
- Summarize the facts: Prior to reviewing a report / analysis / argument, assemble facts available and quickly read them. Be sure to write down (not type) the most important assumptions / drivers / facts
- Estimate outcome: Based on assumptions / drivers / facts that your wrote down, write down an estimate of what you think the analysis should look like and why (play with up and downside scenarios to ensure you’re conducting sufficient diligence)
- Confirm estimates: Then review output to either confirm your estimate (or determine why you’re estimated results are different)
- Critique performance, write down lessons learned: Based on outcome, write down ways you can improve your estimates going forward
- Repeat: Get your reps in regularly
If steps above are put into regular practice, an improved understanding and confidence relating to area of focus is assured.
In the late 1960s, Stanford researchers developed a longitudinal, delayed gratification test (the Marshmallow test) that claimed to predict a person’s long-term success at three years old (see video here).
For the test, an administrator brings a three year old into a room and gives her a marshmallow. He tells her that he is going to leave the room for two minutes and if she doesn’t eat the marshmallow by the time he returns, he’ll give her two marshmallows. They then tracked the three year olds success over the next few decades and concluded that the ones who were able to resist the marshmallow at three years old were more successful in life than the ones who gave in and ate the marshmallow.
In an excellent Ted Talk, Professor Conor Neil from IESE Business School shares the top qualities that Warren Buffett looks for in a partner (integrity, energy, intelligence) and notes that willpower is a necessary component of each:
- to have the willpower to keep alignment with values and time spent
- how much time goes into the things you mean to do?
- to have the energy to accomplish a difficult challenge or multi-year goal, you need the willpower to focus on the present and not let one’s mind get too far ahead of the now
- focus on the next marshmallow
- adaptive intelligence
- in order to gain adaptive intelligence, one needs the willpower to regularly document the things you read, experience, learn
- if you take the time to regularly reflect on what you’ve learned (e.g. through use of a daily journal), over time you’ll gain intelligence as you’ll become the accumulation of your experiences
- write about the marshmallow and how you felt when resisting it (both immediately and an hour or day later)
He concludes with the following advice,
“A successful life is the accumulation of the right decision over and over again, day after day. We so often underestimate what we can achieve in a year and overestimate what we can achieve in a day. Rule #1 for success, when you have a marshmallow don’t stare at it. The diet doesn’t fail because of weakness of will, the diet fails because the chocolate is there. It’s small decisions done repeatedly that makes the difference.”