Among the most fascinating books you’ll ever read about psychology and the mind is Thinking, Fast and Slow, by Nobel Prize-winning economist Daniel Kahneman. One of the key principles that Kahneman teaches is that because our brains encounter so much information, we often use mental tricks, like association and categorization, to sort information quickly. While this allows our brains to process information at incredibly high speeds, it can also lead us to inaccurate conclusions. Or, to put it another way, sometimes our brains take so many shortcuts that we end up in the wrong place altogether.
Need an example? Take a quick look at the title of this essay–“3 Simple Ways to Think Like a Billionaire.” When you read a title like this, your brain processes it immediately and probably assumes a correlation between “simple” and “billionaire.” You say to yourself, “After I read this essay, it will be simple for me to become a billionaire.” Of course, if you actually stopped to think about it, you’d know that a few minutes of reading won’t teach you to be a billionaire. But when you’re making a split-second judgment about whether to keep reading, the brain’s simplistic assumption makes the essay all the more enticing.
There are thousands of tiny shortcuts that our brains take just like this one, but with the right practice we can train ourselves to think slowly and avoid these mental misjudgments. In particular, I’ve noticed that successful people often develop their own simple strategies that guide their thinking to avoid these miscues. One of my favorite examples is the billionaire founder and CEO of Amazon.com, Jeff Bezos. Let’s take a look at some mental strategies that he uses think clearly and avoid incorrect assumptions and mental biases.
1. Can You Predict the Future?
When you think about the last five years of your life, what major events stand out to you? Maybe you got a new job, moved to a new state, or renovated your house. Most significant events that you can remember probably involve some type of change–a different situation or circumstance in your life. And when you think about planning for the future, what events come to mind? Taking a big vacation, earning a promotion, getting married, etc. We often focus on big changes in our lives.
It’s the same sort of thing that you would think Jeff Bezos focuses on as the CEO of Amazon: What products will people want to buy? How will mobile phones change online shopping? How can Amazon be prepared? In a 2012 interview at the Amazon re: Invent Conference, Bezos described how people often ask him, “What’s gonna change in the next 10 years?” Instead of trying to figure out what will change, though, Bezos asks himself the opposite question: What will stay the same?
It’s practically impossible to know how things will change, but very easy to identify things that won’t. For example, Bezos points out that in 10 years, Amazon customers will still certainly want 1) cheap prices and 2) fast delivery. In Bezos’ words, “You can build a business strategy around the things that are stable in time.”
Apply the same principle in your life to prepare for the future. A lot could change in the next ten years, but what things are nearly guaranteed to stay the same? If you have kids, they’ll still be your kids in ten years, so it makes sense to invest in your relationship with them. Or, in ten years, it’s unlikely that you’ll ever reach a point when you think, “I have too much money!” Since the need for money won’t change, it makes sense to save and invest now. Focus on the things that won’t change, and it’s much easier to be prepare for the future.
2. The Regret Minimization Framework
Another classic, frequently referenced strategy from Jeff Bezos is something he calls the “regret minimization framework.” Before creating Amazon, he had a successful career on Wall Street in finance. The internet was just gaining traction at the time, and Bezos had the idea to create a store selling books online. But he faced a major obstacle, which was giving up his stable career for the huge risk of launching an internet business. (See him tell the whole story here.)
As he was struggling with this decision, Bezos came up with the “regret minimization framework.” The gist: He asked himself, “When I’m 80 years old, what will I regret the most?” Would he regret having attempted an online business? Would he regret it if he tried the business and it failed? Or would he regret not having tried at all? The more he thought about it, he realized that his biggest regret would be if he never attempted the business in the first place. So he did it.
This framework is a useful way to make sense of the big decisions we face. Rather than trying to determine which path in your life will lead to the most success, focus on the path that will lead to the least regret. In a recent graduation commencement address, actor/comedian Jim Carrey echoed the sentiment, saying ”You can fail at what you don’t want, so you might as well take a chance on doing what you love.”
3. The Things That Hold You Back
Several years ago, I chatted with a man that lived in a small brick home with dirt floors in a very rural city in Brazil. As the conversation continued we eventually talked what he wanted to do in the future. He told me that, more than anything, he wanted to own a brand new Ford Mustang. Given his circumstances, this seemed practically impossible, and he admitted that he didn’t think he could ever achieve that goal. He was too dumb, too poor, and just didn’t have enough opportunities–or so he thought.
The man made a common mistake that left him with a pessimistic view of the future: he focused only on his limitations. That leads us to Bezos’ third mental strategy, how to deal with our limitations. In an interview, Bezos was asked about the frugal nature of Amazon and how it impacted the company. He responded, “I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.”
To Bezos, scarcity of resources (in this case, the company’s own frugality) was an asset, not a limitation. In fact, he believes that constraints drive innovation rather than inhibiting it. The easy path is to focus on our inabilities and limitations, using them as an excuse. But these constraints can create innovation if we think and innovate within them. To apply this principle in your own life, it may even be worth creating constraints that will drive you to increase your creativity.
So, you’re not going to become a billionaire because of this essay, but you can learn to think like one. Bezos is one of the most brilliant and innovative people in the world, and it certainly doesn’t hurt to borrow some of his mental strategies. I’ve found that when I face difficult decisions and dilemmas, it helps to step outside of the emotions and analyze with a different thought process, just like those mentioned here. And the more you practice, the easier it becomes to avoid your brain’s occasional misfires as it processes the billions of pieces of information it encounters each day.