Welcome to the first issue of the Wayfinder series, a brand-new addition to The Knowledge newsletter.
Wayfinder is about learning to navigate life’s toughest decisions. The choices that keep you awake at night. The decisions that have you second-guessing yourself. The moments when the stakes are high and the path isn’t clear.
Wayfinder is designed to guide you through the fog of indecision, and make choices that align with your values, ambitions, and lifestyle. And we’ll do this using a powerful tool — decision algorithms.
Ancient Polynesian wayfinders traversed the Pacific, discovering island after island by learning to read patterns in sea swells, bird movements, and star constellations. Likewise, I propose we throw away rules, maps, and abstractions. Instead we'll build mental models to help navigate life's challenges.
Wayfinder is about forging paths, not following them. It’s about leveraging powerful decision-making tools and algorithms to turn daunting dilemmas into clear, confident choices.
2. Reader Dilemma:
In today's issue, we're tackling a question from Stacy, who's torn between keeping her well-paying job and starting a new business. Together, we'll explore the process of making a decision that could redefine her life.
Making Stopping Decisions
To navigate Stacy’s decision, we’ll use a ‘stopping’ decision algorithm, a series of questions designed to invoke key mental models and concepts like asymmetry, diversification, optionality, compounding, cognitive biases, and more. These algorithms are meant to replace the stress of remembering all these concepts, allowing you to focus on the questions that matter.
Before every section I'll flag the mental models and principles we'll be using to get a firm handle on the problem.
Step 1: Clarify Your Vision
➡️ Heuristics: These are cognitive shortcuts or rules of thumb that simplify decisions, used when time is limited or when there's too much information to process.
So, Stacy, the first question you need to ask yourself is: “What does hell/heaven look like?”
This question isn’t about heaven or hell in the context of your decision. It’s regarding life in general. You’re not merely deciding between your job and a new business; you’re exploring what a fulfilling life looks like for you.
You’re currently in a lucrative job that doesn’t bring you fulfilment. So, what does heaven look like? What qualities would make a working situation ideal for you? For example, does it include more autonomy, creative expression, or a stronger alignment with your values?
Likewise, what’s your professional hell — a situation you’d like to avoid at all costs? This could be anything from an overbearing boss, a stifling work culture, or a monotonous role that doesn’t challenge you.
To help you think this through, define three landmarks for both heaven and hell. These markers will give you a clear sign when you’re veering too close to one or the other.
For instance, heaven might mean a sense of daily accomplishment, enough time for hobbies or relationships, and making a solid income. Hell could be continuous stress, little personal time, or stagnation in your professional growth.
Sometimes, we’re so accustomed to our situations that we can’t discern if we’re already in a hellish situation or if we’re a single tweak away from turning our current situation into heaven.
If you can get crystal clear on this, you'll know when it's time for drastic action, and you can avoid creating an equally painful situation on the other side of this decision.
Step 2: Count the Costs
➡️ Cognitive Biases: These are systematic errors in thinking that can affect decisions and judgments. Stacy needs to be aware of these, especially confirmation bias, where she may only see the costs that confirm her existing beliefs.
➡️ Levers and Variables: These are factors that can be manipulated to cause a change. For example, Stacy can adjust her time, investment, and effort between her current job and new business to see varying outcomes.
Next, we need to consider the costs of this transition. Not just the immediate costs, like losing a steady income or the capital needed to start your new venture. You also need to factor in opportunity costs, marginal costs, inactivity costs, and reversal costs.
- Immediate costs: These are the costs you’ll incur immediately if you make a change. For Stacy, if she leaves her current job, she’ll lose her current income. There may also be other immediate costs, like the capital needed to start a new venture.
- Opportunity costs: These are costs associated with forgoing an alternative option. If Stacy leaves her job, what opportunities might she miss? Maybe a promotion, or a chance to lead a significant project. And if she stays, what might she miss in the realm of entrepreneurship?
Here's a final thought - the income from here role may seem lucrative now, but it's a linear reward. A full time salary pays the same every month. But the reward for time spent on a (successful) business compounds. The opportunity cost of the time spent in the full time role may be the exponential reward of a business with scalable income.
- Marginal costs: These are the costs incurred for each additional unit of effort or investment. What extra effort is required for Stacy to maintain her current job and also work on her business idea? What’s the cost of that extra stress or the extra hours she’s spending away from loved ones?
- Inactivity costs: These are the costs of not taking action. If Stacy stays in her job and doesn’t pursue her business idea, what might it cost her in terms of personal fulfilment or long-term earning potential?
- Reversal costs: These are costs associated with undoing a decision. If Stacy leaves her job and her business doesn’t work out, what would it cost her to get back into her previous line of work or find a similar role?
Now, let’s add some dimensions to these costs:
- Financial costs: Beyond just salary, consider things like benefits, pension contributions, and the stability of a regular paycheck.
- Emotional costs: The stress of managing two jobs, or the anxiety of leaving a stable job to venture into the unknown.
- Relationship costs: Time away from family and friends or strain on relationships due to work stress.
- Skills/experience: What skills or experience might Stacy gain or lose in either scenario?
To help navigate these costs, consider creating what I’ll call a ‘Decision Impact Matrix’. Plot the costs on one axis and life factors on the other. This will help you visually assess the different dimensions of your decision.
Here's an example Decision Impact Matrix for Stacy's scenario:
|Life Factors||Immediate Costs||Opportunity Costs||Marginal Costs||Inactivity Costs||Reversal Costs|
|Financial||Loss of steady income, initial business investment||Potential career progression, increase in salary, missed business opportunities||Extra hours dedicated to new business, potential strain on personal finances||Potential loss of future business revenue, stagnation in current role||Difficulty re-entering the job market at same position/salary, potential loss on business investment|
|Emotional||Stress of starting new business, fear of uncertainty||Loss of job satisfaction, excitement of new business venture||Increased stress balancing job and business, potential burnout||Dissatisfaction in current role, regret over not pursuing business idea||Stress of failed business venture, emotional toll of job hunting|
|Relationship||Less time for family and friends initially due to business demands||Missed social events due to business demands, potential new business relationships||Strained relationships due to increased stress and workload||Potential resentment over unfulfilled ambition, strain on personal relationships||Potential strain on relationships due to financial instability, loss of business partnerships|
|Skills/Experience||Gaining entrepreneurial skills, potential initial gap in industry knowledge||Missed opportunities for further skills development in current role, gain of diverse skills in entrepreneurship||Time investment in learning new skills for business, potential stagnation in current job skills||Loss of potential entrepreneurial skills and experiences, stagnation in current role||Challenge to maintain relevancy in previous industry, valuable entrepreneurial experience|
Step 3: Set Your Waypoints
➡️ Tilt: Another concept from poker, tilt refers to a state of emotional frustration in which one is not thinking clearly. By identifying waypoints and the actions they should trigger in advance, Stacy can remain objective and not let her emotions dictate her decisions.
➡️ One-Way vs Two-Way Doors: This principle suggests that some decisions are reversible (two-way doors) and others are not (one-way doors). Knowing which type of decision you're making is crucial for understanding the implications of your choice.
Just like the ancient Polynesians navigating vast oceans by reading subtle signs in their environment, it’s important to set distinct signposts on your path. We’ll call these ‘Waypoints’.
Waypoints are clear, concrete signals that show you’re heading in the right direction or warn you when you’re veering off course. They help you stay aligned with your goals and make course corrections as needed.
For example, if your goal is to reach a certain income level, a waypoint might be getting a pay rise within two years. If you haven’t achieved that, it’s a signal to reassess your strategy.
So, Stacy, what are your waypoints? These could be related to income, work satisfaction, time spent with family, or personal growth. Choose signals that align with your vision of heaven and keep you away from hell. Remember, these should be concrete and actionable, not vague aspirations.
Waypoints aren’t just about keeping you on track; they’re also about giving you permission to change course when necessary. They empower you to make informed decisions, grounded in reality rather than being swayed by emotions or nebulous perceptions.
Step 4: Explore Alternative Paths
Stacy, you also asked about the possibility of serving two masters – holding down your job while starting your business. It’s a question many ambitious people wrestle with.
Remember, this isn't a binary choice between staying in your job or starting a business. There may be alternative paths that lead you to your dream outcome.
- Job flexibility: Can you negotiate a more flexible work arrangement with your employer? Part-time, remote, or flexible hours could help you maintain income while freeing up time for your business.
- Leverage: What tasks can you automate, delegate or outsource in your business to free up time and mental energy? How could you thoughtfully structure your business to be lightweight and scalable without additional effort from you.
- Collaboration: Can you partner with someone who has complementary skills and shared goals? Working with a like-minded co-founder may help ease the burden of starting a business.
- Reframing: What if the business was just a low-effort side hustle? There may be some benefit to throttling its potential growth if it would make your lifestyle more sustainable. And what if your full-time role became the side hustle? If you weren't approaching it as a necessary breadwinner but instead as an optional opportunity for networking and skill development, how might that change the burden of unfulfillment you feel?
When you think back to your professional vision of heaven and hell, remember that both the business and job can play a role in your life, but they needn't be equal sized.
- Time management: It’s essential to have a clear schedule and set boundaries. Allocate specific hours for your job, business, and personal life. Track your time to ensure you’re focusing on the right tasks.
- Prioritisation: Recognise that not all tasks are equally important. Identify the high-impact tasks for both your job and your business and focus your energy on those first. In the words of James Clear, “Spend less time on deciding and more time on doing.”
- Build a support network: Surround yourself with people who understand your ambitions and can offer advice, encouragement, and practical help.
It's easy to trap yourself by thinking of your professional life as a single path rather than as a highway with multiple lanes. You can switch lanes and change speeds at any time.
Adjust on the fly, depending on your values, ambitions and the season you're in.
The binary choice is often a false choice. There are always alternative paths that can lead you to your dream outcome.
That's it for this edition of Wayfinder.
I hope our exploration of Stacy's dilemma has sparked some insights for your own decision-making journey.
Have a decision you're wrestling with? Send it my way and it might just feature in a future edition of Wayfinder.