Empire Builders January 16, 2020
Giving my keynote talk on “Emotion and Money” at Hill Capital’s recent Empire Builders event, I found myself recommending to the audience to avoid setting goals related to money. A participant, Sarah Kowal, astutely picked up on this point and posted to social media “Goal setting is a trap. Do you agree or disagree?”
A comment to her question asking about context inspired me to write this.
In preparing for my presentation about Money and Emotion I realized that making the point about avoiding goal setting, as it relates to money, is important because these goals are subject to failure at some point. Goals typically do not address the root causes or address systems to ensure perpetual success. Let me explain.
Goals are finite.
Processes and habits are infinite.
Over the past few years I have keyed into a handful of “successful” people that I respect that have mentioned that they no longer set goals in the traditional ways. They see goals as a trap; nearly assured to not be met and thus create a label of “fail”. In lieu of goals, they focus on habits and processes to get them to where they want to go. I have also been inspired by philosophy that discourages the distractions of the past and the future (“illusions”) and teaches a focus on the present moment (“reality”). Building small habits today is in line with being present and avoids the trap of excessive distracting thoughts of the past or future that comes with traditional goal setting.
I have been inspired by the work of BJ Fogg of Stanford University over the years. He just released a book called “Tiny Habits”. His work has helped me truly understand the saying “How do you eat an elephant? One bite at a time”. Most people understand the punchline, but fail to apply this to their work. How do you get to the top of the ladder? By stepping on the first rung. If you don’t do this well and build a habit of taking one quality step after the other, you are prone to stumbling - and getting hurt.
What I have realized with two decades in finance is that people fail to take one bite at a time - to do all of the small things systematically. They feel it is beneath them, not worth the administrative task, that it is not worth the time, etc. They want their business to be financially stable, but have no granular plan to make that happen. They want to achieve an exit at a superior valuation multiple, yet don’t even understand something as simple as the company’s cash balance on a daily basis. If a business owner doesn't know where cash in their business goes daily, they are highly prone to stumble on their ladder to a big exit.
How do I know this? Well, I have lived it. I have been the proverbial “cobbler’s kid” being an “expert” in personal and business finance yet not knowing where my cash was going in my personal life or in the businesses I started. That all changed when times got skinny. Nothing like buying a home, starting a family or embarking on a big business venture with your own capital that focuses you to start tracking every dollar. I started small - observing $ flows - and now it is a weekly habit.
So, have I thrown away goal setting? No, not quite. I use it strategically for achieving the big ROCKs that my friend Gregg Saunders (successful entrepreneur and now EOS implementer) taught me as a mentor in Entrepreneurs' Organization. I use goals. But I have largely abandoned the Big Hairy Audacious Goals (“BHAGs”) and have focused on doing all the little things systematically that can put me - and my business - in a position to get to where I would like to be long term. Over the past couple of years I have personally found that continuous habitual practices yield greater achievements. I am now more interested in developing habits and systems that provide the small bites to the big goal - using daily and weekly practices to grow without the finite goal anvil over my head.
Drawing this back to my keynote on Emotion and Money - If money is a tough subject for you, don’t set a big goal to “cure it” - do the small things consistently to understand where and how money moves and it that alone will reduce the emotional burden.
Thank you Sarah Kowal for the inspiration to share more on this :)
Interested in learning more on your own? I recommend:
Tim Ferris Interview of Scott Adams // Transcript (see page 26+)
Scott Adams Blog on “Goals vs. Systems”
Shane Parrish's Farnam Street Podcast Episode #54 (@ 31 minutes)
What are your views on goal setting and habits? Share your thoughts in the comments or ping me directly at: patrick (@) hillcapitalcorp.com