The One Thing

Earlier this week, I was thinking about a book that I read a few years ago called ‘The One Thing’.

For those of you who haven’t read it, I highly recommend that you check it out.

I still find myself regularly quoting it when I set priorities for my business, my investments or my life in general.

The author, Gary Keller, built the largest real company in the world by, among other things, asking himself one powerful question:

“What is the ONE THING that I can do that will make everything else easier or unnecessary?”

The idea is that, among all the things that you do, there are just a handful of things that will move the needle in your life.

And you should focus on doing just those.

A lot of you are likely familiar with the 80/20 principle, which states that most of your results in life will stem from just a handful of things – 20% of what you do.

The 80/20 is regularly applied to a wide variety of fields – from engineering to athletics, economics, systems science, quality control, etc.

But you should apply it to your business and investing too.

For example, the investment world is full of ‘experts’ who preach the virtues of diversification.

They say that you’re supposed to put your eggs in as many baskets as you can because you’re too dumb to pick any one good basket.

Of course, these so-called ‘experts’ then tell you that you should give your money to them – because they’ll diversify it for you.

The results you’ll get are exactly what you’d expect from diversifying – average. Most of the time, after you pay the ‘experts’ heavy fee, you’ll actually get below average results.

That’s because diversification is nothing but protection against ignorance – and never a strategy for success.

Instead, the key to success in investing is to know what you’re doing – and concentrating your efforts and resources on just a few things.

To illustrate this lesson, Warren Buffett uses the metaphor of a punch card.

Imagine you had a punch card with just 20 holes in it.

Every hole in the card represents one investment decision you can make in your life. After 20 investments, you’re out – and you can never make another one.

How would your investment decisions change knowing that you only had a limited amount of choices to make?

I bet they’d change a lot.

That’s because you’d be forced to think long and hard about each decision instead of spreading yourself thin across too many mediocre opportunities. 

Put another way, you’d load up on the few exceptional investments and leave out all the rest.

By the way, your own business is an investment too. When you invest your time, and resources into a business, you’re punching a hole in your card.

Warren Buffett himself is a prime example of this principle in action. His entire investment success can be traced back to just a handful of extremely successful investments.

I don’t need to tell you that his success isn’t luck. It was just him focusing on the things he could understand.

(As an interesting aside, Bill Gates’ father once asked Warren Buffett and Bill Gates to separately write down on a piece of paper the one thing they believe most contributed to their success.

Without speaking to each other, they both wrote down the word ‘focus’.)

Warren Buffett’s advice to make sure you make good use of your punch card is to stay within your circle of competence – meaning focusing only on things that you can truly understand.

The truth is that a lot of us don’t have the time or the desire to understand too many different things.

But contrary to what ‘experts’ tell you – you don’t actually have to know a lot to become successful.

You only have to know a few things, the 20% that can really make a difference in your life – and focus on those.

That doesn’t mean you can’t start new businesses and invest in new things.

But every time you do, focus on leveraging the existing skills, knowledge, and expertise that you have instead of starting from scratch. You’ll move ahead a lot faster that way.

To freedom,

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