Wednesday, October 11, 2017

unexpected definition of success

HOW TO WIN IN BUSINESS

Bill Gates, Warren Buffett and Richard Branson have the same unexpected definition of success

12:55 PM ET Thu, 6 April 2017

Bill Gates, Warren Buffett and Richard Branson are three of the wealthiest people alive today. They are all billionaires multiple times over. Indeed, Gates could become the world's first trillionaire. Yet each of them believes that success doesn't have to do with money.

Success, according to these three businessmen, has to do with how happy you and the people around you are.

In an Ask me Anything session on reddit in February, Bill Gates was asked what success means and he responded by quoting his friend: "Warren Buffett has always said the measure is whether the people close to you are happy and love you."

Photo by Bloomberg

Richard Branson and Bill Gates

For Gates, the second component of success is doing work that matters. "It is also nice to feel like you made a difference — inventing something or raising kids or helping people in need," he says.

Gates says his work as Microsoft during the software revolution was the "biggest thing I have gotten to do." As a founding member of The Giving Pledge, a commitment to give away at least half of his wealth, and The Bill and Melinda Gates Foundation, he is also actively involved in philanthropic work.

"IT'S A COMMON MISCONCEPTION THAT MONEY IS EVERY ENTREPRENEUR'S METRIC FOR SUCCESS. IT'S NOT, AND NOR SHOULD IT BE."-Richard Branson, founder of Virgin Group

Buffett is a founding member of The Giving Pledge and has donated much of his fortune to The Bill and Melinda Gates Foundation.

Branson measures success by how happy he is as well.

"Too many people measure how successful they are by how much money they make or the people that they associate with. In my opinion, true success should be measured by how happy you are," he writes in a LinkedIn post published last year.

These 8 billionaires own same wealth as half the world's poorest

Branson also maintains that if you set out to focus on happiness, you will find that wealth follows.

"It's a common misconception that money is every entrepreneur's metric for success. It's not, and nor should it be. I've never gone into business to make money. Every Virgin product and service has been made into a reality to make a positive difference in people's lives," he says.

"And by focusing on the happiness of our customers, we have been able to build a successful group of companies. The simple fact is," says Branson, "if you do good and have fun, the money will come."

See also:

The 3 best pieces of advice Bill Gates would give his 19-year-old self

Sam Adams founder: Unless you're a sociopath, being happy is better than being rich

Richard Branson's best advice for success in 2017
Why Richard Branson had tears streaming down his face when he sold Virgin Records for a billion dollars

What successful people eat for breakfast

make smarter choices

MONEY

3 ways to make smarter choices, according to the Nobel prize winner in economics

Zameena Mejia

12:00 PM ET Tue, 10 Oct 2017

US economist Richard Thaler wins Nobel economics prize

Have a hard time keeping up with your New Year's resolutions? Find it impossible to pass up a good sale even if you're low on cash? Refuse to pay for an overpriced drink when you're thirsty? If so, you've effectively broken the laws of traditional economics, but you've also confirmed over 40 years of research by American economist Richard Thaler.

Thaler, who is considered the "father of behavioral economics," received the Nobel Memorial Prize in Economic Science on Monday for his work on integrating economics with psychology. Thaler's research has helped economists understand that "human behavior often contradicts traditional economic logic," reports a University of Chicago publication, where Thaler teaches.

In his award citation, the prize committee focuses on three aspects of human psychology that Thaler's work explores:

"cognitive limitations," which keep people from acting rationally
"self-control problems," which prevent people from following through with plans
"social preferences," which dictate whether people act out of selfishness or selflessness

Harvard professor Brigitte Madrian, who researches behavioral economics and household finance, tells CNBC Make It that recognizing these tendencies is very important when making decisions about how to invest your time and money.

While it's hard to overcome some of these tendencies outlined in Thaler's research, Madrian says, "the key is to recognize your shortcomings and then try to set yourself up to limit their effects when you're not in a vulnerable situation."

"Knowing what some of the traps are so that you can avoid them might not solve all of your financial woes, but it can make things better," she says.

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One woman paid off over $8,000 in credit card debt in 90 days—here's how she did it

Here are three ways to overcome these tendencies in your daily life and make smarter decisions.

Realize when you are spending irrationally

Thaler says "economics is based on the assumption that everybody is super rational, has no self-control problems, never has a hangover, saves exactly the right amount [of money] for retirement and then invests it perfectly," on CNBC's Squawk Box in 2015.

But people often aren't rational actors. "In myriad ways, we do things because we're human and we do things that are predictably different from what economists expect us to do and that causes problems when we start to make predictions," he says.

Instead, they do a kind of "mental accounting," which, Madrian explains, is like using a set of virtual mason jars for budgeting housing, food and travel. Each jar is a separate "mental account" for one component of your budget.

Mental accounting can both help and hurt us, Madrian says. It helps us simplify decision making, but it isn't a perfect system.

"It's like auto-fill on my iPhone. A lot of the time it's great because it helps me type faster, but occasionally it really screws things up," Madrian says.

Suze Orman reveals her biggest money mistake — and what you can learn from it

In his research, Thaler proposes that "money in one mental account is not a perfect substitute for money in another account." That's why spending someone else's money may seem easier than spending your own.

When asked what he would do with his 9 million Swedish kronor ($1.1 million) in prize money, the laureate himself said he planned to spend it "as irrationally as possible," because it's in a different mental account.

"Anytime I spend any money [on something] that's really fun, I'm going to say that came from the Nobel prize," he jokes.

Balance your goals with your actions

Whether it's sticking to your New Year's resolution or opening a savings account, Thaler's research shows people struggle with meeting these goals because of the "planner-doer model."

As Madrian puts it, that means people often make plans but then don't actually see them through because of a lack of self-control.

"In myriad ways, we do things because we're human and we do things that are predictably different from what economists expect us to do and that causes problems when we start to make predictions," Thaler says.

"WHEN ASKED WHAT HE WOULD DO WITH HIS $1.1 MILLION IN PRIZE MONEY, THE LAUREATE SAID HE PLANNED TO SPEND IT 'AS IRRATIONALLY AS POSSIBLE.'"

Thaler uses the term "nudging" to describe when organizations and governments prompt you in beneficial ways, like by automatically enrolling you in a 401(k) plan or creating an automatic transfer from your checking to your savings accounts.

"If you want to get people to do something, make it easy. Remove the obstacles," he says in his book, "Nudge."

Understand why you want to do something before you do it

Thaler's work finds that people care not only about themselves but also about themselves in relation to others, Madrian explains.

"They care about being treated fairly. They care about what other people think of them. They care about fitting in," she says.

Thaler calls these "social preferences."

For example, when a mother with two children doesn't cut the last piece of cake into two exactly equal slices, the child with the smaller piece of cake is more unhappy than if there had been no cake at all, Madrian says.

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Madrian adds that social influence can improve our decisions in some circumstances but make them worse in others.

"Sometimes we do things not because we want to do them, but because of peer pressure. Or we don't do things because we worry what people will think of us," Madrian says.

Though it may be challenging to overcome these natural psychological tendencies, Madrian says that finding ways to slow down decision making can help.

"Adopt rules that give you more time to deliberate. For example, my parents had a rule against spending more than $500 without thinking about it," Madrian says. "Enlisting the help of family or friends will also help you follow through on good intentions."

"They key is to recognize your shortcomings and then try to set yourself up to limit their effects when you're not in a vulnerable situation."

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