Optionality
As my time in Rotterdam is reaching its conclusion, I find myself already projecting into the next adventure. In doing so, I remind myself that I would have never predicted (post) that I would be going to an exchange in the United States at Wharton just one year after beginning my adventure here. I noticed that, as humans, we tend to make forecasts while underestimating the changes that are likely to happen in our own objectives and external situations🔭.
The idea of compounding 📈 can be applied to both career growth (see previous post) and investment (highly advised to read the Psychology of Money book), but the prerequisite is the consistency of the effort over a long time. Since both the world and our priorities tend to change, how can we combine it with having stable behavior in the long term?
When we are in front of a constraint, it is better first to ask if we can leverage it instead of just seeing it as a limit. Having a margin of safety and inserting some robustness in the form of alternative plans and diversification could help, but how could it be made antifragile to change?
The “unknown unknowns” always represent the greatest risks but also the greatest opportunities. My conclusion is that an equilibrium can greatly help. Investing a percentage of our time in clear and planned career goals can satisfy our need for security, while investing another part in the exploration of projects with a very high, although unlikely, payoff, can be a solution. Google implemented a similar strategy in the early days with success. The percentages of how to split the two investments of time can fluctuate based on the circumstances of that particular period in life, but as long as neither reaches 0%, the compounding effect still takes place. With the caveat that risks with irreversible negative outcomes are never worth pursuing, applying ambidexterity to our lives can combine long-term strategies with the freedom to catch unexpected opportunities.
P.S. Thanks to my dear friends Pablo and Andreas for the inspiration for this post.