Updated: Jun 1, 2019
“If information was the answer, then we’d all be billionaires with perfect abs.” – Derek Sivers
We all know the algorithm to lose weight: burn more calories than you eat.
We all know that if you do ab exercises for hours a day you will eventually have a ripped core.
We all know that if you read for an hour a day you will probably become smarter.
We have the information, so where are the results?
Information is cheap, especially since the advent of the internet. In 10 seconds you can access, via Google, almost any piece of information you could want. So if lack of information is not the problem, then what is?
There is a great disconnect between information and results, between knowing and doing.
The question becomes: if we know how to do something, why do superior results evade us?
Below are five ways to close the knowledge-action gap that is the great disconnect.
First, I believe we trick ourselves into thinking that we know how to do something. With the internet, the time between knowing and not knowing is so short, that we can mistakenly think we knew all along. That might sound kind of silly but the principle is bulletproof. It’s kind of like homework. Teachers don’t just give answers, they make us struggle through the problems so we can understand at a deeper level.
Take an investing example. Everyone has heard the phrase, “buy low, sell high.” It is widely known information. But do we really know how to do that? Have we struggled with the concept enough or is it just a platitude we all know?
So the first problem in the great disconnect is superficial understanding. Information is just facts and figures, whereas understanding is assigning meaning to that information. We can know the words to a song, but that doesn’t mean we understand the song.
Takeaway #1: Make sure your knowledge is not just surface level. Ask yourself: could I teach a 7 year-old this concept in plain simple, language? (Thank you Feynman)
Second, our surroundings are a big piece of how wide or small our great disconnect chasms are. If our parents are extremely motivated, high-action people, we will have great examples of what it looks like to put knowledge into action. On the other hand, if we have never seen that, we are at a disadvantage. When we see how people take action, it allows us to envision ourselves doing the same. Without this example, I believe it takes a lot more discipline.
We can close the knowledge-action gap, but it will be much more difficult to do so. Same goes for the friends we surround ourselves with. If we hang out with people who don’t have much drive, we'll likely sink to their level.
Takeaway #2: Be aware of your surroundings. Ask yourself: do the five people I spend the most time with, make me better or more average?
Third, there is a chasm between knowing and doing called inertia. In other words, it takes energy to do stuff. You may know how to make your significant other/spouse happy, but it takes energy to actually make that knowledge a reality. Put another way, at some point you’re gonna have to take some action.
Knowledge is worthless if no action follows. Some people label this part of the great disconnect as laziness. But I think there is something deeper. I find it hard to believe that if someone knew exactly what it took to live an incredible life, they just wouldn’t do those things out of pure laziness. There has to be something more, which leads to the fourth point.
Takeaway #3: Take action. As Nike's marketers would urge, “Just do it.”
Fourth, we lack purpose. I like to think of it as your “why.” Why do you do what you do?
If our purpose is to be comfortable, we might not like the idea of getting up early to work-out or bringing up that tough topic with our co-worker. If our purpose is to be happy, then we might not ever confront those uncomfortable things in our past (woah! I thought this was an innocent investing blog, what did I sign up for??).
The point is: our purpose will drive our behavior. If we get the purpose right, everything else will fall into place.
For instance, let’s say you want to start a business. You know it’s tough but you also hear that it is the best way to become a millionaire so you start dreaming up ideas. A couple years into the venture, you hit hard times. If your “why” is money, you won’t make it. There are easier ways to make money! Believe me. Plus, you’ll get destroyed by the entrepreneur who works on her business for fun, because she loves it.
Takeaway #4: Focus on your “why.” Friedrich Nietzsche once said, “He who has a why to live can bear almost any how.”
Fifth, discipline incrementally closes the knowledge-action gap. My definition of discipline is doing something you know is good for you even if you don’t feel like it.
Discipline is consistency in the small things that leads to big results in the long run. But most people will actually trade the short term pain and long term gain for short term comfort and long term mediocrity. If you don’t have discipline, then you won’t achieve your goals. Most success is not random.
Discipline is the vehicle by which goals are achieved. If you have a goal of learning French in two years, it may seem daunting. Therefore, you need to break down the bigger goal into more digestible pieces. So you might practice for 30 minutes a day and then speak with a tutor for an hour on the weekends. By breaking down the big goal into habits, the goal seems much more achievable. Without discipline, habits cannot be formed, and without good habits, your life will pass you by. Some people enjoy 'going with the flow’ and there is definitely value in spontaneity, but if you aren’t mindful of your habits and the small things you do with your time, you’ll look back and see that you could’ve achieved some of your biggest dreams with just a little discipline.
A qualifier on this point -- if you try to strong-arm your way to discipline, you might burn out after a while. Two tips to help with that are as follows.
1. Start small. Start small and work your way up so you have some time to get used to your new disciplined life (not that you aren't already disciplined 😘) .
2. Let your purpose fuel your discipline. If the purpose is grand enough, it should provide enough motivation to get you through those days you just don’t want to do that thing you really should be.
Takeaway #5: You don’t have to ‘feel like’ doing something to actually get it done.
What Does This Have To Do with Investing?
Ok, this is great and all, but what does the knowledge-action gap have to do with investing? I’m glad you asked!
A lot of people know they should be investing, but simply don’t do it. I’m fascinated by how to close that knowledge-action gap. This is one of the purposes behind Investing City, to help others close this gap. The five reasons above are a starting point.
But further, this subject applies to even the more advanced investor. There is a disconnect between knowledge and results. Investing is something where the most knowledgeable person doesn’t necessarily do the best. There might be a correlation, but it’s not so much about knowledge. It’s about not letting your emotions get the best of you, not comparing your results to others’, and going deeper than surface level knowledge. Great investment results take discipline and constant learning. Anyone can do it, but only a few do because it’s hard.
As Munger said, "Anyone who thinks investing is easy, is stupid."
Great results are not easy. They take a deep understanding, the right environment, action, a strong purpose, and discipline. If you know what it takes to reach a goal and you don’t take action, you can’t be upset with your current situation. Those are the people who complain about where they are in life yet do nothing about it.
I know that sounds harsh, but we live in a world where information is cheap, but taking meaningful action is expensive.
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