BE CAREFUL WHAT YOU WISH FOR
It’s not until you focus on internal benchmarks and see how far you’ve come, relative to where you began – the gap between today and your own cost basis – that you have a good view of where you stand and what you’ve accomplished.
Capital Thinking · Issue #995 · View online
There are two ways to measure how you’re doing: Against yourself and against others. Internal vs. external benchmarks.
Internal vs. External Benchmarks
Morgan Housel | The Collaborative Fund Blog:
There’s a time and a place for both, but I’ve come to appreciate how much happier you can be if you appreciate when internal benchmarks should get the spotlight.
If Jeff Bezos started a new company that got to $100 million in revenue and sold for a billion dollars, it would mean … nothing to him, both financially and on his list of accomplishments
.But if I did it, it would be … unbelievable. Everything would change.
So accomplishments have a cost basis. What you gain or lose is always relative to where you began.
And since we all begin at different spots, there’s a range in how people feel when experiencing the same thing.
In his book on the final days of World War II, Stephen Ambrose writes about a wounded American soldier who’s carried back to the medic tent. He knows he’s going home – his war is over.
“Clean sheets boys!” he yells back to his comrades still fighting. “Clean sheets, can you believe it! Clean sheets!”
Living in foxholes for weeks caused soldiers to daydream about normal life, and few things tickled their imaginations like the dignity of clean sheets.
Not money or status or respect or glory. Just the absolute pleasure of clean sheets. It’s an extreme example of when the outside world ceases to exist and everything becomes relative to an internal benchmark.
A lighter version of this happens in business and finance, which are home to so many staggeringly successful people whose lives are broadcast over a staggeringly loud social media system.
If you measure your career solely relative to them – the external benchmark – you’re on the never ending path of feeling inadequate, incompetent, and poor.
Nothing you do will ever feel that great because someone is always smarter than you, more popular than you, better looking than you, getting richer faster than you, and making sure you know about it.
It’s not until you focus on internal benchmarks and see how far you’ve come, relative to where you began – the gap between today and your own cost basis – that you have a good view of where you stand and what you’ve accomplished.
Even if it’s the career equivalent of clean sheets.
External benchmarks can be great because so much innovation comes from the urge to chase whoever’s in front of you. They’re also just necessary to survive a competitive environment.
But great things backfire when taken to an extreme, and external benchmarks are no different.
Morgan Housel