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Not all uses of time are equal, and this simple truth can make a big difference in life. People who spend their time doing more profitable work make more money. People who spend their time investing in others build better relationships. People who spend their time creating a flexible career enjoy more freedom. People who spend their time working on high-impact projects contribute more to society. Whether you want more wealth, more friendship, more freedom, or more impact, it all comes down to how you spend and value your time.

If you're like me, you probably want the things listed above (friendship, freedom, impact) and others too (health). But you can't have everything at once, so you need to understand how to effectively manage the tradeoffs that you face on a day-to-day basis.

This article explains how to figure out what your time is worth and use that information to spend your time more effectively. Understanding how to get the most out of your time starts with knowing—in exact terms—what your time is worth. The Value of Time: What is One Hour Worth? A few weeks before I began writing this article, I was shopping for a small travel bag. After much searching I found one that I liked and, at just $19, it was very affordable. But there was one problem: the bag was made by a company in the United Kingdom and it cost $45 to ship it to the United States.

I was immediately turned off by the idea of paying $45 to ship a $19 bag, so I searched for retail stores. The company had a physical location in New York City and I was already planning to visit the city a few weeks later. I looked up the store location and realized that it would take me about one hour to go out of my way and stop at the store during my trip.

That's when I thought of the question that prompted this entire article: “Was one hour of my time worth $45?” Should I save time and pay $45 to get the bag shipped to me? Or should I save cash and spend one hour of my time going to pick it up in person? I had no idea if going to the store or paying extra for shipping was a better use of my time and money.

The Time vs. Money Dilemma At some level, we all have an internal gauge for how much our time is worth. For example, if someone offers to pay you $0.07 for one hour of work, you would immediately decline. Meanwhile, if someone offers to pay you $7,000 for one hour of work, you would immediately accept.

On extreme ends of the spectrum, it is easy to know if a task is worth your time. As you move toward the middle of the time-value spectrum, however, it becomes less clear if a particular task is worth your time or not. And this is the problem: most of life is lived in the gray zone of the time-value spectrum.

For example:

Should you buy the nonstop flight and save two hours or get the flight with a stopover and save $90? Should you pay your neighborhood teenager $20 to mow your lawn so you have an extra hour free on the weekend? Should you spend this week working with a client that will pay you $2,000 right away or working on a business idea that could generate $20,000 over the next year? We make choices like these everyday, but most people base their decisions on gut feelings or guesswork and never calculate what their time is actually worth. Everyone has an hourly value, but very few people can actually tell you what that number is. Until recently, I was no exception.

How to Calculate What Your Time Is Really Worth My time vs. money dilemma prompted me to reach out to every expert I could find on the subject. I talked to entrepreneurs, productivity consultants, executive coaches, and even professional poker players about the best ways to determine how much my time was worth and how to make better decisions based on that information.

Then, I tracked every hour I spent over a three-month period and calculated the value of each hour using six different equations. Don't worry. I've distilled all of this research and experimentation into a fairly simple process, which I'll cover right now.

The remainder of this article is divided into two parts.

Part I is fast and easy, and covers everything most people will need. Within 15 minutes, Part I will help you develop a reasonable estimate of what your time is worth and you'll be able to make more informed decisions because of it. I recommend everyone read Part I. Part II is time-consuming, but valuable. In particular, entrepreneurs and executives will find Part II useful. Part II builds upon Part I and helps you assess the expected value of different uses of time, so you can make better strategic decisions that will pay off in the long-run. Before we dive into Part I, I'd like to share a free spreadsheet I created with examples of every equation in this article. You can use this spreadsheet to plug in your numbers and get an immediate value for your time. I will be referring to this spreadsheet throughout the remainder of this article.

Free Download: The Time-Value Spreadsheet Click here to get your copy. Part I: Realized Income Methods We will start by using Realized Income Methods to calculate the value of your time. These calculations are based only on income you have actually received (or realized), hence the name Realized Income Methods. These calculations will help you make better decisions about how to spend money on day-to-day purchases. (i.e. Should I pay $45 for shipping or should I drive to the store?)

To get started, you need two numbers:

The amount of time you spend to earn money. The amount of money you earn during that time. Let's talk about how to measure these two factors and come up with a quick estimate for the value of your time.

Step 1: How to Track Your Time The first step is to measure the total amount of time you invest to earn money, not just the hours you are physically at work. For example, if you spend one hour commuting to work each day and eight hours at work, then it cost you nine hours to earn money that day. Similarly, you should add in any time you spent working on a side hustle or dropping your kids off at daycare. Using these numbers, we are trying to get a complete picture of the total amount of time you invest each year to earn money.

If you struggle to come up with an estimate for your time, you're not alone. Most people only have a vague sense of where their 24 hours go each day. If you're unsure how much time you spend working, I recommend using 2,500 hours per year as a starting point.

Here's why:

Let’s say you spend 10 hours per day either at work, commuting to work, or doing tasks related to work. With a five day workweek, that’s 50 hours per week. And if you work 50 weeks per year (2 weeks off for vacation), then that’s 2,500 hours per year. I'll leave it to you to make adjustments based on your specific circumstances, but for most full-time employees or entrepreneurs, I think 2,500 hours will get you in the right ballpark.

Tracking Time: How I Did It As an online entrepreneur, I spend most of my time working on the computer. When I started measuring my time, I installed a software tool called RescueTime. RescueTime records the exact amount of time I spend on each task: how much time I spend reading each website, using each software program, browsing social media, and so on.

After I collected three months worth of data, I compiled numbers from other applications to round out my estimates. For example, I added up all of my listening time on Audible to estimate how much time I spent “reading” books.

Using the numbers from RescueTime and a few reasonable estimates, I found that I spend about 2,742 hours working per year.

Because of RescueTime's category-by-category breakdown, I was also able to group my time into specific areas like writing, reading, website design, marketing, and so on. This detailed breakdown isn't necessary, but it will come in handy during Part II of this article. For now, all you need is a reasonable estimate of the total amount of hours you spend to earn money each year.

Step 2: How to Track How Much Money You Earn The second factor you need to know is how much money you earned during the time you spent working.

This is pretty simple. If you're an hourly worker or a salaried employee, just look at your latest paycheck and multiply that by the number of paychecks you receive per year. If your pay hasn't changed much this year, you can also look at your tax return from last year and just use that number. You should also include money from side hustles and freelancing gigs because the time you spent on those activities is included in Step 1.

The number we are trying to calculate is your take-home pay. This is the amount of money you have left after deducting taxes. For most employees, taxes are withheld from your paycheck, so your take-home pay is basically what you get paid. If you are a business owner, however, you should deduct taxes and business expenses from your top-line revenue.

Tracking Money: How I Did It I use a service called Bench Accounting to track my business income and expenses. Bench is an online bookkeeping service that automatically pulls the data from my business accounts and then a bookkeeper compiles everything into tax-ready financial statements. With a few clicks, I can see how much money I've earned during the previous month, quarter, or year.

If you are also an entrepreneur, I recommend using yearly earnings for these calculations because small business income can fluctuate (sometimes drastically) from month to month. Looking at your earnings over a longer time period helps to smooth out these inconsistencies and provide a more realistic value of your time.

Step 3: Calculate the Value of Your Time Finally, divide your total money earned (Step 2) by your total time spent (Step 1).

For example, let's say you spend 2,500 hours per year earning money:

If you make $12,316/year, your time is worth $4.93/hour. This is the 2014 poverty line for an individual in the United States. If you make $46,226/year, your time is worth $18.49/hour. This is the 2014 median income for women in the United States. If you make $62,455/year, your time is worth $24.98/hour. This is the 2014 median income for men in the United States. If you make $100,000/year, your time is worth $40.00/hour. If you make $1,000,000/year, your time is worth $400.00/hour. Again, all of these numbers assume that you are working 2,500 hours per year. Obviously, the numbers will shift if you work more hours or fewer hours.

Are These Numbers Accurate? When I first calculated these numbers I was surprised. The value of an hour of my time was much lower than what I thought it would be.

Think about how many freelancers charge $40/hour, but don't make $100,000 per year. Or consider how many consultants charge $400/hour, but don't make $1,000,000 per year. How can this be? The answer is these people are only being paid $40/hour or $400/hour for some of their hours, not all of their hours. When we divide their total income by the total time spent working, the value of each hour is much less than what they charge for a given hour of work with a client.

Furthermore, although we might know what we would charge per hour, we rarely calculate how much time goes into earning money outside of our working hours. By accounting for all of the time we invest to earn money, we get a clearer picture of what our time is actually worth—and it is usually much less than what you would charge for an hour of work on your job.

Now, if you're like me, you'd like to verify the accuracy of this first calculation. There are a few quick ways to check to see if your hourly value is accurate. Let's cover them now.

Checks and Balances The method we just used to calculate the value of time is called the Take-Home Pay Method because it is based on your take-home pay. There are two other types of Realized Income Methods that we can use to check the accuracy of your Take-Home Pay Method. I'll explain them briefly below, but I think the easiest way to understand them is to look at the examples in Step 3 of the Time-Value Spreadsheet.

Market Rate Method – The Market Rate Method is the first way to check your numbers. The Market Rate Method is the rate you could expect to earn if you were hired by another company for a job you were qualified to perform. For example, I spend a lot of my time writing, so I could be hired for a Content Creator position. I also spend time growing the business, so I could probably be hired for a Business Development role. I looked up the salary for each role I was qualified for and then divided by the amount of hours I work to get another estimate for the value of my time. You can think of this method as what your time is worth on the job market.

Cost-Based Method – The Cost-Based Method is another way to verify your numbers. The Cost-Based Method is the rate you would pay someone else to do the work that you do. In other words, imagine you are the boss and you have to hire someone to do your job. I started by dividing my job into specific tasks (writing, marketing, etc.) and estimating the amount of time I spent on each task. Then, I plugged in what I would be willing to pay someone to do that task full-time. Then, I calculated a weighted average of all of the tasks to come up with an overall rate that I would be willing to pay someone to do the work that I do each day. Finally, I divided what I was willing to pay by the total number of hours worked.

Once I have numbers for all three methods, I calculate the average value of my time. I figure that I might be estimating high for one method or low for another, but the value of time is probably accurate when we take the average across all three methods. Again, you can see each method in the Time-Value Spreadsheet.

How to Use This Information We have now completed Part I. With the calculations above, we were able to determine a quick and accurate estimate of what your time is worth. Now we can narrow the zone of uncertainty and make better decisions.

For example:

If you know your time is worth $25 per hour, then you should never wait in line for 30 minutes to get a $10 gift card. If you know your time is worth $60 per hour, then you should always pay $49 for shipping instead of spending one hour shopping at the store. If you know your time is worth $80 per hour, then you should always buy the direct flight that saves you two hours even if it costs $150 more than the flight with a stopover. Once you know, in dollars and cents, how much an hour of your time is truly worth you can make better decisions on a daily basis.

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At this point, we know your time is worth at least the number you calculated in Part I because Realized Income Methods only account for income you have already earned. Ready to see if your time is actually worth more? Let's dive into Part II.

Part II: Expected Value Methods This brings us to the second way to calculate the value of your time: Expected Value Methods. These calculations are based on the value you expect a given hour of work to create in the long-run.

Expected Value Methods can help you make big, strategic decisions about where to spend your time. What projects should your business focus on this year? Which uses of time aren't effective and should be eliminated from your daily work routine? Should you start a business that could payoff big time in ten years, but won't make any money right away or work a stable job with a reliable income? What is the best way to manage these tradeoffs?

Let's start with the simplest type of Expected Value Method.

The Growth Multiple Method There is a simple way to account for the expected value of your decisions. Take your net income from the previous year and multiply it by a reasonable growth multiple.

The key, of course, is selecting a reasonable growth multiple. For example, my business doubled from last year to this year, so I chose 2x as the growth multiple. With this method, we are essentially saying, “Your actions from this year will continue to drive growth over the next 12 months, so the true value of your time is actually higher than your realized income indicates today.”

The Growth Multiple Method is an easy way to estimate how the work you are doing today will pay off in the long-run, but it doesn't tell you anything about how to use your time more effectively. For that, we need to use the full Expected Value Method.

The Expected Value Method The Expected Value Method is the final, and most difficult, way to calculate the value of time. I'm going to try to explain this in the simplest way possible, but I think the easiest way to understand it is to look at the calculations in Step 4 of the Time-Value Spreadsheet.

Here's the basic logic:

Start by breaking your time out by task. The more detailed you can be about each use of time, the better you can distinguish which areas drive the most value. Find a unit of measurement that connects the tasks you work on with the income you earn. For most business owners, this means you need to know the value of a “lead” in your business. In my particular case, I use email subscribers because I know the average lifetime value of a new email subscriber and most of my tasks can be linked to getting more email subscribers in some way. Estimate the value of each task. Let's say I spend one hour working on a task that results in 50 new email subscribers. If the lifetime value of each subscriber is $1, then the expected value of that task is $50/hour. Repeat this type of expected value estimate for every task you work on. Add all of the expected values together to determine the total expected value of your time. Add extra variables as desired. Expected Value Methods can be as complex as you want to make them. You can account for factors like how much happiness a particular task brings to your life or how likely it is for this hour of work to continue to payoff years from now. Expected Value calculations are highly individualized and you'll probably have to wrestle with the equations for awhile to get them to work for you. Again, I think it's easiest to see this worked out in numerical form. You can see all of the factors involved in this calculation in Step 4 of the Time-Value Spreadsheet.

Additional Notes There are a lot of extra thoughts that go on behind the scenes of these calculations. Here are some additional factors I keep in mind when considering the value of time.

Misguided Success – Don't waste your time becoming successful at the wrong thing. Simply understanding the value of your time is helpful, but you need to know what you want out of life to get the most accurate idea of the value of your time. Too many people chase money or power or approval because everyone around them does the same. What if that's not what you really want? Sure, you can find ways to increase the value of your time, but what if you'd rather have more free time than more cash? This is where knowing your core values, doing an Integrity Report, and getting clear about what is most important to you is useful.

Tradeoffs and Opportunistic Addition – Bill Gates has been named the richest person in the world more than a dozen times. In 2015, he ranked number one yet again with an estimated net worth of $72.7 billion. According to one analyst, “With a worth of $72 billion, a 6% rate of return would earn Gates roughly $114.16 per second he is alive, making it a poor investment for Bill Gates to bother picking up a $100 bill if he dropped it.”

Although interesting and quotable, the idea that it isn’t worth it for Gates to bend down and pick up a $100 bill off the ground is incorrect. Why? Because picking up the $100 bill does not prevent Gates from earning $114.16 at the same time. He will be paid whether he picks up the $100 bill or not. In fact, by picking up $100 Gates will earn $214.16 during that particular second instead of his normal $114.16.

Picking up a $100 bill is not a tradeoff that prevents Bill Gates from earning money. It is an opportunistic addition on top of the money he is already earning. Opportunistic Addition refers to choices that would decrease the value of your time if you spent all of your time on them, but increase the value of your time if you do them at opportunistic moments. For example, consider an author who also does speaking engagements. If they spent all of their time speaking, then they would decrease the value of their time because they wouldn't write any new books, they would gradually become irrelevant and their speaking rate would decrease. However, by doing speaking engagements every now and then—say, once or twice per month—many authors can add thousands of dollars to their bottom line while still having plenty of time to write new books.

Non-Negotiable Free Time – One of the dangers of calculating the value of time is that you end up convincing yourself to work another “productive” hour so that you'll increase the overall value of your time. According to an article in the Wall Street Journal, “Some researchers say assigning an economic value to time risks harming people’s quality of life. Those who are encouraged to focus solely on the dollar value of time tend to feel impatient and pressured, says Jeffrey Pfeffer, a professor of organizational behavior at the Stanford Graduate School of Business. They work more and spend less time in rewarding activities such as volunteering or enjoying music.”

For my part, I decided that I would track my free time to see how many hours I was using for leisure vs. work, but I wasn't going to place a dollar value on that time. Instead, I elected to say that my free time was non-negotiable. Having free hours where I could relax and decompress made it possible for me to be effective during the working hours that remained. You need to value your free time, downtime, and leisurely activities that provide whole health and wellness to your life.

Should you work another hour? – Wondering if you should work another hour? Here's a good rule-of-thumb I learned from Sebastian Marshall: Consider each hour of your day. 9AM to 10AM, 10AM to 11AM, and so on. On average, do you make net positive or net negative decisions during that hour? For example, if you work late, does the hour between 9PM and 10PM lead to positive outcomes on average? Or does that hour include more mistakes than accomplishments? Does that hour include more procrastination than productivity? If it's a net negative hour on average, then you should stop working. Working hard on a project is good until the next hour of work burns you out more than it produces something valuable.

Happiness and Meaning – If you want, you can account for factors like how much happiness or meaning a task adds to your life. However, rather than build these variables into my actual equation, I decided to rank them for each task from 1 to 10 based on how fulfilling it was for me. I didn't use these rankings in any equations, but they can act as a tiebreaker between tasks that are close in Expected Value.

Where to Go From Here Calculating the true value of time is actually much harder than it sounds and far more powerful than it seems.

The value of your time will likely change every year, perhaps even faster. The methods I have laid out in this article are flexible and adaptable. As you spend more time in a particular area or earn more income, you can simply plug the new numbers into the spreadsheet and get an updated value of your time.

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One of the hardest things in life is to know when to keep going and when to move on.

On the one hand, perseverance and grit are key to achieving success in any field. Anyone who masters their craft will face moments of doubt and somehow find the inner resolve to keep going. If you want to build a successful business or create a great marriage or learn a new skill then “sticking with it” is perhaps the most critical trait to possess.

On the other hand, telling someone to never give up is terrible advice. Successful people give up all the time. If something is not working, smart people don’t repeat it endlessly. They revise. They adjust. They pivot. They quit. As the saying goes, “Insanity is doing the same thing over and over again and expecting different results.”

Life requires both strategies. Sometimes you need to display unwavering confidence and double down on your efforts. Sometimes you need to abandon the things that aren’t working and try something new. The key question is: how do you know when to give up and when to stick with it?

One way to answer this question is to use a framework I call the 3 Stages of Failure. 3 Stages of Failure

The 3 Stages of Failure This framework helps clarify things by breaking down challenges into three stages of failure:

Stage 1 is a Failure of Tactics. These are HOW mistakes. They occur when you fail to build robust systems, forget to measure carefully, and get lazy with the details. A Failure of Tactics is a failure to execute on a good plan and a clear vision. Stage 2 is a Failure of Strategy. These are WHAT mistakes. They occur when you follow a strategy that fails to deliver the results you want. You can know why you do the things you do and you can know how to do the work, but still choose the wrong what to make it happen. Stage 3 is a Failure of Vision. These are WHY mistakes. They occur when you don't set a clear direction for yourself, follow a vision that doesn't fulfill you, or otherwise fail to understand why you do the things you do. In the rest of this article, I’ll share a story, solution, and summary for each stage of failure. My hope is that the 3 Stages of Failure framework will help you navigate the tricky decision of deciding when to quit and when to stick with it. It's not perfect, but I hope you find it to be useful.

3 Stages of Failure explained

Stage 1: A Failure of Tactics Sam Carpenter became a small business owner in 1984. Using $5,000 as a down payment, he purchased a struggling business in Bend, Oregon and renamed it Centratel.

Centratel provided 24/7 telephone answering service for doctors, veterinarians, and other businesses that needed the phones to be answered at all hours, but couldn't afford to pay a staff member to sit at the desk constantly. When he bought the business, Carpenter hoped that Centratel “would someday be the highest-quality telephone answering service in the United States.”

Things did not go as expected. In a 2012 interview, Carpenter described his first decade and a half of entrepreneurship by saying,

“I was literally working 80 to 100 hours a week for 15 years. I was a single parent of two kids, believe it or not. I was very sick. I was on all kinds of antidepressants and so forth…

I was going to miss a payroll and lose my entire company. If you can just imagine a nervous wreck, physical wreck, and then multiply that by ten, that’s what I was. It was a horrible time.”

One night, just before he was about to miss payroll, Carpenter had a realization. His business was struggling because it completely lacked the systems it needed to achieve optimal performance. In Carpenter’s words, “We were having all kinds of problems because everybody was doing it the way that they thought was best.”

Carpenter reasoned that if he could perfect his systems, then his staff could spend each day following best practices instead of constantly putting out fires. He immediately began writing down every process within the business.

“For instance,” he said. “We have a nine-step procedure for answering the phone at the front desk. Everybody does it that way, it’s 100% the best way to do it, and we’ve taken an organic system and made it mechanical, and made it perfect.”

Over the next two years, Carpenter recorded and revised every process in the company. How to make a sales presentation. How to deposit a check. How to pay client invoices. How to process payroll. He created a manual that any employee could pick up and follow for any procedure within the company—system by system, step by step.

What happened?

Carpenter’s workweek rapidly decreased from 100 hours per week to less than 10 hours per week. He was no longer needed to handle every emergency because there was a procedure to guide employees in each situation. As the quality of their work improved, Centratel raised their prices and the company's profit margin exploded to 40 percent.

Today, Centratel has grown to nearly 60 employees and recently celebrated its 30th year in business. Carpenter now works just two hours per week.

Fixing a Failure of Tactics A Failure of Tactics is a HOW problem. In Centratel's case, they had a clear vision (to be “the highest-quality telephone answering service in the United States”) and a good strategy (the market for telephone answering services was large), but they didn't know how to execute their strategy and vision.

There are three primary ways to fix Failures of Tactics.

Record your process. Measure your outcomes. Review and adjust your tactics. Record your process. McDonald's has more than 35,000 locations worldwide. Why can they plug-and-play new employees while still delivering a consistent product? Because they have killer systems in place for every process. Whether you're running a business, parenting a family, or managing your own life, building great systems is crucial for repeated success. It all starts with writing down each specific step of the process and developing a checklist you can follow when life gets crazy.

Measure your outcomes. If something is important to you, measure it. If you’re an entrepreneur, measure how many sales calls you make each day. If you’re a writer, measure how frequently you publish a new article. If you’re a weightlifter, measure how often you train. If you never measure your results, how will you know which tactics are working?

Review and adjust your tactics. The fatiguing thing about Stage 1 failures is that they never stop. Tactics that used to work will become obsolete. Tactics that were a bad idea previously might be a good idea now. You need to be constantly reviewing and improving how you do your work. Successful people routinely give up on tactics that don't move their strategy and vision forward. Fixing a Failure of Tactics is not a one time job, it is a lifestyle.

Stage 2: A Failure of Strategy It was March of 1999. Jeff Bezos, the founder of Amazon, had just announced that his company would launch a new service called Amazon Auctions to help people sell “virtually anything online.” The idea was to create something that could compete with eBay. Bezos knew there were millions of people with goods to sell and he wanted Amazon to be the place where those transactions happened.

Greg Linden, a software engineer for Amazon at the time, recalled the project by saying, “Behind the scenes, this was a herculean effort. People from around the company were pulled off their projects. The entire Auctions site, with all the features of eBay and more, was built from scratch. It was designed, architected, developed, tested, and launched in under three months.”

Amazon Auctions was a spectacular failure. Just six months after launch, management realized the project was going nowhere. In September 1999, they scrambled to release a new offering called Amazon zShops. This version of the idea allowed anyone from big companies to individuals to set up an online shop and sell goods through Amazon.

Again, Amazon swung and missed. Neither Amazon Auctions nor Amazon zShops are running today. In December 2014, Bezos referred to the failed projects by saying, “I’ve made billions of dollars of failures at Amazon.com. Literally billions.”

Undaunted, Amazon tried yet again to create a platform for third-party sellers. In November 2000, they launched Amazon Marketplace, which allowed individuals to sell used products alongside Amazon's new items. For example, a small bookstore could list their used textbooks directly alongside new ones from Amazon.

It worked. Marketplace was a runaway success. In 2015, Amazon Marketplace accounted for nearly 50 percent of the $107 billion in sales on Amazon.com.

Fixing a Failure of Strategy A Failure of Strategy is a WHAT problem. By 1999, Amazon had a clear vision to “be earth’s most customer centric company.” They were also masters of getting things done, which is why they were able to roll Amazon Auctions out in just three months. The why and how were handled, but the what was unknown.

There are three primary ways to fix Failures of Strategy.

Launch it quickly. Do it cheaply. Revise it rapidly. Launch it quickly. Some ideas work much better than others, but nobody really knows which ideas work until you try them. Nobody knows ahead of time—not venture capitalists, not the intelligent folks at Amazon, not your friends or family members. All of the planning and research and design is just pretext. I love Paul Graham’s take on this: “You haven't really started working on [your idea] till you've launched.”

Because of this, it is critical to launch strategies quickly. The faster you test a strategy in the real world, the faster you get feedback on whether or not it works. Note the timeline Amazon operated on: Amazon Auctions was released in March 1999. Amazon zShops was released in September 1999. Amazon Marketplace was released in November 2000. Three huge attempts within 20 months.

Do it cheaply. Assuming you have achieved some minimum level of quality, it is best to test new strategies cheaply. Failing cheaply increases your surface area for success because it means that you can test more ideas. Additionally, doing things cheaply serves another crucial purpose. It reduces your attachment to a particular idea. If you invest a lot of time and money into a particular strategy, it will be hard to give it up on that strategy. The more energy you put into something, the more ownership you feel toward it. Bad business ideas, toxic relationships, and destructive habits of all kinds can be hard to let go once they become part of your identity. Testing new strategies cheaply avoids these pitfalls and increases the likelihood that you will follow the strategy that works best rather than the one you have invested in the most.

Revise it rapidly. Strategies are meant to be revised and adjusted. You’d be hard pressed to find a successful entrepreneur, artist, or creator who is doing exactly the same thing today as when they started. Starbucks sold coffee supplies and espresso machines for over a decade before opening their own stores. 37 Signals started as a web design firm before pivoting into a software company that is worth over $100M today. Nintendo made playing cards and vacuum cleaners before it stole the hearts of video game lovers everywhere.

Too many entrepreneurs think if their first business idea is a failure, they aren’t cut out for it. Too many artists assume that if their early work doesn’t get praised, they don’t have the skill required. Too many people believe if their first two or three relationships are bad, they will never find love.

Imagine if the forces of nature worked that way. What if Mother Nature only gave herself one shot at creating life? We’d all just be single-celled organisms. Thankfully, that’s not how evolution works. For millions of years, life has been adapting, evolving, revising, and iterating until it has reached the diverse and varied species that inhabit our planet today. It is not the natural course of things to figure it all out on the first try.

So if your original idea is a failure and you feel like you’re constantly revising and adjusting, cut yourself a break. Changing your strategy is normal. It is literally the way the world works. You have to stay on the bus.

Stage 3: A Failure of Vision Ralph Waldo Emerson was born in Massachusetts in 1803. His father was a minister in the Unitarian Church, which was a relatively popular branch of Christianity at the time.

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Like his father, Emerson attended Harvard and became an ordained pastor. Unlike his father, he found himself disagreeing with many of the church's teachings after a few years on the inside. Emerson debated heavily with church leaders before eventually writing, “This mode of commemorating Christ is not suitable to me. That is reason enough why I should abandon it.”

Emerson resigned from the church in 1832 and spent the following year traveling throughout Europe. The travels sparked his imagination and led to friendships with contemporary philosophers and writers such as John Stuart Mill, William Wordsworth, Samuel Taylor Coleridge, and Thomas Carlyle. It was later written that his travels to Paris sparked “a moment of almost visionary intensity that pointed him away from theology and toward science.”

Upon returning to the United States, Emerson founded the Transcendental Club, which was a group of New England intellectuals like himself who wanted to talk about philosophy, culture, science, and improving American society.

Emerson's deep questioning of his life and values, which began with his work as a pastor, intensified during his international travels, and continued with his Transcendental Club meetings helped him realize the desire to become a philosopher and writer. He spent the rest of his years pursuing independent ideas and writing essays and books that are still valued today.

Fixing a Failure of Vision A Failure of Vision is a WHY problem. They happen because your vision or goal for what you want to become (your why) doesn't align with the actions you are taking.

There are three primary ways to fix Failures of Vision.

Take stock of your life. Determine your non-negotiable. Navigate criticism. Take stock of your life. People rarely take the time to think critically about their vision and values. Of course, there is no requirement that says you must to develop a personal vision for your work or your life. Many people prefer to go-with-the-flow and take life as it comes. In theory, that's just fine. But in practice, there is a problem:

If you never decide on a vision for your life, you'll often find yourself living someone else's dream. Like many children, Emerson followed the path of his father to the same school and the same profession before opening his eyes and realizing it wasn't what he wanted. Adopting someone else's vision as your own—whether it be from family, friends, celebrities, your boss, or society as a whole—is unlikely to lead to your personal dream. Your identity and your habits need to be aligned.

Because of this, you need to take stock of your life. What do you want to accomplish? How do you want to spend your days? It is not someone else’s job to figure out the vision for your life. That can only be done by you. My suggestion is to start by exploring your core values. Then, review your recent experiences by writing an Annual Review or doing an Integrity Report.

Determine your non-negotiable. Your “non-negotiable” is the one thing you are not willing to budge on, no matter what. One common mistake is to make the non-negotiable your strategy, when it should be your vision. It's very easy to get fixated on your idea. But if you're going to get obsessed with something, get obsessed with your vision, not your idea. Be firm on the vision, not on this particular version of your idea. Jeff Bezos has said, “We are stubborn on vision. We are flexible on details.”

The key is to realize that nearly everything is a detail—your tactics, your strategy, even your business model. If your non-negotiable is to be a successful entrepreneur, then there are many ways to achieve that vision. If Amazon's non-negotiable is to “be earth’s most customer centric company,” they can lose billions on Amazon Auctions and Amazon zShops and still reach their goal.

Once you are confident in your vision, it is rare to lose it in one fell swoop. There are so few mistakes that lead to the complete annihilation of a dream. More likely, you failed at a strategy level and felt demoralized. This crippled your enthusiasm and you gave up not because you should, but because you felt like it. Your emotions caused you to turn a Stage 1 or Stage 2 failure into a Stage 3 failure. Most of the mistakes that people assume are Failures of Vision are actually Failures of Strategy. Many entrepreneurs, artists, and creators get hung up on a particular version of their idea and when the idea fails they give up on the vision as well. Don't develop a sense of ownership over the wrong thing. There are nearly infinite ways to achieve your vision if you are willing to be flexible on the details.

Navigate criticism. Criticism can be an indicator of failed strategies and tactics, but—assuming you're a reasonable person with good intentions—it is rarely an indicator of a failed vision. If you are committed to making your vision a non-negotiable factor in your life and not giving up on the first try, then you have to be willing to navigate criticism. You don't need to apologize for the things you love, but you do have to learn how to deal with haters.

The 4th Stage of Failure There is a 4th stage of failure that we haven't talked about: Failures of Opportunity.

These are WHO mistakes. They occur when society fails to provide equal opportunity for all people. Failures of Opportunity are the result of many complex factors: age, race, gender, income, education, and more.

For example, there are thousands of men my age living in the slums of India or the streets of Bangladesh who are more intelligent and more talented than I am, but we live very different lives largely because of the opportunities presented to us.

Failures of Opportunity deserve an article of their own and there are many things we can do as individuals and as a society to reduce them. However, I chose not to focus on them here because Failures of Opportunity are difficult to influence. Meanwhile, your vision, your strategy, and your tactics are all things you can directly control.

4th Stage of Failure

A Final Note on Failure Hopefully, the 3 Stages of Failure framework has helped you clarify some of the issues you're facing and how to deal with them. One thing that may not be apparent at first glance is how the different stages can impact one another.

For example, Failures of Tactics can occasionally create enough havoc that you mistakenly believe you have a Failure of Vision. Imagine how Sam Carpenter felt when he was working 100 hours per week. It would have been easy to assume that his vision of being an entrepreneur was the failure when, in fact, it was merely poor tactics causing the problem.

Sometimes you need a few tactics to create enough whitespace to figure out your strategy or vision. This is why I write about things like how to manage your daily routine and how to figure out your priorities and why multitasking is a myth. No, these topics aren't going to create a world-changing vision by themselves. But they might clear enough space in your calendar for you to dream up a world-changing vision.

In other words, you might not be walking the wrong path after all. It's just that there is so much dust swirling around you that you can't see the path. Figure out the right tactics and strategy—clear the dust from the air—and you'll find that the vision often reveals itself.

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saeed danish2 at June 04, 2021 at 5:30am PDT

In 2010, Thomas Thwaites decided he wanted to build a toaster from scratch. He walked into a shop, purchased the cheapest toaster he could find, and promptly went home and broke it down piece by piece.

Thwaites had assumed the toaster would be a relatively simple machine. By the time he was finished deconstructing it, however, there were more than 400 components laid out on his floor. The toaster contained over 100 different materials with three of the primary ones being plastic, nickel, and steel.

He decided to create the steel components first. After discovering that iron ore was required to make steel, Thwaites called up an iron mine in his region and asked if they would let him use some for the project.

Surprisingly, they agreed. The Toaster Project The victory was short-lived.

When it came time to create the plastic case for his toaster, Thwaites realized he would need crude oil to make the plastic. This time, he called up BP and asked if they would fly him out to an oil rig and lend him some oil for the project. They immediately refused. It seems oil companies aren't nearly as generous as iron mines.

Thwaites had to settle for collecting plastic scraps and melting them into the shape of his toaster case. This is not as easy as it sounds. The homemade toaster ended up looking more like a melted cake than a kitchen appliance.

This pattern continued for the entire span of The Toaster Project. It was nearly impossible to move forward without the help of some previous process. To create the nickel components, for example, he had to resort to melting old coins. He would later say, “I realized that if you started absolutely from scratch you could easily spend your life making a toaster.”

The Toaster Project by Thomas Thwaites (How Innovative Ideas Arise) Thomas Thwaites set out to build a toaster from scratch. The Toaster Project, as it came to be known, ended up looking more like a melted cake. (Photo Credit: Daniel Alexander.) Don't Start From Scratch Starting from scratch is usually a bad idea.

Too often, we assume innovative ideas and meaningful changes require a blank slate. When business projects fail, we say things like, “Let's go back to the drawing board.” When we consider the habits we would like to change, we think, “I just need a fresh start.” However, creative progress is rarely the result of throwing out all previous ideas and innovations and completely re-imagining of the world.

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Consider an example from nature:

Some experts believe the feathers of birds evolved from reptilian scales. Through the forces of evolution, scales gradually became small feathers, which were used for warmth and insulation at first. Eventually, these small fluffs developed into larger feathers capable of flight.

There wasn't a magical moment when the animal kingdom said, “Let's start from scratch and create an animal that can fly.” The development of flying birds was a gradual process of iterating and expanding upon ideas that already worked.

The process of human flight followed a similar path. We typically credit Orville and Wilbur Wright as the inventors of modern flight. However, we seldom discuss the aviation pioneers who preceded them like Otto Lilienthal, Samuel Langley, and Octave Chanute. The Wright brothers learned from and built upon the work of these people during their quest to create the world's first flying machine.

The most creative innovations are often new combinations of old ideas. Innovative thinkers don't create, they connect. Furthermore, the most effective way to make progress is usually by making 1 percent improvements to what already works rather than breaking down the whole system and starting over.

Iterate, Don't Originate The Toaster Project is an example of how we often fail to notice the complexity of our modern world. When you buy a toaster, you don't think about everything that has to happen before it appears in the store. You aren't aware of the iron being carved out of the mountain or the oil being drawn up from the earth.

We are mostly blind to the remarkable interconnectedness of things. This is important to understand because in a complex world it is hard to see which forces are working for you as well as which forces are working against you. Similar to buying a toaster, we tend to focus on the final product and fail to recognize the many processes leading up to it.

When you are dealing with a complex problem, it is usually better to build upon what already works. Any idea that is currently working has passed a lot of tests. Old ideas are a secret weapon because they have already managed to survive in a complex world.

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