The Most Important Skill of Life

Episode #001

The Complete Transcription of Episode-001

Do you know that Sundar Pichai, the CEO of Alphabet, the parent company of Google & YouTube, got paid 226 million dollars in 2022, approximately 1884 crore rupees for that year?

Here is the critical question: What is the most important skill for which he got paid 1884 crores for the year 2022?

What is that ultimate skill which pays huge rewards in every aspect of life?

Welcome to the first episode of The Pursuit of Passion Podcast. Here are the things we will cover in this episode.

1. What is that most important skill?

2. Why is this so important? 

3. The factors that impact this skill.

4. The problems we face while using it.

5. How you can get better at this skill? 

And much more in this episode of our podcast, The Pursuit of Passion.

The answer to the question 'What is that ultimate skill which pays huge rewards in every aspect of life?' is Judgment.

I love the definition of Judgment by Naval Ravikant: "Wisdom is knowing the long-term consequences of your actions. Wisdom applied to external problems is Judgment."

In fact, some parts of this episode are derived from Naval's book.

If I have to define the Judgment in simple terms, it is the ability to be right more often or the ability to make better decisions.

Before we get into the depth of Judgment, Let us revisit a historical event that happened half a century ago. In the year 1971, 120 Indian soldiers were posted at Longewala, in the Thar desert of Rajasthan. On the night of December 4th, the patrolling team detected a large army of Pakistan marching towards them with an army of 2-3 thousand people and 40-50 tankers. 

Major Kuldip Singh Chandpuri, the leader of the post, reached out to battalion headquarters, requesting urgent reinforcements with armor and artillery support.

The Indian headquarters gave them the choice of retreating or leaving the Longewala post and moving back to the battalion headquarters since reinforcements would not be available that night and because they were outnumbered in everything.

2-3 thousand enemy soldiers vs. 120.

500 vehicles vs a few vehicles.

40-50 tankers vs. one armored vehicle.

Despite the odds stacked against them, 120 soldiers decided to stay back. They defended the post for more than 6 hours until the Indian Air Force arrived in the morning, which was unable to reach earlier due to a lack of night vision equipment.

120 people could defend the post against 2-3 thousand people because they had better Judgment than the enemies.

Judgment is everything.

By the way, a Hindi movie was made based on this Longewala battle, and the movie's name is Border.

Let's get back to the question we raised in the beginning. Why did the CEO of Alphabet get paid 1884 Crores in 2022? Let's dig deeper.

What does a CEO do all day mostly? A CEO makes big decisions for their company's growth, like where the company will be heading for the short term and long term, on what technologies or industries or products they have to take a bet and work on.

Who will be chosen for the CEO's position? One who has demonstrated excellent Judgment for a long period.

Now, let's understand why decision-making is everything. If someone makes decisions right 80% of the time, they will create 100 times more value in a decade than someone who makes decisions right 70% of the time.

The market cap of Alphabet is 1.75 trillion USD, which is approximately 145 lakh crore rupees. Suppose a CEO of such a large company is right 10% more often than somebody else. In that case, his decision-making can create an additional 175 billion USD or 14.5 lakh crore rupees worth of value on a judgment call.

Irrespective of what you do, you are the CEO of your life, whether you have that job title or not. If you can be more right and more rational, then you are going to get exponential returns in your life.

A great lawyer will have a better judgment.

A great doctor will have a better judgment.

A great software developer will have a better judgment.

Let's go through different ways we develop Judgment, whether it's a good judgment or a bad judgment.

We build Judgment based on our experiences.

For example, when infants learn to crawl, they start going behind anything that gets their attention, be it insects, lizards, or a steaming hot cup of coffee, without having any prior judgment. 

Once the child gets burned from the hot coffee, the pain from that burn becomes an experience, which in turn forms a judgment. The child is likely to avoid touching it in the future.

Many of our judgments, which we strongly believe in, are through our own experiences.

Apart from experiences, we form our judgments from observations, critical thinking and evaluation, imitating others, trial and error, reflecting on consequences, feedback, role models or mentors, cultural influence, etc.

Once we have built some judgment on any specific topic or issue based on our experience and exposure. We use that built-up judgement while deciding whenever that topic or problem arises.

When there is no prior judgment, we build it on the go while deciding.

Another critical aspect of Judgment is second-order thinking and second-order effects. Second-order thinking is when you consider how your present decisions will impact your future actions, not just immediate ones.

When you throw a stone in the still water, the splash is the first order, and the waves are the second order effect.

Let me give you an example which you must have experienced. Eating spicy food will tingle your tongue and lips, and you will sweat out. It will release endorphins and dopamine, which can make you feel happy and even thrilled.

Choosing spicy food is the first-order thinking. Enjoying spicy food while eating it is the first-order effect.

All is well if you are within your limits with spicy food. If not, the next day, you will suffer from diarrhea/loose-motion, acidity, stomach pain, etc.. This is the second-order effect of having spicy food beyond your limits.

And your whole day will take a hit, and you will not be at your best: is the third-order effect.

Avoiding spicy food, eating spicy food within your limits, or taking preventive medicine after having spicy food during unavoidable circumstances is second-order thinking.

A good Judgment is the ability to predict second-order effects.

Let's get into the factors that impact our Judgment. Numerous factors influence our judgment and decision-making processes, including emotions, cognitive biases, social influences, cultural background, personal experiences, information availability, cognitive load, time constraints, values, beliefs, motivation, and peer influence. 

These elements shape our thought processes and contribute to the choices we make. Understanding these influences and biases is essential for self-awareness and making intentional and informed decisions.

Let's look at some of the characteristics of people with good Judgment. People with good Judgment can think clearly. And they can explain things as if they are explaining it to a child. They say no often, and hence, they are able to focus on a few important things. They prioritize time over money. They are more mindful and live in the present. They see and stay near to the truth and reality.

Let's look at some of the characteristics of people with bad Judgment. People with bad Judgment can not think of second-order effects. They are busy all the time. They often complain they don't have time for the things they want to do. They get easily offended when they hear about their religion, country, or favorite politician or political party, which doesn't match their worldview. They prioritize money over time. They live in fantasy, not with the truth.

I want to emphasize nobody is perfect; everybody is a work in progress. But with good Judgment, you can progress faster.

Here is an interesting question: Do you know how many decisions you make every day? or how many decisions an average adult makes per day?

I will answer it later.

Let's focus on how to improve our Judgment.

We live in an era now where we have too many options and ways to choose from. So, Judgment becomes a very critical skill to navigate through this modern world.

Unfortunately, Hard Work is overrated, and Judgment is underrated. But let me warn you, without hard work, you can never develop a good Judgment. 

To build better Judgment, you have to work hard, not physically but mentally. You also have to put in the time to build better Judgment.

We have to get better at these four spheres to build a better judgment.

1. Understanding Oneself.

2. Understanding People.

3. Understanding the World.

4. Understanding Your Industry.

Let's go through these one by one briefly.

The first one is Understanding oneself. If you don't understand yourself, then how can you make better decisions for yourself?

So we have to constantly evaluate and reflect upon our likings and dislikings. Our strengths and weaknesses. Our daily routine. Our friendships and Relationships.

The Ikigai is one of the best frameworks for understanding ourselves better. You can find out what are the things you can enjoy the whole day and make a living out of them.

You can do a SWOT analysis on yourself. Examine Strengths, Weaknesses, Opportunities, and Threats. Double down on your strengths. Either strengthen your weaknesses or outsource them. Create or choose better opportunities. Avoid Threats by minimizing risks.

Let's go to the second one, understanding people. We have to deal with people all the time, whether at home, school, office, or social gatherings, and mostly everywhere except when we are alone.

Unfortunately, these people have emotions, feelings, and desires just like us. They come from different experiences and have their own imaginations, expectations, and worldviews. Often, these differences create a lot of misunderstandings and conflicts. And these misunderstandings and conflicts suck the life out of us all the time.

Hence, getting better at understanding people becomes critical.

Studying human psychology, behavior, and philosophy will help us understand people better. By the way, by studying these, we will understand ourselves better as well.

Now, the third one is understanding the world. Apart from people, we must deal with governments, institutions, systems, structures, processes, etc. Despite all these being run by the people, we must understand how the world works. Studying finance can help us how to handle money better. Studying sociology can help us build better communities. Understanding the laws, taxes, and rules of the land can help us avoid the consequences of not understanding them. 

Finally, the fourth is Understanding your Industry or Your Niche within your industry. You must be working now or going to work in a specific industry where you will keep earning to match expenses in the short run and build wealth for yourself in the long run.

Fortunately, over a period of time, our education system has evolved to cater to the fourth part: Understanding your Industry.

Now, your monkey mind might have already told and tricked you that you are good at all these things and you have great Judgment. Or You might be really great. But our mind always overestimates our capabilities, and it is biased towards us.

Instead, If you can assume you are just average at these and you need to work on to become great, then you become curious about how to become great at these things. And in that new journey from good to great, you will discover a lot more insights, and you will build better Judgment.

Unfortunately, our education system fails to focus on helping us to understand ourselves, people, and the world better once we cross 16 or 18. That's when we need it most, and that's when we can understand them better.

Also, there can never be a fixed syllabus, say a textbook of 300 pages, that you can read and become great at Judgment.

It's not that simple.

Yet, we are daring to build such a product that can help you understand yourself better, help you understand people better, and help you understand the world better. We are calling this product as 'The Mindset' product. This podcast, The Pursuit of Passion, is also a part of 'The Mindset' product.

You must have answered a few questions through an automated WhatsApp conversation before coming here to listen to the podcast. 

That's one of the features of our product. Suppose you have not gone through our automated WhatsApp questionnaire. Don't worry. You can get the instructions in the description.

I asked a question earlier: how many decisions does an average adult make per day? According to the researchers, an average adult makes 35000 decisions per day.

It's one decision for every 3 seconds. That's a hell of a lot of choices. 

Every major publication has published about 35000 decisions or choices we make per day. However, I was not able to find the original scientific paper. I don't know the considerations or assumptions behind this! 

But yesterday, I walked more than 10000 steps in around 80 minutes. We can say after every step, I decided to take the next step. If you consider such things, suddenly 35000 will also make sense.

Nonetheless, we definitely make more decisions every day than we think.

99% of them might not have any impact. But less than 1% of them might matter a lot. We need better Judgment for those decisions.