How to get started with leverage, and why.
I’ve been thinking a lot about leverage recently.
It all started when I decided to spend the first 6 months of 2022 reading as much as I could about the mental models that Charlie Munger and Warren Buffets rigorously use. One thing that struck me whilst reading was how leverage seems to be the foundation (or the “message”) of so many important mental models.
In fact, I’ve been thinking about leverage so much that I started to see it everywhere so I’m in danger of becoming a man-with-a-hammer (which Warren and Charlie would warn against).
Leverage is a powerful idea, and while it’s intellectually easy to understand, it can be hard to put into practice. My goal with this post is to highlight some frameworks you can use to more easily find everyday leverage.
Eisenhower Matrix
The popular Eisenhower Matrix is designed to help you figure out and prioritize your tasks based on urgency and importance. If it’s done properly, you ideally end up with your tasks grouped into 4 quadrants:
Of course, you want to be working on Quadrant 1 as much as possible, doing the things that will actually move the needle, not the things that feel like they need to be done “right now”. Implementing this framework means you are focusing on your highest leverage tasks first.
The 80/20 Principle
The 80/20 Principle says that 20% of your inputs will account for 80% of your outputs.
The power of the 80/20 principle is that it helps you save time, money, effort, etc by deciding where to focus your current resources to achieve their greatest effectiveness i.e. leverage. If you take an honest look at this week’s tasks, what 20% actually matter?
“$10,000 dollar per hour” work
A smart productivity system I came across recently is from Khe Hye who talks about “The magic of doing $10,000 per hour work”…
