How to Use ‘Zero Based Thinking’ When Making Hard Decisions

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Updated: June 27, 2017

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Zero-based thinking is a core concept of self-help author and motivational speaker Brian Tracy that
allows you to start over by calling "time out" in your life and work. It enables you to kill off
procrastination and/or instantly create a turn around if you are heading down the wrong path.

You are the sculptor of your life. You have the right and freedom to carve out the best possible setting
for living your life. Let nothing interfere with this, least of all circumstances and the resultant feelings of
frustration or melancholy. Zero based thinking helps enormously in designing the life you want to live.

Steps

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Face up to those difficult decisions! Zero-Based Thinking puts previous decisions you made on trial. It
requires you to examine all your current activities––business, career, relationships etc., and ask yourself
the question: “Knowing What I Know Now (KWIKN), would I still make the same decision? Would you
get into that relationship, start the same business; make that investment etc., again”? If the answer to
this question is “No!”, then the very next step is to ask yourself “how do I get out of this and how fast”?
In other words, revert to zero and start from scratch. This is the ultimate ‘drawing a line in the sand’
personal development exercise.

 Zero-Based Thinking goes against traditional dogma of sticking with something even if it
does more personal damage to you than good, which is often one of the biggest
problems in personal strategic planning, namely attempting to make something work
that you wouldn’t even have gotten into in the first place had you known better.

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Know when something isn’t quite right. The best indicator of a zero-based thinking situation is stress or
frustration; something keeping you up at night and continually preoccupying your mind.

 Often the best solution for your biggest problem is simply to discontinue that activity
altogether. Just going cold turkey on your biggest problem can be the simplest and most
direct solution to that problem.

3.

Make a decision to stop. This is like grabbing the steering wheel of your own car and wrenching it,
stopping you in your tracks immediately and giving yourself the opportunity to turn around. The key
idea here is no matter how long you have gone down the wrong road you can always turn back. As they
say, there’s never a wrong time to do the right thing.
  You will be amazed at how creative you become when you do this exercise, examining
every area of your life as though you could start again. Numerous possibilities will arise,
difficult situations will be confronted and solutions will emerge.

4.

Learn how to cut your losses. Zero-based thinking is a great decision-making tool when it comes to
money management and investments also. If you know that a particular stock purchase or property
investment is simply eroding your wealth now but you’ve had difficulty facing up to this realty, don’t
waste a single second more, and ask yourself the hard question: “Knowing What I Know Now... would I
purchase that property/stock”. If the answer is no, it’s time to make that hard decision and cut your
losses so you can invest your capital elsewhere to get a superior return and build wealth.

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Study the opportunity cost and the law of comparative advantage. The concept of Opportunity Cost
and the Law of Comparative Advantage as attributed to nineteenth century English economist David
Ricardo, is often associated with macro economics and international trade. However, it can equally be
applied to personal development. The chief problem with holding onto a business, relationship or
“investment” that does not serve you is not just the limitations it puts on you but the real loss is the loss
of opportunity elsewhere, such as business endeavors, relationships, investments you could be making
elsewhere that would serve you better.

 Remember, every activity/situation has an opportunity cost, the cost of not

participating/contributing to another opportunity. A good question to ask yourself to
assess potential opportunity costs is, "What other opportunities am I missing out on
that would serve me better than my current activities do”.

 Each day we are faced with opportunity cost decisions in our business and personal
lives. Another lens through which we could view the law of comparative advantage is
the 80/20 rule (sometimes referred to as the Pareto Principle, named after Vilfredo
 Pareto, the Italian economist). Applying the 80/20 rule here might also lead you to ask
yourself “What are the highest value (20%) activities I should be undertaking” and then
delegate or eliminate the other low-value (80%) activities.

6.

Sum up your understanding and start over. If a certain decision you made is now holding you back in
life, just be ruthless, use the Knowing What I Know Now Q&A technique to give yourself the chance to
start over. There is no honor, no dignity and no purpose in pursuing something that no longer inspires
you or serves you. From a wealth creation perspective, Zero-Based Thinking is an excellent way of doing
a quick back-of-an-envelope analysis on whether an “investment” you made is still worth keeping or not.

 All your problems started out as opportunities or good ideas at one stage but that could
have been a long time ago. It’s very possible that your life, your needs and your
knowledge has evolved and what was once a good idea, opportunity or investment may
not be so now. Remember, it’s never too late to do the right thing. No matter how long
you have been going down the wrong road, you can always stop and turn back.