How Warren Buffett measures success

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Today’s Issue

There are two general ways to measure success.

• The Outer Scorecard

• The Inner Scorecard

Most people use the first one.

World-class people use the second.

Today, we’re going to break them down.

Let’s dive in.

How Warren Buffett measures success

Depending on when you check, Warren Buffett is worth around $100 billion — give or take a couple tens of billions based on how the market is doing.

As an investor, he’s literally in the business of money.

His job is to turn $1 dollar into many dollars.

You’d think his measure of success is just that — money.

More money = more success.

But you’d be wrong.

Buffett lives by a principle called The Inner Scorecard.

It’s the same principle Nick Saban — the Alabama football coach who’s won 7 national titles — measures his success by.

So, what is The Inner Scorecard and how can you apply it to your life?

Let’s unpack that.

The Outer Scorecard

Let’s start with this first.

The Outer Scorecard is how most people measure success.

• Fame

• Money

• Status

• Influence

• Accolades

• Recognition

• Achievement

These are based on extrinsic motivation.

The Outer Scorecard is fickle.

It’s defined by what the world thinks.

The problem is it’s outcome-focused.

Outcomes are mostly out of your control.

Life is too random and there are too many variables to believe you fully control the outcome of anything.

Playing by this scorecard is a fool’s game.

The Inner Scorecard

A much better way to approach life is by The Inner Scorecard.

This is how world-class people measure success.

• Effort

• Values

• Principles

• Standards

• Excellence

• Commitment

• Performance

These are based on intrinsic motivation.

The Inner Scorecard is reliable.

It’s defined only by what you think.

It’s beauty is it’s process-focused.

The process is entirely within your control.

While you don’t control outcomes, you do control the actions you take on a daily basis to move in the direction of your goals.

You control the “controllables,” as several of my baseball coaches used to say.

The Inner Scorecard has simple principles:

• Live in the present

• Focus on the process

• Ignore all external voices

• Perform to your standard

• Forget about the outcome

Nothing else matters.

Buffett didn’t invent this concept — it’s at least as old as the Stoic philosophers, even if they didn’t call it this — but he learned it from his dad and is most-often credited for it today.

In recent years, The Inner Scorecard has become popular in sports and business.

Saban calls it the “scoreboard” (same thing).

He’s far from the only sports coach who subscribed to the concept.

So, we know what the Inner Scorecard is.

They key question now:

How do you develop one for your life?

Developing your Inner Scorecard

Your Inner Scorecard is highly individual.

It’s much more art than science.

But here are 3 questions to help guide you:

Question 1: What are my core values?

Your values drive your behavior.

Your behavior drives the Inner Scorecard.

Examples of values:

• Courage

• Integrity

• Service

• Ownership

Your values can be anything, but they shouldn’t loosely held.

Your values should be the bedrock principles you live your life by.

Clarifying them is a good first step.

Question 2: What is my personal standard?

Your “standard” is the unwavering commitment you make to how you live your life.

Think of sports teams.

They all train. They all practice. They all lift weights. They all watch film. They all play games.

So what separates elite teams from poor teams?

The standard at which they do those things.

Now, think of companies.

They all want to make money. They all want to be No. 1 in their industry. They all want to dominate their market. They all want to have great culture.

So what separates them?

Standards.

Your standards guide your Inner Scorecard.

Question 3: How good do I want to be?

We all need to decide.

Are we good with “good enough?”

Or do we want to maximize our potential?

Good. Great. Our best.

Which one is it?

How we answer will influence our mindset, habits and behaviors.

Here are a couple examples:

Let’s say you sell cars.

Outer Scorecard measures:

• Make $350,000 this year

• Win top salesperson award

• Get promoted

Inner Scorecard measures:

• Improve sales skills every day

• Obsess over every customer

• Make each sales call great

Now, let’s say you’re a startup CEO:

Outer Scorecard measures:

• Raise $50 million

• Be on Forbes 40 under 40

• Win “best new startup” award

Inner Scorecard measures:

• Make your pitch amazing

• Build a fantastic business

• Relentlessly execute every day

See the difference?

It’s subtle yet extremely powerful.

Summary

Let’s recap.

There are two ways to measure success:

• The Outer Scorecard (extrinsically motivated)

• The Inner Scorecard (intrinsically motivated)

World-class people tend to live by their own Inner Scorecard.

Does this mean the Outer Scorecard measures don’t matter?

Not at all.

In sports, if you don’t win games, you get fired.

In business, if you don’t make money, you don’t have a company.

Outcomes are important.

But here’s the key mindset shift:

The Inner Scorecard gives you the best chance to achieve the Outer Scorecard.

Be relentless about measuring success by what you can control.

How you measure success will determine how successful you’ll be.

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