All business decision-makers must strive to master three intellectual modalities — principles, systems and probabilities — the Deathly Hallows of commercial wizardry.

Using principles leads to more consistent, efficient decision-making. You can often get to 80% of the solution with 20% of the effort if you understand the underlying theory. Principles also help you avoid imitating others.

Systems thinking allows you to anticipate the broader consequences of your actions, spot the root causes of issues, and the intervention points that offer the greatest leverage. Without a sense of the whole you expose yourself to unforeseen risks and limit your effectiveness.

Thinking probabilistically allows you to thrive in an uncertain world. It increases the likelihood of serendipitous events and non-linear payoffs, while allowing you to hedge against risk. Everything in business is a numbers game because the future is unknowable. If you want more princes you have to kiss more frogs.

I spent 15 years focused on the first two, only to learn what the best investors, entrepreneurs and leaders have known for decades: the third — probabilistic thinking — is the Elder Wand that wields the greatest power.

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