Have you ever thought that your thinking could be better? You are thinking about your thinking, called metacognition. Imagine being able to take some concepts and increase the ability to think clearly and make far better decisions going forward. Shane Parrish, founder of Farnam Street, has outlined exactly how to do that in his book Clear Thinking.
Introduction
-while the rest of us are chasing victory, the best in the world know they must avoid losing before they can win. This is a surprisingly effective strategy
-in order to get the results we desire, we must do two things
1- create a space to reason in our thoughts
2-deliberately use that space to think clearly
-master this skill
-don’t react without reason (efforts made to subconscious biological triggers)
-when you’ve created a pause between thought and action, you can turn clear thinking into effective decisions
-mastering the best of what other people have already figured out
-what happens in ordinary moments determines your future. Ordinary moments matter more to success than big decisions
-when we react with emotion to a colleague, we must make amends
-each moment puts you in a better or worse position for the future
-when to takes over and we want to show someone we’re the boss, the future becomes harder
-passive aggressive behavior makes relationships worse
-moments may not seem to matter at the time, but they change our position. Position determines the future
-good positions allows clear thinking; bad decisions leads to being forced by circumstances into a decision
-time is the friend of someone positioned well, and the enemy of a poor position
-clear thinking leads to proper positioning, which allows one to master circumstances rather than be mastered by them
Part 1 – the enemies of clear thinking
-in the space between stimulus and response, we can either pause and apply reason to the situation, or go with default monkey behavior:
-when someone slights us, lashing out with angry words
-when cut off, assume malice
-when things go too slow, get frustrated and impatient
-when someone is passive aggressive, taking the bait and escalating
-we don’t realize we are conforming to the group when we should be thinking for ourselves
-our emotions often react in ways that cause problems downstream
-their is a high cost to losing control, for example undermining others takes a long time to recover if ever
-biological instincts; they control us so strongly that we do it without thinking. We are prone to defend our territory, physically and psychologically. E.g. our identity, status, work, anything to do with us
-we’re wired to organize the world into hierarchies to make ourselves feel better.
-we’re self-preserving; if forced into choosing, we choose ourselves over others
4 default biological triggers
1-emotion default; responding to feelings rather than facts and reason
2-ego default; react to anything threatening our sense of self worth or our position in a group hierarchy
3-social default; conforming to the norms of our larger social group
4-inertia default; habit forming and comfort seeking. Seeking familiarity, resisting change
Chapter 1.2- the emotion default
-responding quickly with emotion leads to downfall, particularly anger
-outrage at a criticism causes you to lash out in defense, alienating potential allies
1.3 – ego default
-ego: “I can do more than the job I’m in but they won’t give me more”
-ego turns unearned knowledge or a little knowledge into reckless confidence
-ego leads to overconfidence, arrogance, hubris, thinking everything is easy
-confidence blinds us to risk
-ego makes us more concerned with maintain or improving position in a social hierarchy than with extending our knowledge or skills
-having people depend on us makes us feel important and indispensable; to empower others, it’s better to make them not dependent
-the person who wants to be seen as great leads to less concern with actual greatness and more with exuding appearances
-ego: frustration from not being appreciated the way I want to be appreciated, from not seeing me the way I want to be seen. This can lead to doing things I would do otherwise; such as approach a competitor, engage in quiet quitting due to feeling under appreciated at work.
-our desire to feel right overpowers our desire to be right
-most people go through life assuming they are right, and that others who don’t see things their way are wrong
-we mistake how we want the world to be with how it actually is
Signs of ego: expending energy on how I am seen, feel pride being wounded, reading an article then thinking I’m an expert, always trying to prove being right, difficulty admitting to mistakes, hard time saying don’t know, frequently envious of others, feel as though you’re never given the recognition you deserve
1.4- the social default
-where all think alike, no one thinks very much; Walter Lippmann
-the social benefits of going with the crowd are felt long before the benefits of going against it are felt
-measure of a person; degree to doing the right thing when it goes against what’s popular. We overestimate our willingness to diverge from the crowd, and underestimate our biological instinct to fit in
-when we do what everyone else is doing, our brains go on autopilot
-social defaults inspire virtue signaling
-lemmings rarely make history
-fear holds us from taking risks
-no one grows up saying they want to do what everyone else is doing
-success and failure require shamelessness
-doing something different might mean underperformance, but may also lead to changing the game entirely
-if you do the same things everyone else does, you get the same result
-if you don’t know what to do, do what everyone else does. If you want better, think independently and correctly
-instead of trying something new, we tell ourselves something new. A new excuse
-someone possessed by social default is easy to defeat
-lemmings may have a rotten image, but no individual lemming has ever been embarrassed
-signs of social default taking hold: trying to fit in, fearful of disappointing others, afraid of being an outsider, or the threat of scorn fills you with dread
1.5- inertia default
-our minds tend to be set in one direction and won’t change unless acted upon by another outside force. Thus changing our minds is hard
-inertia keeps us in jobs and relationships that don’t make us happy. We get complacent.
-the zone of average is the most dangerous for inertia; something so bad will lead us to change. Ok does not. Staying in a relationship that is too good to leave and too bad to stay is staying in an average relationship.
-inertia makes us double down when we are wrong, avoid hard things like conflict.
-Groups create inertia of its own; it pressures people to conform. Group inertia is why a lot of people get married, because other people are.
-inertia is even bad for health. It keeps us doing things that don’t get us what we want
1.6; default to clarity
-manage your default biological tendencies
-you unconsciously adopt the habits of the people you spend time with; the more you are around them, the more likely you start to think and act as they do
-everyone loses the battle with willpower; it’s only a matter of time
-find new friends whose default behavior is the desired behavior
-create an environment that leads to good behavior; don’t rely on willpower to improve defaults
-it’s easier to align yourself with the right behavior when everyone else is already doing it
-reprogramming yourself is more difficult than a computer
Part 2 – building strength
-criticizing others is easier than knowing yourself; Bruce Lee
-we can’t will our way out of biological tendencies
-maintain status quo inertia by having optimal status quos
-rituals; e.g. take a deep breath at work before speaking when someone slights you
-strength is the power to press pause on defaults and exercise good judgment; self-accountability, self-knowledge, self-control, self-confidence
Chapter 2.1 – self-accountability
-I am the master of my fate, I am the captain of my soul; Invictus
Self-accountability; taking responsibility for your abilities, inabilities, and actions. If I can’t do that, I’ll never move forward.
-hold yourself accountable; external rewards are optional. Honest judgments about yourself are more important than anyone else’s
-I’m in charge of my own life
-people who lack self-accountability tend to run life on autopilot, succumbing to external pressure, chasing reward, avoiding punishment, measuring themselves against other people’s scoreboards. Are followers; not leaders, no onus on responsibility for own mistakes, blaming others, circumstances, luck
-kind is not the same as nice. Kind people will tell you what you need to hear, nice people will tell you what you want to hear and avoid giving negative feedback
-you can control how you respond, which can make things better or worse
-is this behavior moving you closer to what you want or further away?
-distancing yourself from reality makes it harder to solve those problems
-telling yourself a positive story doesn’t ensure a positive outcome, but telling a negative story will lead to a bad one
-responses that avoid responsibility leads to becoming a victim
-the real test of a person is the degree to which they are willing to nonconform to do the right thing
-responding to hardships positively matters more to happiness than the hardship itself
-accept things and move on
Chapter 2.2 – self-knowledge
-know the edge of your competence and stay within it, and own strengths and weaknesses
Chapter 2.3 – self-control
-master your fears, desires, and other emotions
-have a space between emotion and actions; emotions are ok to visit, but not a good place to stay in
Chapter 2.4- self-confidence
-leads to knowing what your abilities are and how they add value, whether other people appreciate them or not. It helps to have resilience to overcome challenges and not to give up
-ego prevents acknowledging deficiencies
-confidence without humility is overconfidence. A weakness, not a strength
-despair and worthlessness are ego traps from having too big of an ego. Self-confidence prevents it
-confidence comes from how you talk to yourself
-deep breaths help calm your mind. Do it in stressful situations, not just meditating
-confident people don’t care what others think of them, are willing to risk looking like an idiot, will try new things, willing to stand out. They are beaten down and gotten up enough times to know they can do it
-doing things differently leads to hecklers and naysayers
-listen to the voice that reminds you of past accomplishments. While you may not have done this new thing, you can figure it out
-self-confidence leads to being able to accept hard truths; to deal with the world as it is, not as we want it to be
-don’t deny the truth or avoid pain
-waiting for the right moment is just an excuse to not do something. There is no perfect moment
-self-confident people are honest about their motivations, actions, results. They listen to feedback instead of looking for echo chambers
-life is not a popularity contest; people telling you you are great does not make you great. Avoid this social default
-groups encourage groupthink that the world is wrong and we are all right
-we wonder deep down why we aren’t getting the results we want
-one CEO mentioned: how someone turns out depends on if they can change their mind on what they think is right
-focus on being right instead of proving or looking right
-CEO story of someone choosing to support rivals idea instead of their own. Board saw that as someone who could put aside one’s own ego and choose what’s right, even when in a supporting role. This led to that person being picked as next CEO.
-your identity should not be based on whether you are right or whether you look good
-ego is about who’s right, wisdom is about what’s right
-self confidence faces reality, admits mistakes, changes mind
-outcome over ego
Chapter 2.5 – strength in action
-e.g. going against the norm, such as quitting a good job
-e.g. resisting social defaults, by not making decisions right away and only saying yes to important decisions after a sufficient amount of time has passed
Chapter 2.6 – setting the standards
-it is inevitable that if you enter into relations with people on a regular basis, you will grow to become like them; Epictetus
-first step to building strength: raise standards for yourself, and look at the people and practises in your day to day environment
-our physical environment and people around us influence us
-few things are more important in life than avoiding the wrong people
-we think we are strong enough to avoid adopting the worst of others, but that is not the case
-we consciously become what we’re near. If we are around jerks, we become more like it. Selfish people, more like it. Unkind, slowly more unkind. You adopt the feelings, thoughts, attitudes and standards of people around you. It’s not noticed until it’s too late
-successful people have high standards for others and themselves
-high standards lead to high outcomes
-standards of excellence create champions, not vice versa
-leaders have high standards and get people to rise up and meet them
-smart and lazy people may try and get others to correct their work and do it for them. Ask them if it’s their best work so they make revisions
-low standards come from not caring about it
-if you don’t have the chance to work with a master directly, read about these people and their work
Chapter 2.7 – exemplars + practise
-choose the right examples and imitate them
-if you don’t curate the people in your life intentionally, the people there will be by chance rather than by choice
-show me your role models and heroes and I’ll show you your future
-choosing the right exemplars can transcend you past standards inherited from family, friends, acquaintances, church, society
-choose heroes that you respect, for he who respects another will quickly be respected himself. Choose someone whose life and speech pleases you, who displays outwardly the same character that he had
-your hero’s can change, and they don’t need perfect character, they just have to have something’s you want to become
-think of your hero’s all as a board of directors looking over you and watching you. This raises your own standards and behavior, changing your actions from reaction to reason and logic, as it is a back of the mind reminder
-we will move in the direction of the people we associate with
-embody and practise the behavior of these heroes. Internalize the standards to become the kind of person I want to be
-understand and conquer past patterns of behavior
-one way to think and behave better is to ask: what would my heroes do in this position?
Part 3 – managing weaknesses
Chapter 3.1; knowing your weaknesses
-in negative states we make bad decisions (sleepy, hungry, stressed, tired, fatigued, emotional)
-we have in built tendencies to form judgments and opinions even in the absence of knowledge
-some weaknesses are from biology, some from habit
-bad habits are acquired when the consequences are delayed
-good choices repeated consistently over time is your friend, and small bad choices repeated over time is the enemy
-have the strength to go against the crowd
-manage inbuilt weaknesses with safeguards
-manage acquired weaknesses with strengths
-our biological tendencies are only to increase survival and reproduction. They don’t help to accuracy
-you must not fool yourself, and you are the easiest person to fool; Richard Feynman
-we can’t see our own weaknesses because; it’s ingrained in our identity, it bruises our egos, we have a limited perspective. We are experts about other people’s strengths and weaknesses, and so blind to our own
-knowing my blind spots isn’t enough; we have to do something to guard against them
-when we get feedback about our weaknesses, it’s a rare opportunity for getting better and closer to the kind of person we want to be
-command and control approaches rarely work in the long term; they work short term with disaster long term consequences. Dictatorships don’t work
-the way we see the world is different from others. Everyone has a unique perspective
Chapter 3.2; protecting yourself with safeguards
-being in an unfamiliar environment is a biological vulnerability
Safeguard 1: prevention. Stress is shown to lead to bad decisions
Safeguard 2: automatic rules for success. Make rules and systems rather than goals for sustained success. We’re wired to fit in and want to be liked by others.
Safeguard 3: create friction
-make useless or bad habits more difficult to do with obstacles, and make good things to do easier
-recipe for disaster: give our best selves to the least important things, and the worst of ourselves to the most important
-safeguard 5; shift your perspective
-I’m so busy trying to prove to everyone I’m right that I can’t see things from other people’s point of view”. First consider and go through other peoples point of view before offering your own
-a good empathy thing to say: “what did I miss”? “Did I miss anything?”
Chapter 3.3; how to handle mistakes
-update your ideas about the world and discard wrong ones
-accept responsibility, infix mistake, new plan
-your inner voice has the power to move you forward or hold you back
Part 4 -clear thinking in action
-if you choose not to decide, you still have made a choice; Neil Peart
-don’t casually make a choice from a range of alternatives. Reaching without thinking leads to an unconscious choice
-a decision is a conscious judgment that a certain option is the best one
-letting our emotions make decisions for us is a bad choice
-you need multiple tools in the toolbox in order to make better decisions
-bad decision making; going with the default, easily swayed by emotion, can’t adapt to change, value being right more than doing what’s best. All the tools can’t help in that case
Chapter 4.1 – define the problem
-otherwise you end up solving the wrong problems in life
-smart, type A people react without reason. They go with the first suggestion and try to solve it; too conscientious
-we are given problems in school then we solve. We are too passive. Defining problems takes experience
-putting something off into the future doesn’t work; the future eventually arrives
-identify the real problem and understand it with outside inputs. Only then spend energy solving the problem
-what would have to be true for this problem not to exist in the first place?
-have two phases; a problem defining phase then a problem solving phase
-slow down, but not too much to use a combination of judgment, principles, safeguards
-don’t make a decision on a problem until you understand it
-the best solution makes a problem go away permanently for the long term
-the social default mistakes; action for progress, the loudest voice as the correct one, and confidence for competence, looking for short term solutions rather than long term solutions. These are all signalling statuses to others rather than making real progress. Feeling like moving forward and getting social validation but just going in circles
-putting energy into short term solutions takes away energy from long term solutions; focus on long term
Chapter 4.2 – explore possible solutions
-pre-mortem; worst case cost analysis. Envision the worst and prepare for that scenario(s)
-second level thinking; plan for the future
-problems do not only have two solutions; often times way more. Novices fail to see the complexities of a problem that a master can
-3+ solution; come up with at least 3 solutions to a problem
-think of having both x and y, not just x or y. This will reduce black and white thinking
-intelligent people make decisions based on opportunity cost; all decisions have a hidden opportunity cost. You are forgoing x,y,z,etc for a
-e.g. cost of moving to suburbs vs smaller home inner city is lost time and more driving stress
Chapter 4.3 – evaluate the options
-clarity, goal promotion, decisiveness
-if you don’t know where you want to go, any road will take you there
-ego default; a lot of managers like being depended on, it makes them feel important to need to be asked about what to do
-identify what’s most important to you and make decisions based on that
-most information is irrelevant; wisdom is knowing what to ignore. know what you are looking for before looking through data
-quality of your decisions is from the quality of your thoughts. And the quality of your thoughts is from the quality of your information
-history shows us that the greatest thinkers collected information personally, the hard way
-shortcuts on information don’t work
-try something out to see what kinds of results it yields
-judging people and telling them they are wrong only shuts down communication. When gathering information, your job is to see the world through other people’s eyes
-ask questions, keep your thoughts to yourself, and remain curious about other perspectives
-don’t ask people what they think; instead, how they think
-in decision making, gather information relevant to the decision
-talking heads on media are rarely experts. Including tv, YouTube
-how to get experts to help you (real experts, as they have much deeper information);
-show that you have skin the game; via time, energy, money vested in
-be precise on the ask
-show respect for their time and energy
-ask for reasons and listen
-follow up with results and progress of the feedback
-experts are concerned with being great; imitators are more concerned with looking great
-imitators can’t answer questions at a deeper level
-imitators can’t adapt vocabulary; they just spit out the same idea
-imitators get frustrated when the audience doesn’t understand
-specific knowledge can’t be taught, but it can be learned
Chapter 4.4 – do it
-there is no purpose knowing what you should do and not doing it. If you want results, you need action
-it’s not so much that we don’t know what to do as much as fear of the consequences
-we are afraid of being wrong; inertia default
-when the cost of a mistake is low, move fast
-high consequence and low reversibility: marriage, full time business
-high consequence and high reversibility; where you live
-when the stakes are high, and there are no take-backs, decide at the part moment possible. Get more information and options. But diminishing effect exists. At some point getting more information isn’t worth the cost of time or opportunity cost
-analysis paralysis; having more information doesn’t increase accuracy. It just leads to more confidence from confirmation bias. Confidence increases faster than accuracy
-if the information you are getting is familiar, then stop gathering more of the same and take action
-if you’re waiting to decide, wait no longer than your first lost opportunity. Once that happens, make a decision. E.g. selling a house and buyers start looking to buy other houses. a partner wants to take a relationship to the next level; going exclusive, living together, getting engaged. No answer may lead to them leaving eventually in a relationship
Chapter 4.5; Margin of Safety
-avoiding the worst outcomes maintains optionally and keeps you moving forward
-sometimes things fail for reasons beyond our control
-diversification is a protection against ignorance; many of us don’t know what we are doing and shouldn’t have the confidence required to go all in
-you need a margin of safety the most at the very moment you start to think you don’t
-you have to be willing to look short term stupid on a number of occasions
-spend days thinking about major decisions and see if it makes sense then make them
-execution fail safes leverage your thinking when you’re at your best to protect you against the defaults when you’re at your worst
-fail-safe; determine in advance what you’ll do when you hit a specific quantifiable time, amount or circumstance
-negative signs are red flags that something is going off course. Absence of positive signs can also indicate this too
-use commanders intent to empower others to act and make decisions without you
-poor leaders insist everything be done their way
-tie your hands to prevent stupid decisions being made
Chapter 4.6 – learn from your decisions
-the quality of your decisions eventually determine how far you go and how fast you get there
-learn from mistakes and successes otherwise decision making doesn’t improve over time
-judging decisions based on only outcome does not take into account skill or luck
-be open and transparent in decision making process. Keep track of thoughts at the time as our memories will waver
Part 5 – wanting what matters
-good decision making; knowing how to get what you want, knowing what’s worth wanting
-what truly matters in life: trust, love, health
Chapter 5.1 – dickens hidden lesson
-Charles Dickens most memorable character; Ebenezer Scrooge, who chased wealth at the expense of everything. He sees the future and gets a second chance and changes course
-our biological instinct pulls us towards hierarchy and leads us to money, status, power at all costs
-the key to a successful life is good company and meaningful relationships
-we think money, status and power makes us happy but it doesn’t. It leads to hedonic treadmill
-we value wealth and status more than happiness; the external more than the internal
-phronesis: wisdom of knowing how to order your life to achieve the best results. The ingredient that makes the difference between the unhappy masses and the happy few
-follow the advice you give to others
-keep defaults in check, create space for reason and reflection, knowing what matters and what to say no to
Chapter 5.2 – the happiness experts
-30 lessons for living: tried and true advice from the wisest Americans by Karl Pillemer. He researched the practical wisdom of older people
-biggest conclusion from older people; life is short.
-other lessons:
-say things now to people you care about; gratitude, forgiveness, getting information
-spend the maximum amount of time with your children
-savor daily pleasures instead of waiting for big ticket items to make you happy
-work in a job you love
-choose your mate carefully; don’t just rush in
-what wasn’t important:
-none said that to be happy you should work as hard as you can to get money
-none said it was important to be as wealthy as the people around you
-none said you should choose your career based on earnings potential
-none said they regretted not getting even with someone
-biggest regret? Worrying about things, particularly things that never happened
-happiness is a internal choice; it is a daily active decision to focus on optimism over pessimism, hope over despair
-Marcus Aurelius: when you are distressed by an external thing, it’s not the thing itself that troubles you, but only your judgment of it. And you can wipe this out at a moments notice
Chapter 5.3 – memento mori
-start with death in mind and live with that destination in mind. Everything unimportant goes away
-trying and failure leads to intensity shorty term and this goes away quickly
-failing to try is less intense but never goes away
-regret is up to 10 times worse than failing and trying
-everyday moments matter more than big prizes
Chapter 5.4 – life lessons from death
-wisdom is turning your future hindsight into your current foresight
-what seems to matter in the moment rarely matters in life, yet what matters in life always matters in the moment
-when we’re not going in the direction in which we want to end up, we end up regretting where we end up
-avoiding regret is a key component to life satisfaction
-wise people know what real wealth consists of, and they go after it, no matter what the crowd might think or say
-sometimes the cost of being wise is that other people treat you like a fool
-fools can’t see or understand what wise people do
-wise people value: work, health, family, friends, faith, community. They don’t fixate on one while excluding others; they harmonize them
Conclusion
-good judgment is expensive, but poor judgment will cost you a fortune
-good judgment can’t be taught, but it can be learned
Disclaimer
This is not Financial Advice. This article is meant only for educational and perhaps entertainment purposes.