906: Shane Parrish | Decoding Decisions Through Clear Thinking
Shane Parrish, Farnam Street's expert on clear thinking and decision-making, discusses the power of ordinary moments, the importance of positioning for multiple futures, and the value of positive deviation. They also explore the significance of considering different perspectives in decision-making, thinking in bets, and the impact of our decisions on our lives.
Episode metadata
- Episode title: 906: Shane Parrish | Decoding Decisions Through Clear Thinking
- Show: The Jordan Harbinger Show
- Owner / Host: Jordan Harbinger
- Episode link: open in Snipd
- Episode publish date: 2023-10-05
Show notes
Learn how to optimize decision-making, gain competitive advantage, and live more intentionally through clear thinking with Farnam Street's Shane Parrish.What We Discuss with Shane Parrish:
- Clear thinking equips you to identify transformative moments and adjust your response in the critical space between stimulus and reaction.
- Despite seeing ourselves as life's main characters, many of us operate on autopilot, guided by ingrained behavioral defaults shaped by biology, evolution, and culture.
- In our lowest moments, we react without thought, often missing the chance to engage in reasoning. Conversely, at our best, we identify these moments and employ our full capacity for reasoning.
- Your options are defined by your position in ordinary moments. - A good position offers abundant and improved choices, while a bad one confines and diminishes options over time.
- Learn how you can optimize decision-making, gain competitive advantage, and live a more intentional life through clear thinking.
Episode AI notes
- Clear thinking equips individuals to identify transformative moments and adjust their response between stimulus and reaction.
- Emotional states such as anger, loneliness, and sadness can hinder good decision-making.
- Everyone has an ego that drives them forward.
- A person who wants the world to see them as great shows the world how to manipulate that person.
- Politicians often make mistakes and get manipulated by others because they project their ego and someone tells them what they want to hear.
- Knowing what someone values and how they want to be seen allows for effective manipulation.
- The speaker emphasizes the importance of focusing on the outcome rather than being right.
- Dropping one's ego can help make better decisions and filter information effectively.
- Being open to new information and adjusting one's probability is crucial.
- Treating a job as a career leads to more opportunities.
- Investing in yourself is necessary to be recognized for your potential.
- Clear thinking requires positioning oneself to negate potential problems.
- The person responsible for making the decision should own the problem statement.
- Hold a separate meeting to identify and understand the problem before jumping into solutions.
- Give decisions time to marinate before making them.
- Problem solvers often have the tendency to narrow down the options to just two, thinking they have simplified the problem, when in fact they haven't.
- Writing down thoughts before making decisions prevents self-deception.
- Timing is significant in decision making; some decisions should be made as soon as possible, while others should be made as late as possible.
- Delaying decisions reduces optionality and diminishes opportunities.
- Understanding when it is 'as late as possible' to make a decision is important.
Quick Takeaways
- Clear thinking allows us to adjust our responses in the critical space between stimulus and reaction.
- Understanding the significance of ordinary moments helps us make better choices and achieve desired outcomes.
- Positioning ourselves to make independent decisions helps break free from social defaults and societal expectations.
- Changing our viewpoint based on new information and prioritizing outcome over ego leads to more informed choices.
Deep Dives
Recognizing and Overcoming Instinctual Reactions
Humans have the unique ability to pause and reflect before responding to stimuli, unlike animals. By harnessing this ability, individuals can make better decisions and avoid instinct-driven reactions. Recognizing our emotional, ego-driven, social, and inertia defaults can help us navigate situations more effectively.
Ordinary Moments and the Power to Undo Big Decisions
Ordinary moments, such as daily routines and interactions, often have the power to undo big decisions and impact our lives. Understanding the significance of these moments can help us make better choices and achieve our desired outcomes. By recognizing the decisions we make during these ordinary moments, we can avoid pitfalls and work towards long-term success.
Positioning and Avoiding the Social Default
Social pressure can influence our decision-making process, leading to conformity and groupthink. However, positioning ourselves to make independent decisions can help us break free from the social default. By focusing on the best outcome rather than ego-driven motivations, we can break away from societal expectations and make decisions that align with our personal goals.
Updating Thinking and the Importance of Changing our Minds
The ability to change our minds in light of new information is crucial for effective decision-making. Changing our viewpoint based on credible evidence and adjusting our beliefs accordingly allows us to make more informed choices. Embracing the idea of outcome over ego can help us prioritize the best outcome and avoid being anchored to a particular idea or belief.
The Value of Defining the Problem and Gathering Diverse Perspectives
Often, decision-making processes focus on solving problems without thoroughly defining them. Taking the time to accurately identify and define the problem is essential for effective decision-making. It allows for gathering diverse perspectives and prevents the misallocation of resources. Implementing safeguards in decision-making meetings, such as assigning accountability for problem statements and creating a firewall between meetings, helps ensure that the right problem is addressed and that all influential viewpoints are considered before making a decision.
Recognizing Decision-Making Biases and Knowing When to Stop Gathering Information
Understanding common decision-making biases like overconfidence and confirmation bias can improve our ability to make sound judgments. Overconfidence often leads to disregarding contradictory information, while confirmation bias reinforces our initial beliefs. It is crucial to be aware of these biases and actively counteract them by seeking opposing perspectives and critically evaluating new information. Knowing when to stop gathering information is equally important.
When we find ourselves in a loop, rehashing the same arguments or encountering redundant information, it is a sign that we have enough data to make a decision and should proceed accordingly.
Snips
[10:41] The Instincts and Defaults That Influence Our Decision-Making
🎧 Play snip - 1min️ (10:41 - 11:54)
✨ Summary
Humans share instinctual behaviors with animals, but we have the ability to pause between a stimulus and response. This sets us apart. In certain situations, we react without thinking, which leads to poor decision-making. There are four defaults: we are emotional, meaning we make bad decisions when we're angry, lonely, or sad; and we all have egos, which drive us forward.
📚 Transcript
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Speaker 1
So let's back up a little bit. So we're animals. And what do we share in common with all animals? Well, we're instinctual, right? So animals have a biological instinct to be territorial, to be self preserving, to be hierarchical. And we share these instincts with everybody else. The difference between humans and other animals is we can put in a pause between a stimulus and a response. Animals can't do that. They're not thinking sort of beings like we are. And so I categorize this broadly speaking, and I'm thinking about what situations cause us not to think and just to react. And those situations put us in a worse position, because it's like that detour we're talking about. And I came up with the four defaults. So we're emotional. Alcoholics Anonymous talks about halt, which is hungry, angry, lonely, tired. We don't make good decisions when any of that's true. For humans, it's we're all like that. When we're angry, we don't make good decisions. When we're lonely, we don't make good decisions. When we're sad, we don't make good decisions. And so when emotion takes control of us, we're not making good decisions. And then there's ego. We're all egotistical. You can say you have no ego, but everybody has an ego. And ego is what propels us forward.
[22:51] The Manipulative Power of Ego and Signals
🎧 Play snip - 3min️ (22:51 - 25:29)
✨ Summary
People who want to be seen as great often show the world how to manipulate them. This insight came to the author while observing a man in a fancy hotel who flaunted his Rolex. By understanding what someone values and how they want to be seen, others can easily manipulate them. This applies to politicians and anyone who signals their values, such as displaying a prestigious education on social media. It's a lesson in human nature and being aware of how we may unknowingly invite manipulation.
📚 Transcript
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Speaker 2
In the ego chapter, you said something really insightful, which I would love to deconstruct a little you say, and I'm paraphrasing here, a person who wants the world to see him as great Shows the world how to manipulate that person. It's profound. And you kind of, it was just like that one line sort of throw away whatever in the book. I would love to flesh this out because this is more relevant than ever, especially with all these politicians we see making speaking of unforced errors, right? Making all kinds of mistakes and getting in trouble for things. And you're just thinking, how did you not expect this outcome? And the answer almost always is they got manipulated by somebody else because they wear their ego, where they broadcast their ego. And somebody was just like, Oh, I can have this guy do whatever I want by telling him what he wants to hear. All right. I'll just do that.
Speaker 1
So this idea came to me two summers ago when I was traveling with my kids, we were sitting in a lobby of a fancy hotel. And I was like, Oh, this is a great opportunity to sort of teach the kids about human nature. And so we look around and everything in fancy places just tends to be amplified. It's a little easier to pick out than day to day living. And so we're looking around and we're like, well, what do people value? And like, how do we know what they value? And we found this guy, and I'm telling a different story than the one in the book, but we called him the same name. So that the story, one of the stories in the book is Mr. Rolex, but we called this guy Mr. Rolex to you. And every picture that people took of him, he like, it sure his watch was showing. He would roll up his sleeve, he would posture it. He was always like the right angle. And so I asked the kids and I was like, what can we learn about somebody like that? Not probabilistically, like we know nothing about this guy, right? So I want to be clear, we're just thinking in terms of probabilities. We're not trying to like pretend that we intimately know this person. Well, we know that he values status. And his status is wrapped up in his watch. He wants to be seen as powerful as successful. And if you know that about somebody and you know how they want to be seen, now you can approach them in a way that engenders them to you if you were manipulating them. Yeah. And this is how the world sort of works. If you have a LinkedIn profile or a Twitter bio and you know, it says Harvard MBA in it, I know you value going to Harvard. You're signaling something you're not intending to, but you are signaling something. I have an end to talk to you now. And I know what you value, you value the fact that you went to Harvard. And there's nothing inherently right or wrong with that. But you're showing people how to manipulate you.
[38:37] Outcome over ego: Letting go of narratives and focusing on the best outcome
🎧 Play snip - 1min️ (38:37 - 39:36)
✨ Summary
Amidst the struggle of holding onto a narrative, I remind myself daily to prioritize the outcome over my ego. By focusing on the best possible outcome and putting my ego aside, I can make better decisions and filter information objectively. New information can change my perspective, and I don't let others' opinions affect me. Adjusting my Bayesian probability based on new information is crucial. Nothing is ever certain, so flexibility is key.
📚 Transcript
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Speaker 1
It was really hard to let go of that narrative once we got that narrative, even in light of new information. And the three words that I remind myself with, and I repeat over and over all the time, every day, are outcome over ego. Am I focused on the outcome or am I focused on being right? And it helps me drop my ego and reduce its impact on my decision making, reduce its impact on filtering information. I just want the best outcome. I want my ego and my feelings wrapped up in getting the best outcome. The best outcome is the most right outcome. So in this case, it's like, there's new information I change my mind. I don't care what you say about me. Why am I giving you power over me? I don't know you. You don't know me. Why do I even give a shit what you're saying to me? It doesn't matter. What I'm focused on is there's new information coming in. I'm going to adjust Baynesian probability. This is sort of like how we think we think of baseline. You get new information that confirms or sort of refutes it and you adjust your probability accordingly. Very few things are ever 100%.
[54:42] The Importance of Patience and Dedication in Achieving Success
🎧 Play snip - 2min️ (54:42 - 56:21)
✨ Summary
Lack of patience changes the outcome; we want to get rich quick, but success requires long-term dedication. Similarly, at work, if you treat it like just a job instead of a career, you'll miss out on opportunities. Instead of waiting for recognition, take the initiative and invest in yourself. People won't take a chance on you if you're not fully committed.
📚 Transcript
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Speaker 1
One of those other little statements that I carry around with myself is a lack of patience changes the outcome. And so when you know how to get something and you try to speed it up beyond what's natural, like we all know how to sort of get financial independence. We have to save more money than we spend. We diligently put that into like an index fund and we wait like 50 years. And if you do that, you're going to have a great retirement nest egg. You're not going to have to worry about anything. But we don't want that. We want to get rich quick. We want to go to the weekend seminar and learn how to make millions of dollars because we think that's the fast track. I think we get caught up in that. We also get caught up in that at work, right? And the other thing that sort of came to mind with what you were saying is think of at work and the opportunities that we get. If you're treating your job, like it's a job and I'm your boss and somebody else is treating their job, like it's a career and they're all in and you're sort of a nine to five mentality. They're going to get the opportunities that you don't get. Why am I going to go all in with somebody who's not all in on what they're doing? You know, why am I going to invest or take a chance on somebody? And this is what we do. We sort of like collectively a lot of people walk around and they're like, when is the world going to recognize my potential? When is the world going to give me what I deserve? And then you end up in a bar drinking and you're like, man, if only people saw how good I was, well, you got to go positive and go first. Peter Kaufman told me that you have to get off your butt. You have to like go out there and invest. Why are people going to take a chance on you if you're not all in with them?
[01:01:04] Strategies for Clear Thinking and Problem-Solving in Meetings
🎧 Play snip - 2min️ (59:18 - 01:01:02)
✨ Summary
To avoid solving the wrong problem at work, two safeguards can be implemented: 1) The person making the decision should take ownership of defining the problem statement, while considering input from others. 2) Create a firewall by having a separate meeting to identify the problem, allowing for different perspectives and gathering relevant information. Taking time before making a decision is important, as most decisions don't need to be made immediately.
📚 Transcript
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Speaker 1
So remember, at the beginning, we talked about clear thinking and one of the key elements to clear thinking is positioning and not just being forced to recognize in the moment that something's Going, hey, why are but setting yourself up in the right position so that your strategy negates that. And so what tends to happen at work, if you work with smart people, you get into a meeting room, you book a one hour meeting, you make a decision and you solve a problem, and then you choose A course of action. So you call the meeting, you kind of vaguely know what the problem is. You come into the room, somebody says something that sounds reasonably correct about what the problem is, and then everybody jumps into solution mode, everybody jumps into, oh, here's How to solve that problem. And then all of a sudden you have this inertia that takes over and you've solved the wrong problem. So there's a couple safeguards that you can put in place around this to prevent that from happening. One is the person who makes the decision owns the problem statement. So whoever's actually responsible for making the decision has to have accountability for defining what the problem is. They can take input from everybody else, but they're the person that has to own the problem. And the second way you can create a safeguard around this is to create a firewall between these two meetings. So if you were going to have an hour meeting, you can have a 30-minute meeting one day, and that meeting can just be focused on let's identify what the problem is. Let's get on the same bit. What do you see in the situation that nobody else sees? How can I gather as much relevant information as many different perspectives into this as I can so that we can get at the root problem instead of just solving the first problem that comes Up? Then you give it a little bit of time, right? You take a night. Most decisions don't need to be made the same day. I mean, I used to work in operations like very few of those decisions that you need to make on the spot in the moment.
[01:04:13] The danger of oversimplifying problems
🎧 Play snip - 24sec️ (01:04:13 - 01:04:37)
✨ Summary
In problem-solving, novices often make the mistake of narrowing down the options to just two choices. This oversimplification can lead to blind decisions. It's important to thoroughly evaluate the problem before making a decision.
📚 Transcript
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Speaker 2
I'd love to talk more about deciding what the problem is and evaluating the problem. And you really spoke to me with this one part of the book. He said, problem solving novice is usually try to narrow things down to two options. They feel they've boiled the problem down to its essence when they have not. And of course, it's just easier cognitively to decide between two things. And this is a dangerous oversimplification that creates blind spots.
[01:17:47] How to Make a Decision
🎧 Play snip - 1min️ (01:17:47 - 01:18:42)
✨ Summary
In the book, it's compared to playing Tetris - if you're good, you can use any piece, but if you're bad, you need the right piece at the right time. Your position depends on thinking clearly. Writing down your decisions helps you see your thinking clearly. Some decisions should be made as soon as possible, while others should be made as late as possible to avoid losing opportunities. The first lost opportunity is called the flop, and that's when it's time to decide. Otherwise, your options narrow and your opportunities dwindle.
📚 Transcript
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Speaker 2
Again, it's all about being in the proper position. He had a good analogy in the book with the game Tetris. If you're good at playing Tetris, you can use any piece that comes your way. But if you're bad at Tetris, you always need just the right piece at the right time to avoid getting screwed. I'm paraphrasing here, but your position, of course, depends on thinking clearly. And that is the show that we created for you here today. And I hope it was helpful. There's a lot more practical stuff in the book, such as writing down the way you make a decision. When you write your thoughts down beforehand, you can't lie to yourself, right? Other people can see your thinking. Also, we mentioned the flop. Some decisions you make as soon as possible, right? The other ones, when you make them as late as possible, late is decided by the time you start losing opportunities. So the flop is the first lost opportunity. That is when it is time to decide. Otherwise, your options start narrowing. You lose optionality, in other words, and your opportunities dwindle in a way that might not be advantageous for you. So that's how you decide when it's as late as possible. I'm not sure that was clear in the show.