There’s plenty of factors at play in real life that most people don’t factor into their decisions.
And because they don’t, they screw up.
Here are some of the top dangers to look out for.
1. What We Can’t Predict Because We Don’t Know
I got this from Nassim Taleb’s book The Black Swan.
This applies to so many things. Examples include national security, protecting your life, and predicting or preparing for ways your business could go bankrupt.
The basic idea is that we want to be aware of the black swan. A black swan illustrates something we can’t predict.
You might have prepared for all these possibilities to protect your business from going bankrupt and something you and the rest of the world didn’t factor in comes in to destroy your business.
Maybe it’s a black hole, maybe it’s an alien invasion, maybe it’s a new start-up competitor that comes in with a new angle you didn’t see before.
On September 11th, 2001, to the people working in the World Trade Center, it was a plane crashing into their building from terrorists.
You can prepare for this by acknowledging it and leaving a large margin of safety to fall back on. This idea was given to me by Charlie Munger and Warren Buffett.
Here’s the basic idea: Let’s say your goal is to get to Las Vegas safely by motorcycle. Your margin of safety could be a giant ball of bubble wrap around you to protect you even in the case of a freak accident like a plane crashing down on you.
In business, Buffett and Munger use this by investing in companies that are such no-brainers that even in the worse case situation, they still make more money back. Some of the railroad and insurance businesses they’ve bought are so resilient that even a zombie apocalypse would have a tough time putting them out of business. That’s what you want.
2. What You Don’t Know You Don’t Know
This was mentioned in an interview with Elon Musk. It got me wondering of how to fix this.
You know what you know because someone taught you: math, physics, or how to ride a bike.
You know what you don’t know: I don’t know how electricity works but it helps me.
But what about what you don’t know that you don’t know? How could you possibly fix this?
This is something like: a man doesn’t know that a parasite is affecting his behavior and that’s why he’s shy. He therefore can’t fix it. Or a guy can’t get a date because he doesn’t know he’s coming off creepy. So he can’t fix it. Or there are more high-level examples like the team piloting an interplanetary rocket ship doesn’t know that rainbow matter is affecting its trajectory and can’t account for it because rainbow matter hasn’t been discovered yet.
For now, I don’t know of a complete fix. There really isn’t one except for working on discovering what we don’t know we don’t know with science and experimentation over time.
A partial fix is to surround yourself with smart people who know things you don’t know in the area you want to improve in.
You may not know that a certain verbal tic is throwing you off in the dating world. But someone else does.
You may not even know to be careful of something in business like unethical people or a lack of cash flow, but an experienced business mentor knows through his or her own experience.
3. What Should Be There But Isn’t
Rather than look for what is there that’s new, look for what’s already there but missing.
I learned about this in Robert Greene’s book Mastery. He took it from Sherlock Holmes who noticed a dog wasn’t barking when it should have been and inferred that the culprit must have been a long-time friend of the dog.
Look for what is missing rather than what’s there.
For example, look for what pain or problem is missing in the marketplace to create a product for your business rather than looking for what’s already there and copying others.
Look for what should be typically happening in your workplace or life that eerily isn’t. Maybe that’s a red flag that something’s wrong.
Charlie Munger has a practice of “inversion” that you can use to take this to a whole other level. You can use this in practically everything.
Invert your question or problem.
How can I get a date? can turn into What won’t get me a date?
How do I get fit? becomes What won’t make me fit?
How do I become successful, social, independent, and wealthy? becomes What will I do that won’t make me these things?
It really helps you find every angle to the problem.
This can be used for very specific things like How can I write an email to get this man I admire to respond? becomes What will definitely make him not respond?
It’s not a complete fix but it will help solidy points you might have forgot to factor in.
4. Find the simplest solution, but not simpler.
“Everything Should Be Made as Simple as Possible, But Not Simpler.” -Anonymous
We don’t know who came up with this quote. It could have been Albert Einstein. It may have been someone else.
But I do know that the billionaire Charlie Munger uses it often. He tells the story of how the U.S. was competing with the Soviet Union to be the first to the moon.
The U.S. wanted to have a pen that they could write on in space. They spent thousands of dollars and hours creating this technologically advanced pen that would push out ink in zero-gravity.
The Soviet Union simply used a pencil. They saved a ton of time and money.
Another great example of this is when scientists tried to prove that we revolved around the Sun. It seems obvious now but during those times, things were a lot different.
There was a ton of debate, fighting, and religious bias. High level politics came into the picture too since many high-powered religious leaders believed every star and planet revolved around us. There was quite a bit of ego at the time, as you can imagine.
Scientists on both sides used extremely complicated math and astronomy to answer the question.
Over a long time, it became increasingly clear that the “Earth revolves around the Sun” theory had much simpler math to explain everything. The “Sun revolves around the Earth” theory got increasingly more complicated as additional math and exceptions had to be added to the equation to account for everything.
Ask yourself the question, is there anything you or your team is doing in your life that is needlessly complicated and hard?
Are you doing it simply because everyone else is? Is there an easier or simpler way to the same goal?
I think one big reason for this madness is due to the nature of human’s to think we’re so intelligent. Many assume that the answer simply cannot be that simple. They go on to needlessly add more complexity to a problem.
This applies to everything from dating advice to business systems to productivity.
However, some things ARE complicated. But that brings us back to the quote: “Everything Should Be Made as Simple as Possible, But Not Simpler.”
Find the truth. Don’t oversimplify. Don’t over-complicate.
There are moments when immediate judgments, also known as “thin slicing,” is accurate. Research has shown that instant decisions are fairly reliable when it comes to judging certain personality traits and the viability of a male mate.
But it’s our natural instinct to applies this instant judgement on all areas in life, and that doesn’t always work because first-order decisions lead to second-order consequences. Eating whatever tastes best will destroy us in the long run.
For further reading, I recommend any book by Nassim Taleb, especially Fooled by Randomness.
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