Clear Thinking, by Shane Parrish

Shane Parrish is the author of Farnam Street, a website focused on decision-making and lifelong learning. Clear Thinking is a book on how to make better decisions.

Creating the Space to Think

Many times, we make bad decisions not because we don’t know how to reason, but because we don’t realize we’re in a situation that needs thinking and reasoning. We jump directly from stimulus to response. The first step for making better decisions, then, is learning how to pause and create the space to think clearly.

Mastery over the ordinary moments that make the future easier or harder is not only possible, it’s the critical ingredient to success and achieving your long-term goals.

But there are obstacles. Our defaults—the way we act if we don’t make the effort to pause and think—get in the way. We respond to feelings rather than reasoning and facts, effectively multiplying our efforts by zero. Or we react badly to anything that threatens our sense of self-worth or our position in the group hierarchy. Other times “the social default encourages us to outsource our thoughts, beliefs, and outcomes to others. When everyone else is doing something, it’s easy to rationalize doing it too. No need to stand out, take responsibility for outcomes, or think for yourself.” And not less dangerous, we fall prey to inertia, which prevents us from doing something different, resisting change, and preferring ideas, processes, and environments that are familiar to us.

Strengths and Weaknesses

Counteracting the enemies of clear thinking requires more than willpower. You need to know your strengths and weaknesses and take responsibility for your abilities, inabilities, and actions. Also, you need to decide to be responsible for your actions no matter the situation.

People who lack self-accountability tend to run on autopilot. This is the exact opposite of commanding your own life. These people constantly succumb to external pressure: seeking rewards, avoiding punishments, and measuring themselves against other people’s scoreboards. They’re followers, not leaders. They don’t take responsibility for their mistakes. Instead, they always try to blame other people, circumstances, or bad luck—nothing’s ever their fault.

Well, I have news for you. It’s all your fault.

(…)

There is always something you can do in the moment today to better your position tomorrow. You might not be able to solve the problem, but your next action will make the situation better or worse. There is always an action you can control, however tiny, that helps you achieve progress.

Cognitive blind spots are things that you don’t know and you don’t know. As Charlie Munger says, “when you play games where other people have the aptitude and you don’t, you’re going to lose. You have to figure out where you have an edge and stick to it.”

Building self-control will help you master your fears, desires, and emotions by creating a space for wisdom instead of just following instincts. Self-control is about disciplined consistency over emotional intensity, and creating a space for wisdom instead of blindly following your instincts.

“Show me your models and I’ll show you your future.” Choosing the right exemplars and imitating them in certain ways helps you raise the bar. It’s like having your personal board of directors. They don’t have to be perfect in every aspect, but they should have a skill, attitude, or disposition you want to cultivate yourself.

What Problem Are You Trying to Solve?

When making decisions, defining the problem you are trying to solve is crucial. Otherwise, you may end up solving an irrelevant or non-existing problem. This may seem obvious, but often we take symptoms for problems or don’t dig deep enough to understand what’s really happening in a situation.

The first attempt to define an underlying issue, however, is rarely the most accurate. Mental models will help you explore the best solutions. For example, don’t just imagine the ideal future outcome. Imagine the things that could go wrong and how you’ll overcome these obstacles.

For making good decisions, high-fidelity information—information that’s close to the truth and unfiltered by other people’s biases and interests—is essential. You need to evaluate the motivations and incentives of our sources. Also, remember that everyone sees things from a limited perspective and that everyone has blind spots.

However, information is not enough. You need to understand the why and how behind the data points. What are the variables you should use to make the decision? How are the variables related? What do you know about this project that other people don’t? What would be your process for deciding?

Getting experts on your side can make a huge difference. Just take the time to de learn how to distinguish between real experts and imitators.

Execution

Once you’ve decided on a course of action, you must act. However, sometimes we are afraid to act because of the consequences, or because we are afraid of being wrong.

It helps to consider the consequentiality and reversibility of the decision. Consequential decisions affect the things that matter most. Reversible decisions can be undone by a later course of action. Decisions that can be easily undone should be taken as soon as possible. If the cost of undoing the decision is high, however, then make it as late as possible.

You should also consider a margin of safety. The margin of safety is often sufficient when it can absorb double the worst-case scenario. So the baseline for a margin of safety is one that could withstand twice the amount of problems that would cause a crisis, or maintain twice the amount of resources needed to rebuild after a crisis.

Learning From Your Decisions

When you evaluate a decision, focus on the process you used to make the decision and not the outcome. Keeping your decision-making process as visible and open to scrutiny as possible helps. Also, keep a record of your thoughts at the time you make the decision. Don’t rely on your memory after the fact.

Your ego works to distort your memories and convinces you of narratives that make you feel smarter or more knowledgeable than you are. No one, we think, could make better decisions than the ones we’ve made ourselves. The only way to see clearly what you were thinking at the time you made the decision is to keep a record of your thoughts at the time you were making the decision.

Good decision-making comes from knowing how to get what you want—effective decisions—, and knowing what’s worth wanting—good decisions. Take responsibility for where you are and where you are headed.

Clear Thinking is a great book about making the space to think and make better decisions. Highly recommended.

PS: Quotes are from the book unless otherwise noted.