What Doesn't Change

This blog is dedicated to creators of any kind, that look for new ways of thinking. Decision making is really hard these days. Things are changing quickly. But there are multidisciplinary fundamentals, which don't change.- Mental Models. Discover new perspectives through my sketches and well curated resources.

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Association Bias

Associations serve us a function of mental shortcut to become an efficient decision maker. However often conditioned by non-causal relationships. So we fail. This sketch was possible thanks to Drew Strojny and his well-written article about association and conditioning: http://drewstrojny.com/avoid-association-bias-business/ “ As humans, we like to associate because our memory uses association to function. This mental shortcut helps us operate more efficiently, but it can be influenced by conditioning. Conditioning comes in two flavors: classical and operant. Classical conditioning is repeated simultaneous exposure to potent stimuli (like food) and neutral stimuli (like a ringing bell). The two previously unconnected stimuli quickly become linked in the associative memory and elicit an automatic physiological response. Think Pavlov’s dog. Operant conditioning is controlled through rewards and punishments. Think teaching a mouse to navigate a maze using food rewards. Because associate memory is weaved tightly into how you think, it has a strong influence over your decision making. If you don’t train yourself to acknowledge association bias and conditioning, it could cause you to make bad decisions.“ In the article, he writes about how associations gave us confidence to make hard decisions even direct causality for success is unknown in hiring, releasing new products and Investing. I hope you enjoy reading about the mental models that don’t change with time. If you find this material interesting, share it with relevant people from your circles. Thank you for your time!

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Narrative Fallacy

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“Stories help us make sense of the world. However, if we’re not aware of the narrative fallacy it can lead us to believe we understand the world more than we really do.” Original Source: https://fs.blog/2016/04/narrative-fallacy/

A post shared by What Doesn't Change (@whatdoesntchange) on Jan 26, 2020 at 9:07am PST

This seems obvious, but how many times are we tricked by our reverse engineering and backward reasoning? Consistent effort and curiosity are required to understand the true cause and effect. “The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding.”—Nassim Nicholas Taleb, The Black Swan “These types of stories strike a deep chord: They give us deep, affecting reasons on which to hang our understanding of reality. They help us make sense of our own lives. And, most importantly, they frequently cause us to believe we can predict the future. The problem is, most of them are a sham.” - Shane Parrish, Farnam Street Blog

“Figure out what you know and what’s a guess, and become humble about your understanding of the past.“ - Shane Parrish

Resources used to create the sketch:

https://fs.blog/2016/04/narrative-fallacy/

https://wiki.lesswrong.com/wiki/Narrative_fallacy

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The Curse Of Knowledge

You should be aware of this bias every time you teach someone new knowledge. Or communicate ideas. Because we often overestimate how much people understand us.

“Lots of research in economics and psychology shows that when we know something, it becomes hard for us to imagine not knowing it.”

Matt Linderman - https://signalvnoise.com/posts/213-the-curse-of-knowledge “Anyone who wants to lift the curse of knowledge must first appreciate what a devilish curse it is. Like a drunk who is too impaired to realize that he is too impaired to drive, we do not notice the curse because the curse prevents us from noticing it.“

Great article from Janet Choi on customer.io. Including 5 practical tips how to combat this bias https://customer.io/blog/curse-of-knowledge.html

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Survivorship Bias

“Survivorship bias refers to our tendency to focus on the winners in a particular area and try to learn from them (winners) while completely forgetting about the losers who are employing the same strategy.” - James Clear https://jamesclear.com/common-mental-errors The Misconception: You should focus on the successful if you wish to become successful. The Truth: When failure becomes invisible, the difference between failure and success may also become invisible. “...  photographer Mike Johnston explains on his blog that the artwork that leaps from memory when someone mentions a decade like the 1920s or a movement like Baroque is usually made up of things that do not suck. Your sense of a past era tends to be informed by paintings and literature and drama that are not crap, even though at any given moment pop culture is filled with more crap than masterpieces. Why? It isn’t because people were better artists back in the day. It is because the good stuff survives, and the bad stuff is forgotten. So over time, you end up with skewed ideas of past eras.“ “Survivorship bias also flash-freezes your brain into a state of ignorance from which you believe success is more common than it truly is and therefore you leap to the conclusion that it also must be easier to obtain.“ - https://youarenotsosmart.com/2013/05/23/survivorship-bias/ Resources mentioned above will provide you enough of examples that will remind you situations and thoughts that might have a seed of Survivorship bias. I highly recommend the extensive article by YouAreNotSoSmart mentioned above.

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Path Dependence

"Many real world phenomena are path dependent meaning how we got to the present strongly conditions the future possibilities. Even though previous choices were made on chance or limited information with better options now being available, it is still easier to simply continue upon a pre-existing sub-optimal path than to create an entirely new one. In a very broad sense, it means that history matters. Path dependence is particularly acute in complex systems because of their high degree of interconnectivity and more importantly interdependency. Breaking out of the path will require either a greatly more efficient technology coming along or a very effective organization for people to cooperate on changing to better available solutions. It would take widespread cooperation for us to globally standardize the electrical plug or train track gauges, and this is an example of how the sociopolitical domain influences the development of the technical domain.”

Explanations above were handpicked from ComplexityLabs.io article: http://complexitylabs.io/path-dependence Their courses on systems thinking, game theory, critical thinking are free and seem like a good resource to dive deep.

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Good Design - 4 Principles

In Donald Norman’s classic book The Design of Everyday Things, he describes principles of good design. The book was written in 1988, with few revisions later (latest in 2013). Standards of how we approach interfaces are changing with technological advancements, but these core ideas vividly apply to modern product design as designers practice it today. In fact, the more complex products get, the more important it is to stick to core principles.

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Small wins

“People are generally willing to take a chance on something if it only feels like a small stretch.

That’s how a group of bored students (playing a game called Bigger or Better) transformed a toothpick into a TV, and remarkably quicker than if they’d worked their seven-dollar-per-hour college-town jobs and saved up for one.”

“Researchers call this the psychology of “small wins.” Gamblers, on the other hand, would call it a “parlay,” which the dictionary defines as “a cumulative series of bets in which winnings accruing from each transaction are used as a stake for a further bet.”

“Business research shows that this kind of ladder switching generally tends to accelerate a company’s growth. Companies that pivot—that is, switch business models or products—while on the upswing tend to perform much better than those that stay on a single course.“

Nontraditional ladder hacking is essential for rapid success. There is a whole book about this topic written by journalist and entrepreneur Shane Snow - Smartcuts: The Breakthrough Power of Lateral Thinking

http://a.co/6yzvyMDhttp://a.co/6yzvyMD

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A.I.D.A. Model

“The AIDA marketing model is a marketing, advertising and sales approach methodology designed to provide insight into the customer's mind and represent the steps needed to cultivate leads and generate sales.

The AIDA model was introduced by businessman Elias St. Elmo Lewis in the late 19th century. As an acronym, AIDA breaks down into the steps required for successful marketing: Attention, Interest, Desire (or, in some variations, Decision) and Action. The AIDA marketing model is a cornerstone of modern marketing, to the extent that missing one step is thought to almost guarantee an unsuccessful result.”

Source: https://whatis.techtarget.com/definition/AIDA-marketing-model

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One-way doors vs. Two-way doors Decisions

Most decisions we face can teach us things only after we step through one of its doors.

Amazon’s letter to shareholders explained the concept how large organizations can preserve experimental nature of product development.

“One common pitfall for large organizations — one that hurts speed and inventiveness — is “one-size-fits-all” decision making.

Some decisions are consequential and irreversible or nearly irreversible — one-way doors — and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that — they are changeable, reversible — they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups.

As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.1 We’ll have to figure out how to fight that tendency.”

Nice summary from Danny Wen:  https://medium.com/@dannywen/on-decision-making-3e045c09b173

Shareholders letter from Amazon: https://www.sec.gov/Archives/edgar/data/1018724/000119312516530910/d168744dex991.htm

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Jobs To Be Done framework

“Consumers usually don’t go about their shopping by conforming to particular segments. Rather, they take life as it comes. And when faced with a job that needs doing, they essentially ‘hire’ a product to do that job.”

Popularized by Harvard Business School professor Clayton Christensen. This framework was used decades to drive innovation and product development.

https://hbswk.hbs.edu/item/clay-christensens-milkshake-marketing

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Emotional Intelligence

“Goleman states, “For leaders, the first task in management has nothing to do with leading others; step one poses the challenge of knowing and managing oneself.”

This is accomplished by analyzing a person’s emotional intelligence. Emotional intelligence is comprised of self-awareness, self-regulation, internal motivation, empathy, and social skills. Self-awareness is the ability to recognize and understand personal moods and emotions, and how they affect others.”

http://myframeworks.org/emotional-intelligence-experts/daniel-goleman/

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Power Law

Most of the people interested in the improvement of productivity heard about Pareto or 80/20 principle. Where 20% of actions yield 80% of results. Easy to understand, harder to apply. Usually, we think through the lens of Bell-shaped curve model of the system. However, applying the lens of the Power-law curve makes much more sense in order to progress faster. The example above illustrates these 2 different perspectives how to approach a specific problem. Some more thoughts: “Your return on ads is linear. You spend $500 and you get $1000. That’s the bell curve. Linear.“ “Margin is the difference between the intrinsic value of an asset and how the market values it.” “Because most companies treat all their users the same, most of us aren’t used to getting truly exceptional service, so when we do, we tend to tell our friends about it.“ “It’s easy to see how spending $250 on ads can return the money; it’s much harder to see how hosting dinners pays off.“ Thoughts are basically summary of this great piece written by Taylor Pearson: https://taylorpearson.me/luck/

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Flow state

Flow state is one of the most desired state of mind, when we feel completely lost in the activity, time flies and actions are effortless. Many resources conclude that it is one of the main contributors to peak performance (Check Steven Kotler and his book Rise of the Superman).

“In positive psychology, flow, also known colloquially as being in the zone, is the mental state of operation in which a person performing an activity is fully immersed in a feeling of energized focus, full involvement, and enjoyment in the process of the activity. In essence, flow is characterized by complete absorption in what one does, and a resulting loss in one's sense of space and time.” https://en.wikipedia.org/wiki/Flow_(psychology)

Ultimate resource to understand its fundamentals is a book by Mihaly Csikszentmihalyi who named this psychological concept https://books.google.com/books/about/Flow.html?id=QVjPsd1UukEC

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Availability Heuristic (Bias)

People tend to heavily weigh their judgments toward more recent information, making new opinions biased toward that latest news.

“There are two biases emanating from the availability heuristic (a.k.a. the availability bias): Ease of recall and retrievability.”

Ease of recall suggests that if something is more easily recalled in memory it must occur with a higher probability.

Retrievability suggests that we are biased in assessments of frequency in part because of our memory structure limitations and our search mechanisms. It's the way we remember that matters.”

Because of the availability bias, our perceptions of risk may be in error and we might worry about the wrong risks. This can have disastrous impacts.

Example:

“Careful analysis of deaths in the ocean near San Diego shows that on average, the death of each swimmer killed by a shark saves the lives of ten others. Every time a swimmer is killed, the number of deaths by drowning goes down for a few years and then returns to the normal level. The effect occurs because reports of death by shark attack are remembered more vividly than reports of drownings.”

For more information, please refer to Farnam Street blog: https://www.fs.blog/2011/08/mental-model-availability-bias/

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SYSTEMS THINKING - ICEBERG

“Systems thinking is a way of approaching problems that asks how various elements within a system — which could be an ecosystem, an organization, or something more dispersed such as a supply chain — influence one another. Rather than reacting to individual problems that arise, a systems thinker will ask about relationships to other activities within the system, look for patterns over time, and seek root causes.”  Wonder how to apply this type of thinking in daily life? Take a look at example shared here - Iceberg Model applied to an instance of catching a cold. https://www.nwei.org/iceberg/ Another usage example in context of Leadership and Business: https://www.youtube.com/watch?v=K8xNCySfwC0

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Self-Determination Theory

Ever wondered which criteria are required to be satisfied at work? “Self-Determination is a theory of human motivation developed by psychologists Edward Deci and Richard Ryan. Motivation, in this context, is what moves us to act. The theory looks at the inherent, positive human tendency to move towards growth, and outlines three core needs which facilitate that growth. Those needs are Autonomy, Competence, and Relatedness. Competence – The need to experience our behaviors as effectively enacted (to feel like we’ve done a good job). Autonomy – The need to experience behavior as voluntary and “…reflectively self-endorsed”(to feel like we have control over what we do). Relatedness – The need to “…interact, be connected to, and experience caring for others” (to have meaningful relationships and interactions with other people). Here’s why these needs are so critical: SDT outlines two types of motivation, intrinsic and extrinsic. The three needs promote intrinsic motivation. This type of motivation initiates “behavior for its own sake”, because it’s inherently satisfying or engaging. That innate human tendency to move towards growth mentioned earlier is, essentially, intrinsic motivation.“

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Multicomponent Profit

Company can offer the same exact product at vastly different prices because it appeals to an individuals unique, situational needs. Consumers will often buy a product largely due to belief of it’s usefulness in general. Therefore they are willing to pay much more in a setting then they would for that exact same product in another. For more information: https://artofprofitability.wordpress.com/2014/02/16/model-3-multi-component-profit-model/ or book Art of Profitability - Adrian Slywotzky