906: Shane Parrish | Decoding Decisions Through Clear Thinking

21:58You should be pitching me on something else. Therefore, this is either really poorly thought out despite what you've tailored in the message or you've sent this using some sort of AI email bulk send to a zillion people, which means it's not tailored to me. You haven't even looked at any problem in my channel and therefore you're pitching me without any of that understanding my business. it's a delete and a no and a never in a zillion years either way. And I think a lot of people, especially younger folks shoot themselves in the foot doing things like this. You know, somebody comes in as an intern and they're like, I've got an idea.

22:31You should never have in-person meetings. Cool. I appreciate that you read Seth Godin's blog or something once, but we have in-person meetings, not because we don't know about zoom, but because there's different things going on here that you literally don't even seem to grasp. Therefore you can't have valued it. Therefore your input is worth nothing. It's actually just, you're just wasting my oxygen. Two comments on that. One, you can tell a lot about a person by the way they pitch you. We do this all the time for investing. The way that the deal is presented to us tells us it signals a lot about the type of partner that we might be entering into business with.

23:06If the terms are not fair and they're slanted, then that signals that we probably don't want to work with the person. If it's overly legal, it signals that we're going to have to rely on contracts to protect us, right? So you want a fair deal that's win-win, which is rare. And that pitch, you can often ascertain this in the pitch. The second thing there is like, I don't know, man, people read about ideas. Maybe it's like page one of Google. And what they miss is ideas exist within the context of an ecosystem. What works in one particular ecosystem doesn't necessarily mean it's going to work in another.

23:38I mean, if you put an elephant in Antarctica, it's not going to survive. You can get this idea and you can grasp it, but you're only grasping it at this like novice level. You have the illusion of knowledge and then you try to apply it. You email Jordan and you're like, here, I'm going to try to apply this idea to you, but I don't understand you. I don't understand your ecosystem. That's the pitch. I mean, you're signaling so much when you pitch that, right? Which is either, like you said, it's a template email that goes out to everybody. Often it's like insert podcaster's name here. You get those too.

24:11Yeah. And it's not tailored to you and it's not really serving you. And that is a signal. Like, why would I want to work with somebody who doesn't pay attention to the details, who doesn't customize their approach to me, who doesn't understand what I'm trying to do or why I'm trying to do it. 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.

24:40I would love to flesh this out because this is more relevant than ever, especially with all of 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 or 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. So this idea came to me two summers ago when I was traveling with my kids.

25:14We 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 too.

25:49And every picture that people took of him, he like made 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? Now 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.

26:34And 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 in 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.

27:04You're listening to The Jordan Harbinger Show with our guest Shane Parrish. We'll be right back. If you're wondering how I managed to book all these amazing authors, thinkers, and creators every single week, it is because of my network, the people around me that I know, like, and trust, and of course that know, like, and trust me in return. I'm teaching you how to build the same thing for yourself for free over at jordanharbinger.com slash course. This course is about improving your relationship building skills, developing strong relationships in non-cringy, down-to-earth ways, nothing awkward, nothing cheesy, just practical exercises that take a few minutes a day that will help you become a better connector, a better colleague, a better friend, a better peer, and many of the guests on the show subscribe and contribute to the course.

27:45So come join us. You'll be in smart company where you belong. You can find the course at jordanharbinger.com slash course. Now, back to Shane Parrish. I love the idea of teaching your kids what to look for because it is, I mean, it's super helpful whether or not they're going to use it for nefarious purposes or not, I guess is another question. But yeah, you could just remember that guy's face. And if you see him in the bar later, you could say something like, oh man, that's a really nice watch. Exactly. I was thinking about getting a Submariner, but I don't want to get something that's the same as everyone else.

28:17Do you have a recommendation? I'm not really much of a watch. And that guy will talk your ear off and probably pay for your whiskey. All night. If you just wind him up and let him go. All night. He'd love to talk about how he knows everything about watches and how much you like his watch. and I feel like I use that a lot for small talk. But yeah, if I were trying to get something from somebody, I mean, that's the first vector of attack, right? Well, the reason that I teach the kids this is like now imagine somebody's watching you. What are you signaling unintentionally to other people about what you value, what you want?

28:46And they're like, oh, that we really like the iPad, right? Like, you know, and it's, but it's getting them to think about like all these status symbols that people have. They're also, I mean, there's a different side to it, right? Again, we're being hierarchical, right? So going back to biology and sort of like our innate instincts, some people organize the world such that if I have a Rolex, I am better than you. And that's how they want to feel about the world. But the flip side of this is like, well, what am I doing? What am I signaling? And then it sort of takes you out of the status game a little bit, right?

29:18Because I don't want to get caught up in that. I don't want to be that person. A friend of mine has this great saying that I really love that stuck with me ever since he said it, which is the whale that surfaces gets harpooned. Okay. Is that like the tall poppy gets cut? Is that the same thing? Yeah, exactly. That's a weird new one. All whales have to surface. They have to breathe. So I don't know how much that holds up, but okay. But it's memorable, right? So it makes you think about sort of like coming up for air. If you come up for air, if you signal something, status, then you're going to risk getting harpooned.

29:50Yeah, the analogy falls apart for me. Well, the tall poppy one doesn't really work either because it's like, well, that's just biology. you grow, right? There's no choice involved in that. I suppose. You're just among a field of other poppies that are of equal height so that the idea is you try and stay as tall as the other poppies and they don't single you out. Whereas, I don't know, I'm overthinking the analogy. What else is new? Let's move on to the social default, the bandwagon effect, groupthink, right? Conforming to social pressure and other things that I would imagine we evolved this to survive with tribes in small groups where you don't want to have a bunch of dissenters that decide that their way is better.

30:27At least in the United States and probably also in Canada, we kind of value the outlier who's like, I'm not going to listen to the group. And okay, fine. But yeah, I know that it's easier to rationalize doing something when other people are doing something. We can outsource our evaluations and critical thinking to the group. However, there is a place where we need to go along with what everyone else is doing. So this one's a little more complex. It's not as black and white, maybe, as the ego or the not losing control of our emotions. Totally. So going back to social default, it's just a situation where the situation tends to think for you versus you thinking for yourself.

31:05If we didn't have that, we wouldn't exist today. Because as you pointed out, we wouldn't have survived sort of these tribes, the hunter-gatherer phase, where we're all helping each other. And we're sort of, if we all had these random ideas, we'd all go out for food, and only one of us would come back. We have to get along with the group and we do get along with the group for the most part. And that person at work who deviates is only valued if they positively deviate. They're not valued if they negatively deviate. So if you try something new, this is the asymmetry of sort of like the social aspect of this.

31:37If you try something new and you're successful and you improve performance, that's great. But if you try something new and you're not successful and performance decreases, while you're an idiot for trying it. And so the goal is to go back to knowledge, right? To be an expert and to know when, when you can create advantageous divergence, right? So when you can diverge from the crowd and be right, you're not rewarded for diverging. You have to be correct. Right. Most of the time, you probably want to stay with the tribe, but the expert, the master sort of knows when to deviate. You're right. Success requires sort of shamelessness.

32:13And if you do whatever, what everybody else does, you're going to get the same results everybody else gets in most cases anyway. And there's, there's all these sort of like douchey entrepreneur quotes, right? Like entrepreneurs spend a few, few years of your life. Like most people won't. So you can live the rest of your life. Like most people can't. You ever hear it's like belongs on a poster. No, I've never heard of that one. I think it's an EO thing. And it's just one of those self-congratulating quotes from entrepreneur groups. But it has a kernel of truth in it. for most people, our desire to fit in often overrides the desire of getting a better outcome.

32:45And that's one reason why people rarely try new ways of doing things. And I'm not saying this because like, oh, I left law and I didn't have a choice, right? I got laid off from law with everybody else. I wasn't getting another job in law. I wasn't good at it probably. I mean, it was too early in my career. So I kind of almost was forced to try new things. And I think that that was lucky. I didn't have sort of like this vision that this was the next big thing. I was just kind of like, uh, it's either that or become a police officer or something like that. Not if there's anything wrong with that, but it was just, you know, it was a different outcome to do something different.

33:19You need to do something different, like you said, but you also need to be right as I think was your earlier point, right? You can't just be like, I'm doing it this way. It's like, no, you cost the company more money. You're fired. But if you're like, I'm doing it this way, wow, that saved us$38 million. And our clients are thrilled. you're a managing director now, right? There's a big kind of smorgasbord of outcomes, but you have to get the right one. The upside is actually usually more limited to that. When you deviate and you're correct, like in that case, you save 38 million, they'd be like, here's your$5 ,000 bonus.

33:50Right. And so this also creates a reason to stay in the social. Right, lose your whole career or maybe get$5 ,000, but there's a 1 % chance of it. Yeah, no, not a good calculation. Why would I try to positively deviate if I can't capture some of the upside. You have to make almost like purposely bad decisions. And the fear of looking like an idiot probably causes a lot of us to never try something new. I was mercilessly ridiculed when I started this podcast in law school and people found out about it. The friends of mine were like, you are ruining your career because some employer is going to find this and be like, you're moonlighting or this is a topic we don't like.

34:27Because I was still doing, I was talking about dating and I was like, it was a podcast. I was just talking about whatever I want. Satellite radio, you can drop F-bombs if you want to. They almost kind of want you to do that. Satellite, man, be edgy. And they're like, you're going to get fired. And people would send me these emails either concerned for my career, or they'd be like, you're a tool and look at you. You should just focus on law. What a loser. You know, I got stuff like that. And then of course, you know, now they don't think that, but that's only because I ended up winning the game.

34:55So this goes to emotion, right? Fear. People don't want to do something different because they fear looking like an idiot. If you did all this and you were wrong and you had to go back and like beg for your job. Yeah. That prevents people from doing something different. But you're being prevented by a fear of looking like an idiot. And almost everybody who's extremely successful in the end looks like an idiot in the beginning. Yeah. The trick is how do you know which one it is, right? You don't. You almost have to be like immune to social pressure, which I can't say I was. Maybe I was because I was so already outside of the cool kids club that it didn't matter.

35:30It's like what happens when you fall from the rung eight to rung nine on a 10 rung ladder. Who cares, right? It's not like I'm at the top of the pyramid and everyone looks up to me and then suddenly I have this massive downfall. It's like, what's the difference between, you know, what's the difference? So think about this, right? Like if we're at work and I follow the procedure and I'm wrong and I follow the procedure and I know I'm gonna be wrong, it doesn't matter, you can't fire me. I've followed exactly what you told me to do. I effectively work at McDonald's because I'm exercising no judgment over what happens.

36:00but at the same time, you can't get me in trouble. So one powerful way to position yourself to exclude the social default or reduce its impact on you is you need to be financially independent. And so that way that you can think independently about the situation. I don't think there's anything wrong with working at McDonald's for the record. I don't know if that's what you meant to say. No, it wasn't a slight. It was just like, it's very procedural. The fries go down for like 90 seconds. You pull them up, you know, like it's just very mechanical. Oh yeah, yeah. Yeah. Okay. I'll give you that. The one problem I see Shane is that a lot of people are reluctant to change their minds in the face of new information so that people, I don't want to look like a flip-flopper.

36:40I get that. You want to change your mind in the face of new information. Yet I don't want to look like I do that for some reason, because we don't value that maybe as a society. Somebody recently asked me if I believe the COVID lab leak theory. I went on record as saying this, there's no evidence for this. There's no evidence that supports this. People who are saying that have no evidence. And I spoke to a lot of experts and they were like, it's not likely. I mean, this is like the former head of the CDC and a bunch of epidemiologists were like, no, there's no information. Now there's new information that gets me on the fence like 50-50.

37:10People in the no experts will agree with me on my evaluation of that evidence. However, a lot of other people will say like, ha, so you admit you were wrong. And I bet you think that other conspiracy theory is wrong. And it's annoying, right? Because it's important to change our minds when we get credible evidence and we change our beliefs based on that new evidence. But you have to also come to a belief because of that information in the first place, not because of political or ideological reasons, but because of scientific or evidence-based reasons. It's probably a different podcast. No, I mean, I think you're onto something, right?

37:42There's a lot of things that happen in COVID, right? One, we got a narrative. 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.

38:17So in this case, it's like there's new information. I changed 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 Bainesian probability. This is sort of like how we think. We think a baseline. You get new information that confirms or sort of refutes it and you adjust your probability accordingly. Very few things are ever 100%. You spies love Baines. What is it? Bainesian probability.

38:48You love that stuff, man. Every intelligence agent that I know is like, if you read about this, you got to read about this. You guys live for that stuff. Well, it's just about updating your thinking, right? Which is what we do. It's a fancy name around what we do all the time, right? You're driving a car, you update how hard you hit the brake based on how close you are to the other car. Right. You just naturally do this stuff. But we don't, when we get new evidence, we tell ourselves a story. A, where does that story come from that we're telling ourselves? So in some cases, it comes from excerpts.

39:14Some cases, we're reading a headline by a journalist who writes like 50 articles a year on 50 different topics? Like, are they likely to be an expert or not? I don't think so. But it sticks in our head. The headline sticks in our head. We have no basis for what we're thinking. We can't argue the other side of this better than somebody else. And in some cases, we actually get information from, you know, I'm going to quote unquote trusted sources. And sometimes that's actual information. And sometimes it's proven to be, you know, that they withheld information. And so the only way to deal with the life where all of this is happening is just to update your thinking accordingly.

39:49Here's the best thinking I have for today. I am open to changing my mind in light of new information coming in. And if you're not open to that, I don't even want to talk to you. Like, I mean, what's happening, right? If you don't change your mind when something comes in and sort of refutes what you're saying, then good luck. You mentioned in the book, you've got this CEO friend who said that people who have the ability to change their mind about what they know were the best people to hire. Yeah. You'd also have some of the worst people to hire. I'm curious what that is, because is it just the opposite of that?

40:21Like people who can't change their minds in the face of new information? Yeah, it's people who can't do that, because not only do they not do it, they're not quiet about it. And then they actively work towards not changing their mind and like convincing other people that they're right. And so it's like this poison that sort of like comes into the organization. I think that the way you phrased it was people obsessed with minute details that support their point of view, right? So they're grasping at straws because they want to be right about something. and they just derail everyone else. Yes, totally.

40:48Is that the being on the wrong side of right, confusing the best outcome with maybe the best, the outcome that makes you look correct or the one that paints you in the best light? Yeah, so the wrong side of right is when you get an idea and it's correct, it will work, but somebody else has a better idea and that idea is objectively better and you're so focused on proving yourself right that you just ignore a better solution to the problem. You're focused on satisfying your ego and all your cravings and all the dopamine that that gives you rather than the best outcome. And this is why those three words are so powerful, outcome over ego.

41:26Just reminding yourself of that mantra when you get into these situations, it's so powerful, even in these meetings, right? You can even, if you're running a meeting, one of the things you can do is like, let's focus on the best outcome, not anybody's ego. All of our egos are wrapped up in that outcome. We all want to get the best outcome. It doesn't matter whose solution it is. If you look at this from the outside, it seems almost easy to ask yourself like, oh, who does this in good faith? Who really thinks, oh, well, I'm wrong about this, but I got to look right? I was going to ask you who actually does this in good faith, but I think you're right.

42:00There's so many people out there that the narrative in their head is, if I'm not right, I'm worthless, or I'm a bad person, or I don't belong in the room with the rest of these people. And it's almost never the case, but it's gotta be just, I think for some people, it's a tough lesson to learn and internalize because their value, their entire sense of self-worth is wrapped up in being correct about things. 100%. This is how I happened on this idea. I was working at the intelligence agency. I'm a knowledge worker. I'm paid to come up with solutions to problems. If my solution is not correct, why am I in this room with all these other really smart, intelligent people?

42:35I need to contribute. my contribution, in some ways comes from the ideas that we have. And if my ideas aren't correct, well, then my whole sense of like who I am and my identity, again, going back to territorial, right? So we think of territorial as physical, where, you know, a wolf walks around and pees on the corners. But territory for us is also how we see ourselves, how we see our identity. If you infringe on that, I'm going to respond without reasoning. I'm not going to think clearly. I'm going to react like the animal that I am. When you get wrapped up with your ego and your identity and somebody says, here's a better solution, you're just like, no, that's not a better solution.

43:17Like here's this minute detail that supports my point and you just run with this. And then you start, again, going back to what we talked about first, now you're on a detour, right? You're eventually gonna fix this detour and the longer you go, the further you go, the more time it's gonna cost you, the more energy it's gonna cost you and the longer it's going to take you to get to your destination. I used to think that people were just bad at weighing different criteria, but now I think you're right. I think a lot of it is ego. I still see bad decision makers say things like, okay, well, and this is probably a bad example, but okay, this ticket's$1 ,000 cheaper, but it gets in four hours early.

43:56Maybe something will happen in that four hours that's worth that. And you're like, what is the probability of that? It's like zero. You're getting in at 7 a.m. instead of 11 a.m. like you still, it's fine. You just like tear your hair out thinking, why are you weighing this with the same, at the same level as the cost in the ticket? Or why are you weighing going to this city instead of that city when you haven't been to either one? And now you're Googling, what color is the sand on the beach? Is the sand whiter in Spain or Portugal? I don't know. It's just stupid. And, and, but I think a lot of it does come down to ego because they're like, well, clearly this place is the better choice, but I already told everyone I was going to this place.

44:33So I need to rationalize a reason and come up with evidence to bolster my case why I was right initially. And it's really hard to dig out of that. It's really hard. Yeah, it totally is, right? And we catch ourselves doing this lots. That's a great example of sort of how you can end up in this situation unintentionally. A good way out of this is just to, I mean, it sucks the first time, and then it becomes a lot easier. You send an email and be like, ah, you know what? I was wrong. I changed my mind. When's the last time you said I changed my mind? Like I changed my mind during this episode when I'm like, I'm probably not going to use that whale that surfaces analogy anymore because it sort of falls apart and you're right.

45:10So like I changed my mind about using that. Oh, good. I didn't like that. There's a better, there's got to be a better way to say this. Yeah. But when's the last time you consciously you're like, oh, I'm wrong. Let me change my mind about that. Yeah, it's tough, especially with a stranger. writing an email, it's like, oh, I don't want to, I don't want them to think they can persuade me. Why? Isn't that kind of their job? You're hiring this person as a consultant. I don't want them to know that they could possibly be effective in this position. They better not be right. They better not be right about anything else or I'm going to be super upset.

45:39I'm going to pay this person thousands of dollars. They better be wrong about everything from here on out. Well, it's interesting. I had a friend who's a consultant and he's like, it's the easiest money I ever had. I go in there, I find out what they want. And then I tell them to do that. Jeez. And I'm like, what? And he's like, well, you know, when I started in consulting, I would go in and tell them what I actually thought. And he's like, it was just like mortal combat. They'd never hire me back. So he's like, I found out what they want. I just give them that. And I get hired back all the time.

46:06So it's like this external validation of what people already want. Going back to ego, right? It's terrible. And I worked in a business and this should have been the writing on the wall, but it was more, there was a lot of writing on the wall. By the time I was done, we would hire consultants to fix certain problems. and when they gave us advice that one of the other partners didn't like, he would figure out a reason why they were a terrible fit, not a cultural fit, didn't understand our business and fire them and it would be like, we'd fire the lawyer and then we'd fire the tax accountant and then we'd fire the other consultant.

46:36I'm like, these guys were all pretty smart and they came to the same conclusion. Maybe my business partner's the guy with his head up, his keister and of course, he's still doing that. There's a lot of a lack of self-accountability, but also a lack of self-knowledge, which I'd love to talk about. Knowing what you know and don't know. Cognitive blind spots are crazy. We talk about these a lot on the show, but knowing where you have an edge, sticking to that. Every time I invest in a space that I don't really understand, I almost always regret it. Even if the investment turns out well, it's such a wild ride that I decided not to do that anymore.

47:12I really only invest in things that I truly understand. hand. And that's not surprisingly where I've had the most success. And then of course, index funds, which are, I don't need to understand them too deeply to know that they're safer. Right? Well, let's back this up a little bit here. So like, let's think about how we actually learn to become sort of like masters in a subject. And I have an idea about learning and I call it the learning loop. And if you picture a clock at the 12 hand, there's sort of an experience. At the three hand, you have a reflection. At the six hand, you have a compression or abstraction.

47:43and at the nine hand, you have an action. That action leads to experience. You can have multiple different types of experience. Like this conversation is an experience. I can read a book. That's an experience. I can do something and I can live that experience. And that experience gives me information. It gives me gigabytes of data. And I reflect on that experience. And my reflection is like, how does my brain compress this? How do I keep the essential information and get rid of all the other stuff? Because I can't store all this information in my head. So I want to take what matters from this experience and then I want to compress it.

48:17And I compress it into sort of an abstraction. Outcome over ego is a great example of sort of a compression. Now, if I tell you outcome over ego, I'm giving you the compression. You haven't done the reflection. And so you don't have the same sort of knowledge around that statement that I have. And it carries different meanings for us. You might still be able to use it. But Tim Urban has this thing and he told me about it, which was the chef and the line cook. And I sort of think about it a bit differently, like the chef and me at home. And if I follow the chef's recipe and everything works out, it tastes amazing.

48:54It tastes just like it does in the restaurant. If I follow the chef's recipe and it doesn't work out, well, I mean, he or she could show up at my house, taste it and instantly know what's wrong. Too high of heat, not enough salt. You stirred it the wrong way. You didn't bake it long enough. They instantly know because they know all the ways that it can go wrong. That's real knowledge. And so self-knowledge is how do we figure out where we have an edge and where we can play that game? And if we don't have an edge, going back to social, best practices are a great way to develop our edge before we find one.

49:28You want positive deviation. If you don't know when you're positively deviating, then you shouldn't deviate. it.

49:37This is the Jordan Harbinger show with our guest Shane Parrish. We'll be right back. If you like this show, I invite you to do what other smart and considerate listeners do, which is take a moment and support our amazing sponsors. All the deals, discounts, and ways to support the show are on the website at jordanharbinger.com slash deals. You can also search for any sponsor using the AI chatbot on the website as well. Or you can even, if you're super lazy, you can email me, jordan at jordanharbinger.com. I'll dig up the code for you. I might shame you a little, but I'll still do it for you. Thank you for supporting those who support the show.

50:07Now for the rest of my conversation with Shane Parrish. I think the problem with gaining this level of self-knowledge is that it requires patience and a lot of work. If you don't know your weaknesses, somebody else, if they can figure out your weaknesses, they're just going to use them to exploit you. And I know that sounds a little confrontational, but I see this a lot of times with podcast marketing. I won't get too deep in the weeds here, but people will pitch me something and I'm like, well, what about this? and they'll go, oh, well, we're still working on that. And other people will buy this and they'll be like, oh, this, I don't know if this worked because of X, Y, Z.

50:39And I'm like, well, the problem is you can't, there's no retention metric. And they'll go, oh, I didn't even think about that. Cause I'm going step by step by step by step. And I'm like, there's a gap here in the data. Are you just assuming that that's going to be a hundred percent? And they're like, well, we assume it's probably around 50%. And I'm like, I think it's probably more like 5%. And if it's at 5%, the ROI is not even close. if it's at 50%, it's barely there. This has to be close to 100 % to actually be better than just running ads on Facebook or whatever, for example. And they'll go, oh, well, I mean, you know, I guess your calculations are different than ours.

51:13And I'm like, surprise, surprise, you assume your product's going to be 100 % effective. And I assume it's going to be 5 % effective. Even if we meet in the middle, I'm still losing money and I'm giving it to you. No, thanks. There's so much of that in any business. So a couple of thoughts there. 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.

51:43We 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 gonna 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 gonna get the opportunities that you don't get.

52:30Why am I going to go all in with somebody who's not all in on what they're doing? You know, why am I gonna 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 gonna recognize my potential? When is the world gonna 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?

53:06I think young people are actually kind of better at this. And I don't know why. I think maybe because they have less to lose or maybe there's even less ego because they're young and it's okay to look like you don't know what you're doing. Warren Buffett, in your book, you write that he never wants to make a decision unless he knows the other side's argument even better than they do. I think that's an amazing decision making standard. It's very high because then you've got to be able to argue both sides really well. You can decide on the one that has the strongest arguments versus the side that you simply understand better or that you have more information about at that particular time.

53:40That has to be quite a strong rule for him because it's a very high standard. I do this with my kids all the time, right? They'll come to me and they'll be like, you know, my brother did this, blah, blah, blah, blah. And he thinks this. And I'm like, okay, now take the other side of it. Now argue from your brother's point of view. What's he going to tell me? And it just really opens your eyes to different perspectives. Because if you think of decision-making, the source of all of our problems is blind spots. We're blind to something. If we had perfect information, we'd always make perfect decisions.

54:08How do we get out of that? Well, one way that we can remove blind spots is to see things through a different perspective. Part of the right to have an opinion is you can see the other perspective just as good, if not better than somebody else. Yes, you can just sort of hypothetically argue for the other person. That's a good one with the kids. But I think when it comes to business or investing, to pitch yourself something really strongly and then to also argue against that, you really have to know every little nook and cranny in there. Right. But that shows you the depth of knowledge you need to have to have an edge.

54:40You can't do that and everything. So like you drop a lot of your opinion. I don't have time for this. I can't focus on that. I need to become an expert in this particular thing. I need to go all in in this particular path because that's going to give me that knowledge where I know what I know and where the edge of my knowledge is and how do I use that information. And you can't do that with like a million subjects, but we all think we're experts on everything. We're experts on politics. I can fix the homeless crisis. Like we think we know these things, but like get in the arena and try them out.

55:11And you're going to find out that like, you don't know them as well as you think you do. And you can't have an opinion on like, well-reasoned opinion on hundreds of different things. Like it just doesn't make sense. Many of us have been taught that solving problems, that's how we add value, right? Oh, I got hired here to solve problems. I'm a problem solver. It's part of our identity. And people are really quick to jump into an assessment of the problem and then throw as many resources as they can muster at solving that problem. And people with different ideas of what the problem actually is, we don't even want to hear it, right?

55:42They're pushed away by social pressure. Hey, we've already decided what the problem is. We don't want you to drag us backwards and try and reassess. Everyone's moving forward in the other direction. So we're taught to solve problems, I guess, even in school, but we're rarely taught to define the problem in the first place. And of course, knowing which direction you're going to row is just as important as learning how to row. 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 haywire, but setting yourself up in the right position so that your strategy negates that.

56:19And 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.

56:56One 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 page. What do you see in the situation that nobody else sees?

57:26How 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. You can often wait 24 to 72 hours with very little impact to things. When you come back the next day, what happens is two things. One, you have a clear view of what the problem is.

57:57Everybody is basically on the same page. You also allow other people to contribute. And the other people who contribute are the people in the meeting who might not be extroverts, who might not want to signal something or might have a really different view. And they're worried about how they're going to be perceived. Or they're worried about going against somebody in the meeting or having a different perspective. but what might happen if you encourage it right and you create the right environment is they're gonna email you, here's what I think, like I'm gonna contribute to this but I'm gonna do it outside of the meeting.

58:24Well, now I've got a lot of valuable different perspectives in terms of what the problem is. I'm gonna have a much clearer sense of the problem that actually needs to be solved. So again, all that energy is gonna go towards solving the right problem instead of these detours that we normally do. This is why we're so stressed, right? This is why we're so busy at work. If you actually look at what people are doing, they're spending the vast majority of their time correcting mistakes that they've made, solving the wrong problems, not really solving the problem, miscommunications around things. Like this is part of the reason that we feel so busy about things.

58:56And we think that like miscommunication is a great example. We think, oh, we'll just communicate more. It's not communicating more. It's communicating effectively and getting rid of, you know, paragraphs to say something that a sentence should say. And this is why the ownership comes in and the accountability of the person who makes the decision has to own it. When I worked at the intelligence agency, one of the things I was trying to do right before I left is like, I want the person's name who designed this form on this form. Because we're getting asked to fill in the same information like 16 times.

59:28I want to know who's responsible for this. And I knew I never had to solve the problem. If I could get them to put a name on it or a group on it, it would solve itself because everybody would be so embarrassed at the state of things. They would just correct it. That's funny. Accountability by just forcing it like, hey, if you don't like this form or you have a question, call Shane Parrish. Here's his extension. And people go, oh, God, you know, how can I make this? Someone goes, why do I have to fill my name out 16 times? It should be a dropdown. I should just be able to it should be saved on my whatever.

59:57And it's like, OK, I'm coding that now because I've taken 12 angry phone calls from people and they're all right. Yeah. Well, this is a form of safeguard. Right. And so one of the if you want the person who's responsible for the decision to take it seriously, they have to have their name on it. And by putting their name on it, they're going to take that process more seriously. They're going to search for better inputs. They're going to try to look at things from different perspectives. And they're going to try to solve the real problem because they're putting their name and their reputation and sort of their ego on the actual problem.

1:00:26And it probably leads to some innovation because you're going to get a go-getter kid who gets assigned something and he's going to go, I'm putting my name on this. I bet I could code something in the CMS that makes this really easy. And then everybody goes, oh, can you do that for me? And then suddenly, instead of paper forms that go into an outbox and an inbox, You've got an online intranet based system that when you're logged in, it populates all the information and people are like, oh my God, they do this in one minute, 60, you know, I do this in 60 seconds instead of 60 minutes. This is amazing.

1:00:53And you end up with an efficiency boost because of that accountability safeguard. Right. 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. You said 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. I can't remember the last time I was dealing with three options. My brain just wants two options only. If I have three options, I'm immediately discarding one based on almost arbitrary criteria because I don't, my brain can't juggle.

1:01:34Why is that? Why do we want these sort of like binary choices, this false duality between two things. And if you look at it, if you, yeah, you look at corporate presentations, man, I've sat through thousands of these things at this point. And there's always like, we're at a fork in the road. We have to take one of two paths. Like one path is sort of like status quo. And then one path is like the solution that I came up with. And it's like, well, those, like, what the heck, this whole thing is like oriented towards like inertia around going down that path. It's like, are we actually thinking here?

1:02:06No. Cause if you were thinking and you were an expert, you could probably come up with a lot of things that you could do, including not actually going down that path fully. What's the next step that's going to give us more information to allow us to evaluate different options? And if you think in terms of optionality or position, to come back to common vocabulary that we've talked about today, you think about what's the next step? What puts us in the position to handle multiple futures? Because we don't know how the world's going to change. Can we just take this little baby step? Why do we have to decide on this big project that's going to take four years, what's the next step in that project that we can take?

1:02:41Or what are the different options of things that we could do? Because every time you do something, you're not doing something else. There's an opportunity cost to all of this stuff too. And we never think of that. It's your alternatives that matter, right? If you're ignoring the opportunity cost, to your point, with your analogy with the fork, there's a reasonable alternative where you turn back down the road and you never actually get to the fork. One-way door or two-way doors, right? Like, can I go through this and backtrack? In which case, like, why are we having this meeting? Just go and run with it.

1:03:09Because we want to build up judgment in an organization. We want to trust people. And the only way to do that is to give them opportunities to exercise judgment and then have them walk through that judgment with you. So if you go through a two-way door, you can come back, right? So the cost of that decision is really low. You want to go through that door as quickly as possible. You want people to exercise judgment and take that step. And if it's a one-way door where you go through and you can't come back, well, can I just open a little crack and see what's on the other side before I go through that door?

1:03:37But we don't ever think in terms of like inching our position forward or what the next beachhead is. We think of in terms of like, here's the destination, you are going here. And it's like, well, maybe I'd get halfway there and I don't want to go there anymore. And so you have to be open again, coming back to what we talked about earlier, changing your mind, right? Outcome over ego. Are we going towards the best So come. Annie Duke helped me with this. I had a real hard decision. I don't even know, like a year ago, episode 757 before the show, I was like, Hey, what about this and this and this?

1:04:06And it really kind of stacked up evenly on each side in my, at that point in time. And she goes, well, which decision has more optionality? And I said, what do you mean? She's like, which one could you more easily undo? And that part was relatively clear. I was like, Oh, if I have to undo the decision, well then it would be this one. And she's like, then definitely you take that one because it sounds like there's a lot of unknowns and variables and ambiguity with this, that, and the other thing. Choose the place with more optionality, the one that gives you more optionality. And that was absolutely the right choice.

1:04:36Another practical you give is imagine one option is off the table. Take me through that. I think that's a really good way to shake up a decision. Yeah. So like going back to that hypothetical sort of presentation where it's like we can choose path A or status quo. Well, what if we can't choose path A? Now what? Is it just status quo or is there something else we can do? You can sort of force a couple of things here. One, you can force yourself to recognize what matters most to you. I think we talk about sticky notes in sort of the book where you compare sticky notes and like you can only hold one at a time.

1:05:08So the winning sticky note will always just be one. And it doesn't mean that only one thing matters, but it means like you're going to help identify what's most important to you. The other thing is like, again, go back to this false duality. It's like here are two choices. It's like, okay, well, let's just imagine we can't do choice A, what the world looks like now and what happens. And let's imagine we can't do choice B and what the world looks like. And then you often come up with, hey, there's this little baby step or there's this other path that we didn't quite see. Because if both of these options are off the table, we still have to do something and we'd approach the problem completely differently.

1:05:41And that information helps inform either, oh, no, these paths are correct or man, we're really missing something and we need to go gather some information around this. In that same vein, you also talk, you have this mental exercise about making criteria battle. Yeah. Can you tell us how to do this? I love this. That was sort of the sticky note idea, right? Oh, I see. That's the sticky note thing. Yeah. You have these two competing criteria, but what matters? And often, you know, you're trying to pick the most important thing and you're trying to optimize for that thing. And that's not to say that there is one most important thing, but I've been in so many meetings where everybody's like, no, there's 10 most important things.

1:06:15And it's like, come on guys, like that's BS, right? Like, And the reason we don't want to pick one most important thing, going back again to sort of like ego, we don't want to be wrong because if we pick one thing, we might be wrong. So we're going to like couch this and abstract it into 10. So no matter what, at the end of this, I can be like, yeah, I knew that was important. But it's like, no, you didn't think that was as important as it should have been. And so the way to battle this out is like write down each criteria on a sticky note and then sort of like hold up one and then compete with the other one and then put down the loser and pick up the next one.

1:06:49And at the end of it, you're left with one thing and you can sort of like force rank through this. And that'll give you an idea of like what really matters. And if we have to make decisions at the end of the day based on one criteria, we know what that criteria is. More importantly, your team, if you're the decision maker and you're not there, your team will know what's most important to you. They'll know what the most important criteria is because you've told them. And that empowers them to exercise judgment and to go fast. How do we know when we have gathered enough information to make a decision?

1:07:20That I think a lot of people get caught in this analysis paralysis where I sort of touched on this in the middle of the show. Oh, should I go to this place or this place? And now they're Googling the color of the sand or how hot the beaches are and do you need flip-flops or whatever. You really get stuck in the minutiae and you can't make a decision. How do I know, all right, I've got, I'm 90 % of the way there, stop researching, make the decision. In the book, we talk about ASAP or ALAP. And you make the decision as soon as possible if it's a two-way door or as late as possible if it's a one-way door.

1:07:50And obviously everything's on a spectrum, but how do you know it's as late as possible? This is the question everybody has. And it's stop, flop, or no. You stop gathering useful information. Flop is the first lost opportunity, your boat to lose an opportunity. You've waited as long as possible, but there's a clock on it. The offer is expiring, the investment round is closing, whatever it is, or you know, you know what to do. And you don't have to make a decision before any of those three things. And so you can wait. And when you're waiting, you have optionality. This goes back to sort of what you were talking about earlier.

1:08:23You can change your mind, you can passively gather new information, but you're not forcing yourself to decide. And it's not really a conscious thing running through your head. You're sort of like looking for information, but you're not out seeking it. And so it's not one of these threads that you have running in your head. And when we're gathering information on things, the problem is most of us don't make a lot of decisions we should make as soon as possible, as soon as possible. When you think of like, you can quantify it in terms of time, you can quantify it in terms of money. It doesn't really matter.

1:08:51Let's say hypothetically, you're making a decision, it's under a hundred bucks. You want to make that decision under 10 minutes. That's as soon as possible. And you can set a 10 minute timer and be like, I'm going to make this decision in 10 minutes. I'm going to do all my research for 10 minutes and then I'm going to make the best decision possible. That's an easy decision to sort of undo a low cost decision. The cost of being wrong in that decision isn't high. When the cost of being wrong is high, you want to wait as late as possible in terms of have more processor and structure around that decision.

1:09:19So as late as possible is a great one, right? You stop gathering useful information. The first lost opportunity, it's going to go away or you know what to do. One of the signs that you've gathered enough information is like you just find yourself sort of like playing the song on loop in your head over and over. You're just arguing the same points. Another is that you can argue the other side. This is something we talked about earlier, the work required to have an opinion. You can argue the other side as well as other people. And gathering more information in that point isn't really going to help you further understand things.

1:09:52And then sort of the other one is you find yourself wanting to learn more, but you keep coming across the same information. So you've stopped gathering anything that's useful. Yeah, you're in this sort of loop reviewing the same argument or information over and over. And I find myself doing this quite, or I used to. Now I make decisions faster. I'm only 43. It took me 43 years to get here. But I finally realized, oh, I don't need to go into like Reddit threads from 12 years ago to find the one consideration that I haven't come across reading every single review of this product. maybe just buy the thing.

1:10:23And then you can return it if you don't like it. So you're just, the whole thing's been a waste of time because it's a two-way door with old Amazon Prime taking the lead here. I really find all of these decision-making habits, they all kind of hit close to home. If you really look at your past behavior, one thing that you'd said in the book that I'm so guilty of, confidence increases faster than accuracy. When we're trying to make a decision, we sort of secretly make a decision in our heads, or at least I have, and then we gain confidence from additional information that supports that conclusion, which then feeds our confirmation bias and tells us that we're right.

1:10:57And then when another piece of information comes and contradicts that, we're like, well, I don't know if that really, I'm not going to weigh that as heavily because it sort of goes against the thing. And you need this, you need so much information at that point to decide that you're wrong, that it's almost pointless even doing the research because you need a waterfall of information against the choice that you've already picked. And I do this all the time, right? I find myself coming to a conclusion and researching, but then silently arguing for the side that I picked. And it's very hard to break that habit.

1:11:26Yeah, it's just confidence, right? You're only because you'll discount all the information. I think Charlie Munger said, like, once a sperm gets in an egg, it sort of closes itself off. And ideas are much like that in our head. Once we get an idea, and we sort of feel like we know what to do. It's almost impossible to change that no matter what we come across. Oh, this website, like nobody reads this website. Like you find something that just totally contradicts you and you would find a way, the smarter you are, the better you would discount that way and ignore it. So this is why cognitive biases are really good at explaining why we made mistakes, but really bad at preventing us from making mistakes in the future.

1:12:03You can't have a checklist of cognitive biases where you can't go through and be like, oh, am I overconfident? Nope, not overconfident, check. It doesn't work that way because the smarter you are, the better the story you're going to tell yourself about all the research you did, why you're not overconfident, how you weighed the evidence. But often it doesn't work that way. Shane, thank you very much. I know you've got to go pick up the kiddos. I really appreciate you coming on, man. Next time we got to do it in person, even though I know we said that for the last 10 years, but one day it'll happen.

1:12:31I would love that. Thanks, Jordan. You got it, man. We've got a preview trailer of our interview with poker star Annie Duke on how we can learn to make better decisions by thinking in bets instead of trying so hard to be certain all the time. The quality of your life is determined by the sum of two things, the quality of your decisions and luck. When something bad happens to us, we act as if skill wasn't involved at all. We just sort of pawn it off to the luck element. But when good things happen, we sort of ignore the luck element and we say that it was because of our great skill. A self-driving Uber just hit and killed a pedestrian.

1:13:09But what I thought was really interesting was that the reaction was to suspend the testing and just to take the cars off the road, not just the Uber cars, but other self-driving vehicles. And what I didn't see were any comparisons to how self-driving vehicles did per thousand miles traveled versus the technology that we already have on the road, which is cars that are driven by humans. We know that 6 ,000 pedestrians die per year by regular driven cars. Let's say that you're on the side of the road and you've got a flat tire. And of course, what everybody's thinking in that moment is, I have the worst life ever.

1:13:49Like, why do these things always happen to me? I'm so unlucky. I'm so miserable. What's really interesting to me about it is like, you could have gotten a promotion, like the biggest promotion of your life three days before. And you're not standing on the side of the road going, my life's great because I just got the biggest promotion I could ever imagine. So imagine that you had this flat tire a year ago. And now I'm asking you today, a year later, how much do you think that that flat tire would have affected your overall happiness over the year? For more with Annie Duke, including some common mistakes we make when evaluating decisions, check out episode 40 here on the Jordan Harbinger Show.

1:14:31Again, 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. Now, 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?

1:14:59Other 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, so I wanted to clear that up with him and then throw this in the show close.

1:15:31More on decision-making with Annie Duke. That was episode 757. Actually, we did a couple episodes with her. The most recent was 757. Again, in Shane's book, lots of practicals about clearer thinking and decision-making. We'll link to the book in the show notes. And when you shop using our links, it does help out the show just a little bit. Again, all things Shane Parrish in the show notes over at jordanharbinger.com. Transcripts in the show notes as well. advertisers, deals, discounts, and ways to support the show all at jordanharbinger.com slash deals. Please consider supporting those who support the show.

1:15:59Also our newsletter every week, the team and I dig into an older episode of the show. We dissect lessons from it and I do giveaways on there. I haven't started yet, but I'm going to start giving away a lot of the stuff that I get from sponsors because right now I end up using it or I end up giving it to friends, but there's so much cool stuff that I've got. I want to give it to you. So if you sign up for the newsletter, you're going to be able to do that. JordanHarbinger.com slash news is where you can find it. And hey, if you want a recap of highlights and takeaways, or you just want to know what to listen to next, the newsletter is a great place to do just that.

1:16:29Don't forget about six minute networking as well. Also at JordanHarbinger.com slash course. I'm at Jordan Harbinger on Twitter and Instagram. You can also connect with me on LinkedIn. This show is created in association with Podcast One. My team is Jen Harbinger, Jace Sanderson, Robert Fogarty, Milio Campo, Ian Baird, and Gabriel Mizrahi. Remember, we rise by lifting others. The fee for this show is you share it with friends when you find something useful or interesting. The greatest compliment you can give us is to share the show with those you care about. And you can share it with people you don't care about.

1:16:56Let's be honest. I don't care who you share it with as long as the audience grows. That's the name of the game here. If you know somebody who's interested in decision making and clear thinking, then definitely share this episode with them. And if somebody shared this episode with you, I'm sure it's because they care about you. Ignore the last thing I said. In the meantime, time. I hope you apply what you hear on the show so you can live what you learn. And we'll see you next time.