From Shane Parrish’s book “Clear Thinking”
Here are the key takeaways from Explore Possible Solutions:
- “Once you’re clear on the problem, it’s time to think of possible solutions—ways of overcoming the obstacles to get what you want. The way to come up with possible solutions is by imagining different possible futures—different ways the world could turn out. One of the most common errors at this stage of the decision-making process is avoiding the brutal realities.” (p. 135)
Problems Don’t Disappear by Themselves
- “We all face difficult problems. The defaults narrow our perspective. They narrow our view of the world and tempt us to see things as we wish them to be, not as they are. Only by dealing with reality—the often-brutal truth of how the world really works—can we secure the outcomes we want.”
- “The worst thing we can do with a difficult problem is resort to magical thinking—putting our heads in the sand and hoping the problem will disappear on its own or that a solution will present itself to us.”
- “The future is not like the weather. It doesn’t just happen to us. We shape our future with the choices we make in the present, just as our present situation was shaped by choices we made in the past.” (p. 136)
People are bad problem anticipators.
- “Luckily, there’s a way to convert the hindsight of tomorrow into the foresight of today. It’s a thought experiment that psychologists call premortem. The concept isn’t new, it originates in Stoic philosophy. Seneca used premeditatio malorum (“the premeditation of evils”) to prepare for the inevitable ups and downs of life. The point isn’t to worry about problems; it’s to fortify and prepare for them.
- “The hardest setbacks to deal with are the ones we’re not prepared for and don’t expect. That’s why you need to anticipate them before they happen and act now in order to avoid them.
- “Many people think they’re bad problem solvers when in fact they’re bad problem anticipators. Most of us don’t want to think about more problems; we have enough already. We think that before bad things happen, we’ll get a warning, we’ll have time to prepare, we’ll be ready. But the world doesn’t work that way.
- “Bad things happen to good people all the time. We get laid off without warning. We get into a car accident. Our boss comes into our office and lays into us. A pandemic spreads throughout the world. No warnings. No time to prepare.” (p. 137)
- “Performing a premortem might not save you from every disaster, but you’ll be surprised by how many it can save you from. Here’s how it works.”
Run a Premortem
- Ask yourself, “What could go wrong?”
“Imagining what could go wrong doesn’t make you pessimistic. It makes you prepared. If you haven’t thought about the things that could go wrong, you will be at the mercy of circumstances. Fear, anger, panic—when emotion consumes you, reason leaves you. You just react.” - “The antidote is this principle: The Bad Outcome Principle: Don’t just imagine the ideal future outcome. Imagine the things that could go wrong and how you’ll overcome them if they do.“
- “If you’ve got a presentation to the board next week, imagine all the ways it could go wrong: What if technology fails? What if they can’t find the presentation? What if the audience isn’t engaged?Leave nothing out of consideration. Nothing should surprise you. As Seneca said, “We need to envisage every possibility and . . . strengthen the spirit to deal with the things which may conceivably come about.”(p. 138)
- “The bottom line: people who think about what’s likely to go wrong and determine the actions they can take are more likely to succeed when things don’t go according to plan.” (p. 138)
The Second-Level Thinking Principle: Ask yourself, “And then what?”
- “When you solve a problem, you make a change in the world. That change can be either in line with your long-term objectives or not. For example, if you’re hungry and you eat a chocolate bar, you’ve solved the immediate hunger problem, but that solution has consequences: the inevitable sugar crash an hour or two later. If your longer-term goal is to be productive that afternoon, the chocolate bar is not the best solution to your immediate problem.” (p. 139)
- “First-level thinking looks to solve the immediate problem without regard to any future problems a solution might produce. Second-level thinking looks at the problem from beginning to end. It looks past the immediate solution and asks, “And then what?”[*] The chocolate bar doesn’t seem so tempting when you answer this question.”
- “You can’t solve a problem optimally unless you consider not just whether it meets your short-term objectives but whether it meets your long-term objectives as well. A failure to think of second-order consequences leads us unknowingly to make bad decisions. You can’t ensure the future is easier if you only think about solving the current problem and don’t give due consideration to the problems created in the process.” (p. 140)
Beware of binary thinking.
- “Just because you’ve thought of a couple solutions, though, doesn’t mean you’ve eliminated your blind spots. Binary thinking is when you consider only two options to a problem. When you first look at the choice, it seems simple: We launch the product or we don’t. We take the new job or we don’t. We get married or we don’t. It’s black and white: “do” or “do not.” There isn’t any middle ground.” (p. 145)
- The 3+ Principle: “Force yourself to explore at least three possible solutions to a problem. If you find yourself considering only two options, force yourself to find at least one more.” (p. 146)
- Safeguard: “Imagine that one of the options is off the table. Take each of the options you’re considering, and one at a time, ask yourself, “What would I do if that were not possible?” (p. 146)
- Safeguard: “Come up with Both-And options. Try to find ways of combining the binary. Think not in terms of choosing either X or Y, but rather having both X and Y.” (p. 148)
- “It can be challenging to think this way, yet it’s almost always possible. One area where we tend to be pretty good at integrative thinking is vacation planning. We ask everyone involved what they want to do, and then try to find a place that has it all. This is why resorts or cruises offer a long list of activities: the more variety, the more attractive they are to groups with diverse interests. Guests in such places rarely face a hard choice between, say, the beach or the pool. They can have both.
- You can apply the same thinking to other areas of your life, including your career. The solution to an unfulfilling job is rarely just one option in the stay-or-go binary, even if it seems that way at first. You can both stay and begin reaching out to your network. You can both apply for jobs and go to school in the evenings to acquire a new skill. You can both start a creative project and do more at your current job to give you the creative outlet you need.
- Roger Martin put it this way: “Thinkers who exploit opposing ideas to construct a new solution enjoy a built-in advantage over thinkers who can consider only one model at a time.” He’s right. Not only do integrative thinkers build an advantage, they also tend to capture exponential upside because they break free of traditional ways of thinking.
- Consider Isadore Sharp, who created the luxurious Four Seasons hotel chain. Sharp’s first property was a small roadside hotel in the Toronto suburbs. His second was a large convention hotel in the heart of the city. Each property represented one of the conventional operating models of the time: either going small and focusing on personal service or going large and focusing on amenities. The hotel industry was stuck in binary thinking. Rather than choose between them, though, Sharp combined the intimacy of a small hotel with the amenities of a large one. In the process he created a new way of operating and one of the most successful hotel chains of all time.
- Our personal lives also benefit from Both-And thinking. For example, we often expect our partners to fulfill 100 percent of our emotional needs. That’s a lot to ask of anyone, and many of us experience relationship challenges when disappointments inevitably result. But instead of asking, “Should I stay or leave?” ask instead, “Is there anyone else that could meet some of the emotional needs that my partner can’t? Is there a colleague that I could vent to at work? Do I have a friend who shares this interest or who will take this class with me?”
- When we think of adding people to our lives, we start to open up Both-And options for ourselves. So instead of the usual relationship binary, “Should I stay or leave?” we start to say, “Whom else can I include in my life to help with everything beyond what my partner does well?” (p. 150)
Opportunity Costs
- “The real world is full of trade-offs, some of which are obvious, and others that are hidden. Opportunity costs are the hidden trade-offs that decision-makers often have trouble assessing. Every decision has at least one of them. Because we can’t always do everything we want, picking one thing usually means forgoing another. The ability to size up hidden trade-offs is part of what separates great decision-makers from the rest. It’s also a core element of leadership.” (p. 150)
- Charlie Munger put it this way: “Intelligent people make decisions based on opportunity costs . . . it’s your alternatives that matter. That’s how we make all of our decisions.”(p. 150)
- “One of my favorite examples of this is a story about Andrew Carnegie. When Carnegie was young and relatively inexperienced in his job at the Pennsylvania Railroad, there was a bad train wreck that left train cars strewn across the tracks and gridlocked the entire system. Carnegie’s boss was absent, so Carnegie himself had to decide how to handle the event. Cleaning up the cars would save much of the cargo, but it would be a long and costly operation and would suspend all train traffic for days. Carnegie realized that a multiday system-wide shutdown wasn’t worth the cost of the cargo and the cars. He sent a bold note signed in his boss’s name: “Burn the cars!” When Carnegie’s boss learned of his choice, he instantly made it the routine method of dealing with similar emergencies in the future.” (p. 151)
- “Thinking through opportunity costs is one of the most effective things you can do in business and in life. The optimal way of exploring your options is to take all the relevant factors into account. You can’t do this without considering opportunity costs.”
- There are two principles concerning opportunity costs. The first is this:
- The Opportunity-Cost Principle: Consider what opportunities you’re forgoing when you choose one option over another.
- The second principle is closely related:
- The 3-lens Principle: View opportunity costs through these three lenses: (1) Compared with what? (2) And then what? (3) At the expense of what?” (p. 152)
- “For instance, think about purchasing a car. If you’re like most people, you can narrow the decision down to a few options pretty quickly. “The Tesla will look extra cool and be fuel efficient, but will it be good for road trips? A BMW looks great and has more cargo space, but is a gas-powered vehicle behind the curve?
- Should I get the car that’s $42,000 or $37,000?” When we compare the two models, we focus on what the additional $5,000 gets us in terms of features, and forget to view the choice through the other two lenses.
- When we view the choice through the second lens, we consider the additional costs that arise after we’ve selected an option- for example, how we’ll need to charge the Tesla, its anticipated yearly operating costs, its durability, and how many long drives we’ll go on annually. When we view the choice through the third lens, we consider what else we could do with that $5000. Are we giving up a family vacation? What about the dividends we could get if we invested it? What about the savings if we pay down the mortgage? What about a rainy-day fund in case we lost our job? Looking through all three lenses helps us make a better decision.” (p. 152)
- “Money is not the only opportunity cost to consider. It’s just the most direct and visible, and for that reason people tend to focus on it. They convince themselves that what’s easy to see is all that matters. But in many cases, the real value to thinking through opportunity costs is to understand the indirect hidden costs.” (p. 153)
- “Time is not as easy to see as money but it’s just as important. Suppose your family is growing, and it’s time to move. Relocation to the suburbs will get you a bigger house with a bigger yard for the kids, and it’ll be cheaper than buying a smaller duplex downtown with a backyard the size of a postage stamp. In this situation, many people think of how much money they’ll save by moving to the suburbs, and get caught up in the happy thought of walking across the threshold of their new home for the first time. But his way of thinking views the situation through only the first lens. It doesn’t disclose the less obvious costs of living in the suburbs. When we apply the other two lenses, we start seeing those costs more clearly.” (p. 153)
- “Let’s apply the second lens. Suppose you buy that house in the suburbs. Ask yourself, “And then what?” How will your circumstances change if you choose that option? For one thing, your commute might be different. Perhaps it goes from a predictable half hour each way to an unpredictable hour and a half.
- Now apply the third lens. Ask yourself, “At the expense of what?” What are you not going to be able to do because you’re spending an extra 2-3 hours a day in transit? Will you spend less time with your kids and partner? What will you miss out on by not being with them? Will you be able to spend the commute learning a new language or reading some great literature, or will you have to deal with frustration and stress of driving? Over time, which option is better for your mental and physical health?” (p. 153)
- Tip: “If you’re having trouble assessing opportunity costs, it sometimes helps to put a price on them. For example, putting a price on those extra two to three hours a day spent commuting will make them more visible and easier to assess.” (p. 154)