This tendency to compartmentalize our finances is known as "mental accounting," and it can significantly impact our financial decisions. 

In this special guest post by Shiva from Routine Planner, we will explore the concept of mental accounting, its psychological underpinnings, and its implications on personal finances.

What is Mental Accounting?

Mental accounting is a cognitive bias that involves dividing financial resources into separate "mental accounts" based on various criteria. 

These accounts can be defined by the source of income, the purpose of the money, or even the time horizon for spending. 

For example, individuals may have different accounts for salary, savings, investments, and discretionary spending, treating each as a distinct entity.

This phenomenon was first introduced by Richard H. Thaler, a prominent behavioral economist, in his groundbreaking work on the topic. 

Mental accounting can influence how we allocate funds and make financial decisions, often leading to irrational behavior.

The Psychology Behind Mental Accounting

Several psychological factors contribute to mental accounting:

Framing Effects

How a financial situation is framed or presented can significantly influence our perception. Windfalls, such as lottery winnings or unexpected bonuses, are often seen as "extra" money, leading individuals to spend them more freely rather than incorporating them into their regular budget.

Sunk Cost Fallacy

Mental accounting can contribute to the sunk cost fallacy, where people continue to invest in a no longer rational decision simply because they have already invested time, money, or effort into it. They treat their initial investment as a separate mental account that needs to be justified.

Examples of Mental Accounting in Action

Let's explore some examples of mental accounting in different financial scenarios:

Budgeting and Spending

Imagine a person receiving a year-end bonus of $5,000. Rather than using it to pay off high-interest credit card debt, they allocate the money for a luxurious vacation because they view it as "extra" money meant for indulgence.

Debt Management

Individuals may prioritize paying off a small loan with a higher interest rate before a larger loan with a lower interest rate, despite the latter being more financially beneficial. They mentally categorize the smaller loan as more manageable and separate from other debts.

Investment Decisions

Investors may treat each investment as separate, neglecting the overall portfolio allocation and rebalancing needs.

Pros and Cons of Mental Accounting

Mental accounting offers some benefits, such as simplifying financial decisions and providing emotional comfort. However, it has potential downsides, like biased decision-making and inefficient money management.

Impact on Personal Finances

Mental accounting can have a significant impact on individuals' financial well-being. By compartmentalizing money, individuals might miss opportunities to optimize their overall financial situation, hindering long-term goals like saving for retirement or buying a home.

Overcoming Mental Accounting Biases

Awareness of mental accounting biases is the first step toward making more rational financial decisions. Here are some strategies to overcome these biases:

1. Holistic Approach: Consider your overall financial situation rather than viewing each financial source or expense in isolation.

2. Financial Planning: Develop a comprehensive financial plan considering all aspects of your financial life, from savings and investments to debt management.

3. Avoid Mental Silos: Resist the urge to segregate money based on its origin or purpose. Treat all funds as part of your overall financial resources.

Conclusion

Mental accounting is a fascinating aspect of behavioral economics that sheds light on how our minds influence financial decisions. 

By understanding this cognitive bias and implementing strategies to overcome it, we can make more informed and rational choices, ultimately improving our financial well-being.

About the Author: Shiva Prabhakaran works at Routine, a calendar app for high-functioning knowledge workers. Shiva is open to writing guest blog posts like this for your newsletter or startup/company's blog; send a "hello" to him at marketing@routine.co.

Thanks for reading.

You're not alone. Countless people have been in that same predicament, and it's the reason why a 14th-century philosophical concept still resonates with us today: Occam's Razor.

As we navigate our complex world, it's tempting to assume that the most elaborate explanations are the most accurate.

Occam's Razor urges us to consider that, often, the simplest explanations are the ones that hold the most truth.

Let’s dive into the history and philosophical underpinnings of Occam's Razor and how applying this principle can help us make better decisions in our daily lives.

From Ockham to Einstein

Occam's Razor, also known as the Law of Parsimony, is famously attributed to the English Franciscan friar and philosopher William of Ockham. Ockham was a major figure in the movement of medieval scholasticism, which sought to reconcile religious faith with logical reasoning – a pursuit that often led to spirited debates among theologians and philosophers.

Although Ockham didn't coin the term "Occam's Razor" himself, the principle is derived from his belief that "entities should not be multiplied without necessity".

In other words, when faced with competing hypotheses or explanations, we should choose the one that relies on the fewest assumptions and is the simplest to understand.

This idea was later summed up by John Punch as "Plurality should not be posited without necessity" which has evolved into the more popular phrasing, "the simplest explanation is usually the correct one".

Since its inception, Occam's Razor has been a guiding principle in the fields of science, philosophy, and even business.

The likes of Isaac Newton, Albert Einstein, and Steve Jobs have all advocated for the power of simplicity in their work.

"We are to admit no more causes of natural things than such as are both true and sufficient to explain their appearances"

– Isaac Newton

Newton's famous quote echoes the sentiment of Occam's Razor, while Einstein's advice to "make things as simple as possible, but not simpler" shows the importance of balance in applying the principle.

Understanding the Underpinnings

Occam's Razor guides us to strip away unnecessary layers of complexity and focus on the essence of a problem or question.

But why does simplicity often lead to truth? What is it about the simplest explanation that makes it the most likely to be correct?

One reason is that simpler explanations make fewer assumptions. The more assumptions we make, the more likely we are to be wrong. By choosing the simplest explanation, we reduce the chances of error, and in turn, increase the probability that we're on the right track.

Another reason lies in the nature of the universe itself. While the world can seem incredibly complex, it often follows simple, elegant patterns. Think of the laws of physics, the structure of DNA, or the beauty of a Fibonacci sequence – all examples of simple rules giving rise to complex phenomena.

Here is how you can use Occam's Razor:

Occam's Razor has had a significant impact on scientific thought, but its value extends far beyond the laboratory.

Applying the principle of simplicity to our everyday lives can lead to better decision-making, problem-solving, and critical thinking.

Consider these real-world examples:

1. Troubleshooting technology
When your computer or smartphone starts acting up, it's easy to jump to the conclusion that it's been hacked, or there's some deep-rooted issue with the hardware. However, applying Occam's Razor might lead you to first try the simplest solution – like restarting your device – which often resolves the issue.

2. Evaluating news and information
In today's world of information overload, it's crucial to be discerning about what we read and believe. When faced with competing explanations or theories, Occam's Razor can help us sift through the noise and identify the most plausible, evidence-based explanations.

3. Decision-making
In both our personal and professional lives, we're constantly faced with choices. By using Occam's Razor as a guiding principle, we can focus on the most straightforward options and avoid becoming paralyzed by indecision or analysis paralysis.

4. Problem-solving
When faced with a complex problem, it's tempting to look for elaborate solutions – but often, the simplest approach is the most effective. By applying Occam's Razor to the process of problem-solving, we can cut through the clutter and hone in on the most direct path to success.

Occam's Razor, a centuries-old philosophical principle, still holds immense value in our modern world. By embracing simplicity, we can improve our critical thinking, decision-making, and problem-solving skills,enabling us to navigate the complexities of life with greater ease and clarity.

So, the next time you find yourself tangled in a web of confusion, pause and remember the art of simplicity.

Embrace Occam's Razor and allow it to illuminate the simplest path forward – because, more often than not, that's where you'll find the truth.

Do you have an example of Occam's Razor helping you?
Share in the comments 👇

Today let’s talk about self-awareness as a critical tool to navigate life.

The Dunning-Kruger Effect

So, what exactly is the Dunning-Kruger effect? Well, it's a cognitive bias that affects our ability to accurately assess our own competence.

Essentially, it's when someone who is not very skilled in a particular area thinks that they are actually quite skilled — and, also, when someone who is very skilled in a particular area underestimates their own competence.

Let's start with the overconfidence bias, which is a big part of the Dunning-Kruger effect. This is when someone has an unwarranted sense of confidence in their abilities, and as a result, they tend to overestimate their own performance.

You've probably encountered this before — maybe a coworker who thinks they're the best at their job, despite making mistakes all the time, or a friend who thinks they're an incredible singer, but really, they're just a little tone-deaf.

One famous example of the overconfidence bias in action is the story of McArthur Wheeler.

Back in 1995, Wheeler attempted to rob two banks in broad daylight, with his face completely uncovered. When he was arrested later that day, he was completely shocked — he had assumed that the lemon juice he had rubbed on his face would make him invisible to security cameras, since lemon juice can be used as invisible ink. Wheeler was convinced that he had outsmarted the system, when in reality, he was just overconfident in his own abilities (or lack thereof).

Of course, the flip side of the Dunning-Kruger effect is the imposter syndrome — when someone who is actually quite skilled feels like they're not good enough or don't belong.

This can be just as damaging, and can cause people to doubt themselves and their abilities. It's important to remember that both ends of the spectrum are problematic, and that the key is to find a healthy balance between confidence and humility.

The factors at play

So, why does the Dunning-Kruger effect happen? Well, there are a few different reasons For one, people tend to rely on their own experience and knowledge when assessing their abilities, rather than seeking out external feedback. This can lead to a sort of echo chamber, where someone is only hearing their own thoughts and ideas, without any outside perspective to help them see things more objectively.

Another factor is that people who are less skilled in a particular area may not even have the knowledge or experience to recognize their own limitations. In other words, they don't know what they don't know. This can make it difficult for them to accurately assess their own abilities, since they don't have the necessary context to do so.

“Real knowledge is to know the extent of one's ignorance.”

— Confucius

Here is how to deal with the Dunning-Kruger effect

For starters, we can all try to be more aware of our own biases and limitations. It's important to seek out external feedback and to be open to constructive criticism, even if it can be tough to hear. Additionally, we can all work to cultivate a growth mindset — one that values learning and improvement over perfection.

Here is how we can practice self-awareness in today's busy life:

1. Set aside time for reflection: With the hustle and bustle of modern life, it can be easy to get caught up in the day-to-day routine and forget to check in with yourself.
   To combat this, try setting aside some dedicated time each day (even just a few minutes!) to reflect on your thoughts and emotions.
   This could be as simple as taking a few deep breaths and checking in with yourself, or as involved as journaling or meditation.

2. Pay attention to your physical sensations: Our bodies often provide us with important cues about our emotional state, but we can be so caught up in our thoughts and to-do lists that we forget to pay attention to these signals.
   Try to be more mindful of your physical sensations throughout the day — do you feel tension in your shoulders when you're stressed, or butterflies in your stomach when you're nervous?
   By tuning into these sensations, you can better understand how your emotions are impacting you.

3. Seek out feedback from others: Sometimes, it can be difficult to see ourselves objectively.
   Asking trusted friends or colleagues for feedback on our behavior and communication style can help us gain a better understanding of how we come across to others, and can highlight areas where we might need to improve.
   Of course, it's important to approach this feedback with an open mind and a willingness to learn and grow.

At the end of the day, the Dunning-Kruger effect is a reminder that we're all human, and that none of us are perfect. We all have our strengths and weaknesses, and the key is to keep learning and growing, even when it's uncomfortable or challenging!

Have you noticed the Dunning-Kruger effect in action? 😅 Share your thoughts in the comments!

Don’t forget to check out Remindful, it would mean a lot to me.

Have you ever noticed how certain days, like birthdays, holidays or the start of a new year, seem to stand out from the rest? 

These are what we call Temporal Landmarks and they can be a powerful tool for organizing and remembering events in time. They help us to break up our lives into more manageable chunks, giving us a fresh start and a chance to reflect on what we've achieved and what we want to achieve next.

Studies have shown that our brains process temporal landmarks as special events that stand out from ordinary days. 

We're more likely to create lasting memories of events that happen on these days, which is why we tend to associate them with new beginnings and a sense of renewal. 

That's why people like to make resolutions or set new goals at the start of the year or after a holiday — it's like we're given a clean slate and a fresh start.

But temporal landmarks aren't just useful for remembering the past — they can also be leveraged to increase productivity and goal-setting. Setting a goal that coincides with a temporal landmark can make it easier to achieve. 

For example, starting a new habit or routine at the beginning of a new week or month can be more effective than starting on an ordinary day. This is because the landmark provides a psychological boost, making it easier to take that first step and stick with it.

Temporal landmarks are cognitive tools that help individuals organize and remember events in time. 

They're like little anchor points that help you make sense of your past, present, and future. 

Temporal landmarks can be significant dates such as birthdays or anniversaries, holidays, cultural or religious events, or personal milestones such as starting a new job, graduating from college, or moving to a new city. 

The brain processes temporal landmarks differently than other events, due to the significant emotional weight they carry. Temporal landmarks activate the brain's prefrontal cortex, which is responsible for executive functions such as planning, decision-making, and goal-setting. This activation triggers a sense of psychological distance, creating a mental separation between the past and the present. 

This distancing effect can be particularly beneficial when we need to break free from negative patterns of behavior or pursue new goals.

Temporal landmarks also significantly affect our overall well-being. They create a sense of structure and meaning in life, and help us to feel more in control of our time. 

For example, setting a goal to run a marathon on your birthday can be a powerful motivator to stay fit and healthy. Celebrating a significant religious holiday can provide a sense of community and connection with others. The power of temporal landmarks lies in their ability to create a sense of momentum, pushing us forward towards our goals and helping us to stay on track.

One personal example of how I have leveraged temporal landmarks in my own life is by using the last day of the year (December 31) as a time for reflection and goal-setting. 

I find that this serves as a natural temporal landmark that helps me stay motivated and focused on my goals. It also provides a sense of renewal and serves as a reminder to take care of myself and prioritize my well-being. 

What are other interesting ways you can apply temporal landmarks? 

Let me know in the comments 👇

I couldn’t drive a car for more than 10 years.

Now, I have a driving license, know how to drive a car and I’m physically able to.

I just couldn’t see myself doing it.

When I was a kid, nobody in our family had a car. 

Neither my dad nor granddads could drive and when I asked them about that they’d answered something like “ah, that’s not for me”.

I didn’t have any role model whom I could use as an example for “I can do it too”. 

The kids whose parents had cars are almost always excited about getting their driving license.

I did it out of necessity.

I had a car for a year around 2010, and even though I haven’t ever had any really bad experiences, never been or seen any major accidents, I dreaded driving the car. 

Every time I sat behind the wheel, I got overwhelmingly stressed due to the cognitive complexity of the driving experience. My hands were shaking, I was all sweating and my vision curled into a tunnel.

Even after a while, once I got good enough at it, the stress didn’t go away. 

I was terribly frightened of driving.  

“I just can’t drive.”

That was the story I told myself for many years. 

I thought I would never drive a car in my life again.

…

This might not seem like much to you, but here is me, me, driving, after a 12-year break.

This is just one example of a Self-limiting Belief that can negatively affect your quality of life and limit your potential.

The story of “I can’t drive” was a part of my worldview and my identity. 

Some of these beliefs are ingrained in us from childhood, some are acquired with life experience. That’s what the worldview consists of.

Many of the ideas we inherit are toxic and cause harm or suffering. 

This is a part of the reason why quite many people have a Victim Mentality and a Fixed Mindset.

Now, it is possible to stop being a victim and start editing your worldview.

For this, you need a systematic way of working and building your own worldview.

You need to become The Author of your worldview.

How to Work with Your Worldview

The prerequisite for this is to have awareness, agency and a growth mindset.

But, since you’re reading this, I assume you’re already on your growth trajectory.

The next step is to create a habit of processing and triaging your beliefs and your core values.

The goal of this process is to adopt only thoughts and beliefs that are beneficial for you, improve your thinking and decision-making, and help you grow.

The process should work like this:

1. Identify a specific toxic belief that’s not working for you. 

   You can do that by asking yourself the questions like:

   “What’s not working for me?”

   “What do I feel bad about when I think about it?” 

   “What do I hate doing but should?”

   “What should I stop doing?“

   “What do I not like about other people?”

1. Find the root cause of this belief

   e.g. “I can’t drive” → “Negative predisposition + no positive experiences and examples”

1. Re-write the belief by choosing a specific positive way to think about it

   “I can drive if I can get comfortable with it” 

1. Define your action

   “I need more driving experience so that I can get comfortable with it”

1. Of course, you won’t be to instantly replace the original belief. But now, every time the negative belief comes up you can de-activate it using “or actually”, for example:

   “I can’t drive…” → “or actually, I can drive if I get comfortable with it” → “I really need more driving experience”

The key to making this process work — is to create a habit out of it.

One way to make it easier and more natural is to write your thoughts down.

Writing things down also greatly enhances your cognitive abilities by expanding your “operating memory”.

Sit down comfortably and take a pen and a piece of paper, or a notebook. Don’t use your phone or your laptop, they negatively affect your focus. You want to be maximally focused in order for this to work.

Start asking yourself the questions above. Write every belief you identify, leaving some space underneath it for the following labels:

• Belief:

• Root cause:

• Rewrite:

• Action:

Do NOT fill in the labels until you’ve written down all the beliefs you could think of.

Once you have a list of beliefs, start by going through them one by one and filling in the labels.

You can use the Five Whys method to identify the Root Cause. 

To come up with the Rewrite answer the question “How should it be?” or “What would make me feel good about it?”.

Define your actions yourself. Don’t be afraid to experiment.

Good luck!

Did this method NOT work for you? Send me your feedback.

P.S. Norway is magnificent.

Have you ever felt like you’re struggling with your internal conflicts and uncertainty, and it is quite hard to make sense of all the information and different points of view?

Well, you’re not alone. 

In fact, every single person is experiencing these problems in life to some degree.

Most people are coping with this by developing a hard-coded conservative worldview by the age of 30-40, and sticking to it for the rest of their life, without even considering whether works well for them or even makes any cohesive sense at all. 

Yes, you read it right. The majority of people have an incoherent and inconsistent worldview and have to struggle with it for the whole of their life.

No wonder there is a global shortage of psychotherapists.

The problem here, almost nobody is proactively shaping their own worldview. 

Your worldview is a random collection of ideas and mental patterns, which is very much defined by your ticket in the birth lottery ⁠— your family, culture, religion, education etc. etc.

In most countries, the education system is built around teaching you what to think, not how to think. The school education system has been created at the dawn of the industrial revolution, for the purpose of producing replaceable workers, and it hasn’t improved much since then.

If you happen to be born in a religious family ⁠— you’re given a whole ready-made worldview for you to use from your birth for the rest of your life.

Medieval ideas, mixed with the modern culture built around entertainment, consumption and status signalling and you get a wild cocktail of a worldview that doesn’t have a well-defined structure and can be very confusing and contradictory.

You can compare this to eating junk food and not exercising ⁠— many ideas are useless and even dangerous.

However, it’s just a part of the problem.

Even if you have High Agency and you want to do something about this problem it might look like an impossible challenge.

Not only the amount of information is constantly growing, it is also accelerating.

The number of books, articles, blog posts, newsletters, YouTube videos, inspirational tweets etc. will continue growing year by year, and it seems to be impossible to know what is actually going to work for you.

This is a problem because we often don’t know what to take and what to filter out.

In order to be able to curate and extract value from all that information, we need to be able to let through only the relevant signals, separating them from all the noise. 

Not only that, we need to make sure we actually apply that knowledge. Even if you read or hear a brilliant new idea, without applying it in your context you’re almost guaranteed to forget it. 

To understand what is signal and what is noise, what is relevant and what is useless you need to understand how a certain piece of information fits into your worldview and your personal circumstances.

However, you can’t do that if you are not the one who is responsible for your worldview.

You need to own and control your own worldview. You achieve that by defining and designing your core belief principles and your personal value system.

You need to have a very precise idea of what are the core parts of your worldview and values, and how these ideas affect the choices you make. 

You need to shape and choose these ideas yourself. 

Whatever worldview you’ve inherited in your birth lottery — you need to rebuild it from scratch, brick by brick, idea by idea.

You need to be able to constantly keep shaping and updating your worldview based on the new knowledge you learn. 

It can’t be something that you do once, otherwise, you can end up with a dogmatic worldview that would be relevant to the version of you at the time when you created it.

The famous investor Charlie Munger calls it the Latticework of Mental Models.

“You’ve got to have models in your head. And you’ve got to array your experience—both vicarious and direct — on this latticework of models.”

— Charlie Munger

Working with one’s own worldview should be something that you practice on a regular basis. 

Shaping one’s worldview is a part of everyone’s personal spiritual growth journey towards being a wiser person.

Shaping your own thoughts helps you obtain a crystal clear picture of the world that’s based on a solid foundation that you’ve built from the ideas and mental models you have chosen for that purpose.

If there’s going to be enough interest, I’m going to share a step-by-step methodology for becoming the author of your worldview.

Hit reply and ask questions. 👋

Alice and Bob were born and raised in the same neighbourhood, had similar interests in sports and music, went to the same school and graduated from the same college.

Alice is not very disciplined and doesn’t have a thought-through plan for her adult life. She has tried a bunch of random jobs but didn’t stick at any of them for a long time.

Alice doesn’t have particularly strong willpower. She goes to the gym only when she feels guilty about eating too many sweets and she is struggling to wake up in the morning and that’s why she is always late. 

She has had a bunch of different hobbies, but she hasn’t achieved any major successes after all.

It looks like she is jumping from one thing to another and doesn’t excel and anything in particular. No permanent jobs or interests.

What’s worse, she considers herself kind of a failure…

Bob, on the other hand, had an exact career plan right after college.

He has got an amazing job and goes to the gym three times a week. He is always punctual and makes sure he does everything exactly right and puts a lot of effort into being a good employee, friend and citizen. 

Bob likes playing football and hiking. He travels to a new country every year.

Bob has created a pretty comfortable and ordered life for himself, where everything works great for him.

Bob considers himself a winner. He checks all the right checkboxes in life.

…

Later in their adult lives, Alice happens to discover her Life Goal.

Before the Life Goal, she didn’t know what she wanted to do and what skills she needed to develop, because she didn’t have a reason why.

The Life Goal puts her on the path of self-growth. Now she practices every day.

She is still being late every now and then, but now she has a reason to be late less often. 

Not only her behaviour has changed, but she now lives a much happier life, because what could be more rewarding than working on your Life Goal every day?

Bob, has also pondered many times if he should do something big in his life: volunteer for a charity, move to live off-grid in the middle of the woods or go on a bicycle around the world…

However, none of these things seemed to bring enough motivation to kick him out of the comfort zone of the life he has created. 

His career growth plateaued after a few raises. Bob has got stuck with the same hobbies reaching diminishing returns in his growth. 

So Bob stayed inside the same “box” that he had built for himself until the end of his life.

…

All this time Alice has been growing. Her every day was filled with purpose and accomplishment.

She has developed a multitude of different skills she could never imagine herself doing. She has become an expert in her field, a celebrity and an influencer. 

Alice has kept working on her Life Goal until the end of her life. 

She didn’t manage to reach the Goal — as it was much bigger than her — but that didn’t really matter.

She has changed the lives of many other people and was well remembered after her death.

The point of this story is not to say that everybody needs to have a Life Goal and the only right way to live their life.

The point is to highlight the difference between having one and not having one.

Not having goals in life is like embarking on a journey with no idea of the direction or destination.

Not only you wouldn’t know where to go, you wouldn’t have any motivation to go somewhere in particular, as there would be no reason.

Another important aspect to highlight is the size of the goals you set.

Most people set rather small goals for themselves, which are either about buying something, reaching a professional target, or a personal achievement.

Setting goals bigger than yourself will not only keep you on the path of self-growth perpetually, but it also dramatically raises the bar of the level of achievements and the sense of purpose.

And one more thing:

Now, when the game is over, it all goes back in the box. All that money, all that property, all those houses and all those hotels, Boardwalk and Park Place…

The game is gonna end. It always ends. And when it does, it all goes back in a box.

— John Ortberg

What really matters is what’s left after.

Most likely you clearly remember the last thing you did that you regretted later. Recall it in your head for a quick moment.

Almost all of these kinds of decisions happen in a single moment of time. 

Almost all of them happen on automatic.

All of them happen because of emotions or instinct.

Some of these things become habits, but even a habit starts from a single decision.

The mind is a wonderful servant but a terrible master.

— Old Asian proverb

The first step to solving any problem is awareness.

Even though, economists like to think of human behaviour as “rational” and “utility-maximising” — it is far from the actual reality. 

We make most of our decisions automatically, driven by our emotions and instincts, which are made by the Monkey Brain or the Lizard Brain correspondingly.

The “monkey” part of the brain is in charge of processing our emotions.

Once you learn to see whether a particular decision was made out of emotions or instinct — you’re able to “recognise the monkey”. After that, you can start identifying the monkey after every decision you make.

But the key is, of course, not only to recognise, but to prevent the monkey from making bad decisions. 

And, of course, it is easier said than done.

The problem with stopping a bad decision is that in the moment of an emotional outburst the monkey hijacks the brain and takes over the control of our behaviour.

In this kind of moment, we are not able to use logical parts of the brain. Not only do we become much stupider under emotions, but we also can’t control ourselves.

The monkey is behind the steering wheel.

It is impossible to take over the steering wheel from the monkey brain right in an emotional moment.

So in order to be prepared to tame the monkey, we need to prepare to “expect the monkey”.

Once we’re prepared, we are able to do something about it.

Here is one technique that might help.

We’ll call it Lincoln’s Unsent Letter. It’s based on the story of Abraham Lincoln’s example of anger management.

Shortly after the Battle of Gettysburg, Abraham Lincoln composed a letter to General George Meade in which he expressed profound disappointment in Meade's inability to pursue and destroy Robert E. Lee's army.  Lincoln did not send the letter. Writing such correspondence and storing it away was a favourite coping mechanism of his.

Lincoln understood really well that being controlled by emotions will lead to making bad decisions.

One way to interpret why this works: in order to write an angry letter the monkey brain has to give priority to the human logical brain, which calms down the monkey and helps with making the right decision in the end.

There are many other methods you can try, breathing exercises, meditation, humour, physical activity etc. What is important is to turn it into your Default Mode in emotional situations.

Being prepared and knowing what to do in an emotional moment can help avoid making dramatic and regretful mistakes.

Here’s a step-by-step plan for preventing bad decisions made based on emotions:

1. Learn to “recognize the monkey”

2. Be ready to expect the monkey taking over controls

3. Calm the monkey down, e.g. by writing a Lincoln’s Unsent Letter, or just by cooling yourself down with breathing exercises or physical activity.

Thanks for reading and until next time 👋

I’m interacting with many startups as a consultant or tech advisor on a daily basis. Having seen all kinds of startups, both great and terrible, it is very easy to spot the differences.

Startups fail for many reasons, but some of the reasons are less understood and talked about.

Surprisingly or not, established companies make all the same mistakes, they are just not as deadly for them.

Let’s see what separates failed startups from the ones which survive and thrive.

Mistake 1: Lack of clear vision 

It is staggering how very few companies can clearly articulate what they are doing and why they are doing that. 

In many companies, if you ask an employee why they work on a particular task they would answer “because my manager told me” or because “that’s my job”.  

Very few people can tell what is the actual end goal of their work.

The problem is that without having a clear goal direction for the company to move forward, it will be pulled into many different directions by personal ideas of that goal of individual employees.

Every person in the company whether a manager, an engineer, a designer or a customer support person ― is making dozens, if not hundreds, of decisions on behalf of the company every day.

Without having a singular “point on a map” to move towards, each person in the company would make their work decisions solely based on their own preferences and experience, or even worse ― only implement direct orders of the managers. 

Company Vision (a.k.a. Vision & Mission Statement) is a practical tool for defining and making sure every person in the company knows exactly why they do what they do and what kind of decisions to make in order to help the company fulfil its vision.

During a visit to the NASA Space Centre in 1962, President Kennedy noticed a janitor carrying a broom. He interrupted his tour, walked over to the man and said:

“Hi, I’m Jack Kennedy, what are you doing?”

The janitor responded:

“I’m helping put a man on the moon, Mr President.”

Defining a company vision and communicating it to everyone in the team will make sure everyone knows exactly the direction of the company and has a framework to make decisions supporting this direction.

In addition, it helps to create clarity and elevate team morale and trust in leadership.

Mistake 2: Not being grounded in reality

For an organization, a Feedback Loop is a process of learning from its target audience or users and applying this knowledge for improving its results.

A feedback loop is critical in any development or growth. Not having a clear feedback channel for its customers or users means that a company will make decisions in a vacuum, based on guesses and assumptions. 

This is a fatal mistake for many startups and products.

“You want to build an engine in your company that translates feedback from users into product decisions.”

― Sam Altman, former president of Y Combinator

Another important aspect of the feedback loop is its length. 

A very long feedback loop means that the company can’t process users’ feedback fast enough and can’t timely act upon it. That means the customers will have to struggle or search for other options.

There are two key bottlenecks in a feedback loop:

• the gap between the user and the decision-maker

• the Velocity of Development + the Cost of Change

Either of these bottlenecks can lead to lengthy feedback loops and mediocre results.

3. Not defining company culture and strategy

If the leadership is not pro-actively working on shaping the Company's DNA, then they will end with whatever the DNA has emerged by people bringing their ways of working and practices from their previous jobs.

It may end up working just fine, however, in most cases it leads to a mixed bag of random practices, atavisms and decisions. 

This is a huge topic on its own that wouldn’t fit into a single post. Here is some good reading material to start with: Creativity, Inc. and The Culture Code.

“Building purpose in a creative group is not about generating a brilliant moment of breakthrough but rather about building systems that can churn through lots of ideas in order to help unearth the right choices. This is why Catmull has learned to focus less on the ideas than on people—specifically, on providing teams with tools and support to locate paths, make hard choices, and navigate the arduous process together.”

― Daniel Coyle, The Culture Code: The Secrets of Highly Successful Groups

Does your company have the same problems? Tell me what you think.

Until next time 👋

I’m not going to talk about the why and the how, and how to help the victims of this terrorist action. There are many other sources for this. 

I rather want to share a few thoughts on how to stay sane, even when things become overwhelming. Let’s call it Practical Stoicism. 

Here in Finland life goes on as usual, with the only exception of the media focus on the war and charity ads. But it’s still hard to read the news every day and to live with expectations of what’s coming. The Winter War gets mentioned more and more these days, as there as chances it may happen again.

Bad news such as war events is always an Attention Magnet that captures people’s attention and consumes their thoughts. 

The brain reacts to bad news the same way as to a threat. This makes it dedicate more “processing power” to the information and takes away priority over other thoughts. 

This is an important survival mechanism, but this is also one of the main drivers of anxiety.

People may learn to filter bad news out, to be able to cope with reality and live their daily lives. The more adversity a person has experienced in their life, the easier it is for them to filter out bad news.

However, if there is a chance that bad events may come to where you live — you would be much more worried about possible future threats.

Many people are getting over-stressed about possible doomsday scenarios.

There are different possible ways of how things will go, and there is a lot of uncertainty right now.

Uncertainty induces more anxiety and even makes us physically feel bad. Especially the uncertainty of threats to the way of living or survival.

How to keep calm under uncertainty

The way to deal with uncertainty — is to turn uncertainty into certainty.  

Knowing what to do in a certain situation gives certainty. Having some sort of plan, or a list of options would help restore the sense of control. 

Preparing a Contingency Plan requires a bit of work, but otherwise, is pretty straightforward. You can use a text editor, or even better — a mind map.

1. Write down a list of bad things that can happen, based on your best judgement.

   Let’s take as an example: “A gigantic meteorite destroys the whole city”.

2. Under every such item write all the possible scenarios between the best case and the worst case, e.g. “the meteorite is detected early and the population is alerted” and “it falls completely undetected, and my house is in the epicenter”

3. Strikeout those items, where there is absolutely nothing you can do to change the situation.

   Your goal here is to stop thinking and worrying about such scenarios so that you can focus your thought process on those where you can actually do something.

4. For every case where you can do something — take some time to think through and to visualize how the events will unfold. Try to make a timeline.

   Use existing content to make it easier, here is a great video about which meteorites to worry about. 

   For example, in the case of a meteorite warning: “People will start evacuating in panic, which would create traffic jams on main highways out of the city.”

5. Now, understanding this — you’re in a much better position to prepare.
   For every case, you can write down what you’re going to do in a certain situation.

   You can, for example, map out your shortest way out of the city, so that you know exactly where to go, which would help you leave before the panic congestion. You can prepare a backpack with extra clothes, cash and snacks and put it in your closet, etc.

Take some time to think all possible details through.

The more scenarios and the more details you can cover — the more in control you will start to feel.

Fortune favours the prepared mind.

— Louis Pasteur

In addition to the obvious benefits of increasing your chances for survival, preparing a contingency plan will clear up the fog of uncertainty and will free you from any anxiety or worrying about the future.

If you want to sleep even better, you can actually do some preparations, collect a survival kit and stock up on canned and dry food and a canister of water.

Here are some useful tips for disruptions and emergencies.

Take care and stay sane.

Until next time 👋

How often do you find yourself diving out of something you were doing for a long time, and realizing that you even didn’t pay attention to how much time has passed?

For example, have you caught yourself playing a video game, or binge-watching Netflix series for many hours? Or perhaps scrolling through a social media feed? Re…

Read more

Starting a new project is always hard. There are so many decisions to make, so many variables to define, so many questions to answer. It is hard to even find where to start.

A good piece of advice would be to start writing a plan. A good plan will help answer as many questions as possible from the very beginning. 

Planning helps with giving structure and guiding the thinking process.

The problem is that planning is a learnable skill, and it takes years of mastery to get good at it.

And if your goal at the moment is to focus on the project — you probably just don’t have the time to pump up your planning skill.

“It always takes longer than you expect, even when you take into account Hofstadter's Law.”

— Hofstadter's Law

All of us are terrible at planning, let’s try to understand why, so that we can become a bit less terrible.

There is a whole bouquet of brain errors that contribute to the Planning Fallacy, here are a few:

• Optimism bias: choosing only the “happy path” when estimating options

• Wishful thinking: or Motivated Reasoning

• Hasty generalization: making assumptions based on little evidence

Even if you try to eliminate as many fallacies as possible, there is another important aspect that plays a critical role in the Planning Fallacy.

Let’s simply call it: Underestimating Complexity.

The first step of any project is to grossly underestimate its complexity and difficulty.

— @nicollhunt

When planning, we have to imagine various chains of future events and then identify what factors we should take into account to maximize the chances of success.

Naturally, our brains are wired to avoid ambiguity. The human brain is a future prediction machine, it is constantly making predictions.

But, for all its wonders, the brain has a pretty limited capacity of the short-term memory.

“Most adults can store between 5 and 9 items in their short-term memory. This idea was put forward by Miller (1956) and he called it the magic number 7. He thought that short term memory could hold 7 (plus or minus 2 items).”

— Dr. Saul Mcleod, Simply Psychology: Short Term Memory

This is the main reason why we can never keep the whole plan in the head.

This is why we have to offload our memory and thoughts onto an external medium — paper or a computer.

But even if writing things down helps dealing with complexity — there are still going to be many gaps in the thinking process arising from our inability to process more than a few variables at once.

Some gaps will be automatically “filled in” by assumptions or guesses. 

Other gaps wouldn’t even be taken into account in the plan — the Unknown Unknowns, the bottom of the iceberg — the problems that haven’t been identified during planning because of lack of information.

Assumptions and missing information aside, when there are hundreds or even thousands of different variables that factor in, it is just impossible to enumerate all possible versions of how they play out together and what version of the future is most probable.

In other words, the complexity of almost any substantially meaningful plan is so high that it is impossible to take into account everything all at once.

Writing a plan is a great way to structure your thoughts, but implementing the very first initial plan most likely would be a terrible idea.

“I can’t tell you how many startups try to begin by “boiling the ocean” — that is, trying to do everything they can because they can. It’s almost always a mistake, of course.”

— @mgsiegler

There is a much better approach to complex things which makes the complexity much more manageable.

Instead of trying to cram as much as possible in the very beginning, it is better to spread the complexity over time.

“The secret of getting ahead is getting started. The secret of getting started is breaking your complex, overwhelming tasks into small manageable tasks, and then starting on the first one.”

— Mark Twain (allegedly)

This way, you can cultivate your project in small steps, answering a few questions every day, adding a few new variables and removing the old ones that are not relevant anymore.

This makes it possible to consider just a few variables at a time, which makes the complexity pretty manageable. Thus, you can make sure every step is based on real facts and evidence.

Compared to executing a plan based on assumptions — taking every next step based on the previous one that already works, would create a solid foundation grounded in reality.

Instead of drawing a map of the new territory before the journey, you’d be drawing it step-by-step while exploring and learning at the same time.

After continuing on this path long enough time, it is possible to create and manage extremely complex entities.

For example, if you’re building a product, instead of trying to plan, design and build it all at once, you’d rather start with a small and simple version (MVP).

The smaller the scope of your first verion — the sooner you launch your product — the easier it would become to execute based on user feedback. You will learn real facts much faster and you’ll waste less time building based on assumptions.

You will be able to draw a more preciese and more complex map, compared to what you could have made before you started.

“I think it’s because we know from our past experiences that big things start small. The biggest oak starts from an acorn and if you want to do anything new, you’ve got to be willing to let that acorn grow into a little sapling and then finally into a small tree and maybe one day it will be a big business on its own.”

— Jeff Bezos

With that in mind, there is one very important caveat.

Venturing into an unknown territory you need to know exactly where you’re going. 

You need to define your end goals, your final destination and then make sure you stick to it. 

Even when drawing the map on the go — take a compass with you, so that you can always correct the course and make sure you’re moving in the right direction.

Start small and keep going. Great things are achieved by moving towards your goal over a long period of time.

Onward.

1. Time Corrupts Memory

Human memory is not perfect and fades away with time. We don't always remember things quite the way they went down.

In fact, our memory works more like the Telephone Game.

You will best remember very emotional experiences. You are likely to remember the important ideas that you've come up with and thought through yourself, but you will not remember all the details. 

You’re very likely to forget things that are brought to you by other people.

In the case of a group event, different people will remember things differently, and will also distort them in different ways, depending on their personal Reality Tunnel.

Time moves in one direction, memory in another.

— William Gibson

This is one of the biggest reasons why people have invented contracts. Contracts help us recall the exact word-for-word details of the agreement. Good contracts also help people resolve conflicts in a non-damaging way, in case some of them forget what they agreed to.

You typically wouldn't prepare a contract every time your team have an important conversation, which leads to an important decision. In fact, in many organizations, most decisions are never documented, nor they are properly communicated. 

With time people tend to forget details of any important decision. In addition to people forgetting, there is also the problem of people leaving and joining the organization. This dissolves the “internalized knowledge” of the organization even more, and leads to “forgetting” important information or the reason for why certain things need to be done in a particular way.

The solution is both simple and hard — Document Everything.

Writing things down and making sure all involved people read them is one of the most impactful activities that can define the success of an organization. 

Especially if you do all your work on a computer - it is both easier more important than ever.

2. Collected Baggage Grows Heavier

What you don't do is more important than what you do. 

It may come as a surprise to you, but if you work in an “idea economy”, many activities that people do at work end up being a complete waste of time.

Even when they come with the best intentions and hard work.

In a more general case, this is defined by Parkinson’s Law.

Work expands so as to fill the time available for its completion

— C. Northcote Parkinson

This happens not because people procrastinate or waste their time intentionally. It happens because some activities ate started based on what seemed like a good idea at the time, but are never being checked upon and keep going purely because of the initial momentum. 

Quite often, some activities are continuing because of the Sunk Costs Fallacy. Or simply just because it is someone “job security”, and if this activity would stop making sense on paper, there is a chance they would be made redundant. 

And while bigger companies can accommodate many wasteful overheads — it might be a matter of life and death for a startup. 

What's even worse is that some things are not just a waste, but also slow down everything else. They take away attention and resources from other, more important activities.

This problem tends to accumulate and grow bigger over time. If the organization has resources and capacity, in most cases it would just hire more people, instead of getting rid of things that became irrelevant.

That is why it is extremely important to conduct a periodic Irrelevance Audit.

“Do we really need that another expensive website redesign that’s taking 3 months and not going anywhere?”

“Why do we have this extra weekly meeting that never brings any results?”

“What is the purpose of this internal process that takes the time of three people?”

Getting rid of things inside an organization doesn’t mean that some people have to lose their job.

There is always more impactful work to do, and it is up to the leadership to identify that and make sure people always do meaningful work.

Which of these two have you’ve had to struggle with the most?

Share in the comments!

“No written law has ever been more binding than unwritten custom supported by popular opinion.”

― Carrie Chapman Catt

If you lift your hand standing on a sidewalk in a big city centre ― sooner or later a car will stop right next to you, probably a yellow one, or with a checkerboard or a “taxi” sign on top of it. 

You can sit in the car, and it will take you where you need to go, and you will pay the driver at the end.

You didn't have to agree with the taxi driver beforehand. In fact, it would be the first time you would see them. Nor do you have to talk to the driver to agree on specific terms of service or sign a contract.

However, there's an unwritten Social Contract and you've called upon it by signalling that you're ready for a specific kind of business transaction.

Of course, neither you nor the driver think about what happened in terms of "social contract" or "business transaction" ― you needed to go somewhere and this was how you get there. And if you would ask the driver ― he'd say something like "I'm a taxi driver, this is what I do"

There are many definitions of Social Contract, but for our purpose, we can define it as:

“This is how we agree and expect to behave here so that we all can benefit as a group”. 

Social contracts are the foundational part of a culture. 

Social contracts are very useful because they let people who have never met before “be on the same page” from the beginning and agree to the same terms of conducting themselves. A social contract is the expectations and the Default Mode of behaviour between people in a particular context. 

The context is very important as there are different social contracts in different places and situations. If you lift your hand in a bar, no taxi driver would come up to you and ask “Where to?” even if the bar is full of taxi drivers. 

What’s appropriate in one context or culture can be considered rude or even offensive in another. You can totally wear your only pink swim shorts or a bikini on a beach, but you probably wouldn’t like to show up like that to a business meeting.

Or, let’s say when you walk in your office building and you would say “hi” to someone you don’t know ― they most likely would say “hi” back. However, you would have much fewer chances to get a reply saying “hi” to a stranger outside.

When you get a new job you have to sign a contract with a company, which is typically very detailed and explicit. However, it also carries with itself a bunch of implicit social contracts with people in the company. For example, your employment contract probably doesn’t directly say what you should do when your boss is wrong. Whether you’re going to tell the boss that they’re wrong, or just do as they say ― depends on what kind of social contract is there in this particular company or team. 

Why is all this important?

1. You can better understand why people behave in a certain way, especially in an unfamiliar environment.

For example, if you’re travelling to a different country or even changing jobs - the mental model of Social Contract gives you a way of how to approach understanding why and how people behave in this new-for-you environment. You could look for social contracts in this group and make note of those that you could use.

2. You can break some social contracts without consequences. 

Like any other contract ― Social Сontracts are made by people. Both harmful and useful, they are created by individuals choosing to behave in a certain way. 

It is important to understand that you can create new social contracts and replace old ones by setting an example. It will take on if it is useful.

“The people who are crazy enough to think they can change the world are the ones who actually do.”

― Steve Jobs

Do you have any good examples of Social Contracts? Click on the comment button and share your example!

👋

But before that, let's consider the River of Opportunities. Imagine our world is a river — and we all swim in it. In this river we would have three categories of people: 

1. There are people who don't put too much effort into where they're going in the river. They're floating to wherever the currents of the river take them. The river takes them from one shore to another, and if they happen to bump into a raft — they might try to get on it.

2. There are some people who are actively looking for interesting things and swim in that direction. They don’t have a clear idea of where they’re going and they keep swimming from one thing to another. If they see someone building a raft — they will try to get on that raft or build a raft of their own.

3. Only a few people would choose their own direction, collect pieces of wood floating in the river, build a raft and would sail it in the chosen direction.

The difference between these groups is of course defined by the degree of Mental Agency. Low Agency people are influenced by whatever happens in their life, while High Agency People are trying to be the ones who influence other things and people.

Typically High Agency people choose the path of personal growth through self-development, physical and mental exercise and as a consequence, they are more accomplished, successful and happier.

What is interesting is that the difference between these types of people is based on a single core belief: “The world is what it is” vs “I can change the world”.

“Whether you think you can, or you think you can’t — you’re right,”

— Henry Ford

In the modern world, you often can find yourself in a situation where somebody else gives you options to choose from.

When we are presented with a list of options, our Default Mode of the Social Contract is to pick one from the list. Even when all the options are far from great, they’re typically different from each other, so that one is better than another, which gives an Illusion of Control.

However, in many situations there is room for a much better option, that’s not on the list. The definite set of the presented options only makes it look like there is nothing else, and that makes a lot of people automatically “close the door” for all other possibilities.

But if you’re subscribed to the idea of “I can change the world” — you can always consider a possibility to ask for other options, or even suggest your own.

For example, you’re buying something more or less expensive and there is a salesperson who is collecting your wishes and presenting you with different options. Typically you will be given the time and date when it will be delivered, and the total price for the order. Instead of directly agreeing to what is being offered it is almost always a good idea to ask for a discount, and even take a few minutes to find out what is the maximum discount they can give.

Or, you decide to sign up for a gym, but there are just two options around where you live — one is very expensive and another one is too far to go there often. However, there is always another option — you don’t need a gym to stay in shape, you can go jogging in the neighbourhood and get some dumbbells to use at home. 

Or, let’s say you receive an important contract, with just the two options: take it or leave it. 

In most cases, the person on the other side of the transaction is interested in signing this contract as much as you are. So if the contract doesn’t look great from the very beginning it’s almost always worth it to suggest your changes for some conditions in the contract, or even make your own edits and send it back, thus creating your own option.

“Life can be much broader once you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you and you can change it, you can influence it, you can build your own things that other people can use.”

— Steve Jobs

Once you understand that you can find and create your own options, you will look at the world in a completely different way.

Question everything. Create your own options. Get better outcomes.

Until next time 👋

What was the reason you opened this post?

If you’re like most people, the question above triggered a change in your thinking process to find a particular answer.

Questions have the power to direct the thinking process and focus it on a very specific idea about one or more connected notions or symbols.

If you work with computers, you might be familiar with the command line terminal (or CLI). The way it works is that you type a bunch of commands on the keyboard, press Enter, and then the computer starts these programs and prints some information on the screen.

Questions are like the command line. You can specify some input that executes one or more subprograms in the brain and then returns some information back. 

The way this process works in the brain is through the mental reflex known as instinctive elaboration.

Compared to just telling a person some information, a question can both communicate information and make the person think about an idea along a particular path. 

The most important part here is that asking a question triggers specific thought processes.

Asking questions not only makes an order more palatable; it often stimulates the creativity of the persons whom you ask. People are more likely to accept an order if they have had a part in the decision that caused the order to be issued.

— Dale Carnegie, How to Win Friends and Influence People

So instead of taking them by the hand and pulling through a particular idea maze, you make them go through the idea maze themselves.

This has a few implications:

1. People trust their own thought process many times more than the thought process of other people

2. If you want to convey a controversial or new idea which the recipient might reject — asking thought-provoking questions would work much better, since it will be their own thought process

3. You can guide peoples’ thinking process by making them walk along a certain path of thought and make them better remember it because they thought about it themselves

Most importantly, this effect is partial in most cases, it doesn’t guarantee a total effect. You should rather think of it as hinting, or nudging the recipient’s thinking process in a certain direction.

The outcome would depend on many things, for example:

• how well does the recipient understand your question

• does the recipient have the context

• do they believe in what you believe, etc.

Also, keep in mind that many people would get annoyed or even defensive when asked too many questions, so make sure you don’t ask too many.

Practically speaking, here are the situations when you might want to ask questions instead of just telling things upfront:

• when bringing up an argument to prove a point

• when you want to get a new idea across

• when you’re teaching someone something

• if you need to make your experience more relatable to another person

• if you need to provoke someone’s thought process on a particular subject

Asking questions is very powerful with other people, but this approach can make an even bigger impact when used on yourself.

If you’re on the path of self-growth, asking the right questions is your most impactful instrument of change.

Typically, we spend very little of our time during the day analyzing and adjusting our thoughts and behaviour. It is a very slow and energy-consuming process.

It is even harder to do if it is not a part of your Default Mode.

On the other hand, asking questions doesn’t require too much effort. As long as you ask yourself the right questions — you can nudge yourself in the direction you want to go with very little effort.

You can prepare the questions you want to keep asking yourself and make sure you’re reminded of them but placing them somewhere in your environment (e.g. notes, posters, etc.). 

Here is a good starting point for creating good questions.

Now that you know this, I’d like you to ask yourself:

What should I do with this knowledge now?

• personal default mode

• processes

• company culture

Personal default mode

Think about your company or any organization you’re a part of.

What modes do you have there? What modes do your colleagues have?

For example, if you work in an office, at least two of your main modes would be “talking with people” and “doing things on a computer.” 

If you do more of the “talking”, most likely your main responsibilities include passing information, organizing people, and making decisions — you’re probably in a managerial or leadership position. 

If you spend more time with a computer, you probably are one of those who do the actual work. 

Every person has their own default mode at work, and this default mode is defined by the comfort zone of what they are used to doing the most.

There are multiple implications of the personal default mode in an organization, let’s consider the three most important ones:

1. Any task or activity that's not a part of the default mode of a person would require much more effort and control. So if you need someone to switch gears and do something new, this person wouldn't probably be happy about getting out of the comfort zone of their default mode. 

   So if you need to make someone do something outside of their default mode — start with small steps, and gradually introduce the new activity. 

   For example, if people in an organization are used to receiving tasks and doing what they’re being told — it is almost impossible to make them turn on critical thinking, take responsibility and set their own goals.

2. When hiring people, try to identify what's their personal default mode like. In addition to their skills and knowledge, they have big baggage of habits defining their default mode from the previous place, and it will be very painful and unproductive to change it if it doesn’t fit right away.

   A few questions that you can ask to better understand their default mode, which you probably don't ask at the moment:

   1. How does your typical day at work look like?

   2. Where do you spend most of your time when working?

   3. What kind of tasks would you prefer to avoid?

3. In absence of clear goals and instruction, most people would tend to focus on doing what they’re good at, and what they’re most comfortable with, instead of what the company actually needs.

   This often leads to doing something that is not needed or even distracts and takes away focus and energy from meeting the goals of the organization.

   A very typical example of this is the problem of overengineering in tech companies. Engineers, without a feedback channel with the end-users, would default to solving technical problems instead of working on user needs. And if their manager doesn’t have relevant knowledge and skills to be able to see through this — they end up following whatever the engineers tell them (this parody is so real).

Processes

You don’t have to be crazy to work here; we’ll train you.

Relying on default modes of individual people is rarely the best approach. 

This is why most organizations need to have hardcoded processes. If the process works and the default mode of people is aligned with the process — the organization works as a well functioning machine. 

An interesting aspect of processes is that they create habits. 

The flip side of processes is that people who carry out a process stop thinking critically, since they’re getting used to most decisions being made automatically by the process, which leads to the process becoming the goal, instead of the goal being the goal.

Processes are the necessary default mode for any organization, but it’s a double-edged sword — too strict processes without a degree of autonomy and a feedback cycle is a sure way to an organization running entirely on old habits.

The stronger the culture, the less corporate process a company needs. When the culture is strong, you can trust everyone to do the right thing.

— Brian Chesky, Co-founder and CEO of Airbnb

Company culture

Company culture is the default mode of how people behave in an organization.

There is a set of “how we do things here” type of patterns of behaviour that constitute a huge factor in the automatic decision-making, both on the team and organizational level.

There are some default acceptable behaviours in your organization, which people learn through osmosis and which become habits with time. 

In organizations that don’t pro-actively define their company culture, the culture is defined by whatever default modes happen to be there.

Consider what are the default behaviors in your organization:

• Do people trust their colleagues by default, or do they exercise caution?

• What’s the default mood in the organization, are people excited to show up at work, or is it a business-and-nothing-personal kind of atmosphere?

• Would anyone pick up a piece of trash from the floor, or would the default mode be “it’s not my job”?

• Do people always do what their boss tells them, or they’re welcome to challenge their opinion?

• If your work depends on other peoples’ work, can you rely on things getting done?

• And most importantly, do people care about their work, or do they just check the checkboxes?

These are the kind of things that are not covered by “best management practices” and methodologies, they are rarely even considered at all. 

However, these things define most of the invisible decisions which cumulatively define a multiplier to the organization’s performance.

The same people can show dramatically different behaviour and different performance only predicated on the company culture (Simon Sinek has a great example of this).

Our belief is that if you get the culture right, most of the other stuff, like great customer service or building a great long-term brand, or empowering passionate employees and customers will happen on its own.

— Tony Hsieh, Zappos CEO

Is designing the company culture a part of the default mode in your organization?

Do you put on the seat belt?

Are you stopping to make a choice every time?

Any complex entity, such as a living organism or a machine, has a context-specific Default Mode behaviour, which it exhibits under normal conditions of that context.

It would be easier to understand with a few examples:

1. Even though cars are made for driving, a car with its engine off has the default mode of occupying a parking space. The car doesn’t necessarily always stand in place when the engine is off, it can actually move if there is another force applied to it. But an external force applied to a car doesn’t typically happen often, and it’s outside its normal conditions. Hence, the car’s default mode is pretty much “just standing there”.

2. A hungry animal has the default mode of searching for food. While it doesn’t necessarily always search for food when it’s hungry ― e.g. if it is running away from a predator ― but if there are no higher priority activities it defaults to search for food.

3. Most people’s default mode to anything they strongly disagree with ― is anger. And yes, there are times and circumstances when they can behave differently, but typically the different behaviour is caused by a deviation from normal conditions.

You can apply the mental model of Default Mode to any human behaviour or habit, as it is defined by the autopilot System 1 thinking. 

“It is our choices, Harry, that show what we truly are, far more than our abilities.”
― J.K. Rowling, Harry Potter and the Chamber of Secrets

Is your default mode in the morning to press the snooze button and drop your head on the pillow or to jump out of bed and splash your face with cold water? 

When someone approaches you on the street, is your default mode to mumble “no, sorry”, face away and speed up, or to stop and see if this person needs help?

What’s your default mode at work? Are you setting goals and getting things done, or are you sliding into the comfort zone of doing what comes easy to you?

How about right now, when reading this post ― is your default mode to just read it through to see if it’s useful to you somehow, or did you actually answer the questions above?

The thing is, it is impossible to internalize a mental model without actually “trying it on”, so if your default mode is to “binge-read” the article and move with your day skipping the homework ― you might as well just stop reading about mental models.

Once you learn to see the default mode of things and people, you will have a deeper understanding of why certain things are the way they are, why people do what they do, but more importantly ― why you do what you do. 

The Default Mode is especially powerful when applied to your Automatic Thoughts. In particular, it helps to identify if Negative Filtering is a part of your default mode. Overcoming Negative Filtering is probably one of the biggest factors on the path of becoming a happier and more accomplished individual.

“But until a person can say deeply and honestly, "I am what I am today because of the choices I made yesterday," that person cannot say, "I choose otherwise.”
― Stephen R. Covey, The 7 Habits of Highly Effective People

Understanding the default behaviour enables options for changing it. 

To change a default mode behaviour usually requires changing one or some of its “normal conditions”. For example, if you want to change your habit, one of the best ways to achieve that is to design your environment. 

Put your phone far away from the bed, so that you have to get up to turn off the alarm. When you close your laptop at the end of the day ― make sure the first thing you see tomorrow is your plan for the day. You get the idea.

Next time, we’ll talk about the Default Mode of organizations.

Until then 👋

"We build our lives on the hope for tomorrow, yet tomorrow brings us closer to death and is the ultimate enemy"

— Albert Camus

It’s that thought you don’t want to think about.

Most of us are terrible at spending our time.

We tend to underestimate the time it takes to get something done.

We subconsciously choose easier and more pleasurable things to do instead of hard, but important ones.

We avoid complicated things, conflict situations, or things that require emotional labour.

All this leads to missing out on our full potential.

Most people don’t make the impact they can.

“The only trouble is that they do it about a great many things and I do it about one. If they took the time in question and applied it in one direction, to one object, they would succeed.”

— Thomas Edison

The reason we spend our time recklessly is simple. 

We don’t value our time enough.

We don’t think of how much time we have, we don’t think too much about the limits of our existence. We postpone important things, we don’t say the things we should say, because there’s still plenty of time, is there?

“It kind of feels like our lives are made up of a countless number of weeks. But there they are — fully countable — staring you in the face.”

— Tim Urban, Life Weeks

Nobody is excited to think about their own mortality. “I’ll think of it later, what’s the urgency, right?”

Thinking about death will help us to understand the one most important thing about time.

Time is the ultimate non-renewable currency.

Yes, time is a currency which we’re spending and that we can’t get back. We can exchange our time for currency, as in “getting paid for a job” and likewise we can exchange money for time, so that can spend the time better or with a bigger impact.

But the best way to get more time is to say “no” to things that don’t matter.

You’re Gonna Die

3 words of inspiration. That’s all you need.

— GaryVee (video)

Here are a few practical methods for maximizing the impact of your time.

1. Set a ridiculous price per hour for yourself

Set the value of your time at $1000 per hour or more. Now think about how you should best invest your time. 

Keep reminding yourself about your price tag before switching tasks during the day.

This mental model will shift your perspective in such a way that it will become easier to say “no” to things that don’t matter.

2. Regret minimization framework

This one is famously originated from Jeff Bezos when he left a great career to start an internet book shop.

The idea is that when you’re at the end of your life’s journey - would you regret doing or not doing a certain thing.

“I wanted to project myself forward to age 80 and say, ‘OK, I’m looking back on my life. I want to minimise the number of regrets I have.’ And I knew that when I was 80, I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that. But I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day.”

― Jeff Bezos

3. Big Rocks First

This one is better explained in this video, which is pretty fun!

Don’t waste your time. Go do something big 🙌

However, this should be your No. 1 tactic if you’re a startup founder.

One of the most counter-intuitive things about creating a startup is that instead of avoiding obstacles, you should rather seek obstacles.

Like in skateboarding, instead of rolling around the obstacles, you need to use the obstacles.

Let me explain.

The way most startups happen is by the founders getting so excited about a particular idea that they rush into making it happen. 

Whether they’re doing it out of ideological reasons or chasing money ― the trigger is always the same. The idea is “growing” until a tipping point, where it becomes so big that it creates momentum.

Naturally, to keep the flame of the idea burning, you need to feed it with evidence of why this idea is worth it, and why the founder should continue pursuing it, even though it might be hard and require a lot of effort.

What happens is that the founders are actively looking for validation, for evidence and reasons of why the idea is going to work. 

The founders are investing their hard work, time and money into the future promise of the idea, and they need this reinforcement in order to keep going.

Nobody wants to work on something that might not work.

The problem is that seeking out only positive signals, whether consciously or subconsciously, leads to filtering out all negative signals.

And that’s the negative signals that show where the risks are.

If all the risks are in your blind spot, chances are, sooner or later one of them becomes a reality.

That’s why, in addition to positive validation, you always have to be a little bit paranoid and seek out problems in order to address them upfront.

Meet Inversion Thinking.

Find all the obstacles and potential risks and reverse-engineer them in order to come up with solutions. 

Best put by the famous investor Charlie Munger:

“Just reverse the problem in order to avoid the problem” (YouTube).

Avoiding stupidity is probably the biggest factor for turning an idea into success.

So if you’re building a startup, by all means, keep track of what works and double down on it.

But even more importantly ― seek out problems.

Whether it is legal or technology risks, objections of your prospects or customer support complaints. 

Once you find the problems, addressing them will guide you towards future success.

“The obstacle in the path becomes the path. Never forget, within every obstacle is an opportunity to improve our condition.”

― Ryan Holiday, The Obstacle Is the Way: The Timeless Art of Turning Adversity to Advantage

Take care. 👋