February 2018

Peter Principle -Mental Model 090

Why Managers Rise To The Level Of Their Incompetence

The selection of a candidate for a position is based on the candidate’s performance in their current role, rather than on abilities relevant to the intended role.

 

Example: If you’re a star performer in your current job, you’re more likely to get promoted. Sometimes, you can be promoted into something you’re terrible at.

 

The creator of the Peter Principle, Laurence J. Peter, gives the example that if you’re a great rule-follower who suddenly is placed in charge of making rules and decisions, you may well freeze up in your new role or gum the productivity of everyone else.

 

Wisdom: “Managers rise to the level of their incompetence.”

 

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Parkinson’s Law -Mental Model 089

Why Is The DMV So Slow? 

Work expands to fill the time available for its completion.

 

Example: Parkinson’s Law is named after Cyril Northcote Parkinson, a British historian. During his time with the British Civil Service, he noted that as bureaucracies expanded, they became more inefficient.

 

Wisdom: “Delay is the deadliest form of denial.” — Cyril Northcote Parkinson

 

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Growth Mindset vs Fixed Mindset -Mental Model 088

The Mindset Of Champions Vs The Mindset Of Mediocrity

Having a fixed mindset means you believe your abilities are innate, while having a growth mindset means you believe you can acquire a greater ability if you invest the effort and study.

 

Example: Derek Sivers writes, “In a fixed mindset, you believe “She’s a natural born singer” or “I’m just no good at dancing.”

In a growth mindset, you believe “Anyone can be good at anything.” Skill comes only from practice.

 

In a fixed mindset, you want to hide your flaws so you’re not judged or labeled a failure.

In a growth mindset, your flaws are just a TO-DO list of things to improve.

 

In a fixed mindset, you stick with what you know to keep up your confidence.

In a growth mindset, you keep up your confidence by always pushing into the unfamiliar, to make sure you’re always learning.

 

In a fixed mindset, you look inside yourself to find your true passion and purpose, as if this is a hidden inherent thing.

In a growth mindset, you commit to mastering valuable skills regardless of mood, knowing passion and purpose come from doing great work, which comes from expertise and experience.

 

In a fixed mindset, failures define you.

In a growth mindset, failures are temporary setbacks.

 

In a fixed mindset, you believe if you’re romantically compatible with someone, you should share all of each other’s views, and everything should just come naturally.

In a growth mindset, you believe a lasting relationship comes from effort and working through inevitable differences.

 

In a fixed mindset, it’s all about the outcome. If you fail, you think all effort was wasted.

In a growth mindset, it’s all about the process, so the outcome hardly matters.”

 

Wisdom: “Children given praise such as “good job, you’re very smart” are much more likely to develop a fixed mindset, whereas if given compliments like “good job, you worked very hard” they are likely to develop a growth mindset.”

 

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Cobra Effect -Mental Model 087

What Happened When The British Government Offered A Bounty For Every Dead Cobra?

When an attempted solution to a problem actually makes the problem worse.

 

Example: The term ‘Cobra Effect’ comes from the British rule of colonial India. There were a large number of venomous cobra snakes in Delhi. So the concerned British government offered a bounty for every dead cobra. Initially, the strategy succeeded.

 

However, enterprising individual’s began breeding cobras for income. When the government found about about the breeders, they scrapped the reward program. Since the breeders cobras were now worthless, they let them back into the wild, and as a result, the overall cobra population increased.

 

Wisdom: “We cannot solve our problems with the same level of thinking that created them” ― Albert Einstein

 

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Consequence vs Conviction -Mental Model 086

When Should You Delegate Decisions? 

When making a decision, if there are low consequences and you have a weak conviction, you should delegate the decision. You can let employees make their own mistakes and learn.

 

If there are high consequences and you have a strong conviction, you must make the decision.

 

Example: Keith Rabois was an executive at Square, a payment system startup in Silicon Valley. He wrote about weighing up the consequences and convictions of his decisions. One of his employees wanted to run a new marketing program where a truck would sit outside the stores of existing customers offering their Square payment devices. That way, when people used the device in-store and wanted one for themselves, they could grab one for free outside.

 

The Squares didn’t cost much money and the idea would help spread the word about Squares. The consequences were low. But, as Rabois writes, “At that time, my ten years of experience said it was not going to work on a meaningful enough scale for our metrics and I preferred not to do it.” ‘Preferring’ is hardly a strong statement, so his conviction could be considered weak.

 

Rabois let him go ahead with the program. As a result, his employee learned, “That when you measure this thing, it’s not massive. It doesn’t create massive value for the company.” In the end, Rabois believed that, “It was totally worth letting him make the ‘Mistake’.

 

Wisdom: “I have a fantastic team of people who run the Virgin companies, who have a lot of freedom to run the companies as if they were their own companies, I give them the freedom to make mistakes.” — Richard Branson

 

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Evolutionarily Stable Strategy -Mental Model 085

When It Is Better To Have Daughters Than Sons 

A behavioural strategy which, if adopted by a population in a given environment, natural selection alone is sufficient to prevent alternate strategies from invading.

 

Example: Richard Dawkins said, “A well known example is the sex ratio, where any departure from the stable sex ratio is penalised by natural selection. If there are too many males, an individual is better off having daughters. And if there are too many females in the population, an individual is better off having sons. And so the stable ratio is 50-50. Or strictly speaking, it’s 50% economic investment in sons and 50% economic investment in daughters.”

 

Wisdom: “Extinction is the rule. Survival is the exception.” ― Carl Sagan

 

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Active Listening -Mental Model 084

How To Stop Pretending To Listen To People, And Actually Listen 

Fully concentrating, understanding, responding, and remembering what is being said.

 

Example: Here are some things we do when listening actively:

  • Maintain eye contact.
  • Avoid other distractions.
  • React to what they’re saying with body language, such as raised eyebrows when they share something surprising.
  • Ask questions to clarify points.
  • Use our own words to repeat what they said.  

 

Wisdom: “Most people do not listen with the intent to understand; they listen with the intent to reply.” ― Stephen R. Covey

 

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Nash Equilibrium -Mental Model 083

Navigating Selfishness In Group Dynamics 

Every person in a group makes the optimal decision for himself, based on what he thinks others will do. And nobody can do better by changing strategy: every member of the group is doing as well as they possibly can.

 

Example: The prisoner’s dilemma is the classic Nash Equilibrium example: Two accomplices are locked in separate cells. Each is offered three choices by police:

  1. If both confess, both will be jailed for five years.
  2. If only one confesses, he will be freed but the non-confessor will be jailed for ten years.
  3. If neither confesses, both will be tried for a minor offense and will be jailed for one year.

For each prisoner, confessing is the best option: no matter what they think the other prisoner will do. If the other doesn’t confess, confessing will set them free. And if the other does confess, then they must confess themselves to avoid ten years jail time.

 

Wisdom: “Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live.” ― Oscar Wilde

 

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Zero-sum vs Non-zero-sum -Mental Model 082

The Attitude That Determines Cooperation Or Competition 

A zero-sum situation means for someone to gain something, someone else must lose something. In contrast, a non-zero-sum situation is when the aggregate gains of a group is greater than their aggregate losses.

 

Example: A cake is an example of a zero-sum situation. If you take a larger piece, there is less available for everyone else.

 

Knowledge is an example of a non-zero-sum situation. The more we understand about the universe, the better off we all are. Nobody is worse off for having a more accurate understanding of reality. A cake recipe is non-zero-sum.

 

Wisdom: “It is sort of a bit of a caricature of capitalism, that it’s always this zero-sum game where you have winners and losers. Silicon Valley, the technology industry at its best, creates a situation where everybody can be a winner.” — Peter Thiel

 

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Organisational Debt -Mental Model 081

The Debt That’s Not On Your Balance Sheet 

The short-term sacrifices of a company that will inhibit its long-term performance.

 

Example: Steve Blank wrote about a CEO of a startup. It had a revenue of $40M the previous year. It was expecting to hit $80M the coming year.

 

To keep up with the growth, they had doubled their employees from 100 to 200 in the previous year. They were looking to double it again to 400 in the coming year.

 

Yet, despite intending to expand their workforce, they were accumulating organisational debt. Why?  Because they did not having training programs for the influx of new employees. So they would have trouble retaining their existing recent hires who were working for intern-like salaries with no training and  little equity.

 

The new hires will help in the short term, but if the organisational debt is not dealt with, it will hurt the company in the long run.

 

After talking with Blank, the CEO realised they needed to avoid the organisational debt, and developed a plan to manage new hires, reorganise original hires and increase the remuneration of key employees, and re-examine the company culture.

 

Wisdom: “Just when things should be going great, organizational debt can turn a growing company into a chaotic nightmare.” — Steve Blank

 

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