Building a Smarter Future with Clear Thinking

Each week on my podcast I ask guests for a book they think our listeners should read. One of the areas I quench my curiosity is in books. So, this section helps build my personal bookshelf.?

Over time, many people reach out asking me what books to read.?

This is why I plan to do monthly write ups on books I am reading. The intention is to provide a cliff note version for those that just want the core of the book. Or to provide a running bookshelf for those that want to dive into more books.?

This month we are diving into a book that has influenced me greatly.?

Book: Clear Thinking

Author: Shane Parrish

Rating: 4.8* (out of 5)

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We react to a comment. We take quick action without thinking. We then regret it or rationalize for it as just who we are or the current state of the world.?

The book Clear Thinking challenges this narrative and digs into the “why” behind these actions.?

Simply put, our brains create roadblocks to fulfillment, success and happiness. Knowledge provides us with a GPS to route around such roadblocks. This book is our GPS.?

The map starts with awareness and moves to taking action and ultimately building self confidence. It’s a circular route that never should end.?

Awareness

Emotions wipe out our effort

In multiplication, we see exponential returns when we add in positive variables. For instance, multiplying 2 * 4 provides us more than just adding 2 + 4.?

Multiplication is powerful.?

But the downside is that one numeral eliminates that power… 0.?

Multiply anything by 0 and we wipe out all of the gains.?

In life we learn that the power of work / effort multiplied with time provides us maximum output.?

But just like in math, there is one variable that brings all of our output back to null.?

Emotions.?

In any equation in our life, our desired output will be controlled by how we manage the emotion variable of the equation. The moment we input emotion is the moment we eliminate progress.

This leads to the equation of life being:?

Effort Time Emotions = Output

The emotions variable has a default value of 1, creating minimal impact to output. The moment emotions become present, this variable gains a value of 0. Negating any effort or time that we have put into such an area.?

This is one of those obvious concepts. But the simplicity and obvious nature causes us to neglect it. And awareness is the only way to maneuver around it.?

The Defaults

Shane Parrish discussed many defaults that humans fall prey to. As I read through these, I understood these. I’ve realized them. But I also knew I continue to fall prey to them at times.?

Here are a few of the discussed defaults:?

• Inertia Default: The more familiar we are with something the less innovative / iteration we will make on the concept or idea. Our minds fall prey to inertia. Familiarity narrows our attention and we speed forward with that concept. It’s comfortable. Change is not.?
• Status Quo Default (Coined based on some of the concepts Shane presents): The larger the group the more conformity that will occur. Large groups applaud consistency and efficiency as opposed to challenging.?
• Social Default: The higher the threat to our self worth, perception or social status the more emotional we will be towards the idea / concept / action.?
• The Emotion Default: As our emotions towards an idea or concept increase, the lower the impact additional facts will have on our perception. The gap between rational and emotional widens the more strongly we feel about something.??
• The Ego Default: Our internal desire to feel right overpowers our desire to be right. Meaning we want the credit as opposed to being open to using all opinions and insights to find the true right answer… even if it disproves us.?

The Dual Threat

The exposure to some of these cognitive biases has been magnified in the past couple of decades. And this isn’t really a coincidence.?

As our world has become more socially connected and also more polarized than ever, we are being exposed to the two variables that have the greatest impact on our ability to make progress.

• Comparison: The phrase of “keeping up with the Joneses” has long been common in our industry. Yet, the ability to “see” the Joneses in action is easier and more prevalent than ever before. The ability for others to control their social perception makes it harder than ever to avoid comparison.?
• Pessimism: Since the day homosapiens were created, there has always been something to point to that is negative. This stance doesn’t create progress. With access to information today and the revenue model of the media, we are in a world that profits off of negativity.?

These two points encompass much of the approach by Shane through the book. They make us say “duh.” We knew that.?

Which is a deep point of the book and what Shane wants us to realize.?

There is a difference between knowing something and truly being aware of something. Knowing is the idea that some variable has driven some action. Awareness is the act of knowing when this variable is present and leveraging tools to stop it, divert it or overcome it.?

Awareness is acting on knowledge to make change.?

Action

Not 1 Thing

Breaking news… there is no silver bullet.?

The solution lies in taking small actions, continuously. And stacking the small wins. This stacking of small actions allows us to breed confidence (the third pillar of this journey).?

Every action that we take provides us new information. This information would not be known had we avoided acting and just analyzed. Being prepared is great, but ultimately action generates the value in understanding what we should do next.?

A key default of many is the need for perfection or finding the “right” action. Yet, there is no “perfect” action. It is impossible for us to gather every piece of information necessary to drive a decision. And then when we make a decision, there are so many variables (unknown unknowns) between making the decision and the point of the outcome that we could never predict these.?

Thus, the only way to gain new information and insight is action.?

Environment > Willpower

“What may look like discipline often involves a carefully created environment to encourage certain behaviors. And what may look like poor choices is often just someone trying their best to use willpower and bumping up against their defaults. The people with the best defaults are typically the ones with the best environment." (Shane Parrish, Clear Thinking)

So many motivational figures preach the idea of willpower. That we must be persistent in our efforts to get the results.?

Yet, we all know that it doesn’t matter how long or how hard we work, we won’t get a square peg in a round hole.?

This doesn’t negate the concept of persistence and willpower. But they are soundbites that miss a major point. Leveraging these skills must be focused and crafted in the right environment.?

A desire to be creative will be halted when your workspace is a mess and their constant interruptions. Crafting the right environment is key to generating creativity and change.?

Crafting the environment we want accentuates the power of persistence and willpower.?

The Power of 3

Our world is fast paced. Our Twitter / X feed is updated every second, same with our LinkedIn and Facebook feeds.?

The latest headlines are delivered instantly. Our notifications on our phone seem like a never ending scroll.?

We are living in an environment that makes it hard to digest, distill and truly understand the information we are exposed to.?

What does this lead to??

It leads to us picking the headline and restating this in a conversation. Yet, we don’t truly, deeply from multiple angles understand this.?

So, we say it and sound smart. The desired impact falls short. We have not been able to craft the comment in a way that will stick with the audience.?

The way to make points stick is to condense them. This doesn’t mean doing less work, rather it means doing more work.?

We do this by deeply understanding the point we want to make. We get as close to the source as possible, as opposed to playing a game of telephone with information.

We then leverage the power of analogies, metaphors and stories to relate the point we want to make.?

We have all heard of the idea to explain it to someone like they are a 5th grader. This is similar.?

The key to getting your point across is to be able to explain it in 3 sentences and have the other person understand it.?

This is a skill that may never be perfected. But should be continuously practiced. And the more we work at it, the more confident we will get.?

Confidence

Process Over Outcome

The results trap is the idea of grading our process based on the outcome.?

And we fall prey to this often.?

If our outcome is the desired outcome, then we feel that the process we took was correct. If our outcome is not the desired outcome, then we feel that external factors impacted our outcome.?

In reality, our focus should be on the process. And the idea of controlling what we can (the process), while iterating on this with new information derived from the outcomes.??

As we gain this acceptance, we grow our confidence. We become more comfortable with outcomes that are bad. Which breeds a deeper focus and iterative effort on our process. And leads to more action.?

Diminishing Returns of Information

When we lack confidence we tend to overcompensate by overanalyzing. We dig deeper, look further, analyze longer.?

And it is important to be thoughtful and understanding of the situation. But there is a balance. A balance that is only learned by taking action and doing.?

At some point in our analysis our brains craft a stance. And new information doesn’t shift it. Which then means that the additional research just delays action.?

And the delay is due to a lack of confidence. By taking action and learning, we get a better understanding of that sweet spot of when we have enough information and when we should take action.?

Habits Are Perpetual

Wedding anniversaries are rituals. These are days where couples celebrate their love for each other.?

On this day, couples tend to write sweet notes about their love for their spouse. They celebrate their love for each other.?

The ritual of this day gives us a reason to celebrate our love for our partner.?

We all know that we love our spouses every day. And we should celebrate our love each day. But life happens. And thus, this ritual is a reminder for us to take action on this mentality around love that we should take each day.?

Rituals or habits drive us to take an action that we know we should take. They cause us to put additional effort towards something. And to not just let it fall prey to the status quo.?

Habits create a focus for us to take the action we know we should take, but tend to avoid because of “life happening.” And as we see consistency in these habits, it bodes confidence to continue forward.?

What does this mean to my wealth management business??

The journey to clear thinking is about getting to a point where we are minimizing (not eliminating) the impact of our cognitive defaults on our decisions.?

The journey starts with us overcoming our own defaults. Then this allows us to better be able to take our clients through a journey for them.?

With this knowledge we can then act. Like in that client situation where they want a boat, yet it’s not financially sound. Yet, their social group is all buying boats. Allowing us the opportunity to ask thoughtful questions as opposed to just saying no or providing more facts. Because we know that “no” will not fly and data will fall on daf ears given the status quo default.?

Given the understanding of the results trap, we know clients will look at results only. Which creates opportunity to explore communication tactics and process improvements to limit this early and often in the relationship.?

Finally, lean in on helping clients create the environment and habits that help them to take small actions consistently. How? In financial planning, many of the tasks seem minimal, but they are a big deal to the individual. So, spend more time breaking it down and giving them smaller actions (as small as possible). And make the actions easily executable in a short time.?

Stacking wins will accelerate action and motivation.?

An action to try

Shane Parrish discussed that a deep understanding of a topic lies in our ability to have someone understand it within 3 sentences.?

So, take this one step farther with your clients. Are you able to explain, to someone who doesn’t know your clients, who a specific client is and their triggers & desires in just 3 sentences??

Try it out, we may learn something.?

Additional Resources

If you have a desire to learn more about mental models, check out the mental models section of Shane Parrish’s blog here: https://fs.blog/mental-models/ ?

And if you want to dig deeper into the book on your own, here is a link to purchase Clear Thinking.