It’s not all bad, though; these are natural laws that can be used for good or bad. The nuclear critical mass can be used for relatively safe, essentially unlimited nuclear energy, or the nuclear critical mass could be the delivery mechanism of a catastrophic nuclear winter. In any case, these mental models are playing an increasing role in society as we get more and more connected. As technologies and ideas spread, you will be better prepared for them if you can spot and analyze these models—how S curves unfold, where tipping points occur, how network effects are utilized. And if you are trying to gain mainstream adoption and long-term inertia for a new idea or technology, you will want to understand how these models directly relate to your strategy.
ORDER OUT OF CHAOS
Many global systems, including the economy and weather, are known as chaotic systems. That means that while you can guess which way they are trending, it’s impossible to precisely predict their overall long-term state. You can’t know how a particular company or person in the economy will fare over time or exactly when and where an extreme weather event will occur. You can only say that it seems like the unemployment rate is moving down or that hurricane season is coming up.
Mathematician Edward Lorenz is famous for studying such chaotic systems, pioneering a branch of mathematics called chaos theory. He introduced a metaphor known as the butterfly effect to explain the concept that chaotic systems are extremely sensitive to small perturbations or changes in initial conditions. He illustrated this concept by saying that the path of a tornado could be affected by a butterfly flapping its wings weeks before, sending air particles on a slightly different path than they would have otherwise traveled, which then gets amplified over time and ultimately results in a different path for the tornado. This metaphor has been popularized in many forms of entertainment, including by Jeff Goldblum’s character in the 1993 movie Jurassic Park and in the 2004 movie The Butterfly Effect, starring Ashton Kutcher.
THE BUTTERFLY EFFECT
The fact that you are surrounded by chaotic systems is a key reason why adaptability is so important to your success. While it is a good idea to plan ahead, you cannot accurately predict the circumstances you will face. No one plans to lose their spouse at a young age, or to graduate from college during an economic downturn. You must continuously adapt to what life throws at you.
Unlike an air particle, though, you have free will and can actively navigate the world. This means you have the potential to increase the probability of a successful outcome for yourself. You can at least attempt to turn lemons into lemonade by using these chaotic systems to your advantage. For example, some studies show that businesses started during a recession actually do better over time, and research by the Kauffman Foundation, summarized in “The Economic Future Just Happened” in 2009, found that the majority of Fortune 500 companies were started during tough economic times.
We’re sure you can point to times in your history when a small change led to a big effect in your life. It’s the “what if” game. What if you hadn’t gone to that event that led to meeting your spouse? What if you had moved into that other apartment? What if you had struck up a relationship with a different teacher or mentor? That’s the butterfly effect at the most personal level.
One way to more systematically take advantage of the butterfly effect is using the super model of luck surface area, coined by entrepreneur Jason Roberts. You may recall from geometry that the surface area of an object is how much area the surface of an object covers. In the same way that it is a lot easier to catch a fish if you cast a wide net, your personal luck surface area will increase as you interact with more people in more diverse situations.
If you want greater luck surface area, you need to relax your rules for how you engage with the world. For example, you might put yourself in more unfamiliar situations: instead of spending the bulk of your time in your house or office, you might socialize more or take a class. As a result, you will make your own luck by meeting more people and finding more opportunities. Thinking of the butterfly effect, you are increasing your chances of influencing a tornado, such as forming a new partnership that ultimately blossoms into a large, positive outcome.
You obviously have to be judicious about which events to attend, or you will constantly be running to different places without getting any focused work done. However, saying no to everything also has a negative consequence—it reduces your luck surface area too much. A happy medium has you attending occasional events that expose you to people who can help you advance your goals. Say no often so you can say yes when you might make some new meaningful connections.
Your luck surface area relates to the natural concept of entropy, which measures the amount of disorder in a system. In a clean room where there is a rule for where everything goes—socks in the sock drawer, shirts on hangers, etc.—there are not many possible configurations for everything in the room because of these strict rules. The maximum amount of entropy in this arrangement is small. If you relax those rules, for example by allowing clothes to go on the floor, there are suddenly many more possible configurations for everything in the room. The amount of possible disorderliness, the maximum entropy level possible for the room, has gone up significantly.
In this context, increasing your luck surface area means increasing your personal maximum entropy, by increasing the possible number of situations you put yourself in. Your life will be a bit less orderly, but disorder in moderation can be a good thing. Of course, as we have seen so far, too much of a good thing can also be a bad thing. Too much entropy is just chaos.
We refer to our kids as entropy machines because they create disorder very quickly. They don’t follow rules for where their belongings go in their rooms, so the maximum possible entropy for their rooms is very high. Almost anything can go almost anywhere and ultimately their rooms can get pretty close to this maximum, resulting in a big mess. As entropy increases, things become more randomly arranged. If left to continue forever, this eventually leads to an evenly distributed system, a completely randomly arranged system—clothes and toys anywhere and everywhere!
In a closed system, like our kids’ rooms, entropy doesn’t just decrease on its own. Russian playwright Anton Chekhov put it like this: “Only entropy comes easy.” If our kids don’t make an effort to clean up, the room just gets messier and messier. The natural increase of entropy over time in a closed system is known as the second law of thermodynamics. Thermodynamics is the study of heat. If you consider our universe as the biggest closed system, this law leads to a plausible end state of our universe as a homogenous gas, evenly distributed everywhere, commonly known as the heat death of the universe.
On a more practical level, the second law serves as a reminder that orderliness needs to be maintained, lest it be slowly chipped away by disorder. This natural progression is based on the reality that most orderliness doesn’t happen naturally. Broken eggs don’t spontaneously mend themselves. In boiling water, an ice cube melts and never re-forms as ice. If you take a puzzle apart and shake up the pieces, it isn’t going to miraculously put itself back together again.
You must continually put energy back into systems to maintain their desired orderly states. If you never put energy into straightening up your workspace, it will get ever messier. The same is true for relationships. To keep the same level of trust with people, you need to keep building on it.
In Chapter 3, we discussed ways to proactively organize your time in order to spend this limited resource wisely, such as by using the Eisenhower Decision Matrix. Seen through the lens of entropy, your time, if left unmanaged, will start to go to random, largely reactionary activities. You will get pulled into the chaotic systems that surround you. Instead, you need to manage your time so that it is in a state of lower entropy. When you are able to make time for important activities, you are more easily able to adapt to your changing environment because you have the ability to allocate time to a particular important activity when needed.
To apply the
Eisenhower Decision Matrix usefully, though, you need to assess properly what is an important activity and what is not. Given the butterfly effect and the fact that you must interact with chaotic systems like the economy, making these determinations can be challenging. This is especially true when deciding how and when to pursue new ideas, where an unexpected encounter can reveal new and important information.
To make these determinations, you must therefore seek to understand and simplify chaotic systems like the economy so that you can successfully navigate them. All the mental models in this book are in service of that general goal. You can also develop your own models, such as by making your own 2 × 2 matrices like the Eisenhower Decision Matrix. Below is one we made up relating specifically to helping you determine what events you might want to attend.
Low-cost events
High-cost events
High-impact events
Attend
Maybe attend
Low-impact events
Maybe attend
Ignore
You can use this 2 × 2 matrix to help you categorize events as either high or low impact and high or low cost (time, money, etc.). You want to attend high-impact, low-cost events, and ignore low-impact, high-cost events. The other two quadrants are more nuanced. If there is a high-impact, high-cost event, such as a conference far from where you live, it may be worth going to depending on the specifics of the event and your particular situation: do you have the time and money to go? Similarly, if there is a low-impact event down the hall that will take only an hour of your time, it might be worth attending because the cost is so low.
These 2 × 2 matrices draw on a concept from physics called polarity, which describes a feature that has only two possible values. A magnet has a north and south pole. An electric charge can be positive or negative.
Polarity is useful because it helps you categorize things into one of two states: good or bad, useful or not useful, high-leverage or low-leverage, etc. When you mix two groupings together, you get the 2 × 2 matrix. These visualizations are powerful because you can distill complicated ideas into a simple diagram and gain insights in the process.
While 2 × 2 matrices can be illuminating, they can also be misleading because most things don’t fall squarely into binary or even discrete states. Instead they fall along a continuum. For example, if you’re considering ways to make extra money across a set of possible activities, you don’t just want to know if you will make any money with each; you want to know how much, and how difficult it will be to generate new income from each activity. Winning the lottery will be significantly different from finding money on the ground or getting a part-time job. One simple way visually to introduce this type of complexity is through a scatter plot on top of a 2 × 2 matrix, which visualizes the relative values of what you are analyzing.
While polarity can be useful, when making comparisons you must be careful to avoid the black-and-white fallacy—thinking that things fall neatly into two groups when they do not. When making decisions, you usually have more than two options. It’s not all black and white. Practically, whenever you are presented with a decision with two options, try to think of more.
People are susceptible to the black-and-white fallacy because of the natural tendency to create us versus them framings, thinking that the only two options are ones that either benefit themselves at the expense of “others,” or vice versa. This tendency arises because you often associate identity and self-esteem with group membership, thereafter creating in-group favoritism and, conversely, out-group bias. Social psychologists Henri Tajfel and John Turner established research in this area, published as “The Social Identity Theory of Intergroup Behavior” in Political Psychology in 2013, that has since been corroborated many times. It showed that with the tiniest of associations, even completely arbitrary ones (like defining groups based on coin tosses), people will favor their “group.”
Outside the lab, this tendency toward in-group favoritism often fosters false beliefs that transactions are zero-sum, meaning that if your group gains, then the other group must lose, so that the sum of gains and losses is zero. However, most situations, including most negotiations, are not zero-sum. Instead, most have the potential to be win-win situations, where both parties can actually end up better off, or win. How is this possible? It’s because most negotiations don’t include just one term, such as price, but instead involve many terms, such as quality, respect, timing, control, risk, and on and on.
In other words, there are usually several dimensions underlying a negotiation, and each party will value these dimensions differently. This opens up the possibility for a give-and-take where you give things you value less and take things you value more. As a result, both parties can end up better than they were before, getting things they wanted more and giving things they wanted less.
In fact, this give-and-take is the basis for most economic transactions! Otherwise, without misinformation, misunderstanding, or duress, people wouldn’t make all these transactions. Zero-sum is the exception, not the rule.
Black-and-white and zero-sum thinking simply do not provide enough possible options, just having two. Recognizing that there are more options and dimensions can be desirable in many situations, such as business deals. The more terms of the deal you consider, the more possible arrangements of deal terms there are. If managed properly, this increases the likelihood of a successful deal for both sides, of finding that win-win state.
You can go too far, though. For example, in a complex business negotiation, you cannot discuss every word in the contract or else discussions will take forever, and you’ll never get a deal done. You must instead choose thoughtfully which words are worth discussing and which are not.
More generally, you must continually try to strike the right balance between order and chaos as you interact with your environment. If you let the chaos subsume you, then you will not make progress in any particular direction. But if you are too ordered, then you will not be able to adapt to changing circumstances and will not have enough luck surface area to improve your chances of success.
You want to be somewhere in the middle of order and chaos, where you are intentionally raising your personal entropy enough to expose yourself to interesting opportunities and you are flexible and resilient enough to react to new conditions and paradigms that emerge.
If you study the biographies of successful people, you will notice a pattern: luck plays a significant role in success. However, if you look deeper, you will notice that most also had a broad luck surface area. Yes, they were in the right place at the right time, but they made the effort to be in a right place. If it wasn’t that particular place and time, there might have been another. Maybe it wouldn’t have resulted in the same degree of success, but they probably would have still been successful.
Another pattern: many of the most influential figures (Bill Gates, Martin Luther King Jr., etc.) were at the center of major adoptions of ideas or technologies that swept through society via the critical mass models described earlier. In some cases, they created the new idea or technology, but more often they were the ones who brought the ideas or technologies into the mainstream. They created momentum and ultimately inertia by guiding the ideas and technologies through the technology adoption life cycle.
With deeper understanding of these models, you should be able to more easily adapt to the major changes that will come in your lifetime. You should also be able to spot them coming from afar and participate in them, as if you were catching a wave and having it glide you safely to shore. Being adaptable like this helps you in good times and bad. On the positive side, you can make better decisions with your life and career; on the negative side, you can be more resilient when setbacks and unfortunate events occur, and even help limit their negative effects.
KEY TAKEAWAYS
Adopt an experimental mindset, looking for opportunities to run experiments and apply the scientific method wherever possible.
Respect inertia: crea
te or join healthy flywheels; avoid strategy taxes and trying to enact change in high-inertia situations unless you have a tactical advantage such as discovery of a catalyst and a lot of potential energy.
When enacting change, think deeply about how to reach critical mass and how you will navigate the technology adoption life cycle.
Use forcing functions to grease the wheels for change.
Actively cultivate your luck surface area and put in work needed to not be subsumed by entropy.
When faced with what appears to be a zero-sum or black-and-white situation, look for additional options and ultimately for a win-win.
5
Lies, Damned Lies, and Statistics
DATA, NUMBERS, AND STATISTICS now have an everyday role in most professional careers, not just in engineering and science. Increasingly, organizations of all kinds are making data-driven decisions. Every field has people studying ways to do it better. Consider K–12 education: What is the most effective way to teach kids to read? How much homework should students be getting? What time of day should school start?
The same is increasingly true in everyday life: What is the best diet? How much exercise is good enough? How safe is this car compared with that one?
Unfortunately, there often aren’t straightforward answers to these types of questions. Instead, there are usually conflicting messages on almost every topic: for nutrition, medicine, government policy (environmental regulation, healthcare, etc.), and the list goes on and on.
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