#695: Shane Parrish on Wisdom from Warren Buffett, Rules for Better Thinking, How to Reduce Blind Spots, The Dangers of Mental Models, and More | Science vs

Intro

In this episode of the “Science vs” podcast, host Wendy Zukerman explores the wisdom of Warren Buffett and delves into the rules for better thinking, reducing blind spots, the dangers of mental models, and more. Shane Parrish, the entrepreneur and wisdom seeker behind Farnam Street and the host of the Knowledge Project podcast, joins Zukerman to discuss these fascinating topics.

Main Takeaways

Wisdom from Warren Buffett

• Warren Buffett’s insights and principles can provide valuable guidance for decision-making and investing.
• Positioning yourself for success involves having rules to follow, low debt, saving money, and having “dry powder” for opportunities.
• Successful decision-makers never find themselves out of position and take advantage of weaknesses in others’ positions.
• Investing in relationships is just as important as making the initial decision.

Rules for Better Thinking

• Mental models allow us to see problems through different lenses and avoid blind spots in decision-making.
• Cognitive biases arise from believing that what we see is all there is, while mental models help us look at the world through a different person’s eyes.
• Useful mental models include “and then what?” and inversion, which help in considering different perspectives and potential outcomes.
• Reflection is key to learning and development, involving learning things on your own, reflecting on them, and writing about them.

Reducing Blind Spots and Dangers of Mental Models

• Cognitive biases are good at explaining past mistakes but poor at preventing future ones.
• Creating a checklist of cognitive biases can lead to self-justification and rationalization.
• Building a business on content is hard, but sharing information and making it accessible can provide equal opportunities.
• Writing helps refine and generate new ideas, learn humility, and make the invisible visible.

How to Reduce Blind Spots and Improve Decision-Making

• Separating problem definition from problem solution is crucial for effective decision-making.
• Scrutinizing problem statements helps understand the problem and identify appropriate solutions.
• The person making the decision should be accountable for determining and communicating the problem and identifying fitting solutions.
• Automatic rules can prevent decision fatigue and create more cognitive and emotional bandwidth.

Importance of Positioning and Investing

• Positioning applies to various aspects of life, including health, relationships, and decision-making.
• Being well-positioned involves having rules to follow, low debt, saving money, and having “dry powder” for opportunities.
• Invest in things you understand and diversify when it makes sense.
• Maximize long-term returns, prioritize quality of life, and consider your own risk tolerance.

Summary

Wisdom from Warren Buffett

Shane Parrish and Wendy Zukerman discuss the wisdom of Warren Buffett and how his principles can guide decision-making and investing. They explore the importance of positioning oneself for success, being well-positioned in various aspects of life, and investing in relationships. The key is to never find oneself out of position and take advantage of weaknesses in others’ positions.

Rules for Better Thinking and Reducing Blind Spots

The conversation dives into the importance of mental models in decision-making and avoiding blind spots. Shane and Wendy discuss cognitive biases and the dangers of relying solely on them. They explore useful mental models such as “and then what?” and inversion, which help in considering different perspectives and potential outcomes. Reflection through writing is also highlighted as a key tool for learning and development.

How to Reduce Blind Spots and Improve Decision-Making

Shane and Wendy emphasize the importance of separating problem definition from problem solution for effective decision-making. They discuss the significance of scrutinizing problem statements to understand the problem and identify appropriate solutions. Automatic rules are also explored as a means to prevent decision fatigue and create more cognitive and emotional bandwidth.

Importance of Positioning and Investing

The conversation delves into the significance of positioning oneself in various aspects of life, including health, relationships, and decision-making. Shane and Wendy discuss the importance of having rules to follow, low debt, saving money, and having “dry powder” for opportunities. They also explore the key principles of investing, such as investing in things you understand, diversifying when it makes sense, and considering your own risk tolerance.

Conclusion

In this episode, Shane Parrish and Wendy Zukerman explore the wisdom of Warren Buffett, the rules for better thinking, reducing blind spots, and the importance of positioning and investing. They provide valuable insights and practical tools for decision-making, emphasizing the significance of mental models, reflection, and separating problem definition from problem solution. By applying these principles, listeners can enhance their decision-making abilities and position themselves for success in various aspects of life.