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First Principles#

1. Identify the fundamental principles;
2. Think and diverge from the perspective of these principles;
3. Practice and adhere to these principles, stay true to your original intention, and remember your mission;
4. In other words, trace back to the essence of things and rethink how to do it;
5. This can also be referred to as "the Way" or "the cornerstone."

 
How to innovate using first principles? In daily work and life, including during the entrepreneurial process, how can we apply first principles thinking?
 
Here are three key terms:

Zeroing: This is the starting point of first principles, returning to the most basic concepts and seeking the fundamental cornerstone.

Deconstruction: This involves using a physics mindset to break down phenomena, layer by layer, to find the breakthrough points for change.

Reconstruction: This means building a new track, a new model, and a new method to replace the original one.

Case Study 1: Lianjia:

How did Lianjia Real Estate achieve a valuation of over 40 billion and become a giant in China's second-hand housing market? At that time, almost all the information registered on second-hand real estate websites was fake listings, using low prices to attract customers to call. When customers saw such cheap prices, they would be deceived upon calling, as the salespeople would say that the house had already been sold. With their phone numbers, they could recommend listings every day. As a result, customers always felt cheated, but the entire second-hand real estate brokerage industry operated this way. The owner of Lianjia was quite remarkable; he used first principles to think about this problem:

Zeroing: Sales involve dealing with people, selling things, and serving customers, so the first principle is sincerity and customer-centricity. Returning to basic human nature, being honest and kind, and avoiding too many tricks—doesn't that make the game exhausting for both sides?

Deconstruction: Deconstruct the sales process using a physics mindset, analyzing which aspects influence sales in each step.

Reconstruction: Based on authenticity and customer-centricity, rebuild the sales process and methods.

The owner decided that all information published online by Lianjia would be genuine listings, prohibiting any form of fraud. This caused a stir in the entire second-hand housing transaction market. At that time, Lianjia's sales performance declined, and peers looked down on them, leading to a sharp drop in sales. However, it quickly rebounded with rapid growth because consumers felt that Lianjia would not deceive them, believing that Lianjia's listings were all genuine. This trust from users and quality service allowed Lianjia to stand out, attracting investments from renowned companies like Vanke, rapidly developing into a giant in China's second-hand housing market.

Case Study 2: Google:

"Convenient access to content" is more important.

In the early days of the internet in the 1980s, most internet companies focused on providing various website content for netizens. Those born in the 80s might remember logging onto portals like Sohu and Sina as soon as they went online. However, more than a decade earlier, two young men believed that how to allow users to "conveniently access content" was more important than the content itself, which would create a trillion-dollar market potential. At that time, the total number of netizens was small, content on the internet was scarce, and many services were still paid. If these two young men promoted this idea, the public would scoff, and no one would consider them visionary.

But history has proven that the views of a minority are often correct. These two young men were Larry Page and Sergey Brin, the founders of Google. Their core insight into the internet industry—"convenience and free"—has run through Google's entire journey from establishment to prosperity.

Case Study 3: Apple:

What is Steve Jobs' first principle? Simplicity. You can see that Apple's products are very beautiful and very simple, a perfect blend of technology and art. When designing the iPhone, he also applied first principles.

Zeroing: Nokia represented feature phones, which all had keyboards. If one were to design a phone using traditional thinking, it would involve making the keyboard look nicer. Jobs looked down on these feature phones, so he wanted to reinvent the phone, starting from scratch.

Deconstruction: A phone consists of several components. Jobs' first principle was simplicity. Could some components be removed entirely? Using a physics approach to deconstruct various phenomena, some technologies could be completely realized.

Reconstruction: Reorganizing tens of thousands of parts, the biggest change was removing the keyboard and using touchscreen technology. At the iPhone launch event, Jobs stated that Apple had reinvented the phone, ultimately overturning the mobile giant Nokia (even though Nokia was the first to develop touchscreens).

Case Study 4: Corporate Management:

1. A company is a collection of people, and corporate management is essentially managing people. A group of people works together towards a common goal;
2. People management should be people-oriented, with the highest aim being to serve the people; the slogan of the state and the party reflects this. The purpose of a company should be: profit, benefiting everyone;
3. People's satisfaction includes: material satisfaction, value affirmation (sense of achievement), and personal improvement (capability);
4. It is essential to determine that the direction is correct, achievable, and to set phased goals, using language to motivate, achieving a sense of accomplishment, and rewarding gains;
5. Reflect on and summarize issues in practice, determine the direction, and continue moving forward;

Sources:

1. First Principles - Elon Musk's Thinking Method

2. How to Use Musk's "First Principles" for Thinking

Deliberate Practice#

You've probably heard of the "10,000-hour rule": If we train for 10,000 hours in our field, we can achieve great success in that area.

However, many people strictly adhere to it as a success rule, yet ultimately do not become experts. Why is that? A taxi driver may drive for 10,000 hours over three years, but why is their driving skill not on par with a professional race car driver who trains for just one year? How can this phenomenon be explained?

Deliberate Practice: It explains how a professional race car driver's 2,000 hours of training can surpass a taxi driver's 10,000 hours of training. The principle is: it requires practitioners to focus intensely on achieving phased goals, growing and acquiring skills. The practice steps are divided into four:

Step 1: Set Scientific Goals and Training Plans

Analyze tasks, break them down into granular parts, set phased goals, and create a reasonable training plan.

Step 2: Repeat Training in the Learning Zone

What is the learning zone? First, understand a theory, the concentric circle theory. When people learn and practice a skill, there are three zones: the first is the comfort zone, the second is the learning zone, and the third is the panic zone.

The learning zone is slightly painful; challenge yourself a bit, and you can accomplish it.

Step 3: Obtain Continuous High-Quality Effective Feedback: Timeliness, objectivity, effectiveness.

It is harder to break an old habit than to form a new one, so avoid practicing incorrectly or going off track. Adjust based on feedback (timely, effective) and find ways to obtain continuous and effective feedback.

Step 4: Create High-Quality Mental Representation Models

Mental representation is the visualization of an abstract concept; it is a model, a way of summarizing and generalizing. It is the abstraction of things being concretized. There are many excellent models, such as the pyramid principle, decision trees, and mind maps.

Pyramid Principle#

Understanding the pyramid principle helps improve logical thinking and presentation skills; the pyramid is a very stable structure.

How to use the pyramid principle to plan logic and guide writing?

Express from top to bottom, think from bottom to top, summarize vertically, categorize and group horizontally, tell stories in the introduction, and distill the essence of thoughts in the title.

Writing and organizing thoughts generally require four steps:

1. Write the introduction, SCQA model

   Background: A student asked me a question during my training class; this is the background.

   Conflict: He wants to speak well, but the leader thinks he doesn't speak well, and his logic is unclear, asking him to go back and reorganize his thoughts.

   Question: How to improve logical thinking ability?

   Answer: Learn the pyramid principle.

2. Naming, main title, and subtitle

   Use highly abstract language to summarize all your content in one sentence, adopting a central idea, called conclusion first.

3. Build the framework, chronological order, spatial order, degree order (above governs below, categorize and group)

   Narration should have order, making thoughts clear, allowing listeners to follow along more easily.

4. Define content, viewpoints, data, cases (logical progression, MECE)

   MECE: "Mutually Exclusive, Collectively Exhaustive," simply put, means no overlap and no omissions. When dividing a whole, whether it is an objectively existing or conceptual whole, the parts must meet the following requirements:

   1. The parts must be mutually exclusive (Mutually Exclusive), meaning the content is subdivided along the same dimension with clear distinctions and no overlaps.

   2. All parts must be collectively exhaustive (Collectively Exhaustive), meaning comprehensive and thorough. Mutual exclusivity means no overlaps, and collective exhaustiveness means no omissions; each piece of content has its place and order.

The pyramid principle has four characteristics:

1. Conclusion first, meaning a central idea; in one sentence, explain what you want to do.

2. Above governs below; any thought extending from this sentence must summarize the thoughts of the next layer, establishing a pyramid of ideas.

3. Categorize and group; thoughts within each group must belong to a unified category, organizing the abundant content well. MECE avoids omissions and overlaps, as seen in the content navigation categorization of JD and Tmall.

4. Characteristic four: logical progression; thoughts within each group must progress logically. All content must have logic. Logical reasoning unfolds through inductive and deductive methods. Inductive reasoning, simply put, is to summarize common features together. For example, the sun rose in the east the day before yesterday, it rose in the east yesterday, and it also rises in the east today. Summarizing, the conclusion is: the sun always rises in the east. This is inductive reasoning. Deductive reasoning is based on an existing correct hypothesis to derive conclusions.

The core of the pyramid is:

1. A model: Background, Conflict, Question, Answer (S-C-Q-A)

2. Two types of reasoning: Deductive reasoning, Inductive reasoning

3. Three logics: Chronological order, structural order, degree order

4. Four characteristics: Conclusion first, above governs below, categorize and group, logical progression.

5. Conclusion first and above governs below reflect the vertical connections between various viewpoints, while categorizing and grouping, and logical progression reflect the horizontal connections. These vertical and horizontal connections clearly and tightly form the overall pyramid structure.

Mind Mapping#

It is a thinking method that combines left-brain logic and right-brain creativity.

What is the difference between knowledge and wisdom?#

Knowledge: It is the understanding and experience gained by people in practice, the cognition of the objective world.

Wisdom: It is the ability to harness knowledge and solve problems.

How to harness knowledge to solve problems?#

You can use mind mapping, which has the following characteristics:

1. Focus on the logic of structure and content;
2. Using the connections of mind maps to decompose problems makes it easier to see the key points;
3. Listing key points helps analyze problems and reduce omissions;
4. Abstracting into concrete forms makes thinking clear and orderly, making it easier to find the key solutions;
5. Structured visual graphics help unleash right-brain creativity;
6. The extensibility of mind mapping aids in deep thinking;
7. It is a combination of creativity and logic;

Mind mapping is the structuring, visualizing, and systematizing of knowledge, connecting it for easier memory and mastery, composed of lines, symbols, keywords, pictures, etc. For example:

[Ninth Symphony]

[Meeting Minutes]

[Speech]

[Growth Plan]

Forbidden Fruit Effect#

When my son was young, eating was quite a hassle; he would drag it out, taking half an hour to eat was common! So I racked my brain to figure out how to make him eat on time and quickly.

I found a box and hid his favorite candies inside, placing it on the dining table. Then I said to him: "Son, do you know what's inside this?" He asked, "What is it, Dad?" I said, "I can't tell you yet. If you want to know what's inside, you must quickly finish your meal, and then I'll let you see; it must be something you like."

So he immediately started eating his meal and finished in less than ten minutes. He quickly opened the box and exclaimed, "Wow! It's my favorite candy!" He was very happy.

Later, I learned that this is known in psychology as the forbidden fruit effect. The more you don't let him know what's inside, the more he wants to know, which is why he could eat quickly to exchange for it.

The Concept of the Forbidden Fruit Effect in Psychology#

The more something is prohibited, the more people want to obtain it. The more information is concealed, the more it arouses curiosity and desire for exploration, prompting others to find ways to obtain the concealed information. This phenomenon, caused by unilateral prohibition and concealment, is known as the forbidden fruit effect in psychology, also referred to as the Adam and Eve effect or the Romeo and Juliet effect.

Examples of the Forbidden Fruit Effect#

1. Romeo and Juliet: The more their families oppose, the more intense their love becomes.
2. Xiaomi: Lei Jun's early promotion was effective, but there was no stock to grab, so he called friends to rush; promotion and hunger marketing.
3. Counterexample: Some things do not need to be concealed; there is no need to feel embarrassed. We should address them correctly.

Path Dependence#

WHAT: What is it?

The technological evolution or institutional change in human society has a similar inertia to that in physics; once a path is entered (whether "good" or "bad"), it will continue to develop along that path and become locked into it. The power of inertia will continuously reinforce this choice, making it difficult to break free.

WHY: Why does it occur?

Path dependence can be divided into three categories based on the degree of dependence:

• Low path dependence
• Moderate path dependence
• High path dependence

The higher the degree of dependence, the stronger the locking effect, making it harder to break free.

Impacts of Path Dependence:

1. Positive impact: Correct direction, walking on the right path, a virtuous cycle, the strong get stronger.
2. Negative impact: Going in the wrong direction, creating a quagmire effect through inertia and momentum, a vicious cycle.

WHY & HOW: Reasons and solutions

Reasons for path dependence:

1. Sunk costs & the ability to abandon them?
2. Interest chains involved, resistance to reform & no pain, no gain.
3. Habits and inertia; when confused, moving forward by inertia & thinking clearly, keeping up with the times, innovating concepts, being vigilant, preparing for the future, maintaining a learning state, and always being ready to move in the right direction.
4. The complexity of change & clarifying the route, proceeding step by step.
5. Changes in the larger environment limit choices; for example, Didi seizing market share means customers must choose Didi to quickly get a ride, establishing a huge network for strong locking.

Famous Quotes:

Ren Zhengfei mentioned in "Huawei's Winter" that Huawei's bankruptcy is inevitable; now is spring, but winter is not far away. We must think about winter issues in spring and summer.

The winter of the IT industry may not be winter for other companies, but for Huawei, it could be a harsher winter. Huawei's winter may come colder and sooner. We are still too young; our company has developed smoothly for ten years without experiencing setbacks. Without setbacks, we do not know how to find the right path.

Adversity is an asset, and our lack of it is our greatest weakness. We are completely unprepared psychologically and skill-wise for not developing.

Li Ka-shing: 90% of the time thinking about failure.

Bill Gates: Microsoft is always only 18 months away from bankruptcy.

Robin Li: Baidu is only 30 days away from bankruptcy. Don't think we are number one now; if you stop working for 30 days, the company will be finished.

Smart and wise entrepreneurs are good at being vigilant and preparing for the future; a sense of crisis allows them to persistently strive.

The theory of "path dependence" explains many phenomena, from personal career choices to corporate development and national institutional changes. It is a classic objective law that helps us better understand the world. Of course, every theory has its limitations and cannot explain all phenomena. Let us deeply analyze the theory of path dependence and combine it with other thinking models to help us reach new heights in our personal career development.

Design Thinking#

"Design thinking is a human-centered approach that utilizes the sensitivity and methods of designers to meet people's needs while ensuring technical feasibility and commercial viability." —— Tim Brown, President of IDEO Design Company

WHAT: What is it?#

It has two core concepts: human-centered design + empathy. From understanding customer needs to constructing solutions and validating prototypes, the entire process comprehensively considers human values, technical feasibility, and commercial possibilities, aiming for truly effective commercial innovation. The core foundation is human-centered, serving people.

Human Values: Innovative products and services must meet customer needs, solve customer problems, and be distinct from other products and services, even unique; the key is novelty. For example, electric vehicles are new, differing from traditional fuel vehicles.

Technical Feasibility: Designers' creativity relies on intuition and imagination, but whether a conceptual creation can be realized requires thorough technical feasibility analysis at the existing technological level. Through technical feasibility analysis, designers and decision-makers can clarify the boundaries of the technical resources available to the organization or relevant personnel. It is essential to consider the limitations of technological development levels and existing manufacturing capabilities, as well as the analysis of team technical development capabilities, required personnel, and development time.

Commercial Viability: Analyze innovative products or services from a commercial value perspective to determine whether they can achieve commercial value. If the commercial viability is low, and the existing social and economic environment cannot realize commercialization, we need to rethink the innovative products or services.

WHY: Why learn it?#

Design thinking can bring about a change in thinking patterns, which is conducive to innovation.

Design thinking is more aligned with customers; it considers from a human-centered perspective, not just providing an answer to a problem but meeting customer needs and expectations. It does not rely on logical analysis for solutions but on insights combined with intuition, representing a form of innovation.

Innovation has five types:

1. Product Innovation: Creating a new product, which is unfamiliar to consumers, such as inventing a new phone or car.

2. Technological Innovation: Adopting a new production method or technology, such as graphene technology. If electric vehicles can be charged in 5 minutes and drive 1,000 kilometers, and can be commercialized, it would likely disrupt the automotive market.

3. Market Innovation: Opening a new market, which refers to a manufacturing sector in a country that has not previously entered a market, regardless of whether that market existed before. For example, many domestic companies can go out and explore markets in Europe, America, and Africa, which falls under market innovation. Of course, many foreign trade companies doing OEM work, if they develop the domestic market, also belong to market innovation.

4. Resource Allocation Innovation: Acquiring or controlling a new supply source for raw materials or semi-finished products. For example, a company controlling a resource can be tangible or intangible. Alternatively, companies can allocate resources internationally; for instance, many American companies conduct research and development in Silicon Valley, production in China, and customer service in India, all of which fall under resource allocation innovation.

5. Organizational Innovation: Establishing a new organizational form through reform and innovation, such as Japan's Kyocera's Amoeba model, Han Du Yi She's team empowerment, and Haier's "one person, one unit" model, all belong to organizational innovation.

IBM's Design Philosophy:

IBM's designers are mainly divided into five directions: graphic design, user experience design, front-end development, industrial design, and design research. Some team members have diverse backgrounds, including anthropology, psychology, social experts, and media experts, collaborating closely with interdisciplinary talents and designers.

IBM conducts in-depth understanding of users, quickly generating ideas, testing them among consumers, seeking user feedback, and continuously optimizing the final user experience based on this feedback. At the same time, design thinking is integrated with IBM's expertise in big data, cloud computing, mobile, and social aspects.

How: Five Steps of Design Thinking#

Step 1: Empathy: Gather the real needs of the subjects.

There are three methods:

1. Observation Method

   People	Actions	Objects	Messages	Environment
   What kind of people are observed? What are their emotions?	What are they doing?	What tools are they using?	How do people communicate? What are they saying?	What is the surrounding environment?

2. Interview Method (5W1H tool): Listen to the voices of customers; there may be different discoveries.

   • What: What is it? For example, what is the purpose? What work is being done?
   • How: How to do it? How to improve efficiency? How to implement it, etc.?
   • Why: Why? Why do it this way? What are the reasons?
   • When: When? For example, when will it be completed?
   • Where: Where? For example, where to do it? Where to start?
   • Who: Who? For example, who will complete it? Who is responsible?

3. Experience Method (Empathy Tool): Only by becoming a customer can one better understand the customer, truly starting from the customer's perspective. Participate in tasks with customers, experiencing everything from their viewpoint, thus discovering customer needs.

   Case Study: Pirate Ship CT Scanner

   Through walls, floors, props, and gamified guiding language, the CT scan room turned into a "Pirate Ship Experience Hall," creating a themed fun scene. For children, the serious and scary medical examination became a game and an adventure.

   The Pirate Ship CT Scanner case fully reflects a user-centered problem-solving approach. While meeting the needs of child patients, it also improved the hospital's examination efficiency.

Step 2: Define: Analyze the various needs collected and refine the problem to be solved.

Describe the problem in one sentence: Who? What is needed? What have I discovered? (Stakeholders, Needs, Insights)

Defining the problem is crucial; surface issues may not be the real problems. Just like before inventing the car, if you asked customers, they would always want a faster horse-drawn carriage, while their real problem was how to reach their destination faster.

Step 3: Ideate: Open your mind; the more creative ideas, the better.

1. Three Elements of Preparation Before Ideation:

Space: Find an open and creative space where everyone can relax mentally.

People: Invite industry experts, direct customers, and relevant internal experts to form a cross-disciplinary team.

Creative Confidence: Creative confidence refers to the belief in one's ability to change the surrounding world. Those with creative confidence have a strong sense of self-efficacy, believe they are creative, and dare to try in uncertainty without fearing failure. Professor Simonton from the University of California found that those labeled as creative simply made more attempts and shot at the target more times. Being willing to try and embrace failure is more important than having a natural talent for creativity. David Kelley, the founder of IDEO, mentioned that his mission is to help people enhance their creative confidence to change the world.

2. Divergent Thinking: Brainstorming method.

Mental Relaxation: Start with a small game to put participants in a relaxed physical and mental state.

Free Discussion: Participants should not be restricted by any rules; relax their thoughts and let their minds roam freely. From different angles, levels, and perspectives, boldly expand their imagination, striving for originality and uniqueness.

Delay Judgment: In brainstorming, it is essential to adhere to the principle of not evaluating any ideas on the spot. Neither affirm nor deny any idea, nor comment on any idea. All evaluations and judgments should be postponed until after the meeting. This approach prevents judgment from constraining participants' positive thinking and allows for focused idea development, avoiding premature work that could hinder the generation of creative ideas.

Prohibit Criticism: Absolutely prohibit criticism is an important principle of brainstorming. No participant should criticize others' ideas, as criticism undoubtedly suppresses creative thinking. Some people tend to use self-deprecating language, which can also disrupt the atmosphere and hinder free thinking.

Pursue Quantity: The goal of brainstorming meetings is to generate as many ideas as possible; pursuing quantity is the primary task. Every participant should take the time to think and propose ideas. As for the quality of ideas, that can be addressed in the post-meeting idea processing phase. In a sense, the quality of ideas is closely related to their quantity; the more ideas generated, the more likely there are to be creative ideas among them.

Visual Presentation: Try to present ideas visually (hand-drawn) or create two-dimensional or three-dimensional models using available materials or demonstrate using body language for better understanding of the creativity.

Three Taboo Points in Brainstorming:

The boss speaks first;

Only experts are allowed to speak;

No strange or silly ideas are allowed;

It should be a space without hierarchy or expertise, where creativity and wild ideas can flourish; the time can be adjusted as needed, typically around 30-60 minutes, to quickly gather as many ideas and creative thoughts as possible.

3. Convergent Thinking: Mind Mapping + Voting Method

Organizing with Mind Mapping: Use mind mapping to categorize and link disparate ideas, forming a large mind map, or use mind mapping software for organization.

Step 4: Prototyping: Bring ideas from your mind into tangible form.

Create a realistic physical model or drawing based on the product's usage scenario, demonstrating how people might use the product or service, and then create a rough model to communicate with customers or users for their feedback to improve the product. As the saying goes, a picture is worth a thousand words. Similarly, a good model is worth a thousand pictures. By creating models, innovative ideas can be showcased, communicated, tested, and improved.

The model-making phase is crucial and adheres to the 3R principle: Rough, Rapid, and Right. Do not pursue perfection.

Prototyping Suggestions:

Speed (Pursue Speed): Model-making should be quick and inexpensive, avoiding wasting time on complex concepts.

Rough (Not Seeking Precision): Focus on showcasing design concepts, without spending too much effort on details.

Right (Correct Making): Appropriately showcase ideas and plans, ensuring correctness.

The purpose of creating models is not only to produce a working model but also to give ideas a concrete form, allowing for understanding of the strengths and weaknesses of the idea, finding new directions, and building a more detailed and precise next-generation model.

During presentations, actively invite customer participation, possibly presenting consumer experiences in the form of movie trailers, showcasing potential usage experiences of products and services after launch. It can also be designed as a skit, scenario play, or role-playing to simulate different types of consumers and demonstrate solutions.

Step 5: Testing: Optimize solutions.

Once the prototype is ready, present it to real users for testing. During testing, let users interact with it while observing. If there are minor convenient changes, improve them directly and have users test again. In short, do not get too attached to your own ideas.

Although the five steps of the design thinking methodology appear linear, in practice, they often cycle back and forth. This approach aims to continuously refine solutions, truly achieving "human-centered" design. Through repeated testing, solutions can become more mature.

Confirmation Bias#

In most cases, people tend to think about problems from a "confirmation" perspective rather than a "falsification" perspective. Confirmation is a form of inductive reasoning (most cases are incomplete induction). Conclusions drawn from incomplete induction are flawed, and we should prioritize considering all "potentially falsifiable clues" to verify the correctness of conclusions. During the confirmation process, varying degrees of bias may occur, known in psychology as confirmation bias. It is a self-justifying cognitive trap.

WHAT: What is Confirmation Bias?#

Confirmation bias refers to the tendency to seek evidence that supports a belief or viewpoint once a person has established it. With this tendency, one easily accepts information that supports this belief while ignoring information that contradicts it, even devaluing opposing viewpoints.

Similarly, once an entrepreneur makes a decision, they will seek various reasons to support that decision while ignoring opposing information or individuals, easily distorting objectivity and leading to decision-making errors.

WHY: Why does Confirmation Bias Occur?#

Humans are naturally inclined to rationalize. When we receive arguments against a particular answer, we instinctively reject them and attempt to interpret them in a way that favors us. For things we cannot accept, we try to twist them into what we hope they are. During the decision-making process, when faced with complex and vague issues, people often prefer to take shortcuts.

For example: Sour grapes—when unable to reach grapes, one claims they are sour; when finally tasting them, one says, "They're not that sour!"

For instance, police with potential racial biases often believe that Black individuals are more likely to engage in criminal behavior, leading them to treat small groups of Black individuals unfairly during law enforcement, thus confirming their biases. This is known as a stereotype. Regardless of how much a Black individual defends themselves or proves their innocence, the police may still believe they are being evasive.

In daily life, employing confirmation strategies can effectively save costs and reduce the price of errors, benefiting individual survival.

For example: When hiring salespeople, employers may only hire extroverted employees based on their better sales performance, which is clearly an insufficient criterion and may cause them to miss opportunities. However, at least it prevents making wrong decisions and helps save on recruitment costs. Error avoidance, from a pragmatic perspective, reflects a form of ecological rationality.

 
Anchoring Effect: This refers to when people need to make quantitative estimates about an event, they will use certain specific values as starting points, which constrain the estimated values like an anchor. When making decisions, they unconsciously give excessive importance to the initially obtained information.
 
Humans dislike chaotic states; from the universe and society to personal life and work, there are many unknowns and ambiguities. This uncertainty brings anxiety and fear or attraction and mystery. To eliminate these discomforts, people need to find certain answers to these unknown issues, ending ambiguity and chaos, which aligns with the psychological need for cognitive closure: finding answers to questions and life. This desire and motivation significantly influence confirmation bias.
 
In uncertain or ambiguous situations, individuals achieve cognitive closure through two stages: "seizing" and "freezing." In the "seizing" stage, individuals do not have a clear cognitive closure goal and need to form tentative judgments and hypotheses about the target through information search. In the "freezing" stage, they need to process the information obtained to form final judgments.
 
For example: In high-level strategic meetings, executives should be clear about whether the boss is in the "seizing" stage or the "freezing" stage. If in the "seizing" stage, executives should express their views and propose ideas that align with the company's development logic, helping to establish clear annual goals. If in the "freezing" stage, it is best not to make foolish comments; the boss has already entered a phase of confirming strategies and cognitive dissonance, and anything said would be futile. Instead, they should listen carefully, think critically, and implement accordingly. After the meeting, they can propose calibration plans after thorough falsification.
 
Personal experience can reduce the degree of confirmation bias. Individuals with relevant experience can spontaneously propose alternative hypotheses and make reasonable judgments and decisions through the analysis of different hypotheses. In contrast, individuals with less experience may overly focus on existing hypotheses, failing to consider other possibilities, leading to confirmation bias. The more experienced one is, the more they may defend their viewpoints based on existing experiences, intensifying the polarization of opposing views, but overall, this is beneficial.
 
Individuals often overly trust the accuracy of their judgments; once an evaluation is formed, it is not easily changed. People tend to persist in their beliefs, even when these beliefs gradually become convictions. When these beliefs contradict new data, individuals will still hold onto them.
 
Confirmation bias is just one factor in decision-making errors; criminals often utilize various methods, such as anchoring effects, bandwagon effects, vivid effects, cognitive illusions, reasoning fallacies, human weaknesses, and information asymmetry, to create a 1+1 greater than 2 effect. Why do so many people believe scammers? Primarily due to human greed. Ponzi schemes, pyramid schemes, etc.

HOW: How to Address Confirmation Bias?#

1. Diverse Thinking: Competitive Hypothesis Analysis

Consider and weigh various possible hypotheses and evidence relationships carefully, avoiding hasty conclusions.

2. Falsification Thinking: Thinking from the Opposite Side

The number of experiences needed to confirm a hypothesis is infinite, but falsifying it is different; one counterexample is sufficient to infer that the conclusion is false.

Learn to think in reverse, considering the opposite side of the problem. By contemplating the opposite side, individuals will consider information more comprehensively during searches and processing, making judgments and decisions more cautious. When faced with significant decisions, boldly apply falsification theory to minimize decision-making risks.

3. Scientific Experimentation: Double-Blind Experiments (Reduce Influencing Variables, Record Facts, Analyze Scientifically)

Double-blind experiments are a stricter experimental method, typically applicable to human subjects, aimed at eliminating potential subjective biases, personal preferences, and placebo effects that may arise in the awareness of both experimenters and participants. In double-blind experiments, neither the experimenters nor the participants know which participants belong to the control group or the experimental group. Only after all data has been recorded (and in some cases, analyzed) can the experimenters know which participants are in which groups. The use of double-blind experiments aims to reduce prejudices and unintentional cues' effects on experimental results. Random assignment of subjects to control or experimental groups is crucial in double-blind experiments. Information about which subjects belong to which groups is kept by a third party and cannot be disclosed to researchers until the study is completed. This method is costly and more suitable for theoretical research.

Summary#

Confirmation bias is a byproduct of a psychological self-protection mechanism, a cognitive trap created by individuals' needs to maintain their beliefs. Once trapped, individuals lose all objectivity and rationality without realizing it, often believing they are the most objective and fair. Many "zealous believers" are not intentionally opposing others; rather, their confirmation errors lead them to believe they are correct and good. We can only continuously learn and use scientific theories and tools, such as metacognition, critical thinking, Bayes' theorem, first principles, and decision trees, to help decision-makers minimize the influence of confirmation bias.

Decision Trees#

Choices: Life is a constant state of making choices, from what to eat for lunch to where to buy a house.

Butterfly Effect: Every choice may produce a butterfly effect; the right choice can yield great results, while the wrong choice can lead to poor outcomes.

Case Study: Men fear choosing the wrong profession, women fear marrying the wrong partner.

At a class reunion ten years after graduation, everyone's choices differed, and their values diverged.

Some thrived in business, becoming wealthy;

Some advanced smoothly in their careers;

Some renounced worldly affairs and turned to Buddhism;

Some felt lost, stagnant, merely repeating their past selves.

At the starting line, everyone began equally; why did such significant changes occur after ten years? Perhaps it was just one choice that led to different outcomes today.
 
Is there a tool to help us make the right choices?

Decision trees can help clarify thoughts, make rational judgments, and evaluate whether a decision plan is feasible, assessing which of several plans is better. The evaluation is that this thinking model is quite scientific, objective, and rational.

Four Steps of the Decision Tree Decision Process#

1. Draw a tree diagram: Arrange various states of each plan based on known conditions;

2. Mark profit and loss values: Indicate the probabilities and profit/loss values of each state on the probability branches;

3. Calculate expected values: Calculate the expected values of each plan and mark them on the corresponding state nodes;

4. Prune and make decisions: Prune the branches, compare the expected values of each plan, and mark them on the plan branches, discarding those with lower expected values (i.e., inferior plans). The remaining plan is the best one.

Five Conditions of the Decision Tree Decision Process#

In life and work, when we encounter complex or uncertain issues, we can try to build or mimic a decision tree, combining the objective data derived from the decision tree with our rich experiences, learning, or consulting others, to arrive at the most scientific, objective, and rational decision.

Information Asymmetry#

WHAT: What is Information Asymmetry?#

It refers to the situation where each participant in a transaction possesses different information. In social, political, and economic activities, some members have information that others cannot obtain, leading to information asymmetry. By exploiting information asymmetry, businesses can gain more benefits.

The two consequences of information asymmetry are adverse selection (bad money drives out good) and moral hazard (self-interest at the expense of others), which are detrimental to the healthy development of the market.

WHY: Why does Information Asymmetry Occur?#

Information acquisition channels differ, and individuals choose to conceal information for profit.

HOW: How to Avoid Information Asymmetry?#

1. Legal protections for rights and interests, establishing rules;
2. Clarify your goals, avoid being greedy for small gains;
3. Seek help from experienced individuals to minimize risks;

From the government's perspective, laws should be established to punish those who harm the collective, ensuring adherence to normal market development orders, earning reasonable profits without relying on deception to attract customers and sell poor-quality products, which would lead to a loss of trust and only allow for one-time transactions.

From an individual perspective, when choosing travel products, do not be tempted by low prices; provide the market and businesses with reasonable profit margins, so we can collectively build a healthy tourism market.

Information asymmetry is a normal market phenomenon; we cannot achieve complete information symmetry but can only minimize the risks caused by information asymmetry.

Anchoring Effect#

The initiative belongs to those who control the anchor. The anchoring effect is a prevalent, highly active, and difficult-to-eliminate judgment bias phenomenon. In uncertain situations, judgments and decisions are influenced by initial data, adjusting based on it, leading to results biased towards that data.

For example:

Step 1: Is Gandhi's lifespan greater than or less than 144 years?

Step 2: What was Gandhi's lifespan?

Anyone with a bit of common sense knows that a person cannot live beyond 144 years; the longest-lived person in the world lived to 122 years. Therefore, in step one, most people would answer less than 144 years, and then most would estimate Gandhi's age to be around 100. I personally conducted an experiment, asking about seven people, and their average estimate was around 110 years. Why is this so far from Gandhi's actual lifespan of 80 years? It is due to the influence of the anchoring effect.

Customer Psychology#

For example: A merchant prices a piece of clothing at 198 yuan, but it doesn't sell for a long time. Someone suggests adding a zero to make it 1980 and then conducting a half-price limited-time promotion to see if it sells. It quickly sells out. Why would customers be unwilling to buy at 198 yuan but willing to spend a higher 990 yuan? Moreover, customers feel they got a bargain.

Steve Jobs was a genius who understood human nature and the "anchoring effect." He said: "Customers don't want to get a bargain; they want to feel like they got a bargain."

Subconscious Anchors#

What is an Anchor?#

1. Halo Effect: If someone is perceived as good, everything about them is seen as good and perfect.

2. Primacy Effect: Once the first information is accepted, the first impression is formed, leading to cognitive inertia and producing a primacy effect.

3. Labeling Effect: For example, labeling someone; during a class reunion, viewing old classmates through the labels from school is a form of anchoring. Experiences accumulated in life and work can also become your anchors, such as Northern people being straightforward, able to drink, and eat steamed buns.

4. Priming Effect: Suggestions serve as a form of priming effect, leading us to selectively find corresponding evidence.

How Do Anchors Influence?#

The decision-making process generally consists of three stages: gathering information, integrating information, and forming judgments. Anchors can influence decisions at each stage:

1. By memory or collecting information related to the target estimate, information close to the anchor value may be selectively collected;

2. During the integration of information, the anchor value may be integrated as a piece of information;

3. In the process of forming judgments, the anchor value prompts the use of information related to it.

4. If the anchor value contains biased information, it will lead to erroneous judgments.

Dual Processing: System 1 is the intuitive system that can make quick decisions. More than 90% of decisions in life can be completed by System 1, while System 2 is the rational system. In reality, only about 10% of decisions significantly impact you, requiring the use of System 2, which consumes more cognitive resources. Thus, whether one is willing to spend time and effort thinking determines the judgment bias in decision-making.

Individual cognitive needs, cognitive states, and other cognitive factors (such as whether one has been drinking) can influence the anchoring effect. Individuals with high cognitive needs and those in a cognitive idle state can devote more effort to anchoring judgment tasks, thereby reducing the spontaneous subconscious anchoring effect to some extent, but this does not affect the traditional anchoring effect.

Factors Influencing the Anchoring Effect#

1. Size of the Anchor Value

   Case Study: Borrowing Flowers to Offer to Buddha (Anchor Value)

   Many years ago, I visited a certain temple in the Jiangnan water town and accidentally entered it. A young monk approached me and said that if I took a bouquet of flowers and placed it before the Buddha statue, it would bring me good luck. I felt that the temple's designer was clever, so I followed the crowd to borrow flowers for the offering (the flowers were plastic). When I was about to leave, a monk called me aside.

   The monk said: "Please offer your merit money?"

   I asked: "Is there a fee?"

   The monk replied: "Yes, the flowers have been offered; please contribute your merit."

   At that moment, I wanted to say, "Can I not offer?" but I held back due to face.

   I asked: "How much?"

   The monk quickly took out a beautifully bound donation book. When I looked at it, I was shocked; the minimum donation was over 1,000 yuan, with many exceeding 10,000 yuan. I hesitated, feeling embarrassed. The monk smiled slightly and said: "If you don't have cash, you can use a card."

   I said: "I didn't bring a card either."

   The monk then swiftly flipped through the other half of the donation book. I saw that the amounts ranged from 200 yuan to over 1,000 yuan, which seemed like a reasonable consumption, so I donated and left.

   As I walked out of the temple, I looked at the sky; it was blue and calm, and the sun was bright. I realized: I had been anchored.

   The above case is my real experience; the monk adjusted the anchor value through observation and communication with different customers, influencing customer decisions and maximizing revenue for the temple, making him a "good salesperson." Of course, this may be a rare behavior in some temples.

2. Knowledge and Skills: The more knowledgeable a person is, the less they are influenced by basic anchoring. The less one understands a problem, the more susceptible they are to the influence of the anchor value.

3. Emotional Influence: It is crucial to control one's emotions; avoid making significant decisions when emotionally unstable to minimize anchoring effects.

4. Motivational Variables: Sometimes, a lack of motivation leads to laziness in thinking, so increasing motivation can stimulate thought and reduce anchoring.

5. Time Pressure: Due to time constraints, many decisions must be made quickly, not allowing for more time for logical reasoning or careful thought, thus relying more on readily available information (such as anchor information) for judgment, making it easy to be influenced by anchor information. For example: flash sales in malls, limited-time discounts, etc.

HOW: How to Avoid Being Anchored?

1. When making decisions, maintain a skeptical and critical mindset, scientifically validate, and think about the accuracy and objectivity of the information. Ask yourself several questions: Is it reasonable? Is it necessary? Is it rational?
2. Enhance Cognition: Learn more about psychology, sociology, science, philosophy, logic, and other disciplines to build a relatively complete knowledge structure, and be adept at using model thinking to analyze problems.
3. Take the Initiative: If the other party quotes 1,500 yuan, dare to set the anchor at 300 yuan, which can help avoid decision biases caused by the other party's anchor value of 1,500. Therefore, in negotiations, those who can control the anchor value often hold the initiative.
4. Psychological Phenomenon: The anchoring effect is an unavoidable psychological phenomenon; even experts are not exempt. We can only continuously learn, think critically, broaden our cognitive boundaries, and build our knowledge structures. When others set anchors for us, we can maximize the reduction of the negative impacts of the anchoring effect. Conversely, we can utilize the positive effects of the anchoring effect to help ourselves or our businesses achieve success in future negotiations, marketing, and collaborations.
5. In negotiations, smart negotiators pay special attention to not being limited by the other party's proposals while seeking appropriate opportunities to set "anchors" for the other party. For example, using the "house demolition effect" can steer negotiations in a favorable direction to achieve one's goals.

Critical Thinking#

WHAT: Critical Thinking#

Definition:

1. It is the rigorous, cautious, and multi-dimensional thinking of one's own and others' thoughts and viewpoints in a state of equal personality.

2. It is an art of thinking about thinking methods, capable of optimizing our thinking styles, which includes three closely related and mutually influencing stages: analyzing thinking methods, evaluating thinking methods, and improving thinking methods.

3. It is a thinking model where thinkers can enhance their thinking levels through analysis, evaluation, and reconstruction of their thinking, regardless of the content being considered.

4. It is a belief in oneself or a preferred form of knowledge, actively, continuously, and carefully examining the foundations they rely on and the conclusions that may be drawn from them. The scientific spirit is critical; it involves constantly overturning old theories and making new discoveries.

5. The core cognitive abilities of critical thinking include: articulation, analysis, evaluation, inference, explanation, and metacognition:

   Articulation: Understanding and expressing the meaning and significance of experiences, situations, data, events, judgments, conventions, beliefs, rules, procedures, or standards.
   Analysis: Identifying the inferential relationships between statements, questions, concepts, descriptions, or other forms attempting to express beliefs, judgments, experiences, reasons, information, or opinions.
   Evaluation: Assessing the credibility of descriptions and explanations regarding feelings, experiences, situations, judgments, beliefs, or viewpoints; evaluating the logical strength of inferential relationships between statements, descriptions, questions, or other forms of expression.
   Inference: Identifying and ensuring the necessary elements for drawing reasonable conclusions; forming hypotheses and speculations; considering relevant information and deriving inferences from data, statements, principles, evidence, judgments, beliefs, viewpoints, concepts, descriptions, questions, or other forms of expression.
   Explanation: Stating the conclusions of reasoning; proving the correctness of reasoning; presenting inferences with convincing arguments.
   Metacognition: Self-aware monitoring of cognitive behaviors and the cognitive means employed in those behaviors, especially analyzing and evaluating one's inferential judgments with an attitude of questioning, re-examining, or correcting.

In Teaching:

In teaching, critical thinking emphasizes cultivating students' unique and good thinking habits, broad interests, and open-mindedness.

A professor can only impart limited knowledge to students, which will gradually become obsolete with the passage of time. So, what is the significance of teaching? It lies in teaching students the correct way of thinking, fostering an open mind, humility, caution in viewing oneself and others, while maintaining curiosity and a questioning attitude.

The spirit of critical thinking reflected in Harvard's curriculum can be summarized as follows:

1. Open-mindedness: The goal of the curriculum is to broaden students' thinking, encouraging them to view problems from different angles and solve them using various methods;
2. Rational Thinking: Cultivating students' rational thinking abilities, recognizing errors in reasoning and logic processes, correctly understanding and evaluating knowledge across various disciplines, rationally judging ethical or academic viewpoints, and examining themselves;
3. Problem Solving: In understanding and solving significant issues across various fields, cultivating students' abilities to analyze, judge, classify, and synthesize, and discerning patterns of change in things;
4. Scientific Spirit: Cultivating students' scientific rational spirit and thinking abilities, helping them master effective methods and habits for acquiring knowledge, with critical thinking being an essential component of scientific exploration capabilities.

WHY: Why Critical Thinking?#

We can divide human intellectual activities into three parts: collecting information, processing information, and expressing information. Collecting information is the ability to retrieve and understand information; processing information is the ability of critical thinking; expressing information is the ability to write and speak. The core of these three is the ability of critical thinking to process information because the type of information you process determines what you can understand and the level of information you can express:

1. Avoid being misled by others.
2. Discover your own mistakes.
3. Make wise decisions.
4. An efficient learning tool.

Excellent thinkers are adept at asking questions, questioning, and discovering new things. Critical thinking is also a prerequisite for creative thinking; without critical thinking, how can one discover problems and seek possibilities? Critical thinking allows us to continuously question the present, the world, and our thoughts, thereby constantly challenging ourselves and iterating our cognition. Thus, critical thinking is an efficient learning tool for personal growth.

In an age of information explosion, where truth and falsehood are hard to discern, junk information holds little value for you. While it can provide some entertainment, it should not be excessive, just like junk food; while delicious, occasional consumption is fine, but excessive intake is unbeneficial. Using critical thinking to filter useful information allows for making correct decisions.

HOW: How to Practice?#

Nine Standards of Thinking#

1. Clarity: Statements need to be clear to determine accuracy and relevance for judgment. Ask: Can you elaborate on that? Can you provide an example? Can you illustrate it with a diagram?
2. Accuracy: Clarity does not guarantee accuracy. Accuracy means expressing information consistent with actual situations. Confirm the clarity and accuracy of the problem. Ask: Is that indeed true? How can we verify its correctness?
3. Precision: To be correct, further confirmation is needed. Ask: Can you provide more details? Can you be more precise?
4. Relevance: Only evidence related to the problem is valuable. Ask: Is your information relevant to the problem? Does your information significantly impact the problem? How does your viewpoint affect the problem?
5. Depth: Think deeply to grasp the essence of the problem and find the real causes. Ask: Does your statement capture the core of the problem? Have you only seen the surface of things?
6. Breadth: Consider the problem from multiple perspectives and angles, comparing, analyzing, and understanding as broadly as possible within limited realities. Ask: Are there other solutions? Are there viewpoints I haven't considered? Am I missing dimensions in my thinking?
7. Logic: Consider problems in accordance with deductive reasoning, inductive reasoning, or causal reasoning. Ask: Does what you say make sense? Is the reasoning correct? Can the evidence support the viewpoint? Is there a contradiction between the earlier and later statements?
8. Importance: Focus on finding important information, viewpoints, and concepts. Ask: Is the question I raised important? Are there more critical issues I haven't discovered? How can I find important information?
9. Fairness: Maintain a fair stance for correct conclusions. Some businesses exploit information asymmetry, appeal to authority, exaggerate promotions, falsely label prices, engage in hunger marketing, and manipulate the public, all of which reflect a lack of fairness. Ask: Am I making judgments based on evidence? Have I considered other evidence? Is the assumption reasonable? Is the intent selfish? Is it fair to others?

Eight Elements of Thinking#

Common questioning methods, using an article or book as an example:

1. Achieving Goals: What goal does the author want to achieve?
2. Key Questions: What questions does the author answer?
3. Data Information: What data, facts, and information does the author provide?
4. Logical Reasoning: What is the author's logical reasoning?
5. Key Concepts: What concepts does the author provide?
6. Basic Assumptions: What are the author's basic assumptions?
7. Significance of Results: What is the significance of the author's writing?
8. Core Viewpoints: What is the author's viewpoint?

Seven Traits of Thinking#

1. Humility: Recognize what you know and do not know, distinguish and acknowledge your shortcomings, and strive to improve. Ask: What are my erroneous beliefs? How well do I truly understand myself? What biases do I have?
2. Courage: Just because you say something doesn't mean it's right. Just because everyone agrees doesn't mean it's correct. Truth requires dialectical thinking. This is essential for maintaining the fairness of thought.
3. Perspective-Taking: Think from others' perspectives, genuinely trying to understand them, reasoning from their premises, assumptions, and viewpoints, accurately reproducing their thought processes.
4. Integrity: Hold yourself and others to the same standards.
5. Perseverance: Maintain steadfast beliefs and principles to overcome setbacks and difficulties.
6. Confidence in Reasoning: Analyze your viewpoints, continuously optimizing and improving them. Ask: Do I value evidence and reasoning? Have I imposed my views on others?
7. Autonomy in Thinking: Independently think and solve problems based on your thinking criteria and methods.

I believe that through continuous cognition, one can achieve growth and encounter a better version of oneself.