The Anti-Luck, Decision Making Framework

Welcome to the 10 Minute MBA, I'm your host, Scott D. Clary. On the 10 Minute MBA, I give you tools, tactics, strategies, and insights that you can use to start scale, grow, and 10x your business. Let's get into it. Today, I want to speak about one of my favorite mental models and concepts, the anti-luck decision making framework. Now why is this particular mental model so important? This particular mental model is so important for entrepreneurs because a lot of the time we make decisions without really thinking about why we're making these decisions. And sometimes we make good decisions, more often than not, we make bad decisions and then we end up having to learn from all these bad decisions and hopefully not repeat them again. And that's a fine way to learn. That is how most of us go through and stumble through life. We'll hear the tropes fail as fast as possible so you can learn from those failures and there is no success without failure and so on and so forth and that's all very true. However, there are frameworks so you can think through your decision making process and almost manufacture a little bit of luck so that even if you are making that decision for the first time, there is a better chance that you will have a positive outcome because at the end of the day, anything that you want is on the other side of maybe several decisions, maybe just one decision. Think back to like all those big choices that you've made, the career move, the investment who you married, who you dated, all of it. Those decisions are never random. They shaped your trajectory and even if you thought they were random, they aren't. They are these invisible forces that guide your ship and you through life. But the thing is, no one ever gets a manual for decision making. Most of us are just winging it, we're hoping for the best, we're crossing our fingers as entrepreneurs we do this every single day. We hope that the decisions that we make today are not going to come back and bite us tomorrow. To give you an analogy, it's like playing golf without ever taking a lesson. Eventually you're going to figure it out but it is super frustrating and super inconsistent and I've been there. I mean, early in my career, I found myself making choices with real consequences. It was exciting. It was terrifying. I really had no formal training and decision making. It's not like you cover this in university or college. So it really just ends up being a gut feeling and tons of sleepless nights. But you learn through failure, through trial and error, through mentors, through diving deep into the wisdom of those who have done it before and eventually you start to understand the art of making smart choices. So today I want to bundle up some of those ideas and from what I've learned in my career about decision making. Now I want to premise with this, there is a myth around what a smart decision is because we often assume smart people, quote unquote smart people, make good decisions. But look at history. It is littered with the wreckage of terrible choices made by brilliant minds, Napoleon invading Russia, blockbuster passing on Netflix, countless examples of hubris and miscalculation. See the truth is, even the most intelligent among us fall prey to cognitive biases, limited information or just plain old stupidity, we cling to the familiar, we prioritize the easy over the right and we chase validation instead of results because it's not about being smart. It never is about being smart, it's about being wise and there is a fundamental difference between being smart and being wise. Think about it like this, intelligence is having the raw materials but wisdom is knowing how to use them. It's like the carpenter with the whole toolbox, not just the hammer and just like a carpenter can build anything with the right tools. We can build our dream life, we can build our dream business with the right decision-making skills. So, how do we find these tools? This is where mental models come into play but first, it really starts with taking a less myopic view on life. Enter from stage left, the multidisciplinary mind. See, we live in a world that loves specialists. We're told to pick a niche, become an expert, stay in our lane but true wisdom comes from crossing lanes, from applying knowledge from unexpected sources. Think of the world as a giant buffet of knowledge. Why limit yourself to just one dish? You sample the flavors of physics, philosophy, history, art. Each one offers a different perspective, a new way to see the world and the problems that we face. So, take Warren Buffett for example, he's not just a financial genius, he's a voracious reader, he's a student of history, he's a master storyteller. That multidisciplinary approach gives him a unique edge, it allows him to see patterns and opportunities that other people miss. So, the good news is that you don't need an Ivy League degree or a lifetime of experience to make better decisions. You just need the right tools, the right mental models that help you understand how the world works. So, the more things that you study, the more things that you immerse yourself in, the more lenses and perspectives and models you can apply to your decision making process. So, just to finish on the concept of a multidisciplinary mind, I don't want it to become convoluted. There are parts of your life that you have to specialize in, however, no genius, no person in the 0.0001% of their field has only ever done one thing. When they started, they specialized and they expanded. The point is, to make better decisions, it helps if you are a more complete person. It doesn't mean that you're learning how to code while you're selling your product or service. That could be it, but it doesn't have to be. But have different passions, hobbies, pastimes that upskill you as a human being. Now, back to mental models. Mental models are truly the tools that help you understand how the world works. These models are like cheat codes for life. They give you a shortcut to wisdom, a way to see through the fog and uncertainty and make choices that move you closer to your goals. One of these mental models is the anti-luck framework. This is how you turn a mental model into practical framework and decision making. So the anti-luck framework is a combination of a few different mental models that helps you stack the odds in your favor and not just rely on blind luck when you're making your next decision. These are the mental models that make up this anti-luck framework. So when you are making a decision, there are going to be five different things that you're going to think about when you're making that decision. The combination of these five things is going to be your anti-luck framework. The first thing you're going to think about is inversion. So instead of thinking and instead of asking what do I want to achieve with this decision, start to ask what do I want to avoid. This helps you see the problem from a different lens. It helps you identify potential pitfalls and roadblocks before they become problems. Think of this as a pre-mortem for your decision, a way to spot and eliminate the worst case scenario. The second framework, mental model, that you have to think about when you're making a very important decision is something called first principles thinking. This means that you are breaking down complex problems into their fundamental truths. What are the core principles that play? What are the underlying assumptions? When you understand the basics, you can build a stronger foundation for your decision. Too often we over-complicate things that are not that complicated, force yourself to understand the basics in first principles thinking. The third thing you have to consider when you're making a tough decision is called the circle of competence. This means that you want to know your strengths and your weaknesses. You want to play to your strengths and you want to ask for help in areas where you lack that expertise. It's okay to not know everything. The key is to surround yourself with people who compliment your skills. This particular piece is meant for you to be very real as to whether or not you make a decision if it's something that you can actually execute on. If it's something that you should even be making a decision on because maybe you aren't the expert in this particular field. Just understand your circle of competence and be very self-aware of your strengths and weaknesses. The fourth component is probabilistic thinking. What does this mean? It means that not all decisions are equal. Some have a higher probability of success than others. You just want to start to assess the odds. I'm not saying it'll be perfect, but when you just take a second and think about odds of option A happening versus option B happening and what are the things that could impact those odds and how likely are they to happen, you can make more informed choices. You can avoid unnecessary risk. Think of it like poker. Not just playing the hand you're dealt, you're playing the odds. And lastly, you want to consider second order thinking. So you understand first principles thinking, now second order thinking. This means you are considering the consequences of the decision. Not just the immediate outcomes, but the ripple effects that extend into the future. So what are the second, third and even fourth order consequences? This helps you anticipate unintended consequences and make more resilient choices. Now, each one of these mental models obviously can be expanded on. These can be very complicated. I'm giving you the basics. So you think of these things when you're making your next big decision. You don't have to go all the way down the rabbit hole of every single one of these five components. If you want to, you can. I can do different podcasts on each single one of these mental models. However, this is a great place for you just to start. So now I just want to walk you through examples of each of these five decision making and decision influencing mental models. Because I want you to think of this anti luck framework, which is the culmination of all five as this cheat code underlying your personal growth algorithm. So just like your favorite app is constantly iterating, refining their algorithms to deliver better user experiences or so they should, you have to continuously update your decision making code, quote unquote, to navigate life's complexities. And when you start to apply these mental models to your decision making process, every interaction with this framework starts to strengthen your decision making process. It starts to strengthen your decision making muscle memory. You start to see the world through a multi layer lens. You start to identify patterns. You start to apply these mental models like a seasoned chess player that is able to anticipate their opponents next move. So here are some examples. Let's pick an example of an entrepreneur because a lot of people listening to this are entrepreneurs. So you are deciding whether or not to launch a new product. So instead of relying on gut feeling or hype, you could apply the anti luck framework. So first, inversion, what could go wrong? Identify potential obstacles like manufacturing delays, competitor reactions, market saturation. This helps you build contingency plans around this product launch and also helps you understand the financial risk. First principles thinking, what are the core needs this product addresses? So when you understand the basic underlying problem that this product is solving, you can tailor your marketing needs and messaging to resonate with the right audience, remove all the fluff, remove all the bells and whistles, circle of competence. You want to recognize your own limitations in areas like perhaps finance or legal, you have to bring on experts to fill those gaps. So you have to ensure that if you're making a decision to launch this product, you have their lens looking at these five mental models, not just yours because you don't know those two pieces that well as an entrepreneur, for example. So you want to make sure that you just don't ignore them because it will impact the decision. Probalistic thinking, what are the odds of success? Given the market research you've done, the competitor analysis, so this can really help you set realistic expectations and make an informed decision about resource allocation, about potential success, about potential failure. And then lastly, second order thinking, what are the long term consequences of launching this product? Will it cannibalize existing sales? Will it require ongoing support and updates? You have to think of all the different things this product is going to impact good and bad within and outside your organization. So you're applying the anti-luck framework of this particular example entrepreneur. They're not leaving success a chance. They are actively shaping the future, their future through deliberate informed decision making, because this is just one example. Really, the anti-luck framework can be applied to any decision. Small, you can use this as a tool to navigate uncertainties with confidence. Now, if you would like to level up your decision making game even more, here's some of my personal favorite resources that you should start to go read and explore. They will go deeper into some of the concepts I just touched on today. So you want to go check out Seeking Wisdom from Darwin to Munger. That's by Peter Bevelin. This book is amazing. They discuss a whole bunch of mental models. They bring in a whole bunch of insights from history's greatest thinkers. It's like a crash course in the art of wisdom thinking in bets by Annie Duke. This is written by a former poker champion, Duke. She reveals how to embrace uncertainty and make better decisions under pressure. Obviously, very valuable for entrepreneurs. She talks about probabilities and not just black and white outcomes. You can go pick up Super Thinking by Gabriel Weinberg and Lauren McCann. This book is a very practical toolkit of mental models for everyday life. So from decision making to problem solving to creativity and one last recommendation be great mental models, which is a series by Shane Parrish. This is a multi-volume series that goes into the world of mental models, exploring their origins, applications, limitations, definitely a must read. So I just don't want you to listen to this and then not do anything. I want you to take some action. So this is your anti-luck challenge. Pick one decision you're currently facing could be anything from a career move to an investment opportunity to a personal dilemma. Apply the anti-luck framework. Analyze a situation. Identify potential pitfalls. Consider long-term consequences. Assess the probabilities. Apply those five mental models I just discussed. Make a decision and own it. Don't let fear of indecision hold you back. Take a leap of faith but do it with your eyes wide open and reflect and learn. Once you've made your decision, take some time to reflect on the process. What worked? What did it? What could you do differently next time? Use this experience as a stepping stone. Remember, the goal is not to become a perfect decision-maker overnight. It's to make progress and improve your odds. It's about building a life that is less about luck and more about deliberate design. Remember, decisions are important and they don't just affect us. They really do ripple outward. They impact our families. They impact our communities. They impact the world. The butterfly effect is real. A seemingly insignificant choice can set off a cascade of events that shape the course of history. I don't want to put too much pressure on you, but I just want to frame it for you. I want you to be more intentional in your decision-making process. Because even think about the decisions that led you to listening to this podcast. Your parents decision to have you. Your teachers decision to invest in your education. Your own decision to pursue your passions. Each one played a role in shaping who you are today. So imagine the impact you can have by making really wise intentional choices. So the next time you're faced with a difficult choice, don't just go with your gut. Take a deep breath, apply the anti-luck framework, and make a decision that moves you closer to the life you want to live. The future isn't just something that happens to you. It's something you create one decision at a time. That's it for today. I hope you enjoyed. I hope you got some value out of that. Make sure you come back tomorrow for another business lesson on the 10 Minute MBA.