The General Analysis Model

This is my essential tool for analysing the world. I’m humbly publishing it to let other people use it and help me improve it.

1. The world is wonderfully connected; beware of your conclusions.

Globalization has given us the opportunity to use all knowledge, resources and human intelligence at an ever-decreasing transaction cost. The world has never been as good as it is today, but growing connectivity has brought us a countless number of consequences for the same action. More globalization means an exponential growth of the ‘butterfly effect’ and linear models are going into a decline.

2. No matter the source, data must be verified.

Dependence means that you are sensitive to the actions and errors of the ‘person’, ‘institution’ or ‘whatever’ you are depending on. This can be applied to your everyday life in virtually every aspect you can imagine, but in this case, it means that if the source that you are trusting is wrong, your conclusions are nonsense. Always verify your data.

3. Always work on (verified) data, not your memory.

Of course, it is important to work with verified data (the last point in this paper is about this), but at decision time it is crucial to look at the data. When you are taking a decision, you have to be sure that the information available matches your thesis. Memory is a bad ally when accuracy is needed.

4. An event is equally likely to take place before or after it happens.

Making predictions is very difficult (in fact, it is impossible) and if you think again about my first point, you will understand why I am insisting on it. We tend to overestimate events after they happen and underestimate them beforehand. This is why it is better to work with a range of possibilities instead of linear models. Keeping historical events in our memory and a list of ‘things that can affect our analysis’ will help us.

5. A 99.99% probability doesn’t make something true.

Uncertainty is a part of life and to deal with it, we develop statistics which bring us one measurable indicator: probability. But statistics and probability are about past events (and their estimated likelihood of taking place again), not future ones. There are high-profile, hard-to-predict and rare events that are beyond the realm of normal expectations We call them Black Swans. This is lesson in humility about the limitations of statistics, and it is useful to become aware of the 0.01% probability that can ruin your plan.

6. Try to invalidate your idea, not confirm it.

As a human, you are programmed with many mental biases (anchoring, confirmation bias, problems of induction, narrative fallacy, etc.) and all of them have their origin in our survival instinct. Today’s world is very different from the world in which our survival instinct was developed. Due to this, our biases have become traps for us. We tend to accept things that seem reasonable only by our willingness to accept them. So, in order to avoid these traps, we have to look intensely for the errors in our initial hypothesis, rather than confirm them.

7. Approximate information and preconceived ideas are dangerous.

Brain connections are so mysterious, some flavors remind us of experiences and words help us remember complex concepts, which is why, the association of ideas is risky. Today we use a disproportionate amount of information, and much of it seems helpful only because it is close to the main issue. Besides, our experience brings us a wide range of decision-making tools, and many times these tools give us the opportunity to avoid errors. But our way of thinking is overprotective of our own paradigms and this can lead us to having preconceived and fixed ideas. Both approximate information and preconceived ideas can lead us to wrong conclusions and we have to avoid them.

8. The base case scenario is not necessarily the most likely, avoid overconfidence.

When you work with ‘the most likely scenario’ not the worst and of course not the best, a feeling of caution surrounds all your analysis. You start feeling comfortable about this best case when, in fact, the most important thing is that assumptions backing this scenario can be supported on erroneous fundamentals (which have to be thoroughly reviewed and put in perspective). Overconfidence goes before fall.

9. The crowd is not responsible for your errors, think out of/against the box.

Your responsibility is your own, and you cannot put it on other people. If everybody is doing something wrong and you follow others’ example, you cannot just say ‘I did the same as the others’. If you want to do things better, you have to think differently from others, from a different and unusual perspective. And when you are able to think ‘out of the box’, you have to take the next step, think against it. What does this mean exactly? It is simple, think against established ideas, the next ‘big thing’ would not come from established ones.

10. God is dead, life is absurd and there are no rules.

This point is just a reminder, not an absolute statement. This sentence was the life motto of Albert Camus, which I interpret as follows: don’t make anyone your personal guru or you will be forced to repeat their mistakes (God is dead). Life itself has no meaning, it is your duty to give it meaning (life is absurd). As a thinker, you should be capable of establishing new hypotheses outside the existing belief system (there are no rules).

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DISCLAIMER: This document is a compilation of ideas, I do not deserve any credit for any of them. If you think I have made a mistake or omission please let me know, all comments by e-mail at gcolominasbigorra@gmail.com or on my twitter account @GabrielCobi will be welcome.

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