What IKEA Can Teach You About Making Money

In an interview for “Popular Science” magazine, Nick Offerman, the guy who plays Ron Swanson on the series “Parks and Recreation”, talked about his love for building things with his own hands.

He is a guy who has enough money to buy whatever he wants, but he still keeps a small woodworking studio on the side and using traditional techniques (they won’t even use a cutter jig to cut their dovetail joints!), builds all kinds of stuff out of wood.

To quote Offerman:

Keeping whatever calluses I can on my hands is an important part of my personality.

If you think about it, you are probably not that different yourself and neither are the people you know. You (or many of your friends) still probably keep that crude “bird” you cut out of wood in 6th grade during your “I want to be an expert craftsman” phase or that model airplane you spent months building, almost giving up at certain points, but always returning again to glue one more piece.

I remember how proud I was when I finished a crappy Tic Tac Toe game in my QBasic class back in high school. It only had some basic functionalities, shitty graphics, and wasn’t very exciting, but the important thing was that I had programmed it myself and it worked!

It’s a psychological effect. People feel much more proud of something that they had built themselves, than of something that they bought off the shelf. There is a sense of accomplishment that fuels self-esteem.

The Ikea Effect

IKEA is a billion-dollar furniture company that has stores around the world. It sells furniture that you have to assemble yourself, and that is the secret of its success.

A study that came out in 2011, examined what it calls the “IKEA effect”.

The psychologists behind this study had people assemble IKEA boxes, fold origami and build Lego sets. What they found out was that at the end, after successfully finishing their products, these same people valued them as highly or even more so than the same products created by experts.

Basically, people had a preference for building things with their own hands, over getting everything done for them. And this is exactly the business model that IKEA has employed right from the beginning.

The psychology behind this is related to a cognitive bias called the endowment effect. Things that you own (and things that you create yourself) have a much bigger emotional value for you than ones you don’t:

“In one experiment a social psychologist found that people were more reluctant to give up a lottery ticket they had chosen themselves, than one selected at random for them. They wanted four times as much money for selling the chosen ones compared to what they wanted for the randomly selected ticket. But in random drawings it doesn’t make any difference if we choose a ticket or are assigned one. The probability of winning is the same. The lesson is, if you want to sell lottery tickets, let people choose their own numbers instead of randomly drawing them.” Peter Bevelin “Seeking Wisdom”

This is also why people often get attached to their houses or cars and have a sense of loss when they have to move out or give them away.

The lesson here is if you involve others in the making of a final product, whether that product is a project, a model airplane, or a piece of furniture, they will value the final product much more than if they were not involved at all.
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Bayesian Thinking: If You Want To Be A Critical Thinker You Need To Understand This Concept

It is the middle of the Cold War. Tensions are high and the United States wants to be ready to retaliate against any Soviet nuclear strike or do a first strike if needed.

In order to be able to have the capability to react fast, General Thomas S. Power initiates an operation called “Chrome Dome”, which has B-52 bombers armed with thermonuclear weapons continuously flying on a set route reaching certain points close to the Soviet border.

As part of this operation, early on the 17th of January 1966, a B-56G bomber of the United States Air Force, takes off from the Seymour Johnson Air Force Base in North Carolina. It is carrying 4 hydrogen bombs.

At 10:30 local time, over the coast of Spain, it begins a routine refuelling with an air tanker plane.

However there is a misunderstanding and as the procedure is about to begin, the tanker plane collides with the fuselage of the bomber, causing the bomber’s left wing to snap off. A huge explosion destroys the air tanker and severely damages the bomber.

All people aboard the air tanker, as well as some aboard the bomber die instantly. The rest of the crew of the bomber manage to parachute to safety.

The wreckage falls to the ground near a small village on the coast called Palomares. The nuclear bombs land nearby as well.

Three of the bombs are recovered relatively quickly (two are partially damaged however and cause nuclear leaks on the ground), but the fourth is nowhere to be found.

The guys searching for the bomb look at the evidence and decide that it had probably been blown over the sea by the wind and so is probably lying somewhere at the bottom of the Mediterranean.

They are facing a dilemma. If damaged, the bomb could cause great harm. If undamaged, it could fall into enemy hands. Cost what it may cost, it needs to be found.

What to do?

Put yourself in their shoes. There are some things that you do know.

A tail plate of the parachute was recovered, leading to the high probability that the bomb’s parachute probably deployed.

You have a probable eye witness account. A local fisherman says he saw the bomb enter the water. He points out the location where he saw it.

You also have a detailed map of the seabed in that area.

Enter John P. Craven.
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What Is Your Brain? Your Monkey And Human Brains Explained

The brain is the command center of your body. Thousands of signals from the outside are reaching it every second, and based on these signals it determines a course of action and issues commands which are then carried out by other parts of the body.

Much of this happens on the subconscious level, but the brain also carries out activities of which you are conscious. This means that you have a choice and need to make a decision on what to do next.

What separates the mammals from other types of animals such as reptiles, amphabians or fish, is the fact that they have an enlarged part of the brain called the cerebrum.

Your Monkey Brain

One group of mammals has a cerebrum that is much larger than the other groups. These are the primates, a group that includes monkeys, apes such as our close cousins the chimpanzees, but also humans.

This allows them to do much more than just work based on instinct. If you have ever watched a documentary on wolves, then you have seen that they can make pack strategies, for example when hunting.

Monkeys are even more sophisticated than that. They have most of the basic wiring that humans have. Monkeys have shown the ability to come up with complex strategies and also to make rational choices.

Smart Chimp: “I am completely ignoring your BS!

Cerebrum

The cerebrum is located at the top of the head and is the biggest part of your (or a monkey’s) brain. It is separated into two hemispheres, a right and a left one.

The right hemisphere is said to be tied more to creativity, while the left hemisphere is more tied to logic. Also in an interesting twist, the right hemisphere controls the left side of your body and the left hemisphere the right side.

The two hemispheres are tied together by a bundle of neural fibers called the corpus callosum. It facilitates communication between the two sides of the brain.

The top of the cerebrum is covered by what is called the cerebral cortex. This is a thin layer of grey-matter, which is densely packed with neurons. Much of the thinking that your brain does happens here.

What helps the cortex to pack so much thinking power is the fact that it is made up of many ridges. These ridges divide up the cortex into many parts and each one is responsible for different functions within the brain.

The cerebrum itself is divided into four lobes: the frontal lobe, the parietal lobe, the occipital lobe, and the temporal lobe. This is where the action takes place.

Frontal lobe

If you see a bunch of lights flying fast at night, you might interpret them as being UFOs coming to Earth from another solar system. The activity you just performed is called reasoning.

You get some sort of an input from the outside and your brain tries to make sense of it based on some internal rules that it has.

Whether it is whack or logical, this type of action takes place in the frontal lobe. This part of the brain is the seat of weird conspiracy theories, but also of critical thinking.

Take the classical example of deductive reasoning:

All men are mortal.

Socrates is a man.

Therefore Socrates is mortal.

You arrived at a conclusion based on logic.

In the frontal lobe, you can come up with ground-breaking theories of quantum physics, but also theories of a Grey and Reptilian alien-conglomerate controlling all the politicians of this planet. The mental steps that take you from a basic assumption to a solution happen here.

Parietal lobe

At the moment what you are doing is reading. Your eyes are scanning the screen, looking at the letters, combining them into words and sentences and giving meaning to them. This ability is thanks to the processes happening in the parietal lobe.

This lobe processes visual information and the act of reading is basically looking at symbols in front of you, taking them in, creating patterns between them and based on these patterns interpreting what it sees in front of its eyes.

Basically, these patterns (words being strings of symbols called letters) create thoughts in your brain which then helps you process information.

It works in a similar way with interpreting mathematical symbols and helping you count. This lobe is also involved in basic arithmetic and calculations. On a more abstract level, drawing is also governed by the parietal lobe.

It also lets you perceive depth. What happens is that the lobe helps your brain build a 3-D plane of the outside world and so helps you understand all the spacing around you. This is very important if you want to orient yourself and also manipulate objects.

Processing visual signals and interpreting them as meaning is just one of the things the parietal lobe does. It also interprets other senses and lets you understand what is happening in the world around you.

For example, through your sense of touch, you can feel that it is cold outside. This type of knowledge about the outside world happens in the parietal lobe.

The parietal lobe is involved in the processing of different sensory information from the outside, things like touch and pain, temperature, as well the intensity of each.
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What Is Your Brain?

Four thousand years ago in Ancient Egypt, if you were of higher status and died, you would have ended up getting mummified. The Ancient Egyptians believed that if your body was preserved after death in this world, then a comfortable life in the afterlife would be assured for your soul.

There was a special process that was applied when mummifying a body. The body was embalmed in chemicals and then wrapped up in several layers of cloth. However before the wrapping, the internal organs were taken out and put in jars.

The stomach, the liver, the lungs, and the intestines were all removed and placed in canopic jars made of either wood, stone or porcelain and sometimes topped with the head of a god. The heart stayed in, because the Egyptians believed that it would be weighted (and thereby judged) against the feather of the goddess of truth, morality and justice, Maat.

To remove the brain, a long, sharp object was first put through the nostril. It would break through into the brain and then liquefy it. The liquefied brain would then ooze out through the nostril. What would they do with it?

Once it came out, they would collect it and… throw it away! The Ancient Egyptians did this because they believed that it was of no importance for the human being. For them, it was the heart that was the center of all action.

For the Ancients, the brain just seemed to be some sort of a squishy substance with no real purpose, apart from filling up the head.
egyptbrain1
That view began to change when Galen (remember the former physician of the gladiators?), one of the most well-known doctors of Antiquity, did a demonstration where he silenced a squealing pig by isolating a nerve that tied the larynx to the brain. In this way he proved that the brain was the organ controlling the actions of living things.

Galen was not the first ancient to speculate on the nature of the brain and its role in the body (for example Hippocrates did too), but he was the first one that we know of that traced out the different nerves and muscles and connected them to the brain, and also who gave practical proofs (such as the pig experiment) of how this works.

However, among many people this view still didn’t catch on and most still kept on considering the heart as the primary seat of human actions until the Renaissance proved once and for all the central role of the brain in the body.

The role of the brain

The brain is the primary organ in the nervous system and controls the behavior of living beings. It is the most complex organ in the body. The basic structure of the human brain bears many similarities to that of other animals, but there are also some important differences. These differences are what give humans the power to reason.

There are numerous basic roles that the brain performs in the body:

  • handles all your physical movement (balance, walking, standing)
  • regulates internal processes (such as breathing, body temperature)
  • controls your actions (whether through instinct or reason)

This happens when signals from the outside (collected through sight, smell, touch, taste, hearing) are passed into the brain, which then interprets them and acts based on this interpretation. Most of this happens subconsciously.

For example this is how the signals that are captured by your hearing are transported to and then interpreted by the brain:

hearing_mechanics_cropped

How does the brain perform its functions?
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How To Convince Your Boss To Do Whatever You Want

One of the most important skills that you should have in order to be successful is the skill of persuasion. This is especially important when trying to influence the people who hold the power and make the decisions, either your boss, the CEO of a company you are trying to pitch your business to, or even someone in your social circle you are trying to convince to do something.

I ran across an interesting article in Harvard Business Review about the different decision-making styles of leaders and how you should tailor your message towards each one.

The argument was that people focus too much on the message itself and not on how it is delivered. This is the wrong approach and probably the reason why you fail in persuading the people you want to persuade. The most important thing is how you craft the message.

All too often, people make the mistake of focusing too much on the content of their argument and not enough on how they deliver that message. Indeed, far too many decisions go the wrong way because information is presented ineffectively.

According to the research carried out by the authors of the article, different leaders have different decision-making styles. These should not be confused with their personalities (although a certain personality type might influence the way that person makes decisions):

Our research should not be confused with standard personality tests and indicators like Myers-Briggs. Our framework is simply a categorization of how people tend to make decisions. Of course, people do not always make decisions in the same way; much depends on the situation they’re in. But our research has shown that when it comes to making tough, high-stakes choices that involve many complex considerations and serious consequences, people tend to resort to a single, dominant style. Call it a default mode of decision making.

The different decision-makers can be broken down into 5 distinct categories:

1) charismatics – Richard Branson
2) thinkers – Bill Gates
3) skeptics – Larry Ellison
4) followers – Peter Coors
5) controllers – Ross Perot

Charismatics can be initially exuberant about a new idea or proposal but will yield a final decision based on a balanced set of information. Thinkers can exhibit contradictory points of view within a single meeting and need to cautiously work through all the options before coming to a decision. Skeptics remain highly suspicious of data that don’t fit with their worldview and make decisions based on their gut feelings. Followers make decisions based on how other trusted executives, or they themselves, have made similar decisions in the past. And controllers focus on the pure facts and analytics of a decision because of their own fears and uncertainties.

Each of these different types of decision-makers needs a message structured in a way that suits their style and that they can digest in their own way.
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This Checklist Will Help You Avoid Cognitive Biases And Make Better Decisions

If you have studied economics, then you probably came across the core assumption that people are rational actors who make decisions that are in their best interest and after a careful analysis. This assumption always bothered me, since in my experience that’s not how people behaved in real life.

Turns out, I wasn’t the only one who had these doubts. Later I came across an economics theory called behavioral economics. Unlike classical economics which works with the rational actor model, behavioral economics assumes that people are not rational actors and instead fall under the sway of what they call cognitive biases.

One of the fathers of behavioral economics is a psychologist by the name of Daniel Kahneman, who even won a Nobel Prize in Economics for his work. Together with Amos Tversky, they started studying how people reason and why they often tend to make mistakes in their thinking.

They came to the conclusion that there are two basic ways that your brain goes about making thoughts and coming to decisions: System 1 and System 2.

System 1 is quick, heavily dependent on emotions and the subconscious, while System 2 is slow, logical and conscious. System 1 is the one that humans use most of the time and is basically akin to instinct. It evolved millions of years ago in order for your ancestors to be able to make quick decisions in life and death situations.

Luckily, in today’s world, you very rarely face these life and death situations, however you still tend to rely on System 1 thinking even in cases where a more rational approach would make more sense. A lot of times, you don’t even know it.

This often results in you making sub-optimal decisions, which can be a huge problem in many areas of life, including business. One article in McKinsey Quarterly cites the results of a study which confirm this:

Our candid conversations with senior executives behind closed doors reveal a similar unease with the quality of decision making and confirm the significant body of research indicating that cognitive biases affect the most important strategic decisions made by the smartest managers in the best companies. Mergers routinely fail to deliver the expected synergies. Strategic plans often ignore competitive responses. And large investment projects are over budget and over time—over and over again.

How should you minimize these types of failures? If you want to make a better decision, it often makes sense to take a step back and engage System 2.

How do you do this? Together with Dan Lovallo (one of the co-authors of the above cited McKinsey article), Daniel Kahneman came up with a 12-point checklist that you can use before you make any significant business decision.
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The Question Of Morality: How Would You Act If The Circumstances Were Different?

I have recently binge watched Amazon’s new alternate reality sci-fi series called “The Man in the High Castle”. It’s an awesome show based on an old Philip K. Dick novel of the same name.

man_high_castle_tv_series_map

It is set in an alternative version of 1962, one where the Axis powers won the war and North America (and the rest of the world) is divided between Imperial Japan and Nazi Germany. The territory of the old USA is split between the Greater Nazi Reich, which controls the East Coast, and the Japanese Pacific States on the West Coast. Separating them is a small sliver of territory called the Neutral Zone.

Season 2 will be released soon and the excited fan boy that I am, I have been trying to Google any news concerning this momentous occasion.

Recently a new trailer came out for the upcoming season. It showed some snippets of action from Season 2 and ended with a quote:

Most people are different, depending if they’re hungry, safe, or scared.

This got me thinking again. It’s something I have reflected on before. It often happens that people get criticized for certain courses of action that they had undertaken under specific circumstances. However who is the other person to judge if they haven’t been in the same situation and in the same circumstances? Would another person react in the same way or differently?

This is a question that goes at the heart of morality. Is a good man based on character or is a good man based on circumstances?

Many of us would like to think that we would always uphold the moral high ground under any circumstances. But would we?
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My 3 Year Blogging Anniversary – What Have I Learned?

blogging6157134404_4680b3edf3

Can’t believe it’s been 3 years already since I started my blog. Time flies pretty fast. This wasn’t the first time I started a blog, but it’s the only time I have been consistent and persistent. Before this, I usually gave up pretty fast.

The origin of this blog starts off in September of 2013, when I was recovering from my ACL surgery. I had the idea of starting a fitness blog focusing on gaining weight (since everyone focuses on losing weight and there aren’t too many resources for skinny guys actually trying to gain weight).

Initially, I started a free wordpress.com blog, but then the following month, I decided to get serious and put my money where my mouth is and took the plunge and bought a real domain name. So in October 2013, the Gain Weight Journal was born.

At the same time, I also tried to continue maintaining some other blogs in niches such as language learning. However these were all side activities, which consumed a lot of time. So I decided to unite the different blogs and so the Renaissance Man Journal saw the light of day. The decision behind all this is better covered in a previous post.

What I want to cover now is what I have learned on my 3 year blogging journey. There have been and still are many ups and downs and the journey is still just in its initial stages, but there are already some lessons that I can share.
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Elon Musk Problem Solving: Applications Of First Principles Thinking

The first principles approach for problem solving that Elon Musk uses is an awesome way to find unconventional solutions to all kinds of problems. However this type of thinking does not come naturally to most people.

There are numerous mental barriers that prevent people from thinking in first principles. These barriers can be overcome with certain techniques, such as the generic parts technique and also by asking lots of questions. The hardest part of this entire process, though, is the application.

How can you take this knowledge and these techniques and apply them in practice? How can you make first principles thinking a part of your life?

In Part 2, we learned how to think in first principles. In this part, we will learn how to use that thinking in order to solve real-life problems. Here we go from theory to application.

Concrete examples from history

Eureka! Eureka!” These legendary words were shouted by Archimedes, the Ancient Greek inventor, as he ran naked through the streets of Syracuse. This word can be roughly translated as “I have found it!” and since that time has become a synonym of discovery.

archimedes_cigar_box

Archimedes was a really clever guy and discovered a lot of cool and practical stuff, but his legend was solidified by this one famous incident. The story that precedes this is the perfect example of using first principles thinking to come up with solutions to problems (and it even includes discovering some first principles themselves!).

King Hiero II of Syracuse wanted a golden crown to be made and assigned the work to a local goldsmith. When the goldsmith came back with the finished product, King Hiero suspected that the crown was not all gold and instead that the goldsmith had sneaked in some silver. However how to prove this little hunch?

Luckily, the King had Archimedes loitering around his city and so assigned the problem to him. Archimedes had to determine whether the crown was pure gold or it also included silver, without damaging it. This was almost an impossible problem and no one else in the kingdom had been able to come up with a solution.

This problem was initially also hard for Archimedes himself. He kept pondering it in his mind, but just couldn’t get around to figuring out a method to solve this little conundrum.

That’s where the story gets interesting. Archimedes was a cleanly fellow and one day was getting ready for his bath. He filled up the bath almost to the top with water, stripped down and then got in. As soon as he got into the bath, the water overflowed and spilled over the edge.

Archimedes noticed that as he got into the bath, the level of the water rose. This is what sparked the lighting bolt of discovery. He had discovered a first principle!

He summarized this principle in one of his works “On Floating Bodies”:

Any object, wholly or partially immersed in a fluid, is buoyed up by a force equal to the weight of the fluid displaced by the object.

This is the first principle that Archimedes needed in order to solve the problem. If he submerged the crown in water, the crown would displace an amount of water equal to its volume. Archimedes could then use this fact to test whether the crown contained silver. If it did, then the crown would be less dense.

There is some discussion on the exact method that he used, but no matter the exact steps, it is a great example of coming up with first principles and then using them to solve a problem.

And yes, the goldsmith was a sneaky, dishonest dude and Archimedes proved it.
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