Critical Thinking -- Stein's Law

Bernie Madhoff--former chairman of the NASDAQ and recently admitted Ponzi scheme engineer, Ken Lay--founder of Enron, and Tiger Woods--professional golfer and branding empire -- What do they all have in common?  They were all successful millionaire businessmen with one major flaw --- they all apparently never heard of:

Stein's Law:  "Things that can't go on forever, don't."  (loose translation). According to Wikipedia,  Herbert Stein (1916-1999) was chairman of the Council of Economic Advisors under Presidents Nixon and Ford.     Stein's law is not often quoted and is generally not too well known ...... it's  less than a full page on Wikipedia.  Even though the intent of Stein's law was originally probably directed towards economic issues, it can easily be applied to other, more common situations.    Don't underestimate it -- it is a powerful critical thinking tool-- and simple!

Empires, world powers, governments--nothing lasts forever.  Looking back at the top 100 companies from 100 years ago--probably only 5 are still in existence.  The tech bubble of 2001, the housing bubble of 2008, credit default swaps -- none of them could go on forever--and they didn't.   A highly visible Tiger Woods, having multiple extramarital affairs--he thought that he would remain under the radar of a scandal thirsty tabloid press  --forever?

We all want to ride the wave of success--even though, deep down inside, we know that in some cases, it will inevitably come to an end.  We all muttered under our breath that housing prices "can't keep going up forever".  How many of us acted on it?  How many ignored it and kept on "flipping" houses?    How far are we willing to ride the next wave?   We need to develop more trust and confidence in Stein's law so we don't get drawn into the next bubble du jour.   Once again, it's not a lack of data that results in our bad decisions, it's our own human bias.

I talk a lot about the need to have a "mental drop down menu" -- a menu of quick use critical thinking tools -- a list of mental tools that visually drop down  like a Windows menu.  Keeping these tools simple, makes it much more likely they will magically appear just at the time we need them.   One of the simplest to add to your toolbox is: 


Stein's Law:  "Trends that can't continue, won't" 


Anyone have any other examples ??

5 Skill Sets

5 Skill Sets are the foundation of ERthink:

Mindset

Shuttle Thinking

Think into Time

Patterns

Fatal Distractions

The concept of 5 Skill Sets is a result of my years in medical school. Sitting in lecture halls, 200 students, some paying attention, some feverishly taking notes, some reading the newspaper (this was in the pre-texting era). There was absolutely no way to remember all of the data downloaded during the 4-6 hours of daily lecture. The traditional medical school tool to remember was -- find the "3 pearls" of the lecture--find the 3 key points that you want to remember, and then burn them into your memory. The rest of the data, you just needed to be "familiar" with, so you could look it up when you needed it. So, my "3 pearls" method that worked well in medical school, is now the design model for the 5 Skill Sets.

I have reduced the core of the ERthink seminar to 5 Skill Sets -- 9 words!  My goal was to keep it as simple, and as practical as possible.    Many courses in Critical Decision Skills are two full days of lecture. This course can be completed in as little as 90 minutes.   My goal is not to deluge you in data, but to provide you with a toolbox of readily accessible skills that can easily be put to work. Feel free to rename any or all of the Skill Sets--do whatever it takes to make them easier and faster for you to recall. I have also placed the 5 Skills Sets on the back of my business card to be a handy reminder--easily used as a checklist.   They are also found in greater detail on my web page, ready to be used as a quick reference.

As my lecturing skills have matured, I have learned to not overwhelm the audience with a mass of knowledge--most of which they may or may not remember. I have learned to limit my presentation to a few key points that I absolutely want you to take home and remember -- forever! I would hope that you can concentrate your key take home points from the seminar to such a reductionist level that your notes would also be able to fit on the back of my business card-- to be your complete reference point for critical decision making. ERthink is designed to present the 5 Skill Sets in a visually entertaining manner to help you lock the Skill Sets firmly into your brain.

Why ERthink?