The Inner Path to Clear Thinking: Thoughts from a CIA Veteran

Love him or hate him, there’s little doubt that Warren Buffett is a master of decision-making.

Some might assume the keys to Buffett’s success are his skills in research or his intelligence, but Buffett says that’s not the case. In the introduction to The Intelligent Investor, he writes:

“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”

Buffett’s advice is always noteworthy, but these words took on added meaning for me when I read Psychology of Intelligence Analysis, a seminal work of decision-making by Dick Heuer, a veteran of 40+ years with the CIA.

Heuer has devoted his life to improving high-stakes decision-making, and it shows in his work.

Echoing Buffett, Heuer points out that optimizing decisions is not always about having the best information. In fact, having more information can hurt us, says Heuer:

“Once an experienced analyst has the minimum information necessary to make an informed judgment, obtaining additional information generally does not improve the accuracy of his or her estimates. Additional information does, however, lead the analyst to become more confident in the judgment, to the point of over-confidence.”

This overconfidence doesn’t only show up in intelligence analysis. It also occurs in doctors and medical professionals, stock trading, weather forecasting, and even horserace handicapping.

In other words, it’s probably universal.

I love the idea of this: Making good decisions in entrepreneurship, finance, politics and at home isn’t just about access to information or ideas. It’s also about good judgment and clear thinking.

As an added bonus, information is often domain-dependent. Knowledge of the movement of corn futures doesn’t transfer to decisions on how to buy a home or whether to marry your current girlfriend.

Clear thinking, on the other hand, is not domain-dependent: it’s useful virtually everywhere and stays with you when you change countries, jobs, or frames of mind.

Now, how can we teach ourselves to think clearly?

The Clearest Lens

To understand how to clear thinking, it helps to first understand what clouds it.

Here’s an excerpt from Heuer’s book:

“A central focus of this book is to illuminate the role of the observer in determining what is observed and how it is interpreted. People construct their own version of “reality” on the basis of information provided by the senses, but this sensory input is mediated by complex mental processes that determine which information is attended to, how it is organized, and the meaning attributed to it. What people perceive, how readily they perceive it, and how they process this information after receiving it are all strongly influenced by past experience, education, cultural values, role requirements, and organizational norms, as well as by the specifics of the information received.

Unless you’ve gone through serious training and have the results to prove it (I don’t — most of us don’t), your thinking is probably clouded from all sorts of biased thought patterns, misconceptions, cognitive biases, etc.

To understand this, imagine a lens — a pair of giant sunglasses — that warps, reinforces and distorts what we see and think about the outside world.

“This process may be visualized as perceiving the world through a
lens or screen that channels and focuses and thereby may distort the images that are seen. To achieve the clearest possible image of China, for example, analysts need more than information on China. They also need to understand their own lenses through which this information passes. These lenses are known by many terms — mental models, mind-sets, biases, or analytical assumptions.”

Heuer argues that we focus far too much on how to act on the outside world (research methods, information sources, etc.) and not enough on improving the clarity of this lens.

In other words, to think clearly, we need to focus on improving the quality of our own thought processes.

Defogging Our Lens

Roughly speaking, Heuer suggests that there are two steps to training good decision-making:

“Intelligence analysts must understand themselves before they can understand others. Training is needed to (a) increase self-awareness concerning generic problems in how people perceive and make analytical judgments concerning foreign events, and (b) provide guidance and practice in overcoming these problems.”

Sounds pretty easy. It’s just two steps.

But, as good analysts and investors are rare, proficiency in these two steps will likely take a lifetime.

With that said, there are some easy steps — some “low-hanging fruit” we can gather — to develop basic decision-making skills.

Here are two things:

  • Develop awareness of common cognitive biases. Cognitive biases are the easiest parts of the “foggy” lens to learn about because they tend to be consistent from person to person (emotional, organizational, or cultural biases are probably harder to pinpoint). Some good places to start (among many) are the Wikipedia page and Thinking, Fast and Slow.

Note: I’ve also learned a lot from the study of epistemology (the part of philosophy that studies what we can and cannot know). A non-boring and non-BS way to get interested in some of these problems are The Black Swan or, if you prefer fiction, the short stories of Jorge Luis Borges.

  • Address, evaluate, repeat. Heuer stresses that just awareness is not enough. We need to actively train ourselves to make better decisions. To do so, consider checking out Heuer’s book (free copy here) or starting a decision journal.

Hope you liked that. More thoughts from books coming soon.