1/ "The map is not the territory" is a very interesting mental model.
The idea is that abstractions aren't the real thing.
Well, duh! But there are actually a lot of applications...
The idea is that abstractions aren't the real thing.
Well, duh! But there are actually a lot of applications...
2/ An obvious one is that stocks are abstractions of businesses.
A stock is not a business.
Even the concept of a business is an abstraction.
No two businesses are the same. A business is just a collection of people doing things and making decisions for others (customers).
A stock is not a business.
Even the concept of a business is an abstraction.
No two businesses are the same. A business is just a collection of people doing things and making decisions for others (customers).
3/ The application is that when a stock price is extremely volatile (the abstraction), the underlying business is likely not nearly as volatile (the territory).
And we can take advantage of these dislocations (@ Mr. Market)
And we can take advantage of these dislocations (@ Mr. Market)
4/ Another application is in personal relationships. Maybe we get in an argument with someone because we think they were being rude.
Our thoughts about what they said are an abstraction and may not be what they really meant (the territory).
Our thoughts about what they said are an abstraction and may not be what they really meant (the territory).
5/ This mental model is very obvious but the core implication is that we don't know nearly as much as we think we do.
We love putting labels on things but that can abstract away the reality of the situation.
We love putting labels on things but that can abstract away the reality of the situation.
6/ That makes me think of another example -- moats.
Moats are an abstraction. It's easy to put them into categories (network effects, switching costs, brands, scale, etc.) but just b/c it falls into one of those, doesn't mean our brains can turn off.
Moats are an abstraction. It's easy to put them into categories (network effects, switching costs, brands, scale, etc.) but just b/c it falls into one of those, doesn't mean our brains can turn off.
7/ A moat is not the advantage. Maybe it can fully explain the advantage but reality is often more complex.
It's not to say that frameworks aren't valuable. We need them to help us make cognitive shortcuts. But it's also important to remember: the map is not the territory.
It's not to say that frameworks aren't valuable. We need them to help us make cognitive shortcuts. But it's also important to remember: the map is not the territory.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
