What it is:
We use maps, principles, mental models, learnings from experience, etc. to help us navigate the world around us. But it’s important to remind ourselves – the map is not the territory.
- The map doesn’t include every feature of the territory. Even a very detailed map of London won’t include every thin street.
- The territory is different: Sounds banal, but a map of London won’t help at all, if you’re in Mumbai.
- The territory may have changed. An 1850 map of London won’t help you in 2016 London.
This sounds trite, but we often forget this, as we see in the following examples.
Examples in business:
- Just because there’s a formula for something doesn’t mean the formula is perfect. The Black-Scholes option pricing equation bankrupted Scholes’ hedge fund. And, as Taleb says, the misplaced concreteness of Value-at-Risk has caused a lot of financial crashes.
- Just because it worked in one sector doesn’t mean it will work in another. Happens to the best of us. Elon Musk treats Mars as a Moore’s Law problem. But it’s not. Startups do it too, describing their new venture as the “Uber of X”. And VCs fall prey all too easily.
- Just because it worked before doesn’t mean it’ll work again. At OperatorVC, I see a lot of startups that are building consumer mobile apps. But the age of the app is over. And as TechCrunch found out, serial entrepreneurs just can’t repeat success in consumer businesses.
When you hear someone say, “This is how we did it in my previous company.”, tread carefully.
Rules to follow:
- Start from first principles. Always begin with, “What do we know to be absolutely true?”
- Beware of false rigor. Just because something is described concretely doesn’t mean it is concrete.
- The Map is not the Territory, on the Farnam Street blog.
Linked to: First principles thinking
Filed Under: Decision-making