Many people often hear the two high-sounding but obscure terms "bottom-level logic" and "top-level thinking". If you don't understand them, this tweet will help you completely unveil their meaning!
(Reposted from: Crypto Zen Master)
1. What is the underlying logic?
There is currently no unified, unanimously recognized
Explanation of the underlying logic. There are generally two types:
The first one: The most fundamental rules hidden behind things are a mysterious existence that outsiders cannot understand.
The second type refers to an internal operating mode of a thing.
The following is the big guys’ understanding of the underlying logic:
1. Charlie Munger: "In business, there is an old rule that works very well.
There are two steps:
1) Find simple and basic principles;
2) Strictly follow this principle. ”
2. Richard Dalio, author of Principles, said:
“The operation of all things depends on the laws hidden deep within, that is, a series of causes and effects that determine the direction of the world.
If you can detect the cause and effect relationship, even if you cannot detect all the causes and effects, at least you can detect most of them, then there is no doubt that you have the key to unlock the treasure of this world."
These views and opinions have one thing in common, that is, they believe that there is a basic operating law hidden behind everything.
This law is the so-called underlying logic.
1. Example of underlying logic
The underlying logic is invisible and intangible. If you don’t delve into it, you won’t be able to perceive it.
If no one tells you, you will never think of the logic behind it.
The first example: What is the essence of the Internet industry?
To put it simply, it is a certain online scenario where you improve efficiency, obtain traffic, and then make money from the traffic.
For example, the greatest value of Didi Taxi is that it improves the efficiency of matching drivers and passengers. When the supply of drivers is stable, if Didi wants to further improve its performance, it needs to acquire more users and maintain continuous return visits with users to obtain more traffic.
There will be orders only if there is traffic. This is true not only on taxi-hailing platforms, but also on content platforms such as TikTok and Video Account.
Second example: Chain industry
In the milk tea industry, there is a brand called Mixue Bingcheng, which already has more than 10,000 stores across the country.
Mixue Bingcheng’s valuation is much higher than Heytea’s, which should be beyond many people’s expectations. It’s like an ant defeating an elephant, which is hard to understand.
How does the Mixue Ice City brand make money? Does it make money by selling milk tea? Yes, but that's just the surface. The underlying logic of the Mixue Ice City brand making money is to build a supply chain.
Those more than 10,000 stores are essentially sales points for milk tea ingredients. Based on this underlying logic, you will find that many chain brands are the same, just providing different products.
Once a brand has hundreds of stores and a back-end supply chain, the marginal cost will not change significantly whether the number of franchised stores is one hundred or one thousand.
That is to say, if a company needs 50 people to serve 100 stores, it can still handle 50 people to serve 1,000 stores.
The premise here is that it is a franchise, not a direct operation. The marginal cost of a direct-operated chain brand continues to grow as the number of stores increases. Once there is a slight disturbance, the risk resistance is particularly weak.
There are not many domestic restaurant chains with more than 1,000 stores. This is because the underlying logic is not easy to understand, and even if it is understood, it is difficult to implement. It takes several years to build a supply chain.
Finally, let’s summarize the underlying logic of the restaurant chain in brief: by controlling the upstream supply chain, forming cost advantages, and then using low-price strategies and a large number of store openings to “dump” products in every offline store.
The third example: the underlying logic of real estate
The original underlying logic of real estate is that the government sells land, people use the money to buy houses and borrow money from banks, thus forming a cycle of economic development.
Specifically, the government sells land, real estate companies build houses, banks provide money, and ordinary people buy houses, thus promoting social circulation.
What is happening now? The housing prices are too high, ordinary people have no money to buy houses, houses cannot be sold, and banks do not give money to real estate companies.
Moreover, the government cannot always make money by selling land, and it is also difficult for the government to make money from property taxes. Real estate companies cannot get loans, and ordinary people cannot buy houses.
This is where the current problems in real estate arise. This is called a change in the underlying logic.
2. What is top-level thinking?
Top-level thinking means starting from the core principles of things, breaking down big problems into small, homogeneous problems, and looking for solutions with a positive attitude.
Then connect the goal with the current situation, find the necessary steps, and then list them in order and implement them one by one. In simple terms, it is a framework-based thinking from top to bottom and from big to small.
The biggest difference between it and the underlying logic is the change in the perspective. In computer professional terms, the term "top-level thinking" is called "recursive thinking."
What is recursive thinking?
Let’s listen to a story first:
Once upon a time there was a mountain, in the mountain there was a temple, in the temple there was an old monk, who was telling a story to a young monk!
What is the story?
Once upon a time there was a mountain, in the mountain there was a temple, in the temple there was an old monk who was telling a story to a young monk! What was the story?
...Unless the storyteller is interrupted, the story can be told "infinitely".
The reason is that the "story" nested in the "story" is the "story" itself, which is an example of "recursion" in language. From the above recursive example, it is not difficult to see that there are two necessary conditions for the existence of a recursive algorithm:
1. There must be a recursive termination condition.
For example, the old monk’s story must be interrupted at some point, perhaps because the young monk is tired of listening and asks the old monk to stop, or because the old monk just wants to repeat it 10 times, etc.
2. The description of the process includes itself.
When a problem contains a recursive relationship and has a complex structure, using a recursive algorithm is often more natural, concise, and easy to understand.
This is the basic idea of recursive thinking, which is a basic and important idea from computer design algorithms.
Converting a problem into a sub-problem of the same nature but smaller scale through function calls is a concrete manifestation of the divide and conquer strategy.
So how do we understand that recursive thinking can be regarded as the "top-level thinking" in our lives?
It is to transform a large and complex problem layer by layer into a smaller problem that is similar to the original problem, and finally solve the whole big problem.
Most of us do things recursively, from the bottom up, step by step.
I will do yesterday’s things today just like I did yesterday; I will be the same as my predecessor. This way of thinking is called “random thinking”.
One of its biggest problems is that it is short-sighted and traps itself in a small, inefficient range without realizing it.
The top-level thinking is to start from the core principles, actively seek solutions, connect the goals with the current situation, find the necessary path, list the order of priority, and implement them one by one.
A. The difference between having or not having top-level thinking
For example,
If you are a freshman in college, your random thoughts will become:
1. No one in the dormitory wants to be the dormitory head, so they have to draw lots to decide who will be the dormitory head;
2. In the second grade, the arrival of a foreign teacher made me interested in the history of Western learning, and I studied history books for a period of time;
3. Before graduation, he found that good companies all needed internship experience, so he began to ask relatives and friends if there were any internship opportunities.
Every action is triggered by external opportunities.
A college student with top-level thinking would probably plan like this when he is in school:
1. Internship is a must for job hunting, so internships must be arranged during the summer vacations of sophomore and junior years;
2. University is a process of self-discovery. Science students should join poetry clubs, drama clubs and other club activities;
3. Holding certain positions in the student union, class or dormitory can improve organizational and coordination skills;
4. In order to avoid inbreeding culture, do not limit your friends to those from the same hometown or classmates.
Obviously, after studying in the same university for four years, the two students mentioned above must have received different opportunities after graduation.
B. How to apply top-level thinking?
Look at this example: the British Library built a beautiful new building and planned to move its entire building there. But you know, books are heavy, and there are so many of them, so moving is a huge workload.
Some people estimated that it would cost $3.5 million to do this, which is a lot of money.
If you were the director of the library, how would you move such a large number of books to the new library with the least possible cost?
Hire someone cheaper?
Mobilize all employees and their families?
Ask the builders of the new museum to assume this obligation?
Under the inherent mindset of “moving books”, it may be difficult to find a better solution.
A person with top-level thinking might do this:
A young man said to the curator: I can help you move, and it only costs 1.5 million.
The young man published a message in the newspaper: "From now on, the British Library will lend books to citizens for free and in unlimited quantities, provided that they are borrowed from the old library and returned to the new library...
Young people change their mindset from "moving books" - moving books as a whole - to "returning books" by breaking it down into moving one or several books at a time.
As a result, this seemingly impossible task may be completed with less than a fraction of the cost.
You see, the same thing, when done by people with different thinking patterns, may produce completely different results.
3. Learn the underlying logic and cultivate top-level thinking
The development of any thing has its own objective rules.
I remember a TV drama once said: "The way of heaven cannot be changed by human will.
The underlying laws will not change because of people’s thoughts and ideas, just like a stone will not turn into gold just because people hope it will. The objective world cannot be changed by human will.
On the contrary, the subjective world can be changed by human will. Learn to see through the underlying logic of things and find the root cause of the problem; do not be confused by appearances, and seek solutions to the problem according to the essential cause.
Cultivate a way of thinking that consciously transcends the empirical perspective of the self, and develop your own "God's perspective" to see through things, find patterns, and find methods.
Everyone should be familiar with the classic line in The Godfather: "Those who see through the essence of things in one second and those who spend their whole life not understanding the essence are destined to have completely different lives!
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