Inside View vs. Outside View

Most problems are not unique. Chances are, what is happening to you has happened to many others. It will happen again to others.

What's the outside view? Photo "001102" by my new favorite photographer Alexey Gaponov, Flickr, CC-By-2.0
What’s the outside view? Photo “001102” by my new favorite photographer Alexey Gaponov, Flickr, CC-By-2.0
  • New restaurants often fail within five years
  • New love often is blind to incompatibilities
  • ‘Good enough’ mentality often overlooks opportunities

What can you learn from those who have traveled this path before you?

The Inside View is how we view our own situation, relying on our narrow experiences and intuition to make decisions.

We think our sample size of 1 is representative of a large sample of similar situations, and there for we can ignore those other situations. The Law of Small Numbers tells us that Small Numbers (small sample sizes) act nothing like large numbers (large sample sizes)

Once we incorrectly think we represent a large sample, we foolishly ignore the possible similarities. The Inside View compels us to contrast our small example with similar situations to make it obviously different, somehow.

We then over-emphasize those differences, building cognitive dissonance among the situations. Finally, we act out of ‘intuition’ to ease our brain’s discomfort.

We think our situation is unique. We have the inside view of why, this time, things are different. We ignore the similarities and statistical outcomes.





Click Here to Join the Free PRL email list now



The Outside View is how we view other peoples’ situations. From the outside, these are common story lines. We can expand the frame of reference and pick up on patterns. We focus on the common threads and common outcomes. We remove emotion. We make better informed decisions.

Look at it like a building in a city.

Photo "sopporo city view" by Norris Wong, Flickr, CC-By-2.0
Is this building unique? Photo “sopporo city view” by Norris Wong, Flickr, CC-By-2.0

The Inside View leads us to believe this building is unique. Yes there are other buildings, but the problems in this building are nothing like the problems in other buildings.

The Outside View tells us that the city is filled with buildings. Buildings share similar problems. Solutions already exist for these problems.

The outside view is smarter.

This idea of Inside View and Outside View comes from Daniel Kahneman and Amos Tversky and their theory of Reference Class Forecasting. Kahneman wrote about it in my favorite book of 2017, Thinking, Fast and Slow.

Improve your decision making with the Outside View.

  • Sample: Gather a large sample of similar situations. (Mentors and friends are great resources to get some input for the outside view of your own situation, and larger sample sets are always best)
  • Analyze: Analyze how things played out in those similar situations, focusing on the decisions made and their resulting effects
  • Adjust: Adjust your planning to meet the statistical outcomes, not your own intuitive expectations
  • Iterate: Continually adjust your planning and execution in the face of new information or evidence. This last concept has really taken off in the age of small startups that ‘pivot’ to new models in the face of new information.

Sample > Analyse > Adjust > Iterate

Because your situation is really not as unique as you might think.

2 thoughts on “Inside View vs. Outside View”

Leave a Reply

Your email address will not be published. Required fields are marked *