“If the facts change, I change my mind. What do you do?” Keynes

Thomas Bayes developed a theory whereby he constantly assessed the environment for new information that he could add to his existing mental models, thereby increasing the probability of his models being correct.

It was named Bayes Theory and can be expressed as follows:

Initial belief + new information = Revised belief

It’s an evolutionary way of thinking, ensuring you are constantly questioning and updating your assumptions about the world.

It’s a great model for entrepreneurs. Every experience is an opportunity to update your beliefs.

Take the time to reflect and update your mental models. The more you align yourself with reality, the greater your odds of success.

The Bayesian approach will not enable you to predict everything. Sometimes history is very different to the future.

Nassim Taleb has the following example of the danger of Bayes Theory:

Consider a turkey that is fed everyday. Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed everyday by friendly members of the human race “looking out for its best interests,” as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey.

It will incur a revision of belief, but too late to ensure its survival.