Throughout the mid-1990s, Intel had resisted providing cheap microprocessors for inexpensive PCs. During a 1997 training seminar, however, Intel’s top management team learned a lesson about the steel industry from Harvard Business School professor Clayton Christensen:
In the 1970s, desperate minimills established themselves in the steel business by selling cheap concrete-reinforcing bars known as rebar.
Established players like U.S. Steel ignored the low end of the business and left it for the minimills. But they deeply regretted that decision when the minimills crept into higher-end products.
EAF is a synonymous term for minimills. Source of this image.
Intel’s CEO at the time, Andy Grove, seized on the steel analogy, referring to cheap PCs as “digital rebar.” The lesson was clear, Grove argued: “If we lose the low-end today, we could lose the high-end tomorrow.” Intel soon began to promote its low-end Celeron processor more aggressively to makers and buyers of inexpensive PCs.
What was interesting about Andy’s way of thinking is that he applied insights from a different industry into Intel’s business strategies. He learned an important lesson via distant analogies that had no direct correlation. It’s like explaining to a kid about the structure of an atom using the model of our solar system.
Why Analogical Thinking
Whenever a new idea is presented to us, it makes us feel uneasy, it’s atypical nature confuses us. Analogical thinking takes a new idea and makes it familiar, or takes the familiar and puts it into a new light.
It allows us to reason through problems we have never seen in unfamiliar contexts. It allows us to understand that which we cannot see at all.
Students might learn about the motion of molecules by the analogy to billiard-ball collisions; principles of electricity can be understood with analogies to water flowing through plumbing. It is as Aristotle said in Poetics:
“The greatest thing by far is to be a master of metaphor. It is a sign of genius, since a good metaphor implies an intuitive perception of the similarity in dissimilars.”
Analogical thinking hands us a set of ideas and insights that were alien to us. It gives us access to information that Nassim Taleb calls Black Swans—the unknown unknowns.
For a very long time, the notion of thinking outside the box was ambiguous for me, but I recently concluded that a large part of what we call Out-of-the-box thinking is Out-of-the-experience thinking.
Kepler: An Analogy Addict
Kepler, while developing his theories about planets' orbits around the sun, used analogical thinking extensively.
He compared the gravitational pull of the Sun not just to light, heat, odor, current, and boatmen in a whirling river but also to optics of lenses, balance scales, a broom magnet, a magnetic broom orator gazing at a crowd, and a lot more distant analogies.
Kepler’s analogies were wild, but at that time it was all he had because there was no foundational information about his field of study discovered yet. He did not inherit an idea of universal physical forces. He discovered them. There was no concept of gravitational force, and he had no notion of momentum that keeps the planet in motion. Analogies were all he had.
If you want to read more about Kepler’s analogies and their cognitive importance, read this paper written by Dedre Gentner and her team of psychologists at Northwestern University.
How to Think in Analogies
It is easy to conclude that analogical thinking is an outcome of one’s curiosity about unrelated domains. The only way you will be able to think in analogies is to be aware of those analogies, and awareness in most cases is a consequence of your curiosity.
All you have to do to be a good analogical thinker is to encourage the curious side of your brain. Read and learn about things that have no direct implication on your profession. Don’t think of it as a waste of time and energy, but as an intellectual investment.
Most of us constrain our desires for this aimless indulgence in activities that has no direct consequence on our professional and academic life. Don’t limit yourself. Be obsessively curious about the things that interest you.
For instance, I am a mechanical engineering graduate who is doing online courses at Ivy League universities about political philosophy, macroeconomics, cryptocurrency, etc. And trust me, I have no clue why I am doing them. I just enjoy it. I am doing them way before I came to know about Analogical Thinking. So, to think better, be curious.
I appreciate your patience and dedication to read this overwhelming essay. I am glad you made it through the end. I hope I gave you a new thinking tool that will help you to utilize your precious mental energy more efficiently.
I have been running this newsletter for the last six months, sharing the bits and pieces of my intellect with thousands of readers every month.
More than having a large audience, I want a sustainable group of the right people. People who get something out of these weekly essays. If you know someone who fits the bill, feel free to share my work with them. If you are new here and like what you just read, then by all means subscribe.
