Occam's Razor (also known as the "law of parsimony") is a very useful principle for solving problems more quickly and efficiently. It states that among competing hypotheses, the hypothesis with the fewest assumptions should be selected. Other, more complicated solutions may ultimately prove to provide better predictions, but—in the absence of differences in predictive ability—the fewer assumptions that are made, the better.
In other words, all things being equal, the simplest solution is usually the best. Simple solutions are easier to execute. We should avoid looking for excessively complex solutions to a problem, and focus on the simplest solution that works given the circumstances.
The concept of Occam’s razor is credited to William of Ockham, a 14th-century friar, philosopher, and theologian. While he did not coin the term, his characteristic way of making deductions inspired other writers to develop the heuristic.
According to Warren Buffett,
The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective...We haven’t succeeded because we have some great, complicated systems or magic formulas we apply or anything of the sort. What we have is just simplicity itself.
Charlie Munger also advocates for Occam's Razor –
People calculate too much and think too little…We have a passion for keeping things simple. If something is too hard, we move on to something else. What could be more simple than that?
However, Occam’s razor is not intended to be a substitute for critical thinking. Even Albert Einstein, who believed in the power of simplicity, understood its limitations when he said –
Everything should be kept as simple as possible, but no simpler.
Harlan Coben has disputed many criticisms of Occam’s razor by stating that people fail to understand its exact purpose –
Most people oversimplify Occam’s razor to mean the simplest answer is usually correct. But the real meaning, what the Franciscan friar William of Ockham really wanted to emphasize, is that you shouldn’t complicate, that you shouldn’t “stack” a theory if a simpler explanation was at the ready. Pare it down. Prune the excess.
Remember that Razor should be complemented by other mental models. No mental model is meant to be used by itself, they work best in conjunction with each other.