The Ladder of Inference is a model of cognition and action developed by Chris Argyris.

For entrepreneurs and business owners it can be a tool that differentiates between a successful and an unsuccessful business. It helps people map the decision-making process and run a self-check when making critical decisions. By using this tool, people will be able to separate actions based on observing data and facts from actions based on emotions, assumptions, and personal beliefs.

How does it work?

Step 1, Observing the environment 

Continuous scanning of the environment is a natural process where we involve all the five known senses (hearing, smell, taste, touch, vision) to make sense of the world around us.

Step 2, Selecting relevant data

During this stage, our brain segments reality from non-reality. The process is based on a current understanding of the environment and existing beliefs created by past experiences.

Step 3, Analysing data

At this stage, we assign known values to various bits of information we have selected, involving a deeper level of interpreting the information and its meaning to us.

Step 4, Creating assumptions

Based on the way we interpret an existing situation, at this stage, we start creating assumptions seeking to establish that information we have so far represents “the reality”.

Step 5, Drawing conclusions

This is a stage where we define all data gathered and structured so far. In this stage, we summarise all information and evidence collected.    

Step 6, Forming beliefs

We can easily be subject to a cognitive bias at this stage. This happens because if there is a belief deeply anchored in our evaluation system, it is likely that we tend to overlap a personal an existing belief with facts.

Step 7, Taking actions

Finally, we take action that seems right to us based on our beliefs. Our actions then change the situation and create a new set of circumstances. Since observing our environments is a continuous cycle, we revert to scanning the environment and continue the same loop once we take action.

To summarise the above, the ladder of inference outlines our natural process of making judgments about various situations, and it helps in forming a strategic thinking.