As you grow older and have to increasingly make complex decisions (adulthood brings that on everyone, right? ), one tool you’ll need to improve the quality of your thinking and decision-making is mental models. I first came across mental models on the Farnam Street Blog three years ago, and while I haven’t been able to master most of them, some have been quite useful to how I approach my day-to-day decision-making.
What are mental models?
The term “mental model(s)” is a generic way to describe any sort of framework or concept that you carry around in your mind. Its an explanation of how something works, the why behind the what.
They help you simplify how things work, what to consider when making a decision, and what to discard. For example, compounding helps you understand the value of the long game; supply and demand help you understand scarcity; ecosystems help you understand social behavior and why certain topics seem to be the order of the day.
However…a British statistician named George Box once famously wrote, “All models are wrong, some are useful”. Mental models can be imperfect, but useful. As academicians are wont to say, the real test of knowledge is not truth but utility, therefore the best mental models are usually the ones that can be broadly used across various spheres of life.
There are a thousand and so mental models out there, but here are my favorites:
The law of compounding
I really love this model, most of us know it as compound interest. You can apply this to almost everything you do in life. I also call it the law of the long game; everything we do compounds, and as it does you get better and more successful at it, be it reading books, gaining experience in a particular field, or even parenting.
The map isn’t the territory
Even the best maps are imperfect, and until you start the journey, you never know what you’ll experience. We sometimes spend so much time planning, forgetting that even the data we have is a snapshot in time. Spend less time planning, spend more time executing and optimizing. This doesn’t mean that you shouldn’t plan or not put rigor in your planning process, just don’t get caught up in analysis paralysis.
To understand human behavior, we need to understand the incentives that drive the decisions they make. This, I believe is a basic rule of life. A mentor of mine used to say to me, “if you are confused when listening to something on the news, just follow the money trail”.
However, sometimes it can be difficult to discern these incentives because of the complexity of human nature, but always remember, humans, are conditioned to act according to what they are rewarded for most of the time. These rewards could be intrinsic or extrinsic.
Humans are social beings with a powerful psychological need to belong. Add that to the fact that most of us prefer to use a peripheral, or non-critical style of thinking to evaluate decisions by simply asking, what is everyone else doing? This need for group membership and acceptance is a strong drive, and people will forego the need for an active, deep analysis of the topic at hand. Twitter has so many examples!
Circle of competence
This is also a really great model to practice. We all have blind spots, no matter how learned or experienced we are, which means we always need to keep our egos in check (pretty difficult? Yes).
To improve your decision-making process, you need to know what you understand, the limits of your knowledge, and when to ask for help. This gives you an edge over most people.
My favorite example of this is in marketing, called the “So-What technique”. I’ll use an example to drive this home.
The temperature in Lagos is expected to reach highs of 35° by December, and let’s imagine you sell air conditioning units. To define the benefit, we ask ourselves, so what…
Feature: This Panasonic unit cools quickly
Advantage: The room cools faster
Advantage: You sleep off immediately you hit the bed, instead of tossing around in the sweltering Lagos heat…
Benefit: You are more rested and ready to take on the challenges of the new day with renewed vigor/ A well-rested mind is a healthy mind.
Second-order thinking helps us identify the subsequent effects, whether positive or negative of an action. Another great way to elicit second-order thinking is to always remember that most of the time, we are dealing with complex systems, that continue to interact even after the first decision has been executed.
So yea, those are my favorite mental models
Something to keep in mind while reading this, the quality of your thinking is proportional to the quality of your decisions.
Definitely doesn’t mean I have it all figured out, but the ability to pause and think with rigor can do wonders to your life.