Mental Models For Dummies

Plus 7 of the best that will help you to make sense of reality

Brian Pennie
Dec 19, 2020 · 9 min read

Two young fish are swimming along when they happen to meet an older, wiser fish swimming the other way. The older fish nods and says, “Good morning boys. How’s the water?” The two young fish smile, nod, and continue on their way. As they glide through the water in silence, eventually, one of them turns around to the other and says, “What the hell is water?”

The point of this parable — first told by David Foster Wallace — is that the most obvious and important realities are often the most difficult to see.

Making sense of reality

Mental models are psychological explanations of how things work. They provide us with a new way to see the world, and as a result, help us to make sense of reality. Mental models also improve how we think, helping us to simplify complexity and better understand life.

For example, supply and demand is a mental model that helps us to understand the workings of our economy. Occam’s Razor is a mental model that helps us to seek the simplest solutions to our problems.

It’s important to note, however, that mental models are not reality. They are simply a map of reality, and only provide a representation of how something works. This makes them imperfect, because, like a map, they are reductions of what they represent.

If this is the case, how are mental models useful? Because the world is far too complex to keep all of the details in our brains, so we use mental models to simplify this complexity into bite-sized chunks that are easier to understand.

Stop swinging your hammer

The quality of our thinking is proportional to the models at our disposal. Why? Because the more models you have, the more likely you are to use the right ones to help you to see reality.

Cultivating a broad base of mental models is therefore critical if you want to make better decisions and think more effectively. However, most people don’t have a broad base of mental models. Instead, they take the one or two models they do have and look for problems to stick them into.

This is best explained by the old adage, “To the man with a hammer, everything looks like a nail.” As many people know, the majority of projects require more than a hammer. That’s why you need a variety of tools at your disposal. Only then will you be able to get the job done right.

The same is true for thinking. The quality of our decisions depends on the mental models in our heads. The problem is, most people are stumbling through life with little more than a hammer.

“When you don’t use mental models, strategic thinking is like using addition when multiplication is available to you.” Gabriel Weinberg

Blind spots, big blind spots

Having a variety of mental models at our disposal is particularly important when facing complex problems, as it provides us with an ability to see the world through multiple lenses.

Unfortunately, however, society tends to look at reality through a single lens, dividing it into discrete topics to make it more accessible for study. Shane Parrish captures this nicely in his latest book The Great Mental Models:

“Most of us study something specific and don’t get exposure to the big ideas of other disciplines. We don’t develop the multidisciplinary mindset that we need to accurately see a problem. And because we don’t have the right models to understand the situation, we overuse the models we do have, and use them even when they don’t belong.”

For example, an economist will often think in terms of supply and demand. A behavioural psychologist will think in terms of reward and punishment. Through their respective disciplines, these individuals only see part of the situation, the part of the world that makes sense to them.

“None of them, however, see the entire situation unless they are thinking in a multidisciplinary way. In short, they have blind spots, big blind spots.”

To better navigate the complexities of life, and to help us to see our blind spots, we need what Charlie Munger — one of the most successful people in the world — calls, a “latticework of mental models” (see image below).

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Source: Example of a latticework — interlacing strips of material forming a lattice

A latticework is a great way to conceptualise mental models because it demonstrates the interconnected nature of knowledge. Reality is not comprised of a unique set of disciplines. We only break it down that way to make it easier to digest.

However, once we learn something, we need to place it back into the interconnected system from which it came. Only then can we begin to build an understanding of the whole. This, as Shane notes, “is the value of putting the knowledge contained in mental models into a latticework.”

Mental Models: 7 of the best

For an in-depth review of mental models, see “The Best Way to Make Intelligent Decisions” by Farnam Street (Shane Parrish) and “Learn How to Think Better and Gain a Mental Edge” by James Clear.

However, here are 7 of the best to help you to make sense of the world:

1. Circle of Competence

This idea is simple: Through experience, we’ve all acquired useful information and skills in certain areas of the world. But in some areas — those that require specialist knowledge — we are often lacking.

For example, most people have a basic understanding of car maintenance. You know how to change a tyre and add some oil and screenwash, but if you need to drain the oil, you’ll most likely need a mechanic.

This is a basic example, but whether it’s economics, your ability to manage people, or your communication skills, the idea is always the same: you need to know your strengths and weaknesses. If you remain ignorant to these, your ego drives your actions, and then you’re sure to run into trouble.

Understanding your circle of competence, on the other hand, helps you to avoid potential problems, identify opportunities for growth, learn from others, and help you identify where you have an edge over others.

Tom Watson Sr., Founder of IBM, put it best: “I’m no genius. I’m smart in spots — but I stay around those spots.”

2. The Two Razors

Occam’s Razor and Hanlon’s Razor are two separate mental models, but they complement each other nicely.

Occam’s Razor, which helps us to seek the simplest solutions to our problems, suggests that “among competing hypotheses, the one with the fewest assumptions should be selected.” Here’s a fun example: “when you hear hoofbeats, think of horses, not unicorns.”

In many cases, simpler explanations are more likely to be true than complicated ones. So instead of trying to disprove complex problems, you make a decision based on the explanation with the fewest moving parts.

Related to Occam’s razor, Hanlon’s Razor states that we should not attribute to malice that which is more easily explained by carelessness or stupidity. In a sense, it teaches us to look for the good in others.

Consider this example. A colleague forgets to send you a message about an event. Does this mean that they have something against you? Chances are they don’t, although you’re not alone if that’s your first thought.

Implementing Hanlon’s razor teaches you to first assume this happened because someone made a mistake, rather than intentionally trying to hurt you. Maybe they forgot. Or they simply thought it wasn’t for you.

Utilizing this thinking tool reminds us that people do make mistakes. It also prevents us from making negative assumptions and helps us see the world in a more positive light.

3. Inversion

Inversion is one of the most powerful mental models. Its origins can be found in the word “invert,” which simply means “turn upside down.” As a thinking tool, it helps us to successfully identify and eliminate obstacles by tackling them from the opposite end of the natural starting point.

For example, say you were struggling with a work project. Instead of asking yourself, “What three things will help move the project forward?” ask yourself, “What five things will hold the project back?”

The idea is, rather than thinking about what you want, consider what you’d like to avoid. Or as Charlie Munger once said, “All I want to know is where I’m going to die, so I’ll never go there.”

Inversion won’t give you the answer to every problem, but by looking at challenges from their opposing perspective, it will help you identify things you may have missed.

4. Second-order thinking

Every action has a consequence, and each of these consequences has further consequences. These are called second-order effects. Second-order thinking means thinking about these second-order effects. In other words, it means thinking about the effects of the effects.

This is a powerful mental model because things are not always as they appear. When we solve one problem, it’s often the case that we inadvertently create another one that’s even worse.

This process is best explained in terms of long-term challenges. Take the current crisis with the coronavirus. A recession at this stage is a given, but other second-order effects include airline bailouts, an increase in racism towards China, and regime changes in countries such as Iran, Venezuela, Uzbekistan, or North Korea.

On a more positive note, people might start reading more, and we’ll likely see a drop in CO2 emissions, for a short time anyway.

With any situation, including the coronavirus, second-order thinking allows us to examine long-term consequences before they occur, thus helping us to make of our decisions before we potentially make a bad call.

5. Thought Experiments

Thought experiments are used by many of the world’s great thinkers. Defined as a device of the imagination used to investigate the nature of things, thought experiments help us to envisage real-world problems, enabling us to explore impossible situations and predict their outcomes.

Albert Einstein, the most famous proponent of this thinking tool, used thought experiments for some of his most important discoveries. Whilst exploring the relationship between space and time, he asked himself this question: “What would happen if you could catch up to a beam of light as it moved?” He imagined himself chasing the beam of light, and it was this scenario which played a key role in his development of special relativity.

Thought experiments are powerful because we can learn from our mistakes without real-world consequences. In doing so, they help us to identify answers to our problems, and the best way to get there.

6. First-Principles Thinking

First-principles thinking is one of the best ways to reverse-engineer complex problems. Often called reasoning from first principles, it’s the act of boiling things down to their most fundamental truths.

This is done by separating the underlying ideas from any assumptions they might be based on. A first principle, therefore, is a basic assumption that can’t be deduced any further.

An excellent example of first-principles thinking comes via entrepreneur Elon Musk. In an interview with Kevin Rose, Musk expertly explained how Space X used first principles to innovate at low prices.

In the early days of Space X, Musk was told that “battery packs are really expensive and that’s just the way they will always be.” Instead of settling for this answer, though, he broke the problem down into its fundamental parts.

First, he identified the material constituents of the batteries. Then, he priced the materials on the London metal exchange and calculated the construction costs. As it turned out, the cost of building a battery from the bottom-up was only 13.3% of the original price.

By reasoning from first principles, Musk was able to cut through the fog of pre-existing beliefs to see opportunities others had missed, and ultimately, send rockets to space.

7. Pareto Principle

Named after Vilfredo Pareto, the Pareto Principle (also known as the 80/20 rule) states that, for many events, roughly 80% of the effects come from 20% of the causes.

For example:

  • 20% of your effort produces 80% of your gains.
  • 20% of your customers produce 80% of your profits.
  • 20% of your sources produce 80% of your happiness.

The point of this mental model is to recognize that most things in life aren’t evenly distributed. As such, to get better results, you should focus on the 20% that provides the greatest gains. In other words, focus on what works and do it better.

For me personally, the Pareto Principle helped me to identify the people in my life that give me the most energy. I then flipped that analysis, and I was easily able to recognise those who were draining my energy. I’ve since implemented my findings, and my energy levels have never been better.

Takeaway Message

If you want to improve how you think, see the world more clearly, and ultimately, be more successful in life, look no further than mental models.

These models work for everyone, but what separates the majority from the world’s leading performers, is that the latter put them into action. Maybe you’ve heard or read about these tools before, but knowledge is not where the game is played — it’s played by action. That’s what will define you.

If you want to join the elite thinkers of the world, you know what you have to do — put these models into action.

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