Hi guys,

In this newsletter you'll learn 9 different mental models that you can use to solve difficult problems, see the world in ways that no one else could, even fathom and all around just improve how you think.

If you're wondering what a mental model is, it's simply a representation of how the world works. We operate in a very complex world and it's impossible to truly understand all the different intricacies of everything that we experience.

So in order to help us, we use these different models in ideas that we do understand to aid us in learning about the things that we don't understand.

Here's a quick example:

Let's say an environmentalist of botanist and a business person walk into a forest. They're all going to focus on different things the environmentalists may focus on the impact of climate change, the business person is probably going to look at the forest and see the immense value of the land and the botanist is going to focus on the ecosystem.

Each person essentially is simplifying the innate complexity of the forest into something that that they could understand with the limited knowledge that they have. While doing this isn't necessarily bad what they see is entirely limited to what they know and therefore they can't see the full scope of the forest. So one thing they may end up doing is sharing their specialised knowledge with each other.

This creates a scenario where each person develops a much more well-rounded understanding of the forest.

This is exactly what you do with mental models. You'll learn the fundamental concepts of other disciplines to help give you a bigger toolbox, if you will, to sort of see the world through. The more models you have the more lenses you can use while you look at the world and therefore the fewer blind spots that you end up having.

So now that you understand what a mental model is in the importance of using all of these different models throughout your life, let's learn what some of those models actually are and how you can use them:

1. Map is not the territory

One of the most important mental models to learn is map is not the territory. This model teaches that the representation of reality is not actual reality. Even the best maps are imperfect because they are naturally reductions of what they represent.

If a map were to represent the territory with perfect fidelity, it would no longer be a reduction of the thing, it would just be the thing. Like like imagine trying to navigate New York with a map the size of New York in your pocket. There are just so many obvious reasons why that won't work.

At a more practical level the graph or the spreadsheet of the financials of the company isn't actually the financials of the company. So it doesn't accurately represent the real important numbers in the dollars in your bank account. The information about a project from your direct report isn't the actual project.

So before making decisions based on these assumptions and maps and reports and summaries you have to ensure that you understand 100% that the reduction of the thing is not the thing.

So make sure you get familiar with the actual territory before you make an important decision and not just go based on whatever the map is saying.

2. Circle of competence

Circle of competence is simple. Each one of us through our experience and our study has built up useful knowledge on different areas of the world. Some of those areas are inside of our circle of competence and these are the things that we understand well.

Ff you work as a marketing director marketing is probably within your circle of competence. Product might be around the edges and Engineering is well outside of your circle of competence.

So now when you make a decision you can evaluate where the scope of that decision lies relative to your circle of competence. If it falls inside of it you can make the decision with a confidence knowing that you have the expertise to make the decision. If the decision Falls outside of the scope of your circle of competence that's when you can consult an expert whose circle of competence contains that decision.

Tom Watson the founder of IBM put it best when he said:

We should all aim to do the same.

3. Second Order Thinking

Almost everyone can anticipate the immediate results of their actions. This type of first order thinking is easy and safe but it's also a way to ensure that you get the same results that everyone else does.

Second order thinking is thinking further ahead and thinking holistically. It not only requires us to consider our actions and their immediate consequences, but also the consequences of those consequences.

There's a really famous story about this that is now called the Cobra effect and it's about in the 1900s British Colonials ruled India at the time but there was a massive Cobra problem. They were just everywhere. What the government did was they decided to pay citizens to kill snakes. So citizens would kill the snakes and then bring them to the government and they get paid for kind of like a bounty system.

What ended up happening was the citizens just started breeding snakes so they could kill them to make more money. Once the government found out about this and ended the Bounty program the citizens now had no need for all these newborn snakes so they just let them loose in the street making the Cobra problem even worse off than it it was before.

This story illustrates the perfect example of what happens when someone doesn't consider the second order effects of their decisions.

4. Probabilistic Thinking

Probabilistic thinking is essentially trying to estimate using some tools of math and Logic the likelihood of any specific outcome happening.

The world as complex as it is is very rarely black and white. So instead of deciding things as either happening or not happening, probabilistic thinking encourages us to assign a probability estimate to that thing happening to get a more accurate result.

As a simple example let's say you read a headline in a local paper that says “car break-ins On The Rise”. Now without thinking probabilistically you probably might start freaking out about leaving your car parked on the side of the street but using probabilistic thinking you can add a little bit more context to this for example.

Let's say you know that violent crime has been declining to its lowest rates in decades. Your city is now safer than it has been ever. Let's also say that the chance of your car getting broken into last year was one in ten thousand or 0.01% .

The article states with accuracy probably that this type of crime has doubled it. It is now two in ten thousand or 0.02%.

Now is that worth being terribly worried about? Probably not.

Sp the prior information here is key. When we Factor it in we realize that our safety isn't really being compromised.

5. inversion

Inversion is a powerful tool to improve your thinking because it helps you identify and remove different obstacles to success. As a thinking tool it means approaching a situation from the opposite end of the natural starting point. When most of us start a new project we'd like to think about what success would look like and then we set the goals and priorities around getting there. Using inversion though you think about what failure would look like and what might cause that. Then you set goals and priorities to ensure you avoid whatever it is that might cause that failure instead of thinking about success and aiming for whatever that looks like you think about failure and make sure you stay away from whatever that looks.

Like Charlie Munger has famously said

6. Occam’s Razor

Simpler explanations are more likely to be true than complicated ones. This is the essence of Occam's razor a classic principle of logic and problem solving.

Instead of wasting your time trying to disprove very complex and intertwined scenarios you can make decisions more confidently by basing them on the explanation that has the fewest moving Parts. A simple example of Occam's razor is used to find the truth among conspiracy theories. Most conspiracy theories have many complicated and interwoven threads that seemingly paint a bigger picture. But for conspiracy theory to be true all of those individual threads need to be proven 100 accurate. That's really hard to do, it's much simpler and much more rational honestly to assume the logical explanation because it has fewer dependencies.

For example the Titanic hitting an iceberg and sinking is pretty cut and dry there's not many dependencies. On the other hand a lot of things had to have happened for the Freemasons to cause sinking of the Titanic which is believed by some.

Doctors often look for the simplest solution to an ailment and scientists usually start with the Least Complicated hypothesis to disprove and then they go from there.

7. Hanlon's Razor

Another helpful razor is hanlon's Razor. This model says that we should not attribute to maliciousness that which is easily explained by incompetence.

Essentially just because someone does something that makes you mad or upsets you doesn't mean they're out to get you like we so often believe. It's far more likely that they are just ignorant of something or something else is going on in their life.

For example if a good friend hasn't responded to your messages lately using hanlon's razor we can assume it's far more likely that they are busy with work or something personal came up than it is that they no longer want to be your friend.

8. Reciprocity

Reciprocity or the principle of reciprocation states that for every action there is an equal and opposite reaction. In life the same is true. If you treat someone with kindness odds are they are going to reciprocate kindness back to you. But the opposite is also true if you treat someone poorly you can't be surprised when they do the same to you.

Reciprocity prompts us to rewrite the Golden Rule a little bit. Saying do unto others knowing that something will be done unto you.

9. Activation energy

Activation energy is a model from chemistry and it tells us that a chemical reaction needs a certain amount of energy before it can begin working.

One way to increase energy in a chemical reaction is with a catalyst this is something that can be added to a reaction to lower the activation energy that is required.

Using this practically in our lives we can identify some catalysts like coffee or inspiration even that make doing hard work or a big project easier. Writing a long paper is a really difficult task and takes a lot of activation energy to start and get going. If you drink coffee you can help lower that activation energy and get you going a lot quicker. When someone you know is struggling to get started on a project or finish a project, try to identify what's causing so much activation energy to be required and see if you can somehow lower that threshold.

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Cheers,

Jonas