Mental Models

Thu, 07 Apr 2022 14:13:00 GMT
by pdp

This page contains my collection of mental models I use for decision-making, business, and life in general. Some models are more practical and, as such, can be applied to everyday situations. Others can be used for long-term decisions or to enjoy in a thought process.

Keep in mind that one should never be stuck thinking with common frameworks like the ones provided here. You should use your judgment and adjust to your situations. It is also essential to understand that these mental models are meaningless unless you internalize them. Further reading and practice are required.

Circle of competence

Focus on what you know. Double down on your strengths, and do not obsess about your weaknesses.

For example, Einstein might not be the best pick for a basketball team, but that does not mean he is worthless. His competence is elsewhere. Similarly, if you obsess about your weaknesses, you may never reach your true potential - what you are made for. If you don't know your strengths, it is worthwhile to meditate on this question and ask parents, siblings, and close friends for opinions if possible.

Eisenhower matrix

What is important is seldomly urgent. If you divide the problem space in a 2x2 matrix between Important, Urgent, Unimportant, and Not Urgent, you get the following outcomes:

  • Important and Urgent - rare but requires immediate attention, however, these problems usually take care of themselves, i.e., once in motion, they will unfold regardless.
  • Important and Not Urgent - focus on these but schedule/plan to do later
  • Unimportant and Urgent - delegate to someone else to do
  • Unimportant and Not Urgent - delete / ignore
Urgent Not Urgent
Important rare, takes care of itself focus / do
Unimportant delgate delete / ignore

10/10/10 rule

This mental model is also known as the regret minimization framework, and it goes by asking the following questions:

  • Are you going to regret this decision ten weeks from now
  • Are you going to regret this decision ten months from now
  • Are you going to regret this decision ten years from now

You can use your timescale that fits your problem domain better.

The rule of 5

You are the average of the five people you spend the most time with. Choose carefully who do you spend time with. Similarly, actively seek to spend time with people who will make you better. Don't leave this to chance. This is also why real education starts at home. Your kids will be influenced by who you are and what you do.

Saying no

I like the way Derek Sivers puts it: "It is either fuck yes, or no." It is a great mental model to do the right things in life. Steve Jobs defined it like this:

People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things.

80/20 rule

Being effective is not the same as being efficient. Often 80% of the result is achieved by 20% of the input. That is not to say that efficiency is not a good thing (we want highly efficient engines in our cars for a good reason), but sometimes you need to be effective. It would be best to decide under what situations this rule applies, but it can be used generically to describe a wide range of problems and solutions.

Parkinson's law

All work expands to fill the time available for completion. This is why it is necessary to set more aggressive timelines to force the hand to focus on what is essential. Like the 80/20 rule, you should not use this mental model without thoughtful considerations. Sometimes attention to detail is necessary, in which case, while still applicable, the Parkinson's law is not an effective tool.

Barbel strategy

Avoid mediocracy. It is a strategy used in finance and trading, but we can use it for all kinds of situations in business and life. It boils down to that you either need to be hyper-aggressive or hyper-conservative. Hedge low risk and low return decisions with high risk with high returns objectives.

For example, while light jogging is better than nothing, it does introduce the risk of injuries while providing a low return on investment. Instead, as Nasim Taleb puts it, combine easy walking (hyper-conservative) with lifting heavy objects (hyper-aggressive).

Anti-fragile

Some things benefit from shocks. Sometimes resilience is the result of constant exposure to volatility and randomness. We should aim to build anti-fragile systems and processes.

Via negativa

Often problems can be solved not by addition but by elimination. Consider removing things, not adding more.

Batching

Context switching contributes to most overhead at work. Batching eliminates the context switch by grouping similar tasks in a single block of focused time.

Driving an analogy from technology, the more software runs on your computer, the more often the CPU needs to slice time for each program (context switch) to run, the slower the overall execution is.

You can apply batching to work quite well. For example, I batch my email correspondence in two 30-minutes to 1-hour blocks of time per day.

Luck

Luck is most likely to strike when you have more options. Simply put, the more tickets you have, the higher the chance to win the lottery. The more options you have, the higher the chance to get a lucky break. It is also fundamentally important to know when you are struck by luck so that you can either appreciate or take full advantage of the event.

No pain, no gain

Used mostly for fitness, the reality is that pain is a guide that tells us if we are doing things worth doing. Ray Dalio says that pain + reflection = progress, and I generally agree with him on that one.

Optionality

When many favorable options surround you, all decisions are equally good. Then your ability to make good decisions does not matter. Increase your options, not your ability to make good decisions.

Algorithm

The algorithm is a process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer. You can use algorithms outside of computer science, though. Once you spot a pattern, you can convert it into an algorithm that can be used by yourself and others to achieve consistent results over and over again.

It is helpful to learn about functional programming and side effects to understand algorithms better.

Happyness

Happiness is a subjective matter, but without health, wealth, and being surrounded by people you like spending time with, it is unlikely one can be happy.

Defining what health is is easy. Wealth, on the other hand, is a subjective matter. To be wealthy does not just mean having money. Having wealth is the ability to spend your time whichever way you wish comfortably, and money allows you to buy value which otherwise you need to buy with time. There are plenty of wealthy people worldwide who are not rich from the perspective of the western point of view but are happy nevertheless.

Some common sources of unhappiness are popular media, social networks, and other online and offline realms. I try to stay away from them as much as I can.

Money

Money is a simple, unified system for exchanging value. People who hate money don't get it. It is essential to understand what money is and how it made the world a better place.

Thinking in Systems

A system is a model that yields predictable output based on a specific input.

Most people set goals that they fail to achieve. Instead of goals, one must build and execute systems. Systems help you achieve your goals by following a set of processes that maximize your chances.

For example, losing weight as a goal does not work for many because it does not answer how you will go about it. But setting up a system that focuses on the correct physiological parameters will help you achieve the goal in due course.