Analogy

A mental model is like a tool.  

Tools help you build or solve problems, and while any one tool can be helpful, you need a variety of tools, and you need to know when and how to apply the right tool at the right time given the context.

Becoming overly reliant on any one tool or using the wrong tool at the wrong time can be dangerous. This has become known as Maslow’s Hammer: “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”

This same concept applies to mental models. You must assemble a broad array of high-quality mental tools for your mental toolbox as not every model will be applicable in every situation. This is where wisdom and judgment help you understand which model is relevant to the situation at hand. Don’t become the man with only a hammer by falling into the trap of blindly relying on one or only a small number of tools.  

Diagram      

This example is a classic because it clearly shows what happens when we misapply mental models! We think we understand a problem or situation, but we only see one side of it. We are all “partly in the right” yet “all in the wrong.” Deep fluency in the big ideas can help you develop mental models that reduce these blind spots, allowing you to gain perspective and see problems from various angles. This is one of the main benefits of adding mental models to your mental toolbox – they reduce blind spots, and all mistakes come from blind spots.

Example

Much of this book is comprised of mental models, which can also be thought of as “thinking tools.”

For example, the idea of friction, taken from physics, can be helpful when describing a wide variety of topics, even if not in the realm of physics. It is often used when discussing relationships and, in this case, when someone refers to friction in a relationship, it is not literally the resistance that two people have when they rub surfaces (or maybe it is?!), but, nonetheless, “heat” is being produced due to lack of communication, trust, or other reasons.

Another way to think of a mental model is reasoning by analogy. Sometimes taking ideas, jargon, or examples from another field can help clarify your current issue and its potential solution. Going back to our friction example above, if we are dealing with friction in a manufacturing environment, we can address it by adding grease. In human terms, this “grease” might be paying your significant other a compliment, taking a vacation together, or somehow building context and trust so that the friction in the relationship is alleviated.

Sounds strange, but that is what is known as the “transfer of training” – the ability to use the same ideas in a new situation.

– Richard Hamming, Computer Aided Instruction

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Tangent: The Waggle Dance

Bees use the sun as a kind of compass to orient themselves and, amazingly, have developed a “waggle dance” to help communicate where food sources are. However, in a fascinating experiment, researchers placed the food source above the hive, which would never happen in a natural setting. Rather than coming up with a dance that says, “I don’t know how to say where the food is,” bees come up with an incomprehensible dance that confuses all the other bees. Don’t be like the flailing bee. Rather than making something up, simply admit when you don’t know. Paradoxically, this trait helps you learn faster than you otherwise would.

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Plain English

In addition, these models’ power emerge when deeply understood and combined because they tend to feed upon one another, becoming auto-catalytic and leading to Lollapalooza Effects (Emergence, Alloying). When these ideas are properly combined, 1 + 1 ≠ 2 but, rather, 6!

However, be warned that simply reading about these mental models isn’t enough. The best models come from firsthand sources, from asking yourself why (or why not) something is happening, and you must constantly practice, combine, refine, synthesize, and act on them – allowing you to create your own mental latticework. While we can’t eliminate all mistakes, we can lower our chances of making avoidable ones by focusing on the important and timeless principles, combining and applying them to our given situation and context.

It is also important to understand that mental models are the “map,” whereas reality is the “terrain”. Blindly following the map when the terrain is different is sure to lead to poor outcomes. When in doubt, follow the terrain, see what the world is telling you, and don’t be blinded by how you think things should be. This sounds simplistic, but due to several mental biases, can be quite hard.

Charlie Munger has come up with a roadmap for how to create a latticework of mental models that we can apply:

• Have many tools in your mental toolbox (The Latticework)
• Have a system and follow it, looking at problems rationally and always considering the subconscious influences. (On Checklists, The Iceberg Metaphor)
• Invert problems by first thinking about how you could do harm, and then avoid doing that. (Inversion)
• Improve by learning from other peoples’ successes and mistakes. (On Exemplars)
• Be mindful of leaping-emergent effects (Lollapalooza Effects, Emergence)
• Seek disconfirming evidence (On Having Opinions)
• Think long-term and consider 2^nd and 3^rd order consequences. (Second-Order Thinking, First Principles Thinking, Lateral Thinking, Time Horizons)
• Becoming rational takes time so be persistent, aiming to be just a little wiser than yesterday (Compounding, PIPER)

The man who grasps principles can successfully handle his own methods. The man who tries methods, ignoring principles, is sure to have trouble.

– Ralph Waldo Emerson  

We see the world, not as it is, but as we are – or as we are conditioned to see it.

– Stephen R. Covey

All models are false, some are useful.

– George Box

Technical Description

A mental model is an explanation of someone’s thought process about how something works in the real world. It is a representation of the surrounding world, the relationships between its various parts, and a person’s intuitive perception about his or her own acts and their consequences. Mental models can help shape behavior and set an approach to solving problems (similar to a personal algorithm) and doing tasks. A mental model is a kind of internal symbol or representation of external reality, hypothesized to play a major role in cognition, reasoning and decision-making. Kenneth Craik suggested in 1943 that the mind constructs “small-scale models” of reality that it uses to anticipate events. – Wikipedia

Quotes

You must know the big ideas in the big disciplines and use them routinely-all of them, not just a few. Most people are trained in one model-economics, for example-and try to solve all problems in one way. You know the old saying: ‘To the man with a hammer, the world looks like a nail.’ This is a dumb way of handling problems…You can’t learn those one hundred big ideas you really need the way most students do – where you learn ’em well enough to bang ’em back to the professor and get your grade, and then you empty them out as though you were emptying a bathtub so you can take in more water next time. If that’s the way you learn the one hundred big models you’re going to need, [you’ll be] an “also ran” in the game of life. You have to learn the models so that they become part of your ever-used repertoire. By the way, there’s no rule that you can’t add another model or two even fairly late in the game of life. In fact, I’ve clearly done that. I got most of the big ones quite early [however].

– Charlie Munger, Poor Charlie’s Almanack

What we see depends mainly on what we look for.

– Sir John Lubbock

We can explore our own boundaries and the boundaries of our own lives. But before we go exploring, we’ll need a map. Having a personalized map of your decision-making process is essential, and this book can only roughly chart the stages of observation and analysis that go into drawing that map. The map tells you which areas of your mind are well-known to you and which are still uncharted. It reveals your strengths, weaknesses, and areas as yet untested. Most important, you must look to develop your own map. There is no advantage in trying to identify the common denominator that links you to your friends or colleagues or opponents. We must all look higher and dig deeper, move beyond the basic and universal.

– Gary Kasparov, How Life Imitates Chess

All generalizations, including this one, are false.

– Mark Twain

I’ve pointed out that one of the reasons models can fail to work is because markets are dynamic, not static. Through frequent play, you can increase your mastery over a golf course, as you learn the consequences of each action and thus which are the right ones: if you hit the ball to spot A it’ll roll toward the hole, whereas if you hit to spot B it’ll roll toward the water. Eventual mastery is possible because the golf course doesn’t change in response to your play. But fixing on tactics through which to master a market is unavailing, because the market is shaped by those who participate in it, and thus it responds and changes. No course of investment action – even if executed perfectly – can be right for all markets and all times. In fact, when an approach becomes too well accepted, the widespread reliance on it becomes a source of danger.

– Howard Marks, The Tide Goes Out

The young man knows the rules, but the old man knows the exceptions.

– Oliver Wendell Holmes

Too many theories try too hard to be laws.

– Carl von Clausewitz, On Grand Strategy

The image of the world around us, which we carry in our head, is just a model. Nobody in his head imagines all the world, government or country. He has only selected concepts, and relationships between them, and uses those to represent the real system.

– J.W. Forrester

When there is an explosion in the capacity to receive, store, utilize, transform, and transmit information, the external world changes at a rate enormously greater than the rate at which our internal model evolves. Nothing behaves as we think it should. Nothing makes sense. At times the world appears to be staging a madhouse. It is never a madhouse. It is merely the great tide of evolution in temporary flood, moving this way and that, piling up against that which obstructs its flow, trying to break loose and sweep away that which opposes it. At such times, we experience extreme dissonance and stress. At the heart of that dissonance and stress is paradox. The more powerful and entrenched our internal model of reality, the more difficult it is to perceive and understand the fundamental nature of the changed world we experience. Yet without such perception, it is extremely difficult to understand and change our internal model.

– Dee Hock, Birth of the Chaordic Age

A model is a good model if it: Is elegant, Contains few arbitrary or adjustable elements, Agrees with and explains all existing observations, Makes detailed predictions about future observations that can disprove or falsify the model if they are not borne out.

– Stephen Hawking, The Grand Design

Interconnected Ideas

• The Latticework
• First Principles Thinking
• The Map is Not the Terrain
• Lollapalooza Effects
• Emergence
• Catalysts
• Algorithms
• Lateral Thinking

Recommended Books & Resources