Life and Lessons for and by next CEOs

Knowledge Base

Mental Models

Yesterday I started listening to an audio book. “The Personal MBA by Josh Kaufman”. I have included a link below. I have not yet reached the halfway mark but the very first chapter of this book intrigued me enough to actually acquire the written version.

From an early  point the author makes his opinion very clear that he feels that one could spend ones money much more wisely than studying towards an MBA, and that an MBA is more targeted at the methodologies of running a business and the processes surrounding it. But what all MBA courses miss out on is the fundamentals of entrepreneurship. The skills and process needed to start and get a new business off the ground successfully. He explains his theory in detail and many might agree with him. But for one thing, I agree on some of his visions towards business.

One of the very first strategies that he explained was mental models. Especially mungers network of mental models. Charlie Mungers is one of the founding members of Berkshire Hathaway, Along with warren buffet. And according to buffet, munger could asses and identify the pitfalls of any situation with in the first few seconds. Buffet attributes much of Berkshire Hathaway’s success to Charlie’s mental model centric approach. Charlie understood the systematic way that business actually should work.

So to fulfil my curiosity in these mental models. I decided to go digging into the hart of these mental models and derived the following.

Mental models can be defined as familiar subconscious assumptions based on what a person assumes to be the correct way.

Everybody has mental models, a perception of how things should be, conscious or unconscious. They are part of the human way of thinking (Some scientific studies may dispute this). One accepts what he assumes to be the correct way of things happening. Thus any divergence in these ways will result in an identification of mental discomfort.

This does not mean that mental models are the answers to life. But by imprinting your mind with optimal and efficient mental models, you can quickly an efficiently identify weaknesses in any processes or venture you attempt.

The key to using mental models is defined in the granularity of these models one develops. The finer grained and more modular one develops these models, the more diverse scenarios  one can apply them to. Join them up into a network and one develops a structure of perceived perfection.

However, the level of granularity should be defined by practicality, proficiency and effectiveness to the needs of the situation one applies them to, otherwise one risks over analysing a potentially simple situation. it is always a spin-off  of complexity versus perceived value.

The largest risk in mental models comes from false perceptions based on incorrect information. This according to some are a major factor in most human behaviour, and result in people reacting and as a result of their own perception of the situation at hand. These models could quickly divert into bad decision.

This is where the art of the finer grained modular models take its effectiveness. The finer grained the models is, the easier one will identify incorrect information and adapt ones perception to these situations, progressively developing effective structured model networks.

Take the age old example, “The customer is always right” the metal model that this statement has imprinted on many people is that no matter how bad my behaviour or how ridiculous my request, the business should comply. After all my money pays their bills. Taking this model and breaking it down into modular pieces one can define more practical and efficient models and get a clearer picture of the big picture.

  1. Satisfy the customers need!
    1. A happy customer is a paying customer
    2. The demand is reasonable, and satisfiable and could benefit the business directly or indirectly
    3. The repercussions of not satisfying the needs are indirect or direct
    4. The Bottom line will be affected

This is a very abstract example, but it paint the picture that once a mental models is broken down one can start appreciating how the model came into existence in the first place, but one can also understand that there are boundaries and scope to every situation. The more one applies each model, the more these models are strengthened by situations that define there validity and counter situations that refute that.

A very well known mental model is the one cited by Forest Gump.

“My mama always said life was like a box of chocolates. You never know what you’re gonna get.”

This yet again is a model that can be over generalised, and abused to make bad decisions. Break this model into less generalised modules and one comes to the conclusion that life has allot unanticipated challenges. but instead of just sitting back and doing nothing about it, one can learn from the experiences of others and apply models that they have unintentionally developed to make the most out of most of these situations.

What caused my high interest in these mental models and the modularisation of these models, is related to my extensive background in ICT, especially programming and to be exact, object orientated programming. If one applies some the same methodologies of  OO programming to the modularisation of the mental models the essence of certain processes and situations starts to make more sense.

We live our lives by the metal models that we have accepted into our existence. Understanding and knowing how to act on these these models could define whether the outcome of a situation is in your favour or not.

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