The Great Mental Models Volume 1: General Thinking Concepts

Summary

The book consists of 9 general thinking concepts including 3 supporting ideas. It elucidate the mental models required to improve one's learning, thinking and decision-making process. It provides different perspectives and mental models for one to hewn their thinking.

Table of Contents

1. The Map is not the Territory
2. Circle of Competence
3. First Principles Thinking
4. Thought Experiment
5. Second-Order Thinking
6. Probabilistic Thinking
7. Inversion
8. Occam's Razor
9. Hanlon's Razor

Supporting Ideas:

10. Falsifiability
11. Necessity and Sufficiency
12. Causation vs Correlation

Breaking it Down

1. The Map is not the Territory

Key concept: The abstraction is not a reflection of reality

Main points:

• Personalities typing shows a map of what someone may be like but does not show a full representation of them
• Maps are necessarily flawed as they are meant to serve as a guide and not a detailed portrayal of reality

Maps serve the utilitarian purpose of providing guidance for navigators. For a 1:1 scaled map, its utility may be greatly reduced due to difficulty in understanding and using it. Hence, maps are perceived as guides rather than a perfect version of the territory.

This shows how in different aspects, an abstraction serves as a guiding point to how one should approach something. To reduce the complexities of understanding the entirety of reality, maps help to generalise reality into key points/insights. Therefore, if the map does not provide a clear portrayal of the territory, the focus should be on how the guiding information from the map is best used. While bearing in mind that the map does not fully reflect reality.

• The three key factors to consider about the map/abstraction

1. Territory/Reality check
2. Considering who the creator of the map is
3. How the map influences the territory

1. Territory/Reality check

In many cases, it is hard for the map to be a perfect representation of the territory. It can be boiled down to the difficulties in delineating all the minute details of the territory and the changes in time. For example, the map showing the roads might be an accurate representation of it 10 years ago. However, there might be changes to the road - causing the map to be out of date. Hence, it requires one to check reality. Seeing if the details on the map are still true. A reality check is similar to primary research to check whether one's assumption(s)/hypothesis is true/false.

Reality checks are important as it keeps us grounded to the changing environment. For example, the business landscape when Fredrick Taylor created the theory of management. The theory delineated how workers should specialise and be financially incentivised to create a higher level of efficiency. Even though the theory worked wonders at the beginning, the efficacy of the strategy diminished and started to be the status quo. This can be filtered down to a few potential reasons:

a. Competitors used the same strategy that Fredrick Taylor implemented

b. The workers were more aware of the financial incentives in place

c. Better strategies and methods were created

2. Considering who the creator of the map is

The map has to be created by someone and in some cases, one's perspective/judgement can be very different from what others may consider it to be. It challenges one to consider who the creator of the map is as their prejudices, unconscious biases, heuristics, incentives and intents may cause the map to be skewed in a certain way. This can be observed in many aspects of the world ranging from arguments, academic papers, books and more. They all portray a certain abstraction from one's perception of the world which may not be a reflection of reality. Understanding this fact, allows one to consider if the abstraction will have a tendency to skew towards a certain direction.

3. How the map influences the territory

In many cases, the abstraction (map) itself influences reality (territory). This can be noticed in different spheres of one's life. For example, governmental policies are targeted towards aiding the lower income bracket. The policy creates an unintended effect of encouraging people who do not belong in the bracket to game the system. Therefore, abstraction plays a role in influencing reality.

An example is the parable of the Tragedy of Commons. The parable describes how each herdsman is limited to a number of sheep to ensure that the fields are not overgrazed. The herdsmen consider the cons of adding just one more sheep than the amount that he is restricted to. He realises that it is advantageous to him, and he slowly adds more sheep and others follow suit. In this parable, the map is the number of sheep each herdsman is entitled to. While the territory is the real number of sheep and the condition of the fields. The parable elucidates the problem where individual interests encourage individual actions that ultimately cause more harm to the collective.

Questions:

1. Why is the underlying principle of the map is not the territory?
2. How can this concept be implemented?

1. Understanding how an abstraction does equate to reality but serves only as a guide

2. This concept can be implemented in understanding personalities. For example, an individual may have the MBTI of INFJ. However, that does not mean that all INFJ behaves the same. In this case, it shows how the personality typing of INFJ is an abstraction and not a reality.

Another implementation is market research. In many cases, it is easier to accept whatever is written in the reports than to actually cross-check with reality. Instead of completely extracting information form reports, we should consult different sources and engage in deeper understanding of the industry to make an informed decision.

2. Circle of Competence

Key concepts: Knowing what one is good at and leveraging on it

Main points:

• A circle of competence can be identified by an individual that knows what he/she knows and does not know, knows what information is unobtainable, and, knows all the different perspectives
• A circle of competence can be built & maintained by having a curiosity to learn, monitoring one's progress and having a feedback loop
• To operate outside of one's circle of competence, requires one to learn the basics, seek out an expert and use the general mental models to create cross-associations
• It is important to understand how an individual may be blinded by incentives even though they are working in their circle of competence

1. Identification of one's circle of competence

For one to identify what their circle of competence lies in, these three pointers are a great gauge:

1. Knowing what one knows and does not know
2. Knowing what information is unobtainable
3. Knowing all the different perspectives

This is crucial in enabling one to identify their circle of competence. If one is unable to identify an aspect where they have these three areas, it is a sign that there is a lack of a circle of competence. Hence, it might be a better idea to go back to considering what one is good at, what one can get lost and have fun doing, what one values and more.

2. Building and maintaining a circle of competence

If one is able to identify or wants to build a circle of competence, there are three key areas to building/maintaining it:

1. Curiosity to learn
2. Monitoring one's progress
3. Feedback loop

Firstly, curiosity to learn is the fundamental desire to know what one does not know. In most cases, learning is highly effective when what is taught exceeds what one expects.

Secondly, monitoring one's progress ensures that the things known and taught are in-check. This potentially prevents blind spots from being formed and serves as a road map for further areas for improvement.

Thirdly, the feedback loop is essential in creating a flywheel effect in learning. In most cases, the feedback loop leverages the gradient descent algorithm in individuals to correct one's misunderstandings and gaps in one's understanding.

3. Operating out of one's circle of competence

In cases where one is working in an area where he/she has close to no understanding of the environment, specialisation and more, it is important to build upon these three areas to develop a better understanding:

1. Learning the basics
2. Seeking an expert
3. Cross-associating from general mental models

In many cases, learning the basics will be important to understand and be up-to-date on what the landscape is like. More than that, it allows one to understand the lingo used in a certain industry, have a rough understanding of the complexities and more.

While learning the basics may equip one with the capabilities to understand, there will be many situations or most of the time insufficient to have a fully rational decision. This is why it will be important to seek an expert. An expert provides the landscape and understanding. However, it is important to go back to the concept of the map is not the territory. Whatever is shared by the expert may be a representation of how reality is. But it may not be the full picture itself. Therefore, it will be crucial to seek out more than one expert and also use the concept of falsifiability to ensure that one's understanding is indeed a reflection of reality.

Lastly, the general mental models that one has might reduce the steep learning curve when one operates out of one's circle of competence. The potential cross-associations and principles learnt can be generally applied. Thus, it is important to have general mental models that can be generalised and used. For example, it is the idea of how incentives can be generally used in many different organisations which brings us to the last point.

4. How incentives are a problem when one works in their circle of competence

Even when an individual may have a circle of competence in certain knowledge, it is important to weigh the effects of incentives. Even though option A may be a better option for the company, they might choose option B as it provides them with an easier way out and incentives that come along the way. For example, a company which has many communication channels managed by an individual. Even though it is obvious that streamlining all the different channels to a single one may be the best option, that individual may be incentivised not to do so. It is because when there are multiple communication channels, that individual is in control of it and dictates the flow of communication. Hence, this very case elucidates how incentives override an individual's circle of competence.

Questions:

1. What is the underlying principle of circle of competence?
2. How can this concept be implemented?

1. The underlying principle is to know how to work with what one is good at

2. This concept can be implemented when it comes to elevating performance, identifying what one should

3. First Principles Thinking

Concept: Foundational knowledge that everything else can be built on. First principles are:

1. Rudimentary
2. Falsifiable
3. Non-reducible

Main points:

• The two techniques that enable the use of first principles of thinking
• Assumptions are not first principles as it is not falsifiable
• Tactics are not first principles as they are derived from it

1. Two techniques to use first principles thinking

The two techniques are:

1. Socratic Questioning (6 steps)
2. The Five Whys

1. Socratic Questioning

1. Clarifying one's thinking and explaining the origins of the idea(Why do I think this way? What exactly do I think?)
2. Challenging one's assumptions(How do I know this is true? What if I thought the opposite?)
3. Looking for evidence and testing for falsifiability(How can I back this up? What are the sources?)
4. Considering alternative perspectives(What might others think? How do I know I am correct?)
5. Examine consequences and implications(What if I am wrong? What are the consequences if I am?)
6. Questioning the original question(Why did I think that? Was I correct?)

2. The Five Whys

It is the process of asking whys till one hits a falsifiable fact

Facts:

a. The example of how H. Pylori bacteria by Barry Marshall and Robin Warren shows how assumptions are not first principles.

In the past, many believed that the stomach was sterile and was seen as an underlying truth and principle. However, the H. Pylori bacteria was discovered to be able to live in the stomach. The research of Barry Marshall and Robin Warren on how the stomach was not sterile allowed them to win the Nobel Prize award. Hence, it is important to test for falsifiability. If it cannot be proven wrong, it is most likely an assumption made than a first principle.

b. The example of Temple Grandin's creation of the curved cattle chute is a good anecdote of how tactics are derived from first principles. When she created the curved cattle chute, many asked why did she do this way when there are other solutions to it. She replied by mentioning how the underlying principle is to reduce animal stress which is derived from achieving animal welfare. Hence, it is not whether the curved cattle chute is being used but rather if the tactic (curved cattle chute) can reduce animal stress.

c. The case of the creation of artificial meat. People may think that the first principle of meat is the cow, chicken, etc. However, what truly is the first principle is actually the taste and texture. Understanding this, resulted in the creation of artificial meat rather than just trying to increase the efficiency of just raising livestock.

Questions:

1. What is the underlying principle of first-principle thinking?
2. How can this concept be implemented?

1. It is to find out the foundation of everything which can be built on. It has to be non-reducible, falsifiable and rudimentary.

2. This concept can be implemented in ideas, tactics, assumptions and more. Most importantly, it challenges one to see beyond what is fed/shared by others. It encourages one to adopt the mindset of questioning (such as Socratic questioning) that seeks to explain the origins, assumptions, evidence (falsifiability), alternative perspectives, second-and third-order effects and to question the original question itself. First principles thinking enables one to be a thinker rather than just an individual that spits out whatever information that is fed to him/her.

4. Thought Experiments

Concept: The process of discovering different possibilities through the use of one's imagination and rigour of investigation

Main points:

• 6-step technique to conduct thought experiments
• The application of thought experiments

1. 6-step technique to conduct thought experiments

1. Ask a question
2. Conduct background research
3. Construct a hypothesis
4. Test with thought experiments
5. Analyse outcomes and draw conclusions
6. Compare the hypothesis and adjust accordingly

2. The application of thought experiments

It is best applied in imagining physical impossibilities, re-imagining history and intuiting the non-intuitive.

Questions:

1. What is the underlying principle of thought experiments?
2. How can this concept be implemented?

1. The underlying principle of thought experiments is to leverage one's imagination and investigative rigour to explore the impossibilities

2. This concept is best applied in situations that require one to visualise variables that are not in place.

5. Second-order Thinking

Concept: It is to consider the effects of the effects

Main points:

• The benefits of second-order thinking are teaching how to prioritise long-term interests over short-term gains and helping one to construct effective arguments
• One must be cautious of the slippery slope effect one considers themselves to be using second-order thinking

Questions:

1. What is the underlying principle of second-order thinking?
2. How can this concept be implemented?

1. The underlying principle is to consider the effects of the effects

2. This concept can be implemented widely ranging from business. economics, social sciences, daily habits & choices and the list really goes on. Most importantly, it is most well used when one has to make a decision that will lead to an impact in a certain area. Second-order thinking challenges one to think further ahead than just the status quo.

6. Probabilistic Thinking

Concept: Considering the likelihood of different outcomes

Main points:

• The 3 different types of probabilistic thinking
• How there is an order of magnitude effect on the outcome when the prior information given is inaccurate
• Anti-fragility shows how it is better to benefit from volatility and unpredictability with 2 ways to do so

1. The 3 different types of probabilistic thinking

• Bayesian Thinking
• Fat-tailed Curve
• Asymmetries

a. Bayesian Thinking

It is the likelihood of an outcome on its association with another outcome. For example, the likelihood of _% event A happening if event B happens.

b. Fat-tailed Curve:

They are like bell curves with highly unpredictable extreme events (long/sharp tails).

More extreme events = Longer tails

Bell Curve : Fat-tailed Curve

Extremes are predictable : Extremes are unpredictable

Height : Wealth

c. Asymmetries

It is meta probabilities. For example, the likelihood of event A happening tomorrow. In most cases, estimation cases are asymmetric and tend to be more optimistic.

2. Ways to be Anti-Fragile

One has to have upside optionality and fail properly. For upside optionality, it is ensuring that there are only potential pros than negatives. Hence, it is better to take action than not do anything.

While for failing properly, it is ensuring that failure does not equate to a game over and failure is a process of learning.

Questions:

1. How can this concept be implemented?

This concept can be implemented to decision making at many different levels. It also further highlights the importance of data analysis and statistics. But it highlights how it is important to have the right preceding conditions and prior information. Otherwise, the results of one's results are potentially inaccurate.

7. Inversion

Concept: It is to approach something around and backwards instead of forward

Main points:

• The two approaches to using inversion
• Kurt Lewin's Force Field Analysis
• Inversion catalyses innovation (eg, the creation of index funds)

1. Two approaches to using inversion

a. If one's assumption is true/false, what other factors have to be present for it to be true/false?

b. Instead of directly aiming for the goal, think about what will cause one not to reach the goal and prevent that from happening

2. Kurt Lewin's Force Field Analysis

1. Identify the problem
2. Define the objective
3. Identify the forces that support
4. Identify the forces that impede
5. Strategise the solution which involves both adding & augmenting the supporting forces and eliminating the impeding forces

3. Inversion catalyses innovation

It is ubiquitous to ask oneself what should one do to solve a problem. Such problem-solving involves forward thinking which generally pushes one to a general range of solutions. However, inversion changes the thinking process as it goes from how to solve to what to avoid.

Facts:

a. In Sherlock Holme's third case "The scandal in Bohemia", he uses inversion by showing how if his assumption is true, he considered what else has to be true. In this case, it would be the assumption that Adler has the compromising picture of the king and intends to blackmail Jim, then it would be true that she would greatly value the photos it will bring her money. This would then require her to have it in an accessible location allowing her to retrieve it if anything happens.

b. American Tobacco Company & Edward Bernays did not ask "How do I sell cigarettes to women?". Instead, he wondered what else would have to be true for women to make smoking a lifestyle. For Edward Bernays to make smoking a lifestyle for women, it required two aspects to be true:

1. Smoking is seen as a slimming aid
2. Smoking for women to be socially acceptable

To make smoking seen as a slimming aid, Bernays launched an anti-sweets campaign- making cigarettes replace desserts. He made desserts seen as something that made people fat while cigarettes made people slimmer. He even went all the way to have restaurants add lucky strikes to the dessert menus, furniture stores have compartments to put cigarettes and more. While for smoking to be socially acceptable, Bernays tried to reshape American society and culture by using different methods. He made smoking symbolise the emancipation of women.

c. John Bogle's creation of Vanguard's index fund is a good example of the second approach of inversion. While many focused on how to outperform the market, he focused on minimising losses to fees and poor money management. He asks how to avoid becoming poor instead of how to get rich.

Question:

1. How can this concept be implemented?

This concept can be implemented in problem-solving especially. It encourages one to come up with solutions by considering the factors that prevent a solution from working. By circumventing said factors, we adopt a different stance towards problem-solving.


8. Occam's Razor

Concept: It is the logic that the simplest explanation with the fewest moving parts is more likely to be true than the complicated explanation

Main points:

• Occam's razor promotes efficiency as it has fewer complexities
• Occam's razor should be cautioned not to be led to artificial simplicities. If there are many moving parts breaking it down to the rudimentary level, it should be kept as it is

Facts:

a. When Louis Gerstner took over IBM in the early 1990s, IBM was in troubled waters. Many were looking for a vision and complicated recipe for success. However, Louis Gerstner did not give a vision but focused on simple, tough-minded business execution. He focused on serving the customers, competing for businesses and focused on profitable businesses.

Questions:

1. How can this concept be implemented?

This concept can be implemented in problem-solving especially when a solution has to be found. While having a flashy solution will impress others, sometimes the simplest solution is the best solution.


9. Hanlon's Razor

Concept: How one should not attribute something to malice but rather stupidity

Mistake > Intent

Main points:

• An explanation with the least amount of intent is likely to be the most accurate one.
• For someone to act out of intent requires more energy

Fact:

a. The Linda problem by Daniel Kahneman and Amos Tversky elucidated the "Fallacy of Conjunction" by showing how specific conditions are more likely than a single general one. It delineates how one will tend to over conclude based on the available information. It links to Hanlon's razor as it shows how one's tendency to fall for the "Fallacy of Conjunction" leads one to over conclude that others are acting out of malice than stupidity

Questions:

1. How can this concept be implemented?

This concept is best used for human to human interaction. It encourages one not to overthink people's actions but to consider how it is more common to make a mistake than to act out of malice.

10. Supporting Idea 1: Falsifiability

Concept: The ability to prove something to be wrong. If it cannot be proven wrong, it cannot be proven right either

Main points:

• History shows trends of what happens when preceding conditions are met. While law are things that will happen even if conditions do change
• Falsifiability shows how something can be proven false, making proving right possible. If I cannot be proven wrong, this is where history is used to test the likelihood of a certain assumption being true

11. Supporting Idea 2: Necessity and Sufficiency

Concept: The difference between both lies in the set of conditions necessary not equating to the set of conditions sufficient achieve a desired outcome/effect/event.

Necessity : Sufficiency

Tennis Coach : Roger Federer

Main points:

• The set of conditions necessary is part of the set of conditions sufficient for a desired outcome
• The set of conditions sufficient has many factors that are beyond one's control such as luck.

12. Supporting Idea 3: Correlation vs Causation

Concept: Correlation is the interconnectedness of an outcome when a certain variable is present. Causation is the direct relationship between two variables.

Main points:

• The 3 variations of correlation are no correlation (0), weak-moderate correlation and perfect correlation (1)
• Causation can be tested by using a controlled set

Fact:

a. In Daniel Kahneman's book "Thinking Fast & Slow", it gave an example on how treating depressed children withy energy drink/standing on their head/hugging a cat significantly improved their mental state over a span of time. However, in fact, it was the case of regression to the mean that “improved” the children. Depressed children are an extreme group. Regression to the mean shows that the extreme group (depressed children) will regress to the mean even without the energy drink/standing on their head/hugging a cat. Hence, it is important to establish a controlled set to prevent the act of considering a certain effect to be a causation of a certain variable.

Reflection

This book has challenged me to go beyond what I currently know. Even though there were concepts that I have heard/understood, the way the book explains and share different anecdotes highlighting the concepts made me ruminate about the applicability of the concepts. Out of the 9 concepts, I found Inversion, Occam's razor and Hanlon's razor to be the most interesting. The 3 supporting ideas were great in helping to substantiate and elucidate some of the concepts better. Throughout my journey of reading and documenting my takeaways from the book, I have found myself naturally gravitating towards associating different concepts to other aspects such as business, leadership, human behavior and more.