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General Thinking Tools: 9 Mental Models to Solve Difficult Problems Farnam Street

When I first came across Charlie Mungers 1995 Speech, The Psychology of Human Misjudgment, I realized that I could learn more from him than my MBA. So I spent the next few years reading and researching about cognitive biases and how we mislead ourselves. Munger showed me that the world had more to offer than just computer science and business, the two disciplines Id spent the most time in. He opened up a world of mental models, which is just a fancy schmancy word that means thinking tools that you can use to solve problems.

A mental model is simply a representation of how something works. We cannot keep all of the details of the world in our brains, so we use models to simplify the complex into understandable and organizable chunks. Whether we realize it or not, we then use these models every day to think, decide, and understand our world.

While there are millions of mental models, I want to focus on nine that will help you think through problems better.

1. The Map is not the Territory

The map of reality is not reality. Even the best maps are imperfect. Thats because they are reductions of what they represent. If a map were to represent the territory with perfect fidelity, it would no longer be a reduction and thus would no longer be useful to us. A map can also be a snapshot of a point in time, representing something that no longer exists. This is important to keep in mind as we think through problems and make better decisions.

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2. Circle of Competence

When ego and not competence drives what we undertake, we have blind spots. If you know what you understand, you know where you have an edge over others. When you are honest about where your knowledge is lacking you know where you are vulnerable and where you can improve. Understanding your circle of competence improves decision making and outcomes.

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3. First Principles Thinking

First principles thinking is one of the best ways to reverse-engineer complicated situations and unleash creative possibility. Sometimes called reasoning from first principles, its a tool to help clarify complicated problems by separating the underlying ideas or facts from any assumptions based on them. What remain are the essentials. If you know the first principles of something, you can build the rest of your knowledge around them to produce something new.

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4. Thought Experiment

Thought experiments can be defined as devices of the imagination used to investigate the nature of things.[1] Many disciplines, such as philosophy and physics, make use of thought experiments to examine what can be known. In doing so, they can open up new avenues for inquiry and exploration. Thought experiments are powerful because they help us learn from our mistakes and avoid future ones. They let us take on the impossible, evaluate the potential consequences of our actions, and re-examine history to make better decisions. They can help us both figure out what we really want, and the best way to get there.

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5. Second-Order Thinking

Almost everyone can anticipate the immediate results of their actions. This type of first-order thinking is easy and safe but its also a way to ensure you get the same results that everyone else gets. Second-order thinking is thinking farther ahead and thinking holistically. It requires us to not only consider our actions and their immediate consequences, but the subsequent effects of those actions as well. Failing to consider the second and third order effects can unleash disaster.

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6. Probabilistic Thinking

Probabilistic thinking is essentially trying to estimate, using some tools of math and logic, the likelihood of any specific outcome coming to pass. It is one of the best tools we have to improve the accuracy of our decisions. In a world where each moment is determined by an infinitely complex set of factors, probabilistic thinking helps us identify the most likely outcomes. When we know these our decisions can be more precise and effective.

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7. Inversion

Inversion is a powerful tool to improve your thinking because it helps you identify and remove obstacles to success. The root of inversion is invert, which means to upend or turn upside down. As a thinking tool, it means approaching a situation from the opposite end of the natural starting point. Most of us tend to think one way about a problem: forward. Inversion allows us to flip the problem around and think backward. Sometimes its good to start at the beginning, but it can be more useful to start at the end.

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8. OccamsRazor

Simpler explanations are more likely to be true than complicated ones. This is the essence of Occams Razor, a classic principle of logic and problem-solving. Instead of wasting your time trying to disprove complex scenarios, you can make decisions more confidently by basing them on the explanation that has the fewest moving parts.

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9. HanlonsRazor

Hard to trace in its origin, Hanlons Razor states that we should not attribute to malice that which is more easily explained by stupidity. In a complex world, using this model helps us avoid paranoia and ideology. By not generally assuming that bad results are the fault of a bad actor, we look for options instead of missing opportunities. This model reminds us that people do make mistakes. It demands that we ask if there is another reasonable explanation for the events that have occurred. The explanation most likely to be right is the one that contains the least amount of intent.

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These general thinking tools are just 9 of the mental models that you can learn to thnink better.

FS Members can discuss this on the Learning Community.

    References: [1] Brown, James Robert and Fehige, Yiftach, Thought Experiments, The Stanford Encyclopedia of Philosophy (Summer 2017 Edition), Edward N. Zalta (ed.). Retrieved from https://plato.stanford.edu/entries/thought-experiment/

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