Why Mental Models Are Important

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If you want to make good decisions, you need a way to think around the decision you’re making. Different topics will need distinct models or frameworks (used interchangeably here). E.g. deciding what to have for breakfast is not the same decision criteria as deciding who to hire. 

Two main types of mental models are;

  1. Maximize X
  2. Minimize Y 

Or, another way to think about the above is; 

  1. Going towards X
  2. Going away from Y 

Breakfast  may be about minimizing time spent eating, while hiring might be about maximizing alignment between candidate and job requirements. 

A Business Development job might be about maximizing long term partnerships while a sales job might be about maximizing quarterly revenue. Similar goals, but the framework you use to think about either will affect your decision making. 

A larger example- 

Fictional Company, ACME, is looking to go from $10 MM in yearly revenue to $15 MM. They make money by selling their products in retail stores and online. Upping revenue could come from a few sources; raising their prices, offering more products, getting shelf space in more stores, etc. All options have their own pro’s and con’s list, but for the sake of argument, let’s assume the CEO of ACME has determined getting into new stores should be the focus (trying to pursue all options simultaneously would spread resources too thin and ensure missing the goal of increasing revenue). Thus, moving forward, if an opportunity to develop a new product comes up, the chosen framework- focusing on new shelf space- would tell you that for the time being, new products are not being taken on. Frameworks can change over time, but putting them in place to streamline decision making across the company will get ACME to their goal more quickly.

Frameworks and mental models are important for determining how to think about and around particular topic. They’re often a set of particular questions asked to suss out the best choice. They can also be sets of questions used to find the incorrect decision, so you know what to avoid. Given three or more choices, oftentimes one is obviously less good than the others. Knowing how to eliminate a bad option requires a framework for what constitutes good or bad. Furthermore, knowing where the holes in your chosen model are will be important to know when to stop using your particular model.

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