Dear Fabulous Traveler ,

In a vastly complex world, we strive to be life learners in order to make informed decisions.  

Unfortunately, no one taught most of us the proper way to learn.

Our school years showed us how to learn by rote: we absorbed history lessons just well enough to recite them back during an exam. As soon as the exam ended, the knowledge faded away with it. By chance, some history facts from those lessons might remain in our mind, isolated, separated, and without context.

This rote learning taught us to memorize facts, but it did not teach us to analyze situations, build processes, or question our assumptions. We need a better solution for the complexities of real life. How can we achieve practical knowledge that will help us better navigate our world?

Your Tools

We’ve identified two tools that will help you make any decision or tackle any problem.

First tool: checklists

Surgeons have to navigate one of the most complex, unforgiving environments every day. In this profession, extreme stress and fatigue can make it all too easy for an otherwise competent doctor to miss a step, forget to ask a key question, or fail to plan properly for every eventuality.

In his seminal book, The Checklist Manifesto, surgeon and author Atul Gawande has suggested a straightforward way to remember all the intricacies that a surgeon needs to balance on a daily basis: create a checklist.

A study has found that when surgical teams followed a straightforward surgical-safety checklist, patient death rates fell by half.

In one case where Gawande was preparing to remove an adrenal tumor, the anesthesiologist realized during the checklist rundown that extra blood might be required but was not on hand.

The blood was delivered and the patient did need it during surgery.

Gawande was “convinced that the fact that the anesthesiologist caught that was what saved this man's life.” Gawande affirms that his team averts at least one potential problem via the checklist every week.

Second tool: mental models

Charles Munger, the billionaire partner of Warren Buffett, has brought us the other half of the answer. He has said that we need to create a collection of mental models to succeed in life.

Mental models are sets of knowledge that help you evaluate the world around you.

Mental models are developed from multiple disciplines such as mathematics, computer science, physics, and psychology.  They can help us make better decisions and reach successful outcomes.

According to Munger, it’s important to have a variety of mental models at your disposal. He has said that “you will need to learn models from multiple disciplines because all the wisdom of the world is not to be found in one little academic department.”

You may have studied some of these concepts before. The field of statistics, for example,  has developed several mental models to better decide between two outcomes.

The central idea of the mental model approach is that you need to have multiple models to consult, and they must be fundamentally lasting ideas. We will present three mental models that you can start applying today.

Occam’s razor.

Occam’s razor is a philosophical problem-solving principle that suggests we should avoid complexities. We have a tendency to make things more complicated than they really are; the simplest solution is often best.

In his seminal essay, Build Things That Don’t Scale, the prominent startup investor Paul Graham suggested that startup founders start small rather than creating a full-scale (and more complicated) solution right away. For example, a company can start by filling orders by hand. Then, once the market is proven, they could hire an engineering team to build a high-volume solution.

When you’re looking at a problem, you need to ask yourself two questions:

1. How can I simplify this?

2. Which parts of this could I completely remove from consideration?

Opportunity cost.

Opportunity cost is a key concept in economics: for every opportunity we take, there is a cost. For example, the two hours spent watching a movie are two hours not spent doing something else.

Here are two more examples:

• When you find true love, the opportunity cost is the loss of all other potential mates
• When you watch TV, the cost may be that you’re not spending time with your kids

Confirmation bias.

Confirmation bias has been observed throughout history, but the concept was formalized by the field of psychology in the 1960s.

Confirmation bias is the tendency to seek out, pay attention to, and remember information in a way that fits with our existing beliefs. This self-manipulation is one of the most common cognitive errors; we must work hard to stay aware of it.

Imagine that you’re managing a team. You’ve received multiple complaints that one person is behaving poorly and negatively affecting the team, but you can’t bring yourself to remove him. He has always been nice to you. Without conscious awareness, you start tallying his successes and contributions, building a case in your mind for this employee that matches your own experience. You are missing the big picture in favor of a story that fits what you already believe about this person.

Now let’s imagine that you’ve just bought a house. You discover some issues, maybe an unexpected water leak or poor insulation, and you immediately dismiss them as minor.  If you had known about this issue before buying the house, you may not have made the purchase. But because you did purchase the house before discovering the issues, you downplay the problems in your mind without even realizing it. You have already decided that buying the house was a good decision; any information to the contrary doesn’t fit your mental script and is discarded or explained away.

Humans are optimistic creatures. We try to find ways to confirm that we are correct, and often avoid information that might make us acknowledge a mistake.

The next time you’re trying to make a decision, pay close attention to make sure that you are not falling victim to confirmation bias. Do you believe that one solution is better than the other for sound reasons, or have you skewed the data because there’s one you’d like to see succeed?  With awareness, we can be more careful.

Your new toolset

Charles Munger cleverly combines these tools in his decision-making. He uses a checklist of mental models when approaching an investment decision, reviewing his mental models one by one to make sure he’s not making any cognitive error.

This checklist allows Munger to make decisions more quickly with confidence. Once he has considered a problem from the perspectives of multiple mental models, he feels certain that he has avoided common mistakes in his reasoning.

You can do the same.

This Week’s Plan

Your one-time action

Take your Mental Fitness Notebook and create a new section named Mental Models.

Create a checklist of the three mental models we have presented. Leave enough space next to each item to write a question or two:

Occam razor: Did I simplify the problem and eliminate unnecessary elements? Did I start by considering the simplest solution that could prove my idea?

Opportunity cost: What’s the opportunity cost of this decision? What am I giving away if I make this choice?

Confirmation bias: Am I considering this in a rational way? Have I altered or weighed the evidence to match my expectations?

Your goal

This week, think about these mental models and apply them to your everyday life. Each night before sleeping, take a look at your Mental Fitness Notebook and think about the three mental models we have described.

Think about one decision you need to reach, or one aspect of your day, and apply these three mental models by answering the questions linked to each one. After three days, add one or two new mental models that you’ve discovered on your own.

What We Are Doing

We’re adding a new toolset: a checklist of mental models that you can use to better navigate the complexities of the world.We will continue to explore mental models in future journeys. At the same time, try to collect your own mental models and begin using them to lead a wiser life.

To whet your appetite, here are two other mental models:

Decision tree

From the study of operations management, a decision tree physically diagrams a set of decisions, showing the consequences of each potential path. Each decision leads to an expected result, which often creates a new decision, and so on. A decision tree can be a great way to develop new insights into a problem or find the best way to reach a goal.

Inversion thinking

This idea comes from 19th century mathematician Carl Jacobi, who believed that the solution to many hard problems could be clarified by expressing them in reverse form. Try approaching a problem by inverting it: instead of asking “how can I have a happy marriage?”, ask yourself “what makes a marriage unhappy?” Once you identify the “solutions” to an unhappy marriage, you can work to avoid them.

Wishing you all the success you deserve!