Here, I’m going to introduce you to a new tool to help you make your most important decisions more effectively. Based on the burning questions members submitted, this is one of the things that all of you want most from being a Mental Model Of The Month member.
The Two Types Of Decisions We Make
Every single day we make hundreds if not thousands of decisions.
Most of these decisions are inconsequential like deciding which socks to wear. Others make all of the difference.
For example, one crucial decision we all make every single workday is what tasks to focus on. We all have only 24 hours in a day, but if we master prioritization, we can get 100x or even 1,000x leverage on our time.
Consequential and inconsequential decisions require two different approaches:
- Satisficing (for inconsequential decisions): Making decisions fast and settling for good enough options.
- Maximizing (for consequential decisions): Making decisions slowly in order to look for the best possible decision.
As a rule of thumb, the more consequential the decision, the more it’s worth devoting extra time applying mental models in order to improve the quality of the decision... WAY MORE TIME THAN MOST PEOPLE ACTUALLY DO. For inconsequential decisions, deliberately using mental models is not worth your time.
The next step is to determine which decisions in YOUR life are the most consequential.
I’ll give you a few examples of how others have done it:
The College Search: The college you attend has a huge impact on your life, and it is one of the first major decisions that high school students make. Unfortunately, when making this decision, most students fall for the availability bias. They unnecessarily and unconsciously restrict their search based on where their peers plan to attend, what is popular locally, rankings, or what their parents/counselors recommend. When my precocious friend, Jordan Goldman, was deciding where he wanted to go to college, he decided to take a maximizing approach. He scraped the websites of colleges to get student email addresses and then reached out to those students asking about their experiences at their school. Amazingly, he got thousands of responses. Then he made his decision based on this high quality, personalized data that wasn’t available anywhere else. Side note: Jordan ended up going to Wesleyan, and he used the data he collected as the foundation for his company, Unigo, which grew to 80+ employees before he sold it.
Investing: As some of your know, I first learned about mental models by reading Poor Charlie's Almanack, written self-made billionaire investor and Warren Buffett’s 40-year business partner, Charlie Munger. If you haven’t read this book, stop what you’re doing right now and purchase it. It’s a must-read for mental model collectors. In the book, Munger shares how he uses a checklist of mental models (specifically cognitive biases, a type of mental model) before making each investment decision. He first runs through a checklist of cognitive biases to make sure that he’s not falling prey to any of them. Then, he runs through the list again to see how the cognitive biases may be impacting the sellers of the companies he’s considering investing in. Munger attributes this approach to a lot of his success as an investor.
Career: I’ve made the decision in my career to pay special attention to how I can maximize results through writing… specifically, writing articles. Over the past few years, I have systematically studied the mental models of the top article writers in the world and stress-tested those models in my own writing. Now, whenever I write an article I have a checklist of about 10 mental models I run through before I even think about publishing. This approach has worked. The average article I write is seen by 100,000+ people.
What’s key to understand is that you can maximize consequential decisions by:
- Collecting the right mental models
- Using those models as a checklist whenever you make those decisions
For example, when it comes to using the 80/20 rule to identify my weekly priorities, I’ve identified 13 mental models across various disciplines that help me find the 20% of inputs that create 80% of the outputs (I explain each of these mental models in detail in the first guide):
Every model provides a unique perspective that the other models don’t. By combining the models together as a checklist, you get exponential value.
This video interview from self-made billionaire Ray Dalio captures how he does this and why it’s so important.
Today’s Action: Determine the vital few decisions you want to maximize.
Determine the vital few decisions you make that you want to use mental models for by taking the steps below:
- Access the Life-Changing Decision Template I created for you. To help you identify your most consequential decisions, I created a template of my most important decisions that I've identified in my life.
- Make an expansive list of the most important decisions you make regularly. The reason for starting with an expansive list is to ensure you do not fall prey to the availability bias of going with the first things that come to mind. (The availability bias cognitive bias leads to many of the most common decision-making mistakes.)Earlier in this lesson, I shared how daily prioritization is worth maximizing. What makes this decision so important is the fact that you make it every single work day. So, if you get the process right once, you can use it over and over for the rest of your life.
- Narrow down the list to the top three. In this step, we’re going to use the trusty 80/20 rule and look for the 20% of decisions we make that determine 80% of the outcomes in our life. We want to keep this list really short, because being deliberate takes a lot of time.
- Reply to this email with the top decision that’s NOT already in the template that you’re adding to your list. I will compile everyone’s response and add them to the template.
Don’t worry about getting this perfect. You can revisit this whenever you want.
