Mental Models: How to Become Unstoppable

Mental Models: How to Become Unstoppable

Apr 29, 2023

 

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The most confident people in the world are the best thinkers.

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 How to Become Unstoppable

Read time: 5 minutes.

The greatest in the world aren't the most talented, they're the best thinkers.

Charlie Munger and Warren Buffet grew Berkshire Hathaway to a $700B investment empire.

Their secret: A set of mental models that helped them view and understand the world better than everyone else.

Today, Iā€™m going to share with you 9 mental models that will sharpen your thinking and improve your decision-making skills as an entrepreneur: 

 

1. Alloying

Combining elements/skills & ideas creates new substances. These created substances can be stronger than the sum of their parts. 

This creates a: 1+1 = 3 scenario.

How you can apply Alloying ā†’ Integrate ideas to create strategies & combine skills to create superpowers (Example: I use visuals + writing in my content).

 

2. Margin of Saftey

Represents your buffer against losses and failures. You can apply it to investing, business, and life.

How you can use it ā†’ Take into account a margin of safety when making investments, setting goals, or even making promises.

 

3. Ambiguity Aversion

It's all about understanding the difference between risk & ambiguity: 

Risk is a situation with a known probability & potential outcomes Ambiguity is a situation with undefined probabilities and outcomes

How you can use it ā†’ Always choose risks over ambiguity (a devil you know is one that you can manage).

 

4. Divergent & Convergent Thinking

Convergent thinking is following steps towards one solution (what we've been taught in school). 

Divergent thinking, on the other hand, is creativity through exploring non-traditional solutions.

 How you can apply it ā†’ Use divergent thinking to stand out by experimenting with unusual solutions.

 

5. Law of Diminishing Returns

You can produce 100 units/hr for 40 hours. In your 41st hour, the output will drop to 80 units/hr. 

After reaching optimal capacity, your performance and results will drop.

How to utilize it ā†’ Understand your limit & don't go beyond it.

 

6. Multiplying by Zero

Any number multiplied by zero no matter how large equals zero. In life, a failure in one area can negate great effort in all other areas

How you can use it ā†’ Eliminate the "zeros" that can ruin you, these can be: people, activities, and risks.

 

7. Luck Surface Area

Let's face it, everyone wants to get lucky. 

In reality, your chances of getting lucky are determined by: Your actions toward your passion and the number of people you effectively communicate with.

How you can use it ā†’ Follow this formula to create your own luck: Luck = Passionate Action x Effective Communication.

 

8. The Map is Not Territory 

We have a simplified understanding of reality that we often use to judge & take action. In reality, things are more complex than they look.

How you can use it ā†’ Stay skeptical, embrace the complexity of life & stay humble.

 

9. First Principle Thinking

Our world is full of noise and pre-framed ideas. The first principle thinking is breaking assumptions down into basic elements and reassembling them from the ground up.

How you can use it ā†’ When faced with a Challenge, break things down to basics.

 

  


 

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