Mental Models for better decision making

A mental model is a representation of how something works. Our brain uses them to understand the world and to simplify complex things for us because we cannot keep all the details of the world with us. The way we think and understand the world and the way we take decisions is influenced by the mental models that we use. It is important to have the right mental models so that you see reality and take the right decisions.

As a product manager or any team member taking decisions everyday, mental models become useful tools for better decision making and to ensure you are not missing anything out. The following are 3 mental models that can be very useful in your day to day work.

Inversion

Human beings tend to only think forward while solving problems. This was probably because of the situations our ancestors faced. Facing a wild animal you cannot beat? Run. Winter is approaching? Gather more food. Most of the problems they faced had clear solutions.

But the world today is very different and problems are becoming increasingly complex. Thinking forward is not enough. Inversion is a simple but powerful mental model that helps us think backwards.

So what is inversion? Let’s say that you are trying to achieve a goal. You would now think about “What can I do that will me make me achieve my goals?”. Inversion is to flip this question and ask yourself, “What can I do that will make me not achieve my goals”. This way you will be able to uncover all those situations that will not help you achieve your goals and avoid them.

Let’s look at an example

Let’s say that you are a product manager at Amazon and you are working on improving clicks on ads that are listed by your sellers.

You would probably ask yourself, “What can I do to ensure that users engage with the ads?”

1. Highlight the ads
2. Show ads basis past shopping behaviour
3. Catchy thumbnails
4. Catchy headlines and descriptions
5. Good prices

Now, think about this question,“What can I do to ensure that users do not engage with the ads?” Some more scenarios that you missed out on above will be uncovered here.

1. Show them the same ad after they engage with it
2. Show them the same ad when they did not engage with it
3. Show ads irrelevant to what they are looking for at that moment

So next time, when you face a complex situation at work or personal life, remember to invert.

Second Order Thinking

Ever found yourself in a situation where after you solve a problem, you unintentionally end up creating new problems. These new problems are what we call second order consequences.

Human beings always look at the obvious implications of a business decision or change but do not consider further consequences. Second order thinking involves asking yourself, “And then what?” This means thinking about the immediate outcomes of your decisions and thinking about their consequences.

A lot of extraordinary consequences in life come from second order consequences, as it is not easy to think in terms of systems and their interactions.

Let’s look at an example

Let’s say you are a growth marketer working for a food tech startup and you are planning to launch a campaign that gives special discounts on British desserts for Christmas.

An immediate outcome of launching this campaign would be an increase in sales of British desserts and your campaign becoming successful. Some second order consequences could be

1. Restaurants running out of British desserts
2. Disappointed customers who cannot buy desserts as the restaurants ran out of them
3. Drop in sales of Indian desserts
4. Restaurant owners who sell Indian desserts reaching out to the support team to make complaints

So next time, when you take a complex decision, remember to ask yourself, “And then what?”

Probabilistic Thinking

Probabilistic thinking is trying to estimate using our knowledge, beliefs, logic, and math to estimate the likelihood of any specific outcome.

We live in complex social systems and do not control all variables that influence a particular outcome. So, our outcomes are not binary and are probabilistic. Based on new evidence that comes in, the certainty of a particular outcome can increase or decrease.

At work or in life, it is important that we identify what matters, understand the odds of something taking place, and check our existing assumptions before taking a decision. We need to particularly pay close attention to variables that can cause unnecessary changes or derail your entire plan.

Let’s look at an example.

Let’s say that you have a flight to catch and the usual time it takes to reach the airport is 1 hour. This is assuming that there won’t be any traffic, changes in routes or issues with cab availability.

But let’s say that on the day of your flight, there is an election rally taking place that could delay your time to reach the airport by another hour. There is a new variable that has been added to your equation that will influence the outcome. In this case, it will take 2 hours for you to reach the airport.

So next time, when you take a complex decision, remember to ask yourself

1. Do I know all the data points relevant to my decision?
2. Do I know all the variables that will affect the outcome of my decision?
3. What is the weightage that each variable has on the outcome of my decision?
4. Do I know about the variables that can derail the plan?
5. What are the assumptions that need to be true for a certain outcome to be possible?

References

I took this amazing cohort-based learning program where we learnt about making decisions confidently.

Decision Making for Product Managers

Mental Models: The Best Way to Make Intelligent Decisions (~100 Models Explained) - Farnam Street

Invert, Always Invert

Second-Order Thinking: What Smart People Use to Outperform - Farnam Street

Mental Models & Product #4: Probabilistic Thinking