4 Mental Models to Make Smarter Decisions

Did you know that most managers say half their time spent on decision-making is ineffective? Not only can strategic thinking save you time, demonstrating this skill in the workplace has been shown to accelerate careers. 

For managers who make decisions frequently, using mental models—thinking tools that help make sense of issues—can guide them to make better and higher quality decisions that saves them both valuable time and resources.

Let’s look at four mental models for managers at any level and how you can apply them to commonly faced challenges.

First-principles thinking

During an interview with Elon Musk, he attributed his success—from creating a rocket that can be re-used to revolutionising the electric car industry—to a form of reasoning known as first-principles thinking, which breaks down a problem into its bare fundamentals.

Putting first-principles thinking into practice, we start off by asking ourselves: “What do we know about the problem to be absolutely true?” By answering this question, we’re then able to uncover any hidden assumptions that must be addressed first. Otherwise, you may end up with a sub-par solution that only solves the problem temporarily.

In the real world, managers often have to think about whether to merely improve an existing product or process or build something entirely new. First principles thinking provides you with a guide for sound reasoning and analysis.

The OODA loop

Time isn’t a luxury managers always have and we don’t always have enough information to feel confident about making a decision.

However, we can turn to the US fighter pilots for help. They’ve developed a secret weapon to make sound decisions at speed: the OODA Loop.

The OODA loop (Observe, Orient, Decide, Act) is a four-step approach to decision-making that focuses on filtering available information, putting it in context and quickly making the most appropriate decision while also understanding that changes can be made as more data becomes available.

Resourceful managers and entrepreneurs use the OODA loop to quickly test different ideas, get feedback on how those ideas perform, and move on to the next better idea.

Second-order thinking

When we think through a problem, we are likely to use first-order thinking: “snapshot judgments” that look for quick and easy solutions without thinking much of the consequences. First-order thinking is often enough for solving simple problems, but it can create more problems if the issue is large and complex. 

Enter second-order thinking, where decision-making is more deliberate and consequences are carefully thought through. In using this mental model, you’re able to examine a variety of outcomes and have greater foresight to pre-empt future consequences. 

Second-order thinking is especially useful building a manager's career when they finds themselves thinking through issues often with long-term effects such as hiring, building culture and managing operations.

Inversion

Thinking about how to not solve a problem can feel counterintuitive, but the mental model known as inversion that does just this can help uncover hidden challenges that block you from achieving the outcomes you want.

In short, inversion works by identifying the factors that can lead to failure, which allows us to devise a plan to avoid those blockers. Inverting a problem won’t always solve it, but it will help you avoid trouble. 

Still, this is a versatile thinking tool and can be applied to problems such as achieving cross-functional collaboration, project management and higher productivity.

How to improve your decision making?

These are only four of the myriad of mental models we can use. The more mental models we can refer to, the more likelihood of us improving our decision making skills.

As you pick up and practice mental models frequently, you would slowly want your decision-making to be both effective and efficient. You’re effective when you’ve chosen the right thing to do based on your situation and you’re efficient when you can make the decision fast.

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Sign up for a series of strategic decision-making workshops. Drop us an email at hello@newcampus for any enquiries.

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