Mental models how to think like successful people

A network effect also called network externality or demand-side economies of scale is the effect that one user of a good or service has on the value of that product to other people.. Whe

In order to comprehend some of the

essential underlying principles of the

world, society, and nature, smart and

successful people tend to use particular

sets of "life and business models,“ like a

tool box, which help them to guide and

focus their thinking.

Academics have coined them "mental

models,“ defined as a collection of

someone's thought process about how

something works in the real world As such

mental models assist in seeing a problem

from different perspectives.

All of us can do the same By studying the

biggest ideas and principles (models) from

different disciplines such as physics,

sociology, philosophy, management, we

can create our own network (or

latticework) of models We can use some of

them in one situation and others in

differing situations; resulting in better

decisions.

Tech Executive, Marketing Expert, Leadership & Executive Coach, LinkedIn Influencer, Author, Speaker

Vice Chairman of iconic Berkshire Hathaway and currently one of the best

multi-disciplinary thinkers in the world

Warren Buffett, aka the "Sage of

Omaha”, is a master in time

management, focus setting, and

priority management

It is said that one day Buffett asked his

pilot to draft a list with the 25 most

important things he wanted to do in his

life In a next step Buffett asked him to

circle the 5 most crucial ones Buffett

challenged his pilot to solely focus on

those 5 to avoid being distracted

Consequently, only when you figure out

your priorities and follow through with

dedicated and concrete action plans you

set your own agenda and will succeed

Dwight Eisenhower was the 34th President

of the United States and was highly productive over decades of his life

His most famous productivity strategy is known as the Eisenhower Matrix, a simple decision-making tool that you can use by separating your actions based on four possibilities:

1 Urgent and important (tasks you will do immediately)

2 Important, but not urgent (tasks you will schedule to do later)

3 Urgent, but not important (tasks you will delegate to someone else)

4 Neither urgent nor important (tasks that you will eliminate)

SMART is a mnemonic acronym, giving criteria

to guide in the setting of objectives, for

example in project management,

employee-performance management and personal

development Ideally speaking, each corporate,

department, and section objective should be:

SPECIFIC – target a specific area for

improvement;

MEASURABLE – quantify or at least suggest

an indicator of progress;

AGREED UPON – specify who will do it;

REALISTIC – state what results can

realistically be achieved, given available

resources;

TIME-RELATED – specify when the result(s)

can be achieved

One of my favorite ones KISS is an acronym for "Keep it simple, stupid" as

a design principle noted by the U.S Navy

The KISS principle states that most systems work best if they are kept simple rather than made complicated; therefore simplicity should be a key goal

in design and unnecessary complexity should be avoided

Versus Critical Thinking (which is

primarily concerned with judging the

true value of statements), Lateral

thinking - the term was coined by the

physician and psychologist Edward de

Bono - is about solving problems

through an indirect and creative

approach, using reasoning that is not

immediately obvious and involving

ideas that may not be obtainable by

using only traditional step-by-step

logic

Techniques are e.g Random Entry

Idea, Provocation Idea, Disapproving

or de Bono´s Six Thinking Hats

Approach (Parallel Thinking)

We often tend to address topics in a superficial manner by asking questions which rather test and reward knowledge (mostly using closed questions) than stimulating inquisitiveness (applying e.g open questions)

To flip that I suggest to apply the model

of "Wonder Questions, " a set of powerful questions: The Why? and Why Not? questions; The What If? and What If Not? questions; The What Else? and the How? questions

To find out more about these “Wonder Questions”

you can check my previous Slideshare

6 SUCCESS QUESTIONS YOU MUST ASK

A network effect (also called

network externality or

demand-side economies of

scale) is the effect that one user

of a good or service has on the

value of that product to other

people When a network effect

is present, the value of a

product or service is dependent

on the number of others using

it

One should always start with the customers´ wants and needs and work backwards This is quite different to what most organizations do in reality (although many would not admit it) when they develop ideas, products, and services which they like and not

necessarily their customers To sum it up: What is best for your customers is ultimately also best for your company

To evolve and get better we need

to learn Learning (also) comes

from failing

Welcome failure as an essential

part of learning and

improvement to establish

"Lifelong Learning," i.e an

ongoing, voluntary, and

self-motivated pursuit of knowledge

for either personal or

professional reasons

Whatever a person is doing, she should stay human, approachable, and show respect towards others

One should choose being focused over task-focused, even and especially, when push comes to shove

people-Believing in the good and staying minded Being curious without being naive and willing to confront one´s own weaknesses to learn and grow Giving and supporting others without

open-expecting anything in return

A phenomenon whereby higher

expectations lead to an increase in

performance

The reverse is the golem effect, in

which low expectations lead to a

decrease in performance

By the Pygmalion effect, people

internalize their positive labels, and

those with positive labels succeed

accordingly The idea behind the

Pygmalion effect is that increasing

the leader's expectation of the

follower's performance will result in

better follower performance

The Peter principle is a concept in management theory formulated

by Laurence J Peter

It states that the selection of a candidate for a position is based on the candidate's performance in their

current role, rather than on abilities relevant to the intended role

Thus, employees only stop being promoted once they can no longer perform effectively, and "managers rise to the level of their

incompetence."

A decision tree is a decision

support tool that uses a tree-like

graph or model of decisions and

their possible consequences,

including chance event outcomes,

resource costs, and utility It is

one way to display an algorithm

The spacing effect is the phenomenon whereby learning is greater when

studying is spread out over time, as opposed to studying the same amount

of content in a single session

That is, it is better to use spaced presentation rather than massed presentation

Practically, this effect suggests that

"cramming" (intense, last-minute studying) the night before an exam is not likely to be as effective as studying

at intervals in a longer time frame

The butterfly effect is the concept that

small causes can have large effects

Initially, it was used with weather

prediction but later the term became a

metaphor used in and out of science In

chaos theory, the butterfly effect is the

sensitive dependence on initial

conditions in which a small change in

one state of a deterministic nonlinear

system can result in large differences

in a later state

Also called Paradoxical Thinking It involves creating a paradox or

contradiction by conceiving of two opposing ideas as being currently true

Examples are "Winning by losing“ or

"Disagreeing and committing“ or

"Setting realistic yet challenging goals.“

The contradiction and its meanings will generate new insights and ideas

To generate and evaluate new ideas

Walt Disney would have shifted his

perspective three times by playing

three separate and distinct roles:

1 the dreamer (generating as many

fantasies as possible),

2 the realist (working the fantasies

into practical ideas)

3 the critic (poking holes into the

idea)

Whenever you introduce something new (e.g a new product, service offer, process, KPI, etc.) take out two

existing, similar ones

It´s like following a health diet and working out at the same time Careful not becoming too lean at a certain point however You need sufficient energy to outrun your competitors

In negotiation theory, BATNA is

the most advantageous alternative

course of action a party can take if

negotiations fail and an agreement

cannot be reached

A party should generally not

accept a worse resolution than its

BATNA Care should be taken,

however, to ensure that deals are

accurately valued, taking into

account all considerations

This is a game which is designed in a way that all participants can profit from it in one way or the other In conflict resolution, a win–win strategy is a collaborative strategy and conflict resolution process that aims to accommodate all

participants

Mathematical game theory also refers

to win–win games as non-zero-sum games (although they may include situations where both players win or lose, as well)

For a reversible decision

(aka two-way-door

decision), if it were not good

you can change it However,

a irreversible decision (aka

one-way-door decision) is

very expensive, difficult or

even impossible to be

changed or reversed

By using the average human brain size and extrapolating from the results of primates, British anthropologist Robin Dunbar proposed that humans can comfortably maintain only

150 stable relationships

Dunbar explained it informally

as "the number of people you would not feel embarrassed about joining uninvited for a drink if you happened to bump into them in a bar."

A minimum viable product

has just those core features

sufficient to deploy the

product, and no more

This strategy targets

avoiding building products

that customers do not want

and seeks to maximize

information about the

customer per dollar spent

The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes

It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients."

Mathematically, the 80/20 rule is roughly followed by a power law distribution for a particular set of parameters

Economies of scale are the cost

advantages that enterprises

obtain due to size, output, or

scale of operation, with cost per

unit of output generally

decreasing with increasing

scale as fixed costs are spread

out over more units of output

The opportunity cost, also known as alternative cost, is the value (not a benefit) of the choice of a best

alternative cost while making a decision

A choice needs to be made between several mutually exclusive

alternatives

Assuming the best choice is made, it

is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice

A sunk cost is a cost that has

already been incurred and

cannot be recovered

Sunk costs do, in fact,

influence actors' decisions

because humans are prone

to loss aversion and framing

effects

In light of such cognitive

quirks, it is unsurprising

that people frequently fail to

behave in ways that

economists deem "rational"

Loss aversion refers to people's tendency to prefer avoiding losses to acquiring equivalent gains: it's

better to not lose $5 than to find $5 Some studies have suggested that losses are twice as powerful,

psychologically, as gains

Loss aversion was first demonstrated by Amos Tversky and Daniel Kahneman

A false positive error is a result that

indicates a given condition has been

fulfilled, when it has not In the case

of "crying wolf" – the condition

tested for was "is there a wolf near

the herd?"; the result was that there

had not been a wolf near the herd "

A false negative error is where a test

result indicates that a condition

failed, while it was successful A

common example is a guilty

prisoner freed from jail

The boiling frog story is generally offered as a metaphor cautioning people to be aware of even gradual change lest they suffer eventual undesirable consequences

It is also used in business to reinforce that change needs to be gradual to be accepted

By using this argumentation

approach, a party asserts that a

relatively small first step leads to a

chain of related events culminating in

some significant (usually negative)

effect, much like an object given a

small push over the edge of a slope

sliding all the way to the bottom

Because no proof is presented to show

that such extreme hypotheticals will

in fact occur, this fallacy has the form

of an appeal to emotion fallacy by

leveraging fear

You might have heard the phrase

"Mind over Matter", meaning that there is a strong connection between mind and body Your every thought produces a biochemical reaction in the brain

Essentially, when you think happy, inspiring, or positive thoughts, your brain manufactures chemicals that make you feel joyful, inspired, and uplifted

A cognitive bias refers to the

systematic pattern of deviation from

norm or rationality in judgment,

whereby inferences about other

people and situations may be drawn

in an illogical fashion

It is helpful to know some of the most

common ones like the Bandwagon

Effect, the Confirmation Bias, the

False Consensus Effect or

the Hindsight Bias A great list of

cognitive biases you can find here

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1 Charlie Munger via Farnam Street Blog

2 Warren Buffet via Forbes

3 Dwight D Eisenhower via Wikimedia Images

4 Eisenhower Box via James Clear

5 Edward de Bono via News.com.au

6 Robert Rosenthal via UC Riverside

7 Laurence J Peter via Lamentees Marivillosa

8 Lorenz Attractor via Gakushuu.org

9 Edward Lorenz Portrait via Subhankar Biswas

10 Robert Dunbar via Wikimedia Images

11 Vilfredo Pareto via Biografias y Vidas

12 Economies of Scale Graph via Course-notes.org

13 Amon Tversky & Daniel Kahneman via Danielgogek.com

14 Abraham Maslow via Sofia University

15 Human Mind Jigsaw via Freepik