Few things will improve the quality of your life more than learning how to make high-quality decisions. The average adult makes an exhausting 35,000 decisions per day. Decisions range from the unimportant (Should I schedule these interviews before or after lunch?) to the critically important (Do I hire this candidate?). The consequences of important decisions can change your company’s future, and sometimes our lives. Yet amazingly, no one really teaches us how to do it.
Most people do not possess the tools to correctly process key decisions. And it is important to note that even people with good decision-making skills can get it wrong. History is full of bad calls made by smart people, many of whom could even be called “professional deciders.” However, there is much we can do to increase our odds of making high-quality decisions.
Those who make consistent, high-quality decisions use mental models. A mental model is simply a way of thinking that helps us process what goes on around us. Charlie Munger, billionaire investor and vice chairman of Berkshire Hathaway, once summed up his approach to wisdom using mental models. He stressed the importance of having models in your head and then filtering your experiences through that network of mental models to arrive at better decisions.
So, what are these core Mental Models?
First Principles Thinking
Separate the underlying ideas or facts from any assumptions based on them. Once you get down to the essential facts, you can build to produce something new. Elon Musk explains it like this: boil things down to their fundamental truths, then reason up from there.
A fancy way of saying “use your imagination.” Lay out a problem mentally and extensively think through all the potential consequences. When we cannot find actual evidence, thought experiments force us to confront questions we can’t easily answer.
Almost everyone can anticipate the immediate results of their actions. That is first-order thinking. Far fewer can think farther ahead and think holistically, anticipating subsequent effects beyond the immediate.
This is trying to estimate, using math and logic, the likelihood of any specific outcome happening. Identifying the most likely outcomes is one of the best tools available to improve the quality of our decisions.
Most of us tend to think in one direction about a problem. Sometimes it helps to turn things upside down. Instead of asking “What’s the fastest path to reaching our company’s goals,” ask “What are all the obstacles that could delay those goals”
Simpler explanations are more likely to be true than complex ones. Don’t begin with trying to disprove a complicated fact pattern. Instead, begin with trying to prove a simple fact pattern.
Circle of Competence
When ego drives what we undertake, we have blind spots. Know what you know, but more importantly – know what you don’t know. Then utilize the expertise of those around you to fill in knowledge gaps.
We can not always predict the outcome of our decisions. But if you have a solid decision-making process using mental models, you will find yourself making high-quality decisions more often. Have experts to fall back on when you are still in doubt. Our healthcare recruiters can be a valuable resource when you are making critical hiring decisions.