Mental Models that helps make effective decision makers
An introduction to adopting mental models to become better as a decision maker
Effective Decision making is a life skill, one that most people often do not invest time and effort to get better compared to other skills in their lives. People often refer to getting more “experience” in their careers and lives to get better at decision making. While “experience” is crucial and needs to be combined by the practice of reflection (going over an experience with a decision and figuring out what could have been better), there are other things one can do to improve this skill to make effective decisions. This is where exposure to mental models is a useful tool in your toolbox to improve your ability to make good decisions. In this essay, you will be introduced with a few prominent mental models that you can use in your personal and professional lives, and get better at the art and science of decision making. Remember like any other skills that you would invest time in to get better, decision making skills require deliberate practice, reflection and testing. Mental models are like machines in a gym - they are available to help you tone your “muscle” of decision making, but they alone cannot guarantee perfect outcomes. The mental models also work together, rather than in isolation. Finally, making good decisions is going to make you more effective in your personal and professional lives, however good decisions can have non-good / unexpected outcomes, just like bad decisions could also lead to good outcomes.
The mental models shared below are inspired from my personal pursuit to get better at this skill, relying on experts like Shane Parrish from Farnam Street Blog (highly recommended), books like “Thinking fast, and slow”, my readings of (auto)biographies of lives I admired, and conversations I had in my coaching related initiatives and trainings outside work. Some content headings and images have been adapted from the original source of the course “Decision by Design” from Farnam Street Blog. I hope the models presented here are useful for you, as they are for me.
Navigating the paradox of choices
One of the most common occurrences when making a decision is to choose between options. You are required to make a choice - either you want to act i.e. choose an option among the ones presented to you, or you decide to wait to figure out other options and thus, postpone the decision altogether. Knowing when you need to wait, and when you need to act, becomes a good starting point for us to start our journey of discovering mental models.
Image is from Original Source: Decision by Design / Farnam Street Blog
The above is an interpretation of the commonly known Eisenhower matrix. At the top right, you will find a quadrant that represents a decision that is “consequential” to you and is expensive to “reverse”. Please note that a decision could be consequential to you but could be inconsequential to the other person. This applies also to the point of “reversibility”. A decision that is expensive for you to reverse, and thus termed as “irreversible”, could be reversible for another person. A consequential decision is one that is of high stakes for you, which could have a significant impact to you in terms of its effect, both in positive and negative cases. A decision to marry someone is usually an easy example of “consequential” decision, while a decision to pick up a restaurant for a casual get together can be an easy example of “inconsequential” decision. The decision to marry could be irreversible for you, meaning it is hard or expensive for you to undo that decision if you go ahead with the one, but not impossible. Similarly if a decision to pick up a restaurant leads to a choice of restaurant that turns out to be “bad” could be reversed. Most decisions fall into this matrix in one of its quadrants. So, find a decision that you want to test this with, and now when you are ready, check the below picture.
Image is adapted from Original Source: Decision by Design / Farnam Street Blog
A decision that sits in a particular quadrant for you can be addressed using the heuristics shared in the above picture. At any point in time, you are optimizing for either making the decision to “not decide” at this stage (go slow) OR to decide quickly. The matrix quadrants and the indicators in the above picture can guide you to the relevant action that you can take if you find your decision in one of the quadrants. A decision in the bottom left (inconsequential and reversible) must be made as quickly as possible (ASAP) from your side. Please note the point of delegation here, especially the phrase “high judgement individual” that is used here. The idea is for you to find a person that you admire for their judgement, that is they usually make good calls and are rational in how they approach any decision. In a team setting, you can also use the above actions in the picture to build decision making muscle of your team through delegation of non-consequential decisions.
Image is adapted from Original Source: Decision by Design / Farnam Street Blog
High consequence and irreversible decision is perceived as binary (taking a new job offer or not, marrying your partner or not). If you find yourself in such a decision, try by breaking this type of decision into smaller decisions that can map to other quadrants of the above matrix. Breaking down a big decision of high consequence and the cost of reversing into smaller decisions allows you to make progress on such decisions effectively.
Solving the root problem
Often people jump into solving a problem as soon as it is presented to them, and thereby make decisions without thinking deeply about the presented problem. One way to address this is to ask if the problem at hand is indeed a root problem or a symptom of an underlying problem. There are many ways you can figure out if a problem is a root or not. Using the principle of “5 Whys”, where you ask “Why” as many times till you get to a state where asking any more Whys will not lead to new problems to solve. The other technique you can use to create a “firewall” between problem understanding and solution identification. I use this technique by creating two different meetings, one for going deep into the problem and making sure I understand the problem completely, and the other for solution brainstorming with my team. This physical separation of problem understanding and its solution through different meetings prevents the need for me to not jump into solving a problem too early.
You can also use prompt questions to help yourself and your teams to get a better understanding of the problem and also to discover the root problem. Asking the question “What would have to be true for this problem to not exist in the first place ?” is a good place to start.
Once you have figured out potential solutions to the “root” problem, you should invest the time in finding a solution that solves the problem for good, otherwise you risk the problem coming back. You can use the prompt question “Does the solution to the problem stand the test of time ?” for that purpose. This addresses the point if a particular solution solves the root problem for good, or it's merely a temporary solution.
Finally, you will often see individuals in most teams and organizations getting rewarded to find a solution to a problem - which is not bad per say. However, in some situations, avoiding the problem in the first place could have been the right approach. This thinking is usually missed by teams and organisations if they do not think deeply about the problems presented to them. So, take the time to reflect on the incentives built in your team about how they address problems. If the incentive is for people to get recognized when they figure out a solution to a presented problem, it may not be an optimal setup. Think about this question prompt : “In the last months, which was the problem that could have been avoided and instead you / we recognized someone who solved the problem ?” The intention here is not to have people avoid problems, but not to create problems that require a solution as a decision that could have been prevented in the first place. In the popular parlance, it is often referred to as “prevention is better than cure”.
As a decision maker, own the frame
When you are a decision maker in a situation and you are presented with a bunch of solutions to choose from, usually (a) or (b) - a binary decision, resist the urge to pick one especially if it's a consequential decision immediately. Owning the “frame” of a problem requires you as a decision maker to get out of the tendency to see that decision outcome in a binary. One way to enforce this is by asking for a third option even if such an option does not exist or is not presented to you. If decision options are presented to you to choose, ask if there were other options even though you or the team would not have picked up that option. This process of “framing” is critical for consequential decisions, where you need to go slow. One other technique I use often when “framing” the problem is by asking a lot of questions to my team or someone who needs a decision from me. The questions start with clarification : “Do you mean this is the decision that we need to make “, “Is this what decision option A means according to you ?” By asking what a decision really means and speaking about the options presented in my own language, I “frame” the problem for myself rather than being imposed by others' interpretation and understanding of the problem we are trying to solve by making a decision.
You can use the following techniques to think through options of a decision that you need to make: (Adapted from Original Source: Decision by Design / Farnam Street Blog)
Technique #1: Vanishing options
If one of the options you’re considering was gone, i.e. completely off the table, what would you do?
Technique #2: This and That
Think how options and solutions can work together. That way you don’t need to choose between one or the other
Technique #3: Explore the Opportunity Cost
Factor in what are we giving up when we make a choice when deciding between a narrow set of options
Technique #4: Gather more information
If you are inclined to a choice, ask what information would change your mind? If you are not inclined to any choice, ask what information would help you decide?
Lastly, to own the frame, you also look for evidence that disconfirms the view and hence you need to find the best “contrarian” in your team or network who has usually a good counter argument to a decision option. By engaging in the dialogue with the “contrarian”, if something is surprising for you, ask “what it is that you need to update in your view about the decision and its options”.
How to anticipate the future when you are making a decision ?
It is hard for a decision maker to look into the future and understand the impact of the decisions that they are making in the present. So with the mental model of anticipating the future, you are thinking about long term consequences of your decisions. A few prompt questions when deciding between options of a high consequence decision are the following :
Which solution creates the fewest problems in the future.
What favourable conditions and actions it will take to get to the outcome you want.
What problems I foresee and can address in order to prevent failure.
Another technique you can use here is called “Second order thinking”. This type of thinking is important for hard decisions, especially for consequential and irreversible decisions. Think in the long term and go over each option to a decision by answering “what will the problem be then” if everything goes well and if it goes bad when you commit to the option. Based on that, find what information you need to gather now.
I like a quote a lot when making such decisions (often very few) : “Hard decisions make for an easy life. Easy decisions make for a hard life”. Second order thinking helps put your choices in the context of the long run - to know the consequences (if things goes well and if it goes bad).
Leveraging the right information to help support your decision
Reflection, not experience, leads to learning. I made a point earlier in the introduction of this essay that often people say that experience will make you a better decision maker, which is not entirely correct. If you do not reflect, you will not learn. Reflection is often summarised through the following steps:
We have an experience
We reflect on that experience
We draw a conclusion or abstraction from reflection
The abstraction becomes our “action”
Most of the information we consume on the internet or through conversations with others when we’re told we’re learning is really just other people’s abstractions. And other people’s abstractions are unlikely to help us make better decisions. This is not a direct criticism for the social media generation where for example medical advice is shared in 60 seconds and people use that as a replacement for actual intervention from a medical professional. It also parallels this with the current world where long form conversations are avoided and people want to get the information a bit under a minute and they move on. There is no learning unless we take the time to go back and arrive at our own abstractions through the process of reflection. This is also a fundamental aspect in becoming better at decision making. The quote from the book “Principles” by Ray Dalio captures this beautifully.
In order to get the right information, you need to seek the right people. You need to get as close to the source as possible and get raw, unfiltered data, and get into weeds, but also consider the motivations and incentives of that source. When you find experts or people with experience making similar decisions, don’t ask them what they would decide if they were you. Instead, ask what would be their process for making a decision if they were in your shoe. Ask them about parameters and variables they will keep in consideration when they have to make a similar decision. Putting too much work in getting the right information is particularly important for “irreversible” and “consequential” decisions.
A tip that I can recommend you can use to put this model into practice is shown below.
Inculcate automatic behaviours when making decisions
One of the things you could do to improve your decision making skill is to remove your ability to make decisions when you know you are unlikely to make good ones. What if we could recognize the situations where we are more likely to do something stupid in advance and avoid them all together?
We know what those moments are, and they could be different for different people. The below is a snapshot of those moments.
Image is adapted from Original Source: Decision by Design / Farnam Street Blog
Slow your decision making process when you see two or more of these signs combining. And instead, organise your environment to promote thinking and processing (walks, quiet time) over gathering more information about your decision.
For some people, creating rules and advertising such rules to others also provide an alternative to not finding oneself in a bad situation where you would likely make a bad decision. Like, for some people who have rules that they do not have more than 2 drinks a week. When it is communicated as a rule, others take notice of that and usually support in keeping up with your rule. Creating such rules also inculcate automatic behaviours to induce good decision making. Determine such automatic behaviours in advance so you don’t have to decide in the moment, like responding to go for more drinks than you should, or not accepting the first offer you get on a phone call.
The steps you take to control your anxiety in such situations where you may likely make bad decisions are also useful. These steps vary from person to person. I recommend the technique of physiological sigh that is available here to address your anxiety in a given situation.
The other technique you can use to be more aware of your stress markers and state of mind is called the awareness of “Somatic Marker Hypothesis” i.e emotional processes guide (or bias) behaviour, particularly decision-making. When a somatic marker associated with a positive outcome is perceived, the person may feel happy and thereby motivated to pursue that behaviour. When a somatic marker associated with the negative outcome is perceived, the person may feel sad, which acts as an internal alarm to warn the individual to avoid that course of action. According to this hypothesis, when people make decisions based on risky choices, they experience somatic markers, such as stress or excitement, which can influence their decision-making processes. These somatic markers are shaped by previous experiences with gains or losses and can help guide future decisions. For example, successful traders often develop somatic markers for recognizing patterns in financial markets that indicate whether a particular stock will rise or fall. They use these markers to make informed decisions that maximise their gains and minimise their losses (source of this example).
The above mental models are a tip of the iceberg, and if you want to learn more, I highly recommend the three volumes of the book “The Great Mental Models”. A lot of what was shared here is based on the ideas from the book that I was fortunate to work with other practitioners and learn from. Lastly, don’t forget the key ingredient to learning : “Reflection”. Find what type of decisions you are required to make and learn from it to become better over time.
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