Mental Models

by Dan Walsh

I’ve been reading Poor Charlie’s Almanack when I have spare time. It’s a large, ponderous tome written by Charles Munger – Warren Buffet’s other half. Charles has constantly been cited as having phenomenal decision making skills. ┬áHis almanac is filled with his wisdom, and the process he uses to create mental models, which he uses for rapid decision making. It’s the type of book I ┬áhave to put down at least every other page to really let the content sink in. There’s so much.

Charles uses the main one or two principles from disparate fields to use as the basis for each mental model. He then combines these models in various ways to think about a given situation. It’s genius – so I’ve started to pull together the guiding principles from fields of which I’m familiar.

Graphic Design: Justify. Justify everything. Why is this red? It must have a reason. Why did I spend money this way? There must be a reason. If it can’t be justified, then it was a weak decision.

Search Engine Marketing: Test all assumptions / I don’t know anything. The perfect ad, landing page, or decision never works the way I think it will once the world can interact with it. Let the world in, then make decisions based on data.

(more research)

Search Engine Marketing: Many small, incremental changes make a huge impact. Sometimes changing a keyword bid from 50 cents to 45 cents can mean an extra $100 in monthly profits. Multiple this by 100 changes…

Structural Engineering / Software Engineering: Redundancy. There must always be a backup support. Whether it’s a bridge or the server for a website, or a photocopy of my passport. The initial cost is annoying, but the potential cost is crippling.

Molecular Biology: It’s difficult to discern how a single variable can effect a complex system. Use triangulation to determine behavior and outcome.

I’ll continue to add to this…