Mental Models

This page was inspired by Charlie Munger’s idea that good judgement comes from a latticework of mental models drawn from many disciplines. I’ve organised the models into nine practical buckets – so you can quickly find the right tool for your situation.
Please select from the below.

Leadership and Motivation, Strategy and Competition
Principal-Agent Problem
When decision rights are delegated, agents optimise their own payoff under information asymmetry. Without smart contracts and governance, effort, risk and horizon drift away from the principal’s goals.
Analysis and Framing, Decision and Risk
Probabilistic Thinking
Replace certainties with distributions and odds. Make choices on expected value and downside limits, update beliefs as evidence arrives, and stay calibrated.
Decision and Risk, Operations and Quality
Redundancy
Deliberate duplication of critical elements or capacity to avoid single points of failure and reduce downtime. You trade cost and complexity for availability and graceful degradation.
Analysis and Framing
Regression to the Mean
Extreme results are partly luck. On the next measurement, luck is unlikely to be as extreme, so results tend to move back toward the typical level.
Decision and Risk
Regret Minimalisation Framework
Project yourself to the decision horizon and choose the option that you will regret least. Weight omissions heavily, and treat reversibility as a key lever.
Strategy and Competition
Richard Koch’s 3 key formulas
Koch argues that breakout ventures operationalise three repeatable formulas: a Customer Attraction engine, a Delivery machine, and a Commercial formula that locks in fat margins. (He also describes a fourth, Innovation, as an optional accelerator.)
Analysis and Framing, Decision and Risk
Second Order Thinking
Consider the long-term and indirect consequences of decisions, rather than just the immediate or obvious ones.
Analysis and Framing, Decision and Risk
Signal versus noise
Distinguish meaningful information from random fluctuation. Set thresholds and smoothing to avoid reacting to noise, and act only when movements clear expected variability.
Communications and Influence, Leadership and Motivation
State, Story, Strategy
Align your State (how you show up), your Story (the narrative you choose), and your Strategy (the plan). Start with state, or the best strategy won’t stick.
Markets and Finance, Strategy and Competition
Supply and Demand
Prices and quantities are set by the interaction of willingness to buy and willingness to sell. Shifts in either curve change the equilibrium; elasticities determine how much price vs volume moves.
Analysis and Framing, Decision and Risk
Surface Area
Increase the surface where good things can happen and shrink the surface where bad things can strike: grow opportunity surface while hardening risk surface.
Analysis and Framing, Strategy and Competition
SWOT analysis
A fast external–internal scan: match Strengths and Weaknesses to Opportunities and Threats, then turn the pairings into moves.
Communications and Influence
5 Ws of communication
A compact questioning frame to make any message decision-ready: Who, What, When, Where, Why (optionally How).
Decision and Risk
The 2 Arrows
Focus where importance intersects with control. Act directly on what matters and you can change; influence or ignore the rest.
Operations and Quality
The COPE framework
Create content once in a structured, presentation-agnostic form, then reuse it across channels, devices and formats with minimal rework.
Markets and Finance
The Fat (Thin) protocol Thesis
In blockchains, value tends to concentrate at the shared protocol layer rather than the application layer, though modular stacks and wallets can shift where value accrues.
Behaviour and Cognitive Bias
The Habit Loop
A simple mechanism for automatic behaviour: a cue triggers a routine to obtain a reward. Change the loop by keeping the cue and reward but swapping the routine.
Innovation and Design
The Idea Maze
A method to systematically explore the space of approaches to an idea — mapping branches, dead ends, and success paths before committing scarce time and capital.
Analysis and Framing, Decision and Risk
The Map is not the territory
Models, metrics and narratives are representations. They are useful abstractions, not reality. Treat them as tools, validate them against the world, and update when they drift.
Operations and Quality
The PARA Method
A universal foldering scheme that organises everything by actionability: Projects now, Areas ongoing, Resources maybe, Archives done.
Strategy and Competition
The Tragedy of the commons
When access is open and individual users don’t bear the full cost of their consumption, shared resources are overused and degraded.
Analysis and Framing
Thought experiment
A structured mental simulation to test ideas when real experiments are costly, slow, or impossible.
Innovation and Design, Strategy and Competition
Zero to One
Build something fundamentally new that creates a monopoly-like position, then scale with deliberate execution and distribution.
Operations and Quality
Deming’s 14 points
A management system for building quality into work by reducing variation, improving processes, and aligning everyone to long-term purpose.
Innovation and Design
Gall’s Law
Complex systems that work evolve from simple systems that worked. Start small, get it working, then scale.
Leadership and Motivation
Agency (high / Low)
A practical lens for how people approach problems: low-agency waits for circumstances; high-agency creates options and moves first.
Leadership and Motivation
Maslow’s Hierarchy of Needs
A motivation heuristic: people prioritise unmet lower-order needs before higher ones. Use it to diagnose constraints and design incentives.
Behaviour and Cognitive Bias
Munger’s Tendencies
Munger’s catalogue of 25 psychological tendencies that systematically distort judgement — and how to guard against them.
Analysis and Framing
Occam’s Razor
When multiple explanations fit the evidence, prefer the one with the fewest necessary assumptions.
Strategy and Competition
Porter’s five forces
A framework to assess industry structure and profit pools by evaluating five competitive forces and their drivers.
Strategy and Competition
The Growth-Share Matrix
A portfolio tool from BCG that maps units by relative share and market growth to guide investment, harvest and exit decisions.
Strategy and Competition
Thucydides Trap
When a rising power threatens to displace an incumbent, structural stress raises the risk of conflict unless actively managed.