A deeper look into Shane Parrish’s insightful framework for decision-making

During these final weeks of the year, I’ve been immersed in “The Great Mental Models - General Thinking Concepts” by Shane Parrish. The book, enriched with insights from legendary thinkers like Charlie Munger and Warren Buffett, presents a compelling framework for decision-making that I believe deserves wider attention.

Here are the core mental models that stood out to me, each offering a unique lens for approaching problems and decisions:

The Map Is Not The Territory

Every model of reality - whether it’s a map, description, or mathematical equation - is fundamentally an approximation. These models serve us well in specific contexts but come with inherent limitations. The key lesson here is to consistently verify our assumptions and understand when our models might fall short.

Circle of Competence

This model emphasizes the importance of self-awareness in decision-making. It’s crucial to:

  • Clearly understand your areas of expertise
  • Recognize your knowledge gaps
  • Map others’ areas of competence
  • Know when to leverage collaborative expertise

Interestingly, understanding the boundaries of your knowledge often proves more valuable than pushing those boundaries.

First Principles Thinking

This approach involves breaking down complex problems into their fundamental truths. It connects well with techniques like the 5 Whys or Root Cause Analysis - continuing to ask “why” until you reach an atomic, falsifiable truth. While challenging, this method is essential for moving beyond incremental improvements to true innovation.

Thought Experiment

Made famous by giants like Einstein and Schrödinger, thought experiments allow us to explore possibilities beyond physical constraints. By imagining scenarios free from real-world limitations, we can uncover insights that might otherwise remain hidden. These mental exercises have been crucial in developing groundbreaking theories in physics and other fields.

Second-Order Thinking

This model pushes us to look beyond immediate consequences. Instead of just asking “what happens next?”, we should ask “and then what?” Consider artificial general intelligence (AGI): the important questions aren’t just about achieving AGI, but about its cascading effects on society, economy, and human potential.

Inversion

One of the book’s most fascinating insights, inversion approaches problem-solving differently. Rather than directly pursuing solutions, it focuses on identifying and removing obstacles. In investing, for example, avoiding common pitfalls (like FOMO, high fees, and excessive trading) often proves more effective than chasing the next big win.

Probabilistic Thinking

This framework helps navigate uncertainty by understanding the likelihood of different outcomes. It’s not about perfect prediction but about making informed decisions with incomplete information - a crucial skill in today’s complex world.

Occam’s Razor

When faced with multiple explanations, start with the simplest. This principle advocates for simplicity not just for its own sake, but because simpler explanations are easier to test and verify. Complexity should only be embraced when simplicity fails to adequately explain the phenomenon at hand.

Hanlon’s Razor

As Thuli Mandosela beautifully put it, “I need to listen well so that I hear what is not said.” This principle warns against attributing to malice what can be explained by ignorance or misunderstanding. It encourages approaching apparent conflicts with empathy and curiosity rather than judgment.

Final Thoughts

These mental models form a powerful toolset for decision-making, each offering a unique perspective for analyzing problems and opportunities. While they might seem obvious in hindsight, their real value lies in conscious application to our daily decisions.

The book deserves multiple readings to fully integrate these tools into our decision-making arsenal. As we approach 2025, I look forward to applying these principles more deliberately in both personal and professional contexts.

Originally shared on LinkedIn

Tags: #DecisionMaking #MentalModels #CriticalThinking #Leadership #PersonalDevelopment