What mental models are

It took me a while to realize that mental models do two things: they help you assess how systems work and they help you make better decisions. These two concepts underlie everything you do in life.

For example, how does a rocket engine work? The engine is a system for you to reverse engineer and understand. It has many parts that depend on each other, and you want to map out how.

Next, which type of rocket fuel should you use? That's a decision to make.

Mental models guide you toward the best answer to both questions. Without mental models, you typically stumble around in two ways:

1. You follow whichever path momentum takes you—without reflection.
2. You use your instincts as shaped by past experiences and memorized advice. This is a better approach than blindly following your momentum, but it's not as good as rigorously using mental models.
   

How to assess systems

The world makes more sense when you see it as a patchwork of systems, each of which can be reverse engineered.

A "system" is simply anything with multiple parts that depend on each other. Every machine and process is a system at some level. For example:

• A business such as Microsoft or a startup.
• A tool such as a rocket or a keyboard.
• A process such as economic growth or sustaining a romantic relationship.
• A state of being such as your health or happiness.
  

A mental model of a system is a reduction of how it works. The model identifies the core components and helps you wrap your head around how they interact. This clarity is necessary to drastically improve a system:

• When you improve the system of business, you make more money.
• When you improve the system of relationships, you gain deeper friendships.
  

For example, here's a mental model that SpaceX uses to reduce complex systems:

First Principles — What is the most efficient way to solve a problem if you started from scratch? If you look past humanity’s attempts to solve it, what is the best approach if you reasoned from its fundamental principles?

The SpaceX team looked past decades of incremental rocket improvements to re-examine spaceflight from scratch. They asked, What do the underlying engineering (not historical) principles reveal to be the most cost-efficient and power-efficient way to build a rocket? They worked up from those physical constraints to build the world’s most efficient rocket.

They let a simple mental model—one that fits on a cue card—guide them through the iterative deconstruction of a massive system so they could drastically improve it. Imagine if you looked at every part of the world this way. Some people do.

There are many more models like this for examining systems. We'll go through them shortly.

I wrote this post years before Musk went off the rails. I'll eventually update this post accordingly.

First Principles in practice

How do you use First Principles for your down-to-Earth problems?

For every project you're tackling, ask:

1. What system underlies this project? Is it a relationship, a business, a product, or something else with multiple components relying on each other?
2. Is this system already efficient?
3. If not, what are the ironclad principles underlying it?  
4. Can I start over from those principles to identify a remarkably better way to design this system?
   

Anything that takes up a lot of your time must be investigated like this.

This brings us to our next question: How do we know which systems in our lives are worth significantly improving? To answer this, we'll use yet another mental model: one that I call One Level Higher.

One Level Higher

One Level Higher — Repeatedly ask whether you’re optimizing a cog in a machine instead of the machine itself. The higher the level you optimize at, typically the greater the ROI.

Here's the best way to explain One LeveL higher: If you work for years to earn a 15% raise when you could just switch jobs for an instant 35% salary boost, you're optimizing your current job instead of your career as a whole. That's the higher level optimization.

But you can go a level even higher than that.

The job market is itself a cog in another machine: earning financial stability. But what if you could achieve financial stability without having to toil away at a 9-to-5? If your real passion lies outside of the office, then climbing the corporate ladder would be falling prey to inertia. Instead, the better path would be reducing your expenses by moving to a cheaper city and living more modestly. With lower costs, you could switch to part-time and pursue your true passions if they don't align with your job.

Isn’t that the higher-level game you're really optimizing for?

One Level Higher encourages us to keep asking this question—until our minds explode from nihilism and existentialism, that is.

We have a problem

One Level Higher model is simply the process of asking yourself: Is it higher-leverage to optimize a level above the one I'm focused on?

This is a hard question to ask due to the phenomenon of inertia. It’s painful to confront the possibility that you’ve spent years on the wrong thing. Whether it’s coding, a 9-to-5 job, saving money, building muscle—anything you've done for a long time—you’ve been riding the drug of steady progress.

But what most people don't realize is that working hard without asking what are the better things to be working on is a hidden form of laziness. Yes, appreciate the beauty of flow when you're in it, but don't become addicted to it.

Losing agency over your life due to extended flow is what I call flow paralysis. It is the archenemy of critical thinking. It's the clearest sign you’ve abandoned mental models, because the use of models continually adjusts your life trajectory.

Think of it like this: mental models are powered by information. They produce different recommendations based on the updated information you put into them. So, if you're in a flow state for a long time, you'll have buried your head without ingesting new data and advice. Your mental model will no longer be an up-to-date compass for what to do next.

A classic example is how teenagers are told to go to college. They enter a flow state in pursuit of college but at no point do most question themselves out of it: Should you really be going to school for the degree you chose? Or did you choose the degree because “it felt right" when you were 17 and you haven’t re-examined the life decision since? Could you make a convincing argument for why all the other degrees would not be better options? If you can’t make that argument convincingly, you’re not thinking critically. You're just going with the flow.

Then, once they get to college, they're in a flow state of trying to graduate. They play a low-level game of securing a high GPA instead of a higher-level game of learning useful skills that prepare them for reality.

That's four years of one's life treated like a homework assignment instead of a deliberate decision of what's best for oneself.

This applies to everything you do. What about your your friendships? Are you socializing with people who aren't great to be around? Why? There are seven billion other people to spend time with.

These are the systems and decisions you must repeatedly reassess over time.

This brings us to our next mental model category: how to make decisions. (Don't worry, I'll return to more systems mental models shortly.)

"When you view the world as a series of outputs, you form opinions. But when you view the world as a series of systems, you form strategies."

—Channing Allen

How to make decisions

I’ve only discussed half the power of mental models: optimizing systems to get more out of them.

The other half is making better decisions.

Good decision-making is the discipline of silencing your instincts and switching to mental models—assuming there's enough data to act on. Leave the "gut decisions" for playing sports, and, for the most part, avoid them when playing life.

Every decision you make is either a decision about prioritization or allocation:

• Prioritizing — Which path is the best to take?
• Allocating — How much attention, time, or capital should be spent on this?
  

Here’s an example of a mental model to prioritize which project to work on:

Regret Minimization — To maximize your long-term happiness, prioritize projects you’d most regret not having pursued by the time you’re old and looking back at your life.

Hopefully you're seeing the pattern now: everything in life is a system or a decision, and mental models are tiny rules of thumbs for strategically navigating both—so that you see greater success, happiness, efficiency, or whatever it is you want. Before you YOLO an important life decision, pause, run through the list of mental models I'll provide shortly, and see if any lend clarity.

Hear Jeff Bezos explain how Regret Minimization works:

The Regret Minimization mental model leverages the lifehack that encompasses all others: be good to your future self. Our brains aren't wired to prioritize our future selves, so we need mental models to keep us disciplined.

Bezos used Regret Minimization to break out of his Amazon flow and prioritize his own space exploration company. Like SpaceX, he then used First Principles to re-examine space flight from the ground up. His space company, Blue Origin, competes with SpaceX for NASA contracts.

Pareto principle

Here’s a second decision-making mental model, which helps you allocate resources:

Pareto Principle — 80% of your output will come from the top 20% of your inputs. To maximize ROI, preferentially invest in the 20%.

For example, 80% of the value you get from socializing comes from the top 20% of your friends.

So, preferentially strengthen relationships with those friends and drop many of the rest. Be cognizant of nourishing the friendships that matter.

Another example: 80% of your procrastination comes from 20% of your indulgences. So, place those 2-4 top indulgences out of arm’s reach, and you’ll see an outsized gain in weekly output. You don’t have to completely isolate yourself from distractions. That would be inefficient and impractical. Just do the 80/20.

Putting mental models to use

Enough theory. Let's apply these models to everyday life.

The models below are recommended because they’re frequently needed, easy to apply, and reliably useful at achieving better outcomes.

Optimizing systems

As a reminder, here are examples of systems:

• A process, such as economic growth or maintaining a romantic relationship.
• A business, such as Microsoft or a sports team.
• A machine, such as a toothbrush or a rocket.
• A state of being, such as your health or happiness.
  

And here’s what to consider when encountering important systems in life:

1. One Level Higher

First, when dealing with a system, start by identifying the highest-leverage level to optimize at: Ask whether you’re optimizing the machine or a cog within it.

2. Theory of Constraints

Once One Level Higher has shown you the best system to optimize, optimize it by following the Theory of Constraints: At any time, it's just one of a system’s inputs that is constraining the other inputs from producing a greater total output. Therefore, to continuously increase a system’s output, iteratively identify and address the current biggest constraint.

For example, if you’re trying to pursue a hobby but you can’t get yourself to start, first identify the underlying inputs:

• Time
• Motivation
• Knowledge of how to move forward
  

Ask yourself: By doubling which of these inputs could I finally get myself to pursue the hobby? Increase that input first. Then, if you find yourself stuck again after starting, ask the question once again. Perhaps next time it'll be your time or motivation that's the new constraint.

The Theory of Constraints is especially important in business. Maybe you're not getting more customers because one of your inputs is constraining the others:

• Lead flow
• Sales skill
• Product quality
• Pricing

Find your bottleneck, increase its capacity, and continuously repeat this process until you get where you want. At any given time, one thing will be holding you back the most. Your job is to remember to pause and look for it.

Eventually, you'll hit the maximum potential for your current implementation. That's when you either revisit One Level Higher to break out of your bubble and move onto better things or switch to First Principles to start from scratch.

3. First Principles

If making improvements using the Theory of Constraints doesn’t help a system achieve your efficiency target, discard the system's current approach and re-examine the system from the ground up. Take nothing but the proven, underlying principles as given. Work up from there to create something better.

Systems recap

Using the above three models, we can navigate systems more efficiently:

• Use One Level Higher to identify the right level to be optimizing.
• Use the Theory of Constraints to optimize the system.
• When that gets you as far as you can go, use First Principles to break out of your rut and design a better system from the ground up.

Making decisions

We can follow a similar chain of mental models for decision-making.

1. Long-term: Regret Minimization

Make long-term life decisions using Regret Minimization: choose whichever option you’ll most regret not having pursued when looking back at the end of your life. This is how you optimize for long-term fulfillment.

2. Medium-term: Pareto’s Principle

Make medium-term decisions using Pareto's Principle: to maximize ROI, preferentially invest in the 20% of inputs that produce the most output.

This is how you could optimize each year or decade of your life—who to spend time with, which skills to hone, and which businesses to build.

3. Short-term: ICE

Make short-term decisions using the ICE model: When facing many options needing prioritization, score each on three variables using a scale of 1-10:  

1. How much positive Impact the option would have if it succeeded.
2. The Confidence you have that this option will succeed if you attempt it.
3. How Easy (low resource, low time) it would be to pursue this option.
   

Add the 1-10 scores together then divide by three to get your average. Repeat this exercise for each option you're considering then rank all the options by their ICE scores.

Options at the top of the list will have the highest expected value and could be given priority over the others.

This is how you plan your life on the timescale of weeks or months. It's how my businesses decide which projects to pursue.

4. Immediate: Eisenhower Matrix

Finally, The Eisenhower Matrix helps you make immediate decisions: Make a 2x2 grid with its axes labeled "Important" and "Urgent." Categorize your daily tasks into the four quadrants and prioritize them in this order: important and urgent, important but non-urgent, unimportant but urgent, and unimportant and non-urgent.

Refer to this image for context.

What you're supposed to do now

Mental models are critical for living wisely. Yet, somehow they're not even a blip on our educational radar.

Here's what I recommend: Schedule a recurring event in your calendar. Once per month, block out 20 minutes to step back from your life and run all your systems and decisions through the mental models listed above.

Here's a tip: Apply these models to your life as if you’re improving somebody else’s life. Research shows that when you act like you’re giving a friend advice, you sidestep your flow paralysis. Meaning, talk to yourself in the third person: “Julian, you are doing X. Why aren’t you doing Y instead? What would a mental model suggest is the best path forward?”

That’s all it takes to get started: every month, run your life through mental models as if you’re assessing somebody else’s life.

This post is a 2,500 word PSA advising you to be more thoughtful about your life because you only have one and your future self is you.

"Your entire life runs on the software—the models—in your head. Why wouldn’t you obsess over optimizing it?" —Tim Urban