Nate Tilley explains mental models as frameworks that help you make decisions faster without analyzing everything. He covers second-, third-, and fourth-order consequences, using a business example where cutting advertising has ripple effects you need to see coming.
A mental model is really how do you apply a framework and how you get like a system and a shortcut using heuristics to make those decisions very quickly and without having to go through the normal rigmarole of doing all of that kind of police work and detective work. You might be like, look, I really need to cut out all the distractions and all of the noise and, and I need to make some decisions about my schedule and how I'm going to be able to actually work and get the output that I want. Right. So do doing this on my calendar, is this going to allow me to get more work and how do I be more productive? How do I get more done in day? Well, there's so many different ways that you can come and tackle that problem and make that decision. We're looking at that decision in the inverse relationship and having a look at, well, what is it that I would need to do in order to be very productive? Well, I would need to cut off all distractions, I would need to cut off all the noise, I would need to stop doing all this minutia that's not allowing me to actually do the main thing right. So when you look at it in that inverse way, it actually gets you to the outcome that you're going for a lot quicker than if you were just to think of how do I get to that outcome based on the decision that I have at hand when I'm making it? What that is called is a mental model. You can apply a model to something and you can get to that outcome with, without having to have all of the information at hand or without having to be paralyzed by the decision that you've got to make right now by needing to spend a whole day to think about it. And as you start to increase the frequency of the decisions that you make, it's really important that you have mental models that you can apply to your decision making process to make sure that you are being very effective and accurate and you're moving with speed and power when you are making so many decisions. But it doesn't only go with the volume of decisions that you have to make. It's also really important to think further. What are the downstream effects of this really important decision that I have to make? Which comes to a second mental model which is really what is like the second and third order consequences from the decision that you're making right now? When you really stop to think about what are the downstream effects, what are the second, third and fourth order consequences that will come about as a result of me making these decisions. Well, really, when you look at it, okay, I'm going to stop advertising. Well, advertising is the oxygen to the organism that is your business. Well, if I do that, then I'm not going to have this pool of new customers coming in, so I'm not going to have this revenue. And I know that with my business model that when I have clients come in, the business is job is to produce a happy customer. And then that happy customer goes and brings me another two customers. And it's a flywheel that keeps perpetuating and and building momentum over time. So if I cut the advertising costs and I don't have those customers coming in, what is going to be the negative recourse of the second and the third order consequences? Well, I have no revenue coming in. That means I'm going to have to let go of half of my team. And then if I let go of half of my team, how is that going to affect my culture? How is that going to affect my employer brand? What is the second and the third order consequences of that going to be? If I can't bring in good talent, I'll be bringing in subpar talent into my organization that will deliver subpar results. Therefore, my clients will get a bad outcome. And instead of them going out and producing two new referral clients to you, you'll be at a negative of two clients because they'll be spreading negative word of mouth around your business. And based on those third order consequences, I'm using this purely as an example to thinking about questioning things when you're making decisions and thinking about not only what is it that I'm optimizing for right now, but what are the second and third and fourth order consequences from that? That is another mental model. Hey guys, if you enjoyed this video, make sure that you click the like button and subscribe. We're dropping a video on YouTube every other day and if you've got any questions about any of the content that I covered in this video, just basically leave a comment with heysubree in the comments section. And every week we're also trying to go through all those questions and get them answered. So go ahead, click subscribe and we'll see you in the next video.
