The Tools of Successful Executives That Nobody Talks About in the Corporate World
Today, I'll be addressing the second question from last week:
"How can I eliminate Blind Spots and understand the reality around me to make better decisions that save time, energy, and money in my work?"
Additionally, I will provide a practical example of how to use these powerful tools to make one of the most crucial decisions in our career: deciding whether to stay in your current position or change your area, country, or company
Before diving into the answer, here's a brief summary of last week’s Newsletter for our new subscribers.
Summary
Last week, we explored how improving the quality of decisions made at the outset is crucial for saving time and energy at work. I shared my personal experience, explaining how transitioning from a Problem Solver mindset to a Decision Maker mindset taught me that eliminating Blind Spots allows for a better understanding of the surrounding reality, thus avoiding mistakes and issues.
If you want to read the full Newsletter, you can find the English version at this link (it’s a great opportunity to practice a language every successful executive must master with confidence and fluency to excel in their corporate work):
Now, let’s continue with this week's Newsletter.
Let’s look at the truly powerful tools used by successful executives and entrepreneurs like Charlie Munger, Warren Buffett, Bill Gates, Ray Dalio, and Naval Ravikant, which help eliminate these Blind Spots, see reality clearly, and make optimal decisions.
These tools are Mental Models.
Have you heard of them? Few people discuss them, especially in the corporate world.
What are Mental Models?
Mental Models are mental frameworks that help us understand and interpret the complexity of the reality around us by analyzing it from different perspectives.
Photo credit: Indiana University
Using Mental Models is like putting on different lenses to view the same situation from various angles, resulting in a clearer and more comprehensive view.
These models allow us to make more informed and thoughtful decisions and are based on principles from various disciplines such as biology (Natural Selection, Red Queen Effect), physics (Inertia, Relativity), economics (Pareto Principle, Compound Interest), and psychology (Incentives, Confirmation Bias), among others.
Here are some of the most well-known models and among my favorites:
Pareto Principle: Approximately 80% of results typically come from 20% of efforts or resources.
Examples:
20% of clients usually contribute to 80% of revenue. Focusing on this 20% can optimize sales strategies and increase profits.
20% of your daily activities contribute to 80% of your work performance. Identify and focus your efforts on that 20% to maximize your work effectiveness.
Opportunity Cost: Represents the value of the next best alternative use of the resources employed. Every decision involves a trade-off, and opportunity cost is what you give up by choosing a specific option.
Example: If you choose to spend extra time at work to complete a project, the opportunity cost could be the time you could have spent with your family or on your hobbies, sports, etc.
"Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it." — Albert Einstein
Compound Interest: Refers to the phenomenon where efforts and results accumulate over time, generating additional benefits. This model highlights the importance of time, consistency, and reinvestment for exponential growth. It typically applies to financial investments but is a principle that applies to all areas of our lives.
Example: Regularly investing time in going to the gym can significantly boost your energy and productivity at work in the long term, creating a cumulative positive effect on your health and job performance. Often, results aren’t immediately visible (here, the Inertia model comes into play). This delay between sacrifices and expected results leads many to abandon the gym, returning to the starting point, tired and overweight.
In the notes, I will recommend some books you can read to delve deeper into Mental Models and identify your favorites.
Photo credit: takasuu from Getty Images
Practical Example of Using Mental Models for an Important Career Decision
Consider one of the most important decisions you have probably made in the past or might need to make in the near future:
Deciding whether to stay in your current position or change.
The change could involve a new area within your company, an international assignment, moving to another company, or leaving the corporate world altogether.
To analyze the complex reality surrounding you, both at work and in your personal life, and to view it from different perspectives to eliminate potential blind spots, you can use the following mental models. These models will help you assess the opportunity, avoid blind spots, and make accurate decisions, minimizing future regrets:
Inversion Thinking: Instead of asking why you should change jobs, ask why you shouldn’t. For example, if you’re considering changing work areas, reflect on why your current position is advantageous: it might offer stability, growth opportunities, or a positive work environment. This exercise allows you to more clearly evaluate the benefits of your current role compared to the potential risks of change.
Regret Minimization Framework: This model, popularized by Jeff Bezos, involves making decisions based on how you will feel about them in the future.
Example: When deciding whether to change jobs, ask yourself: "Will I regret not seizing this opportunity in 10 years?" If the answer is yes, it could be a sign that change is the right choice.Cost-Benefit Analysis: Carefully evaluate the costs and benefits of changing jobs:
Costs: Time to rebuild reputation in the new job, distance from home, stress of transition, risk of not adapting
Benefits: Salary increase, professional growth, personal satisfaction
SWOT Analysis: Assess the Strengths, Weaknesses, Opportunities, and Threats related to changing jobs. This helps you see a complete picture of the situation.
Red Queen Effect: Named after the Red Queen in Lewis Carroll’s "Through the Looking-Glass," who says to Alice, “Here, you see, you have to run as fast as you can just to stay in the same place.” In biology, this principle refers to the need for species to continuously evolve to maintain their competitive advantage over other evolving species. In our example:
Staying in the current position: It might seem safe, but ask if you’re still growing and improving your skills. If your current role doesn’t offer development opportunities, you might fall behind compared to colleagues who continue to evolve
Changing area/country/job: A new role might offer new challenges, learning opportunities, and professional growth, keeping you competitive and continuously improving your skills. Assess if your current position allows you to grow and improve constantly. If you feel stagnant, changing jobs might be necessary to continue evolving and maintain your competitiveness in the job market.
Incentive Model: When deciding whether to change jobs or stay in your current position, evaluate the incentives associated with each option. Consider what motivates you most and what rewards are offered in each situation.
Example:Staying in the current position: Incentives might include job security, established relationships with colleagues, good understanding of the work environment, and current benefits.
• Changing jobs: Incentives might be a salary increase, new professional growth opportunities, a more stimulating work environment, or better work-life balance.Forced No Rule: Proposed by Naval Ravikant, this rule suggests that if you can’t decide despite extensive analysis, the answer is "No." According to Ravikant, decisions that significantly impact our lives require certainty. If you find yourself making endless pros and cons tables, the best choice might be to say "No." This helps avoid decisions you might regret and keeps you focused on long-term goals.
You can use many other mental models (Circle of Competence, Inertia, Relativity, Compound Interest, etc.) to thoughtfully evaluate your decision to change or stay in your current job.
And let’s not forget your gut feeling or “sentimental model” 😉: it’s not as rational as mental models, but it should be considered alongside Mental Models when making important career and life decisions.
I know what you’re thinking: "Okay, Silvia, this is all interesting, but if I use Mental Models, will my decision be perfect?"
Great question.
No mental model is perfect.
The goal of a mental model is to help us remove blind spots, view the situation from different angles, and guide us in making the best possible decision with the information available at the moment, but it will never guarantee a perfect decision 100% of the time.
Applying Mental Models and reducing Blind Spots is not an immediate process, but they are essential for becoming a more effective and aware executive. Investing in tools and practices that help us see beyond our blind spots can transform our way of working and significantly improve our performance.
They have been incredibly helpful in my corporate career, when I had to decide whether to relocate for work to London, The Hague, and Santiago, and more recently when I decided to leave the corporate world to focus on my various personal projects.
I’m confident that Mental Models will be helpful for your career and life as well.
Happy Decision Making with Mental Models!
Silvia
1. Bibliography for Deepening Mental Models: • The Great Mental Models Volume 1: General Thinking Concepts
• The Great Mental Models Volume 2: Physics, Chemistry and Biology
• The Great Mental Models Volume 3: Systems and Mathematics
• Mental Models: 30 Thinking Tools that Separate the Average From the Exceptional
If you need to 'change the lenses' through which you view your work reality and want to make decisions with clarity and confidence, do not hesitate to contact me by replying to this email. Alternatively, you can book a free 30-minute session to analyze together what obstacle is blocking your career and define an action plan to achieve your professional goals."