these foundational business concepts mental models, and together, they create a solid framework you can rely on to make good decisions. Mental models are concepts that represent your understanding of “how things work.” Think of driving a car: what do you expect when you press down on the right-side pedal? If the car slows down, you’ll be surprised — that pedal is supposed to be the accelerator. That’s a mental model — an idea about how something works in the real world.

mental model is simply a representation of how something works.

It’s not just knowing the mental models that is important. First you must learn them, but then you must use them. Each decision presents an opportunity to comb through your repertoire and try one out, so you can also learn how to use them. This will slow you down at first, and you won’t always choose the right models, but you will get better and more efficient at using mental models as time progresses.

What are the most efficient ways to build new mental models? Read a lot — just read. [2] Reading science, math, and philosophy one hour per day will likely put you at the upper echelon of human success within seven years.

We also tend to undervalue the elementary ideas and overvalue the complicated ones. Most of us get jobs based on some form of specialized knowledge, so this makes sense. We don’t think we have much value if we know the things everyone else does, so we focus our effort on developing unique expertise to set ourselves apart. The problem is then that we reject the simple to make sure what we offer can’t be contributed by someone else. But simple ideas are of great value because they can help us prevent complex problems.

In identifying the Great Mental Models we have looked for elementary principles, the ideas from multiple disciplines that form a time-tested foundation. It may seem counterintuitive, to work on developing knowledge that is available to everyone, but the universe works in the same way no matter where you are in it. What you need is to understand the principles, so that when the details change you are still able to identify what is really going on. This is part of what makes the Great Mental Models so valuable — understanding the principles, you can easily change tactics to apply the ones you need.

The quality of your thinking depends on the models that are in your head.

This difference is key. Thinking in probabilities — this business has a 60 percent chance of success — rather than deterministically — if I do A and B, then C will definitely happen — doesn’t just guard against oversimplification; it further protects against the brain’s inherent laziness.

«I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person’s brain because it understands the most fundamental models: ones that will do most work per unit. If you get into the mental habit of relating what you’re reading to the basic structure of the underlying ideas being demonstrated, you gradually accumulate some wisdom.»
Charlie Munger11

I think it’s undeniably true that the human brain works in models. The trick is to have your brain work better than the other person’s brain because it understands the most fundamental models — the ones that do the most work. — CHARLES T. MUNGER,

It's 90% mental. The other half is physical

The sciences do not try to explain, they hardly even try to interpret, they mainly make models. By a model is meant a mathematical construct which, with the addition of certain verbal interpretations, describes observed phenomena. The justification of such a mathematical construct is solely and precisely that it is expected to work - that is correctly to describe phenomena from a reasonably wide area. Furthermore, it must satisfy certain esthetic criteria - that is, in relation to how much it describes, it must be rather simple.

Charles Munger, right-hand adviser to Warren Buffett, the richest man on the planet, is known for his unparalleled clear thinking and near-failure-proof track record. How did he refine his thinking to help build a $3 trillion business in Berkshire Hathaway? The answer is “mental models,” or analytical rules-of-thumb4 pulled from disciplines outside of investing, ranging from physics to evolutionary biology. Eighty to 90 models have helped Charles Munger develop, in Warren Buffett’s words, “the best 30-second mind in the world. He goes from A to Z in one move. He sees the essence of everything before you even finish the sentence.

Everything is mental,

That’s a good thing to keep in mind — use your mind to visualize how things might be, as you go along. That can make the plethora of details and setbacks just a part of the plan.