Mental Models - How To Think Like Successful People

1. In order to comprehend some of the essential underlying principles of the world, society, and nature, smart and successful people tend to use particular sets of "life and business models,“ like a tool box, which help them to guide and focus their thinking. Academics have coined them "mental models,“ defined as a collection of someone's thought process about how something works in the real world. As such mental models assist in seeing a problem from different perspectives. All of us can do the same. By studying the biggest ideas and principles (models) from different disciplines such as physics, sociology, philosophy, management, we can create our own network (or latticework) of models. We can use some of them in one situation and others in differing situations; resulting in better decisions. Tech Executive, Marketing Expert, Leadership & Executive Coach, LinkedIn Influencer, Author, Speaker © Andreas von der Heydt – How Smart And Successful People Think And Act

2. Vice Chairman of iconic Berkshire Hathaway and currently one of the best multi-disciplinary thinkers in the world. © Andreas von der Heydt – How Smart And Successful People Think And Act

3. Warren Buffett, aka the "Sage of Omaha”, is a master in time management, focus setting, and priority management. It is said that one day Buffett asked his pilot to draft a list with the 25 most important things he wanted to do in his life. In a next step Buffett asked him to circle the 5 most crucial ones. Buffett challenged his pilot to solely focus on those 5 to avoid being distracted. Consequently, only when you figure out your priorities and follow through with dedicated and concrete action plans you set your own agenda and will succeed. © Andreas von der Heydt – How Smart And Successful People Think And Act

4. Dwight Eisenhower was the 34th President of the United States and was highly productive over decades of his life. His most famous productivity strategy is known as the Eisenhower Matrix, a simple decision-making tool that you can use by separating your actions based on four possibilities: 1. Urgent and important (tasks you will do immediately). 2. Important, but not urgent (tasks you will schedule to do later). 3. Urgent, but not important (tasks you will delegate to someone else). 4. Neither urgent nor important (tasks that you will eliminate). © Andreas von der Heydt – How Smart And Successful People Think And Act

5. SMART is a mnemonic acronym, giving criteria to guide in the setting of objectives, for example in project management, employee- performance management and personal development. Ideally speaking, each corporate, department, and section objective should be: SPECIFIC – target a specific area for improvement; MEASURABLE – quantify or at least suggest an indicator of progress; AGREED UPON – specify who will do it; REALISTIC – state what results can realistically be achieved, given available resources; TIME-RELATED – specify when the result(s) can be achieved. © Andreas von der Heydt – How Smart And Successful People Think And Act

6. One of my favorite ones. KISS is an acronym for "Keep it simple, stupid" as a design principle noted by the U.S. Navy. The KISS principle states that most systems work best if they are kept simple rather than made complicated; therefore simplicity should be a key goal in design and unnecessary complexity should be avoided. © Andreas von der Heydt – How Smart And Successful People Think And Act

7. Versus Critical Thinking (which is primarily concerned with judging the true value of statements), Lateral thinking - the term was coined by the physician and psychologist Edward de Bono - is about solving problems through an indirect and creative approach, using reasoning that is not immediately obvious and involving ideas that may not be obtainable by using only traditional step-by-step logic. Techniques are e.g. Random Entry Idea, Provocation Idea, Disapproving or de Bono´s Six Thinking Hats Approach (Parallel Thinking). © Andreas von der Heydt – How Smart And Successful People Think And Act

8. We often tend to address topics in a superficial manner by asking questions which rather test and reward knowledge (mostly using closed questions) than stimulating inquisitiveness (applying e.g. open questions). To flip that I suggest to apply the model of "Wonder Questions, " a set of powerful questions: The Why? and Why Not? questions; The What If? and What If Not? questions; The What Else? and the How? questions. © Andreas von der Heydt – How Smart And Successful People Think And Act

9. To find out more about these “Wonder Questions” you can check my previous Slideshare 6 SUCCESS QUESTIONS YOU MUST ASK © Andreas von der Heydt – How Smart And Successful People Think And Act

10. A network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When a network effect is present, the value of a product or service is dependent on the number of others using it. © Andreas von der Heydt – How Smart And Successful People Think And Act

11. One should always start with the customers´ wants and needs and work backwards. This is quite different to what most organizations do in reality (although many would not admit it) when they develop ideas, products, and services which they like... and not necessarily their customers. To sum it up: What is best for your customers is ultimately also best for your company. © Andreas von der Heydt – How Smart And Successful People Think And Act

12. To evolve and get better we need to learn. Learning (also) comes from failing. Welcome failure as an essential part of learning and improvement to establish "Lifelong Learning," i.e. an ongoing, voluntary, and self- motivated pursuit of knowledge for either personal or professional reasons. © Andreas von der Heydt – How Smart And Successful People Think And Act

13. Whatever a person is doing, she should stay human, approachable, and show respect towards others. One should choose being people- focused over task-focused, even and especially, when push comes to shove. Believing in the good and staying open- minded. Being curious without being naive and willing to confront one´s own weaknesses to learn and grow. Giving and supporting others without expecting anything in return. © Andreas von der Heydt – How Smart And Successful People Think And Act

14. A phenomenon whereby higher expectations lead to an increase in performance. The reverse is the golem effect, in which low expectations lead to a decrease in performance. By the Pygmalion effect, people internalize their positive labels, and those with positive labels succeed accordingly. The idea behind the Pygmalion effect is that increasing the leader's expectation of the follower's performance will result in better follower performance. © Andreas von der Heydt – How Smart And Successful People Think And Act

15. The Peter principle is a concept in management theory formulated by Laurence J. Peter. It states that the selection of a candidate for a position is based on the candidate's performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and "managers rise to the level of their incompetence." © Andreas von der Heydt – How Smart And Successful People Think And Act

16. A decision tree is a decision support tool that uses a tree-like graph or model of decisions and their possible consequences, including chance event outcomes, resource costs, and utility. It is one way to display an algorithm. © Andreas von der Heydt – How Smart And Successful People Think And Act

17. The spacing effect is the phenomenon whereby learning is greater when studying is spread out over time, as opposed to studying the same amount of content in a single session. That is, it is better to use spaced presentation rather than massed presentation. Practically, this effect suggests that "cramming" (intense, last-minute studying) the night before an exam is not likely to be as effective as studying at intervals in a longer time frame. © Andreas von der Heydt – How Smart And Successful People Think And Act

18. The butterfly effect is the concept that small causes can have large effects. Initially, it was used with weather prediction but later the term became a metaphor used in and out of science. In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state. © Andreas von der Heydt – How Smart And Successful People Think And Act

19. Also called Paradoxical Thinking. It involves creating a paradox or contradiction by conceiving of two opposing ideas as being currently true. Examples are "Winning by losing“ or "Disagreeing and committing“ or "Setting realistic yet challenging goals.“ The contradiction and its meanings will generate new insights and ideas. © Andreas von der Heydt – How Smart And Successful People Think And Act

20. To generate and evaluate new ideas Walt Disney would have shifted his perspective three times by playing three separate and distinct roles: 1. the dreamer (generating as many fantasies as possible), 2. the realist (working the fantasies into practical ideas) 3. the critic (poking holes into the idea). © Andreas von der Heydt – How Smart And Successful People Think And Act

21. Whenever you introduce something new (e.g. a new product, service offer, process, KPI, etc.) take out two existing, similar ones. It´s like following a health diet and working out at the same time. Careful not becoming too lean at a certain point however. You need sufficient energy to outrun your competitors. © Andreas von der Heydt – How Smart And Successful People Think And Act

22. In negotiation theory, BATNA is the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached. A party should generally not accept a worse resolution than its BATNA. Care should be taken, however, to ensure that deals are accurately valued, taking into account all considerations. © Andreas von der Heydt – How Smart And Successful People Think And Act

23. This is a game which is designed in a way that all participants can profit from it in one way or the other. In conflict resolution, a win–win strategy is a collaborative strategy and conflict resolution process that aims to accommodate all participants. Mathematical game theory also refers to win–win games as non-zero-sum games (although they may include situations where both players win or lose, as well). © Andreas von der Heydt – How Smart And Successful People Think And Act

24. For a reversible decision (aka two-way-door decision), if it were not good you can change it. However, a irreversible decision (aka one-way-door decision) is very expensive, difficult or even impossible to be changed or reversed. © Andreas von der Heydt – How Smart And Successful People Think And Act

25. By using the average human brain size and extrapolating from the results of primates, British anthropologist Robin Dunbar proposed that humans can comfortably maintain only 150 stable relationships. Dunbar explained it informally as "the number of people you would not feel embarrassed about joining uninvited for a drink if you happened to bump into them in a bar." © Andreas von der Heydt – How Smart And Successful People Think And Act

26. A minimum viable product has just those core features sufficient to deploy the product, and no more. This strategy targets avoiding building products that customers do not want and seeks to maximize information about the customer per dollar spent. © Andreas von der Heydt – How Smart And Successful People Think And Act

27. The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes. It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients." Mathematically, the 80/20 rule is roughly followed by a power law distribution for a particular set of parameters. © Andreas von der Heydt – How Smart And Successful People Think And Act

28. Economies of scale are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. © Andreas von der Heydt – How Smart And Successful People Think And Act

29. The opportunity cost, also known as alternative cost, is the value (not a benefit) of the choice of a best alternative cost while making a decision. A choice needs to be made between several mutually exclusive alternatives. Assuming the best choice is made, it is the "cost" incurred by not enjoying the benefit that would have been had by taking the second best available choice. © Andreas von der Heydt – How Smart And Successful People Think And Act

30. A sunk cost is a cost that has already been incurred and cannot be recovered. Sunk costs do, in fact, influence actors' decisions because humans are prone to loss aversion and framing effects. In light of such cognitive quirks, it is unsurprising that people frequently fail to behave in ways that economists deem "rational". © Andreas von der Heydt – How Smart And Successful People Think And Act

31. Loss aversion refers to people's tendency to prefer avoiding losses to acquiring equivalent gains: it's better to not lose $5 than to find $5. Some studies have suggested that losses are twice as powerful, psychologically, as gains. Loss aversion was first demonstrated by Amos Tversky and Daniel Kahneman. © Andreas von der Heydt – How Smart And Successful People Think And Act

32. A false positive error is a result that indicates a given condition has been fulfilled, when it has not. In the case of "crying wolf" – the condition tested for was "is there a wolf near the herd?"; the result was that there had not been a wolf near the herd. " A false negative error is where a test result indicates that a condition failed, while it was successful. A common example is a guilty prisoner freed from jail. © Andreas von der Heydt – How Smart And Successful People Think And Act

33. The boiling frog story is generally offered as a metaphor cautioning people to be aware of even gradual change lest they suffer eventual undesirable consequences. It is also used in business to reinforce that change needs to be gradual to be accepted. © Andreas von der Heydt – How Smart And Successful People Think And Act

34. By using this argumentation approach, a party asserts that a relatively small first step leads to a chain of related events culminating in some significant (usually negative) effect, much like an object given a small push over the edge of a slope sliding all the way to the bottom. Because no proof is presented to show that such extreme hypotheticals will in fact occur, this fallacy has the form of an appeal to emotion fallacy by leveraging fear. © Andreas von der Heydt – How Smart And Successful People Think And Act

35. You might have heard the phrase "Mind over Matter", meaning that there is a strong connection between mind and body. Your every thought produces a biochemical reaction in the brain. Essentially, when you think happy, inspiring, or positive thoughts, your brain manufactures chemicals that make you feel joyful, inspired, and uplifted. © Andreas von der Heydt – How Smart And Successful People Think And Act

36. A cognitive bias refers to the systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion. It is helpful to know some of the most common ones like the Bandwagon Effect, the Confirmation Bias, the False Consensus Effect or the Hindsight Bias. A great list of cognitive biases you can find here. © Andreas von der Heydt – How Smart And Successful People Think And Act

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43. 1. Charlie Munger via Farnam Street Blog 2. Warren Buffet via Forbes 3. Dwight D. Eisenhower via Wikimedia Images 4. Eisenhower Box via James Clear 5. Edward de Bono via News.com.au 6. Robert Rosenthal via UC Riverside 7. Laurence J. Peter via Lamentees Marivillosa 8. Lorenz Attractor via Gakushuu.org 9. Edward Lorenz Portrait via Subhankar Biswas 10. Robert Dunbar via Wikimedia Images 11. Vilfredo Pareto via Biografias y Vidas 12. Economies of Scale Graph via Course-notes.org 13. Amon Tversky & Daniel Kahneman via Danielgogek.com 14. Abraham Maslow via Sofia University 15. Human Mind Jigsaw via Freepik © Andreas von der Heydt – How Smart And Successful People Think And Act