Framework Thinking For Executives: Be More Effective With Mental Models.

There’s been a buzz lately around framework thinking and how executives can apply it to problem-solving and running their businesses. Certainly, people like Elon Musk, Warren Buffet and Charlie Munger have brought it to the spotlight, but the history of mental models goes back to the days of Aristotle.

Having an approach for breaking down a decision among the myriad we all face is critical to keeping pace with the flow of running a business. Having a trained and disciplined method for how you think about problem-solving will help you be a more effective executive, consistent in your decision-making and have a higher level of accuracy in value creation. Training yourself to think in frameworks and mental models will allow you to be considered and quick in your decision-making as you face constant challenges and opportunities, especially as a C-level executive.

The models and frameworks can be simple and powerful, or they can be more complex in nature. What has been helpful for me is that no matter how complex or the scale of the problem/challenge, breaking it down to its most basic levels and building it back up works every time. As executives, we tend to get mired in complexity and overwhelmed by the scale of a challenge, especially as more people, dollars and geographic regions come into play. I apply framework thinking not only to business but to my day-to-day life to ensure that the same 24 hours I have as everyone else is leveraged and utilized most effectively to ensure I meet my personal and professional goals.

Having worked in advertising agencies and consulting firms, I know both types of services businesses use frameworks effectively. However, consulting firms are traditionally better known for their discipline in solving complex business problems with repeatable frameworks. Many of those frameworks are published on the web for everyone to see and utilize, however, like having the secret recipe for Coca-Cola, it does not mean you can make it…. The magic is in the people behind the framework, the thinking, the inputs and the insights needed to flow the thinking in a way that has impact and meaning. I guess you could say frameworks are like analog AI, the output is only as good as the input.

Here are some frameworks and models I frequently use, whether in my mind, on a piece of paper or a whiteboard.

1.????Eisenhower Matrix – for tackling business and leadership priorities and my daily life, I find this matrix simple to understand and leverage in the day-to-day. The matrix is organized into 4 quadrants from Urgent | Important | Delegate | Don’t Do. Now, in the course of a day, something could shift from Important to Urgent or from Delegate to Don’t Do. The matrix is fluid depending on the context and situation of the usage.

o??Quadrant 1 (Urgent and Important): These tasks are critical, with immediate deadlines or consequences. They require immediate attention and should be the top priority.

o??Quadrant 2 (Important but Not Urgent): This quadrant contains tasks essential for long-term success, such as planning, strategizing, and personal development. Allocating time for these tasks helps prevent them from becoming urgent.

o??Quadrant 3 (Urgent but Not Important): These tasks appear urgent but contribute little to long-term goals. Delegating or handling them quickly can minimize time spent, allowing focus on more important tasks.

o??Quadrant 4 (Neither Urgent nor Important): This quadrant includes low-value, time-wasting activities. Minimizing or eliminating these tasks can increase overall productivity.

2.????Inversion – There are two angles to the inversion mental model: working backward from the desired outcome and thinking about the alternative of a decision or approach. The model also requires executives to think about problems or opportunities from multiple perspectives, analyzing a decision from all angles to ensure nothing is missed, or second-order thinking (see below) is properly planned for and understood.

o??Inversion In Strategy Planning – Consider launching a new product, we often think about why the product will resonate with consumers and groupthink, among other pressures, can encourage even the smartest of people to launch product duds from the start. One that comes to mind recently is the Olive Oil Starbucks drinks. I suspect that not all possible negative outcomes, including the reports of upset stomachs post-imbibe, were taken into account (or strategically ignored.)

o??Risk Management - Inversion can be applied to risk management by identifying potential risks and taking steps to mitigate or avoid them. For instance, consider what could go wrong when planning a project, such as budget overruns, delays, or quality issues. By inverting the problem and developing contingency plans, you can minimize the impact of these risks and increase the likelihood of a successful project outcome.

o??Innovation – Most executives and organizations tout that innovation is critical to their future and positive financial outcomes. But, larger organizations are often stifled by roadblocks and corporate obstacles that can slow down effective innovation. Inversion thinking can help executives identify all of the barriers to innovation within their company – resources, bureaucracy, risk aversion or lack of proper talent. By thinking about and solving the roadblocks, we know which decisions we need to make to clear the way for proper innovation and speed to market.

3.????First Principles – This mental model is getting the most air time because of the man in the spotlight, Elon Musk, talking about how he re-engineered putting people into space and his approaches with SpaceX. The concept has been around for thousands of years, and I bet many of you use parts of this model daily to break down how to scale your business and teams. At its core, first principles thinking involves breaking down complex problems or concepts into their most fundamental elements, examining them in-depth, and reconstructing the problem or concept with a fresh understanding. Here are some ways for effective executives to leverage this mental model in the day-to-day –

o??Problem-Solving - When faced with complex challenges, we can break down the problem into its fundamental components, analyze each aspect, and develop innovative solutions based on the underlying principles. Deconstructing a problem in the business down to its most basic (or getting back to fundamentals) is often not leveraged because we are either overthinking the problem or are mired in too many complexities and details.

o??Strategic Planning & Organizational Design – A question I like to ask here is, “How Does The Business Make Money?” This question often re-orients everyone in the room to strip away the second and third-order problems and attack the core of the business – income. How can we then build back up on a blank piece of paper the decision we are making and compare the delta to where we are today and where we need to be tomorrow?

o??Innovation - By fostering a culture of first principles thinking within the organization, we can encourage our teams to question assumptions, explore new ideas, and develop innovative solutions that drive growth and competitiveness. Breaking down category and buyer insights to their most basic, modeling the marketplace and finding areas for growth can be effective. We often see all those little tools and devices and think to ourselves, “ Someone made millions on that…” Scrub Daddy is a good example – a high-quality product shaped differently with a smiley face to lift our spirits.

4.????Second-Order Thinking – I believe this framework is not utilized enough. At its most basic, it is an If/Then prediction of what happens after a decision is implemented. It encourages executives to think beyond the short-term and anticipate the potential long-term, indirect, or unintended consequences of choices. If we raise interest rates in this economic environment, what happens next? Will banks fail because they are overweight on lower-interest investments? If we let that person go from our team, what happens next? Will that account go up for review? Will other people follow them out the door? Or, will we become a more effective team? I have also heard this called “war-gaming,” but the more PC moniker is second-order.

Once we have mapped all of the possible ripple effects of a decision (both positive and not-so-positive), we can weigh the trade-offs to the decision and determine if the return on the decision is still worth the choice.

The magic of framework and mental model thinking up-levels when one combines the models in their day-to-day decision-making. Combing the power of first principles and second-order thinking, for example. I would recommend that you find one or two that work for you and begin approaching your day with a deliberate approach. I think you will find that your executive presence, ability to make great decisions and span of decision-making will increase.

Here are some recommendations for further mental modeling and critical thinking learning:

1. "Thinking, Fast and Slow" by Daniel Kahneman – This book delves into the two systems of thought that govern our minds and explains how they can be harnessed for better decision-making.
2. "The Art of Thinking Clearly" by Rolf Dobelli – A compilation of 99 cognitive biases and how to overcome them, this book is a valuable resource for enhancing critical thinking.
3. "Influence: The Psychology of Persuasion" by Robert Cialdini – This book explores the six key principles of persuasion and how they can be used to improve critical thinking and decision-making.
4. "Superforecasting: The Art and Science of Prediction" by Philip Tetlock and Dan M. Gardner – Learn how to improve your critical thinking and predictive abilities from the world's top forecasters.
5. "The 5 Elements of Effective Thinking" by Edward B. Burger and Michael Starbird – This book outlines practical strategies for improving your critical thinking skills.
6. "Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger" edited by Peter D. Kaufman – This book compiles Berkshire Hathaway's vice-chairman's mental models and investing philosophies, Charles Munger.
7. "The Black Swan: The Impact of the Highly Improbable" by Nassim Nicholas Taleb explores the concept of Black Swan events and their consequences, helping readers develop critical thinking skills to understand and navigate uncertainty better.
8. "Mindware: Tools for Smart Thinking" by Richard E. Nisbett – This book offers a comprehensive guide to various mental models and critical thinking tools to help you make better decisions.
9. "How to Think Like a Mathematician: A Companion to Undergraduate Mathematics" by Kevin Houston – This book provides insights into mathematical thinking and problem-solving strategies, which can be applied to improve critical thinking in general.
10. "Factfulness: Ten Reasons We're Wrong About the World – and Why Things Are Better Than You Think" by Hans Rosling, Anna Rosling R?nnlund, and Ola Rosling – This book challenges common misconceptions and biases, promoting a fact-based and critical approach to understanding the world.