Active Listening -Mental Model 084

How To Stop Pretending To Listen To People, And Actually Listen 

Fully concentrating, understanding, responding, and remembering what is being said.


Example: Here are some things we do when listening actively:

  • Maintain eye contact.
  • Avoid other distractions.
  • React to what they’re saying with body language, such as raised eyebrows when they share something surprising.
  • Ask questions to clarify points.
  • Use our own words to repeat what they said.  


Wisdom: “Most people do not listen with the intent to understand; they listen with the intent to reply.” ― Stephen R. Covey


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Nash Equilibrium -Mental Model 083

Navigating Selfishness In Group Dynamics 

Every person in a group makes the optimal decision for himself, based on what he thinks others will do. And nobody can do better by changing strategy: every member of the group is doing as well as they possibly can.


Example: The prisoner’s dilemma is the classic Nash Equilibrium example: Two accomplices are locked in separate cells. Each is offered three choices by police:

  1. If both confess, both will be jailed for five years.
  2. If only one confesses, he will be freed but the non-confessor will be jailed for ten years.
  3. If neither confesses, both will be tried for a minor offense and will be jailed for one year.

For each prisoner, confessing is the best option: no matter what they think the other prisoner will do. If the other doesn’t confess, confessing will set them free. And if the other does confess, then they must confess themselves to avoid ten years jail time.


Wisdom: “Selfishness is not living as one wishes to live, it is asking others to live as one wishes to live.” ― Oscar Wilde


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Zero-sum vs Non-zero-sum -Mental Model 082

The Attitude That Determines Cooperation Or Competition 

A zero-sum situation means for someone to gain something, someone else must lose something. In contrast, a non-zero-sum situation is when the aggregate gains of a group is greater than their aggregate losses.


Example: A cake is an example of a zero-sum situation. If you take a larger piece, there is less available for everyone else.


Knowledge is an example of a non-zero-sum situation. The more we understand about the universe, the better off we all are. Nobody is worse off for having a more accurate understanding of reality. A cake recipe is non-zero-sum.


Wisdom: “It is sort of a bit of a caricature of capitalism, that it’s always this zero-sum game where you have winners and losers. Silicon Valley, the technology industry at its best, creates a situation where everybody can be a winner.” — Peter Thiel


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Organisational Debt -Mental Model 081

The Debt That’s Not On Your Balance Sheet 

The short-term sacrifices of a company that will inhibit its long-term performance.


Example: Steve Blank wrote about a CEO of a startup. It had a revenue of $40M the previous year. It was expecting to hit $80M the coming year.


To keep up with the growth, they had doubled their employees from 100 to 200 in the previous year. They were looking to double it again to 400 in the coming year.


Yet, despite intending to expand their workforce, they were accumulating organisational debt. Why?  Because they did not having training programs for the influx of new employees. So they would have trouble retaining their existing recent hires who were working for intern-like salaries with no training and  little equity.


The new hires will help in the short term, but if the organisational debt is not dealt with, it will hurt the company in the long run.


After talking with Blank, the CEO realised they needed to avoid the organisational debt, and developed a plan to manage new hires, reorganise original hires and increase the remuneration of key employees, and re-examine the company culture.


Wisdom: “Just when things should be going great, organizational debt can turn a growing company into a chaotic nightmare.” — Steve Blank


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Unintended Consequences -Mental Model 080

How Luck Is Preventing Heart Attacks 

Unforeseen outcomes that are not intended by purposeful action.


Example: The sinking of ships during wartime has created many artificial coral reefs, which scientists can study and recreational divers can visit.


In medicine, unintended consequences are called ‘side effect’ or ‘off label use’. For example, the painkiller aspirin is also an anticoagulant (blood thinner) meaning it helps prevent heart attacks.


In CIA jargon, negative unintended consequences are known as ‘blowback’. For example, the funding of the Afghan Mujahideen and the destabilizing of Afghanistan contributed to the rise of the Taliban and Al Qaeda.


Wisdom: “We are free to choose our paths, but we can’t choose the consequences that come with them.” ― Sean Covey


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Reflective Listening -Mental Model 079

How To Avoid Misunderstood Conversations 

The listener repeats back what they have just heard to confirm understanding of both parties.


Example: Reflective listening involves restating the speaker’s point in your own words. If they were to say, “We have many people visiting our store, but far fewer are engaging with our brand online,” you could respond with, “So, you’ve noticed the physical store traffic is growing but online traffic is decreasing?”


Wisdom: “The most important thing in communication is hearing what isn’t said.” ― Peter Drucker


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Best Alternative to Negotiated Agreement (BATNA) -Mental Model 078

How To Feel Confident When Entering Negotiations 

The most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached.


Example: While negotiating with a salesman over a new Ducati motorbike, you know you can purchase the same bike for $30,000 at a nearby dealership (your BATNA). This means you won’t pay more than $30,000.


Wisdom: “He who has learned to disagree without being disagreeable has discovered the most valuable secret of a diplomat.” – Robert Estabrook


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Pygmalion Effect -Mental Model 077

How To Increase Your Employees Performance Without Spending $1 

Higher expectations lead to an increase in performance.


Example: Dov Eden from the University of Tel Aviv conducted a study on 105 Israeli soldiers and their 4 instructors. The instructors received a list of their trainees, with ⅓ having been marked as having a high command potential (ability as a soldier), ⅓ having a regular command potential and ⅓ a low command  potential. However, the list they were given wasn’t based on testing. It was completely random. Made up.


After 16 weeks of training with their instructors, the soldiers command potential was tested. The soldiers who had been randomly identified as having high command potential significantly outperformed their classmates.


It showed, when the instructor believed a soldier had the ability to be a great performer, their behaviour towards them changes and helps improve their performance.


Wisdom: “People become really quite remarkable when they start thinking that they can do things. When they believe in themselves they have the first secret of success.” — Norman Vincent Peale


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Generalist vs Specialist Species -Mental Model 076

Are You A Fox Or A Hedgehog? 

A generalist species is able to thrive in a wide variety of environmental conditions, while a specialist species can thrive only in a narrow range of environmental conditions.


Example: A racoon is a generalist. It can live anywhere in North and Central America, and is an omnivore eating everything from berries, to eggs, to small animals. A koala is a specialist. It only eats eucalyptus leaves.


In business, a CEO is expected to be a generalist, they must be across all the business functions. However, their executives, such as the VP of Marketing can be a marketing specialist and excel despite lacking knowledge of the company’s accounting practices.


Wisdom: “A fox knows many things, but a hedgehog one important thing.” — Archilochus


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Diffusion of Responsibility -Mental Model 075

How Apple Uses Task Ownership To Avoid The Diffusion Of Responsibility 

A person is less likely to take responsibility for action or inaction when others are present.


Example: In 1964, a women in New York, Kitty Genovese, was raped and stabbed to death near several witnesses. Yet nobody came to her aid or called the police, as they thought others would be assisting her and phoning the police.


The Diffusion Of Responsibility problem is also faced by companies. For example, every project at Apple has a Directly Responsible Individual who is held accountable for the progress and completion of a task.


A former Apple employee, Gloria Lin, commented, “When everyone knows that something is important, but no one feels like it’s their responsibility to see it all the way through. In a fast-growing company with tons of activity, important things get left on the table, not because people are irresponsible but just because they’re really busy. The benefit here is more ownership than accountability. When you feel like something is your baby, then you really, really care about how it’s doing. You will obsess over metrics and track down issues and rally people and want to do nice things for them when you achieve something great.”


Wisdom: “The price of greatness is responsibility.” ― Winston S. Churchill


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