The Great Mental Models, Volume 2: Physics, Chemistry and Biology

by Shane Parrish

As you go through this book, you will begin to see patterns and understand that both natural systems and people organize themselves in a limited number of ways. What applies in biological growth applies in economic growth. What governs chemical reactions relates to any process of change. Furthermore, lessons for an individual have relevance for teams and organizations. As you learn the models, identifying the forces at play in any situation will become easier. You’ll see things that others don’t and avoid costly mistakes.

However, straightforward tit for tat is not as effective as the strategy known as tit for tat with forgiveness. This strategy involves occasionally cooperating in the face of defection. It is easy for two opponents to get stuck in a cycle of mutual defection from which they cannot escape unless and until one decides to cooperate. If both are using tit for tat, a cycle of mutual cooperation will then commence. Life is an iterative and compounding game. In the words of Peter Kaufman, it pays to “go positive and go first.” Also, remember that people make mistakes. Assuming there is no maliciousness, it pays to forgive.

Second, seeing things go wrong for other individuals gives us a stronger sense of our own superiority because we look and feel better in comparison. We naturally position ourselves within hierarchies based on every possible quality and are highly sensitive to where we stand in relation to others. Any sign of their inferiority transpires to be a plus for us.4 Status is always relative.

The entropy of the universe only increases with time. One of the impacts of this law is that we need to expend energy to create order. Without the deployment of energy, all things move away from order.

Murray Gell-Mann, a Nobel prize winning physicist, clarifies entropy in contexts such as organizing a pile of coins or the mixing of jelly and peanut butter in their containers. Why is it that if someone knocks the table the coins will get mixed up, or that despite their best efforts your children inevitably get jelly into the peanut butter jar and vice versa? “The explanation is that there are more ways for [coins] to be mixed up than sorted. There are more ways for peanut butter and jelly to contaminate each other’s containers than to remain completely pure. To the extent that chance is operating, it is likely that a closed system that has some order will move toward disorder, which offers so many more possibilities.”

While the stories we tell are unimaginably diverse on the surface, if we go deeper we can spot distinct patterns and structures that emerge every single time. The content may vary, but the form of the stories we tell is remarkably predictable. Fairy tales are one way we have combated disorder in our history. They offer explanations for occurrences that seem to have none, giving a structure to what we find hard to comprehend. Fairy tales also set out a common understanding that everyone can buy into, trying to slow down entropy by preemptively fitting the unexplainable into a systematic order.

Inertia is a useful model to try to understand some elements of our behavior, including our thinking patterns and habits. Our natural inclination to reject the new is in part normal resistance to the effort required to change. Keeping things as they are requires almost no effort and involves little uncertainty. We need force to effect change, and force requires effort. This model offers a lens to help us understand resistance to change and why we fail ourselves when we get complacent. Inertia implies that once we stop doing something, getting started again is harder than continuing the whole time would have been. At a basic level, many brain studies have shown that the idea of multitasking is a myth. When we shift our focus from one input to another, we exert more energy and use more time to finish everything than if we would have completed one task before starting another. Inertia also helps to explain why we continue on with bad habits and why it’s hard to make systematic change. Many cities continue to rely on cars for short commutes instead of implementing an infrastructure to facilitate public transportation, walking, or cycling. We stay at jobs we hate, avoid meaningful conversations with people of different opinions, and almost never change the religion our parents imposed on us at birth. All because it is easier to stay on our current path, however stagnant and unfulfilling it may be.—

Velocity is often confused with speed, but the two concepts are very different. Speed is just movement; even if you are running in place, you have speed. Velocity has direction. You must go somewhere in order to have velocity. This model teaches us that it’s much more important to pay attention to where you are going and not how fast you are moving. No one wants to be a hamster in a wheel, focused on moving so fast that we lose track of what we’re trying to achieve. While speed ensures movement, velocity produces a result.

When we all had sticks, the variation in productivity wasn’t much. Small changes in individual performance didn’t have significant absolute impacts. It wasn’t until we developed tools that allowed us to leverage small changes in individual performance that we started to see a lot of variation in productivity. To take that further, if technology increasingly promotes variation in individual performance, then we can expect the gap between the most productive and least productive people in a society to increase over time.

And finance policy recognized the need in industry to defer profits until an adequate industrial learning process had taken place. In other words, financial policy frequently accepted low near-term returns on industrial investments in order to guild industries capable of producing high returns in the future.”15 Conversely, the Asian countries that were developing at the same time but did not follow these agricultural interventions had long periods of impressive growth, but they were unable to sustain it. With no real land reform in Indonesia, the Philippines, and Thailand, agriculture output was dampened because landlords made more money renting plots than making investments to increase yields, and families had no incentive to maximize the outputs on the land they didn’t own.

Furthermore, most of us appreciate that to only learn from others, or to only credit that which is gained from direct experience would both be functionally useless. A scenario in which you could only learn from one or the other would not produce the alloy we call knowledge. Theoretical learning cannot prepare you to understand all the nuances of your particular life, such as your partner or the dynamics of your team. And if you relied solely on your own experiences to learn, you would be condemned to repeat the mistakes of others, which is extremely ineffective.

In any system, it’s natural for parts to continuously wear and need replacing. This is true of ecosystems. Extinctions are a ubiquitous feature of life on earth, as a sort of meta natural selection. The same selection process that applies to individuals is true for species as a whole. The catch is that the same evolutionary process that ensures a species’ survival can also be its downfall. Natural selection within a stable environment tends to be a process of refinement. A species will become more and more tuned to the precise adaptations it needs to survive. This is ideal in reliable conditions, but it can mean a species lacks the resilience it needs to survive any changes. So while the best-adapted organisms may be the strongest during normal conditions, they may struggle to survive volatility. Generalist species are far more resilient than specialists. A rat or a cockroach can survive almost anywhere, a panda less so.

The Red Queen Effect is often applied to business strategy and human conflict. These two areas bookend the spectrum of the use of this model. Applied to business, it is an argument against complacency. As noted above, the originator of the hypothesis, Leigh Van Valen, observed that longevity does not protect species from extinction. No matter how long a species has survived, a failure to adapt can result in extinction. There is no plateau a species can reach when it gets to say, “Okay, the hard work is done. I can coast now, getting by on what I have.” Because all species are continually adapting, the pressure is constant. The same dynamic exists in business. Your competitors are always working to get ahead, and thus you must as well. Your customers’ needs are always changing, and you need to be able to identify and meet these. Considering the actions of your competitors and the desires of your customers are part of the core, daily functions that your business must always perform.

Thus, what exaptation is fundamentally about is flexibility. We cannot know the exact pressures we will face in the future. So what we need is a box of diverse tools that can be used and combined in almost a limitless number of ways to meet the challenges we face. Some of these pieces will never have any use, and some will be complete game changers. But no one can divine this ahead of time. Survival of a business often depends on being able to change quickly. You can’t do that if you have to start from a blank slate every time environmental pressures push you to develop and innovate.

The competitive exclusion principle, also known as Gause’s Law, states that perfect competition between two species requiring the same resources to survive in the same niche is impossible. Georgii Frantsevich Gause first identified the principle in 1934 when he found that two species of bacteria requiring the same resources could not coexist in a petri dish. One species will find its own niche by becoming increasingly specialized to require different resources from the other. This is known as resource partitioning. If it doesn’t, the second species’ slight advantages will become significant enough to wipe out the first. For instance, if there are two carnivores in the same area that hunt the same prey animals, one species will always have some meaningful advantage, like greater speed or camouflage. This will enable it to outpace its competitor, which will have to find another food source or face extinction.

What is it about tea that allowed it to be replicated all over the globe? For starters, tea has an inherent flexibility. There are multiple ways to make and consume tea, which can be modified based on cultural norms and social desires. Different degrees of oxidization of tea leaves will produce green, oolong, or black tea. Each of these can flavored with different spices or milk, or whatever else is locally available. It lends itself to different brewing techniques based on local equipment and resources. But all outputs of seeping tea leaves in boiling water are uniformly called tea. So there is also a core structure that cannot be changed. Tea only comes from the tea plant. This combination of a firm concept within a flexible package is one clear explanation of how tea managed to spread from a tiny geographical location to have acolytes in almost every country on the planet.

Hierarchies, however, clearly confer a benefit that is large enough to balance out their costs. In the absence of an imposed structure, people have a natural instinct to self-organize. In organizations that claim to have a flat structure with no leaders, people often just end up more frazzled than normal as they attempt to navigate the inevitable unspoken power structures. Even anarchist movements end up with leaders. Leadership is important. Getting rid of the title of “captain” or “boss” doesn’t change the fact that someone in the locker room or the boardroom is going to set the example for others, so it’s best to ask who we want that person to be.

The upper class also shows status through wearing clothes that are totally impractical for doing any labor, reflecting participation in expensive activities and having more than one actually needs. “Charlemagne owned 800 pairs of fine gloves at a time when gloves were difficult to produce and clean,” notes Etcoff.4 We can admit to ourselves that not a lot has changed. Status is still frequently demonstrated through fashion. Labels, fabric, the cut of a suit or a hoodie, communicate a lot. Yes, it is often nuanced. For example, even though luxury goods in some contexts are still markers of status, dressing scruffy when you don’t have to is also a form of demonstrating one’s privileged place in the hierarchy. The academic in a shirt with soup stains, the CEO in battered jeans, the billionaire in a tracksuit—these are all examples of them announcing to the world that their status is so secure they don’t need to indicate it through luxury clothing. In so many cases, what we wear “helps us negotiate our relations with the outside world and provide us with comfort and protection.”

This is a problem in democracies, as Aristotle pointed out over 2,000 years ago. For all their political attractiveness, they are essentially governed by millions of people acting in their own self-interest. And those interests tend to be driven by incentives that offer immediate rewards. Voters want to hear about policies that will have an immediate, positive impact on their lives. Most have less interest in policies that won’t have any obvious benefits for years or even generations. As Niall Fergusson writes in Civilization, “We love our grandchildren. But our great-great-grandchildren are harder to relate to.”3 Politicians have no choice but to respond to the incentives to think short-term; otherwise, they won’t gain voter support. They therefore present platforms highlighting the benefits that will miraculously occur should they win. Due to the relatively short term that people tend to hold political office, it’s difficult for any particular politician to make significant positive change in that time. They’re surrounded by rapid feedback loops that depend on them showing fast results—short election cycles, frequent opinion polls, media reports every minute of the day, and instant social media chatter. The result is a system where politicians have little incentive to think beyond the current election cycle. In a similar manner, publicly traded companies are incentivized to sacrifice long-term growth in the interest of showing profits on quarterly reports. The short tenu...

Humans don’t like cognitive dissonance—“the state of tension that occurs whenever a person holds two cognitions (ideas, attitudes, beliefs, opinions) that are psychologically inconsistent.”16 We engage in self-justifying rhetoric to reduce this dissonance. In the case of incentives for endorsements, the often subconscious thought process might go like this: “I am a good person. I supported this drug. A good person would not support a drug that is harmful. So the drug can’t be harmful because I am a good person.” We don’t see these connections laid out, and so what is produced is the opinion the drug is good without having a window into the mental gymnastics that got us there.