How to be a Clearer Thinker - Model Thinking and Systems Thinking.  

用系统思维理解世界，用模型思维解决问题.

Hey, it’s Dr. Liu here with Better LIFE Research TIPS. We live in a complex world that is sometimes hard to understand. But we often need to make clear decisions in our life. In this short video, I will try to explore how to become a clearer thinker, and make better decisions. Why we should solve problems using model thinking, and understand the world using systems thinking, and how?

First of all, we need model thinking for problem solving. Models are how we simplify the reality. A model is simply a representation of how something works. Models help us to better organize information and be a clearer thinker. Evidence shows that people who think with models are better problem solvers than those who don't. And people who think with lots of models outperform those who use only one model. There are three key principles when using model thinking to solve problem.

The first principle is, Reduction. We use models to simplify the complex into understandable chunks, because it is hard to keep all the details in our brains. We reduce most details and only keep the essentials. We focus on what works under the current situation, and avoid wasting time to look for complex solutions. A very famous mental model for problem-solving is called “Occam’s razor”. It states that the simplest solution is correct. It works best as a mental model for making initial and rapid decisions before adequate information can be used. For research work, the principle of “Occam’s razor” can be summarized as: ‘when you have two competing theories that make exactly the same predictions, the simpler one is better.’ The simpler a hypothesis is, the more easily it can be proved or falsified. Failing to observe Occam’s razor is often a sign of bad science and an attempt to cover poor explanations.

Another related mental model is called “First-principles thinking”. The idea is to break down complicated problems into basic elements and separate these elements from any assumptions or conventions. This mental model was used by all great thinkers including ancient philosopher Aristotle and current technology entrepreneur Elon Musk to unleash all creative possibilities. It is a great way to improve our thinking and unlock our creative potentials. Without the “First-principles thinking”, people may often miss opportunities due to poor assumptions or conventions, or inadequate reasoning by analogy. If we focus on the first principles of something, we can build our knowledge around them and we will have more chances to produce something new.

The second principle of model thinking is, stay within the Circle of Competence. All models have limitations, and our knowledge have blind spots. Understanding our Circle of Competence helps us avoid problems, make decisions when there is limited information, and identify opportunities for improvement. The concept of the Circle of Competence has been used over the years by Warren Buffett as a way to focus investments only in areas he knew best. He said, “I’m no genius. I’m only smart in spots—but I stay around those spots.” The idea is, if we want to improve our chances of success in life, we should define our Circle of Competence, and focus on making efforts inside this circle. We may work to expand that circle over time, but we should never fool ourselves about where it stands now, and never be afraid to say “I don’t know.”

The third principle of model thinking is, using diverse models when possible. Models simplify reality by using artificial analogs. They are reductions of what they represent. As a result, any one model is insufficient to capture the complexity of reality. For each single problem, If we only look at it one way, we often got some blind spots. If we use only one model to think and analysis, we often only get a narrow and limited result. For the same problem, specialists in different disciplines may often see something different. By putting different disciplines together in our head, we can work on a problem in a multi-dimensional way. By applying ensembles of diverse models, we can reach deeper understanding of the reality, reduce uncertainties, and reveal hidden problems. The idea is, the more different models we have—the bigger our toolbox. Variety of models can help to improve our ability to make better decisions.

Models can help us to solve problems, but all models have limitations and naturally they will make mistakes sometimes. There is a saying, all models are wrong, but some are useful. Models always needs to be continuously checked in reality and be continuously improved. In order to understand the world better, and make better decisions, in addition to model thinking, we need systems thinking. By using systems thinking, we summarized three key principles for good decision making. 

The first principle is, think big and long term. The world is a complex system. Each problem we are trying to solve usually is a system including multiple parts, and also a part of a larger system. Systems thinking not only focuses on the way how a system's different parts interrelate, but also how systems work over time, and within the context of larger systems. Think big and long term allows us to view the mistakes in our decision making in a positive way. Part of systems thinking is probabilistic thinking. We should know that, results of our decision making could be good or bad due to complexity of reality, and limitations of our models. As long as the probability of winning is good, we should take the risk and keep trying, because we are winning in the long term. If we treat our life as a big and long term system, we will less likely be fooled by short term win and loss, and thus we will be more likely to make better decisions for ourselves. Systems thinking leads to perseverance.

The second principle for good decision making is, expand the number of options when making decisions. Systems thinking asks us to think big, allowing us to identify more options and more possibilities for our decision making. An essential component of systems thinking is the attention to feedback. Many people only focus on the immediate results of their actions, but systems thinking requires us to think farther ahead and to think holistically. It requires us to not only consider our actions and their immediate results, but also the subsequent effects of those actions. It is sometimes also called second-order thinking. By studying the relationships between parts of the systems, we may also be able to identify the leverage points in the systems, and thus make better decisions. Systems thinking leads to more creative ideas.

The last principle for good decision making is, be prepared for mistakes. Since it is impossible be 100% correct in our decision making, it is always a good idea to be prepared for our potential mistakes. Systems thinking requires us to treat uncertainties as part of the system and we can improve the stability of the system by thinking ahead. Systems thinking leads to more calm and confidence when meeting setbacks.

In summary, model thinking can help us to solve specific problems. It makes things simple, and it focuses on logic. Systems thinking can help us to make better decisions. It provides better understand of the complex reality, and it focuses more on probability. Model thinking focuses more on what we can do now. Systems thinking focuses more on what is possible in the future. Model thinking can help us to do things right. Systems thinking can help us to do the right things. Model thinking is more result oriented, and is mainly for the action. Systems thinking is more resource oriented, and is mainly for the strategic planning.

Thanks for watching, I am Dr. Liu with research tips for the underdogs. If you like this video, pleas subscribe for new videos coming every week. Model thinking can help us to think clearly. Systems thinking can help us to think wisely. Until next time, let’s keep thinking and make better decisions in our life.

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