Mental Models (Part 3)

You need to start thinking about how to work backwards. “Indeed,” says Munger,”many problems can’t be solved forward.”

Let’s take a look at some examples:

Let’s say you are the CEO of a spiffy new AI company and you’re planning to scale up operations.

Conventional strategy might tell you to focus on the usual fanfare: capital investment, market research, and aggressive marketing.

But, applying inversion, your focus would shift to identifying the actions that would most likely guarantee failure: shitty risk analysis, poor cash flow management, or failing to understand customer needs.

Corporate Strategy Using Inversion

Conventional Strategy	Inversion Strategy
Market Research	Identifying Market Missteps
Aggressive Marketing	Avoiding Brand Dilution
Capital Investment	Cash Flow Management

Or, let’s say you are the CEO of a hot new space company startup (let’s call it AstroTek) and you’re planning a badass (and very ambitions) mission to Mars to collect alien microbial samples your team recently discovered and return them to Earth.

The objective is not just to reach Mars but also to safely return to Earth with valuable data. The mission, called “Red Soil,” has generated billions of dollars in investment and the whole world has their eyes on you, making the stakes exceptionally high.

Now, let’s assume you took a conventional approach.

Here, you may tell your team as AstroTek to focus on engineering the most advanced spacecraft, you may go out and hire the best rocket scientists in the world, and you may work on formulating a new, novel, super-awesome propulsion system.

Of course, nobody is denying that these things are undoubtedly important, but when we apply the inversion model, we can add an additional layer of scrutiny.

By applying inversion, you (being the genius space CEO that you are) would consider all the things that could turn the mission into a complete disaster and would work on mitigating those risks.

For example, you may want to think about how a failure in life-support systems could jeopardize the mission (let’s assume you’re a genius and were able to send the first humans to the Red Planet).

or

How not having a backup plan for returning to Earth might lead to catastrophic failure.

Here’s The “Red Soil” Mission Strategy Using Inversion

Conventional Strategy	Inversion Strategy
Advanced Propulsion	Failure Analysis of Propulsion
Top Engineering Talent	Skills Gap Analysis
Innovative Spacecraft	Spacecraft Redundancy Systems
Long-Term Sustainability	Short-Term Recovery Plans

In this example, the Inversion Strategy column doesn’t replace the conventional strategy but supplements it.

For instance, while it’s very important to develop your new super-awesome propulsion system, it’s equally important to analyze points of failure in that system and develop contingencies.

The skills gap analysis aims to understand what kind of failures or inefficiencies subpar team skills could lead to.

Redundancy systems in the spacecraft serve as a backup to primary systems to prevent mission failure in case of a malfunction.

The list goes on.

The implications of using inversion in such a high-stakes mission are significant.

Not only does it lead to better preparation, but it also serves as an emotional and psychological tool to prepare your team for any adverse events.

There is a lot on the line, don’t fuck it up 🙂

But, with a comprehensive understanding of what could go wrong, you could have your team work on building resilience into the systems, for example, significantly improving the probability of mission success.

That extra layer of risk mitigation that you’d get from applying inversion can be invaluable in complex, high-stakes projects like a mission to outer space.

Here are some practical applications of Inversion:

1. Business Strategy: Businesses can use inversion for risk analysis, product development, and even in customer acquisition. For example, instead of just focusing on how to attract more customers, think about what could drive customers away and proactively address those issues.
2. Personal Development: For us regular plebeians who are just working on ourselves, inversion can serve as a powerful tool for personal growth. Instead of focusing on what success looks like, think about the habits and mistakes that would prevent you from achieving success and actively work on avoiding them (6).
3. Personal Finance: If you’re like me (trying to make a dollar out of 15 cents), inversion can be particularly valuable to you, especially when it comes to financial planning and investment decisions. So, the next time you’re looking at some bullshit charts, instead of solely focusing on which stocks to buy, instead consider which ones to avoid. This could help you steer clear of speculative assets, companies with poor financial health, or industries with high regulatory risks, for example. You don’t have to be an expert to make cash, sometimes just avoiding these common traps alone can be enough to push you over the top. Or, at the very least, reduce your risk of significant financial losses.

For example, let’s say one of your goals is to achieve long-term financial stability. Instead of just focusing on ways to increase your income or investments, instead, consider what financial habits to avoid.

Some of these may include: not making emotional decisions, avoiding excessive debt and impulsive spending, or failing to save enough cash for emergencies.

But, by identifying these negative behaviors (a madden self-awareness level of 85 and above) and actively avoiding them, you should be able to craft a pretty solid financial strategy that’s built around minimizing risk and maximizing stability.

Here are some bullshit charts to provide some clarity:

Bullshit Chart #1: Risk Assessment

Factors to Consider	Potential Downsides
Market Volatility	Risk of High Losses
Competition	Business Survival Concerns
Startup Uncertainty	Limited Historical Data

Inverting your approach, you now see the importance of diversification to mitigate these risks.

Bullshit Chart #2: Goal Setting

Initial Goal	Inverted Goal
"I want to invest heavily in a single startup."	"I will avoid putting all of my savings into one venture."

Bullshit Chart #3: Portfolio Diversification

Initial Portfolio Strategy	Inverted Portfolio Strategy
"Heavy investment in a single startup."	Diversified portfolio across various asset classes."

At the end of the day, inversion can help you anticipate risks in the financial markets. Instead of solely focusing on potential gains, think about what could go wrong.

For example, when evaluating an investment, apply inversion by assessing potential downsides, such as market volatility, industry risks, or economic downturns.

Charting these risks can lead to a more balanced investment strategy. If you can actively focus on what to avoid, you’ll often find that it leads to better outcomes; outcomes that are tailored to hedge against risk and anticipate potential pitfalls (7).

And now, for my next trick, we will tie it all together.

Now that you are familiar with Inversion, it’s worth noting how Premeditatio malorum serves as a parallel construct.

A nearly perfect intersection with inversion.

Both approaches emphasize the value of contingency planning by focusing on negative outcomes to engender more resilient strategies.

Inversion usually operates in a more problem-solving context, and Premeditatio malorum tends to focus more on emotional and psychological preparedness.

The two can (and often should) be used together in tandem for a more holistic approach to strategizing and decision making (8).

Premeditatio Malorum vs. Inversion

Aspect	Premeditatio Malorum	Inversion
Origin	Stoic Philosophy	Decision Theory
Primary Application	Emotional Resilience	Problem-Solving
Modern Utilization	Personal Development, Risk Management	Business Strategy, Decision Making

Implications for the future?

In our modern era of constant disruption and technological growth on a scale unprecedented in human history, the relevance of Premeditatio malorum seems to only get stronger.

The world is full of danger, uncertainty, and risk; but the practice’s capacity for building emotional resilience and strategic foresight makes it invaluable in navigating uncertainties, both personal and professional.

But listen, I’m not going to sit here and blow smoke up your ass and tell you that “inversion will help you get laid or get a promotion at work” or “using inversion will help solve all your problems.”

Every mental model has its limitations, and inversion is no different.

For example, one could argue that an overemphasis on the negative could potentially inhibit risk-taking or induce undue anxiety (9).

Surely, it would take a person with a particular set of skills to navigate the troubling emotional waters of Stoic Premeditatio malorum.

Perhaps, to find equilibrium (or simply get yourself started) it may help to validate or quantify the balance point where the exercise optimizes the benefits while minimizing the downsides.

Tradeoffs, right? (see section 3 here)

At the end of the day, Premeditatio malorum can be a valuable exercise capable of building you into an emotionally resilient warrior whilst augmenting strategic planning.

Whether viewed through the lens of Stoic wisdom or modern decision theory, its applications are broad, compelling, and worthy of deeper, more rigorous exploration – and I challenge you to explore deeply.

Remember, inversion is counterintuitive.

Thinks may get a little tricky sometimes.

It is not obvious when running [smoov.bra.in2023] that the path to success could mean spending time thinking about the opposite of what you want.

This fact is usually hidden from the common mind when it’s running on default settings.

Note: If this does not make sense to you, it’s likely a runtime error… [smoov.bra.in2023] needs more CPU and RAM to process fully but the simulation params have prevented this. This is an ongoing issue that the developers expected but have been unable to correct.

And yet, thinking in opposites is a key tool of many great thinkers.

Stoic scholars visualize negative outcomes.

Effective business leaders work backwards to avoid mistakes.

The reason for this is simple: success is overrated.

Avoiding failure matters more.

This is the exact opposite of what most people are out there doing. Most people are locked in on how to achieve success. But most of the world’s most successful people are focused on the inverse.

Think about that for a moment.

Now, I’ll ask the same question I proposed at the beginning: “What do you want to avoid?”

Munger says: “It’s such an easy answer: sloth and unreliability. If you’re unreliable it doesn’t matter what your virtues are. You’re going to crater immediately. Doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability.”

When it comes to underrated ways to improve, avoiding mistakes has got to be tops on the list. It’s great to focus on success, but sometimes it’s worth taking another look and considering why people fail (in life/work/love/etc).

Winning is rare.

Failure is everywhere.

Failure is default mode.

Default mode is disaster.

To sum things up: inversion is a mental model in which you consider the opposite of what you want.

You think backwards.

It’s a rare and essential skill for leading a logical and rational life.

It often forces you to step outside your normal thought patterns (and mental gymnastics) and see problems/situations through a different lens.

So, whatever you’re going through, whatever situation or problem you’re facing, always try to consider the opposite side, the inverse. Nearly all great thinkers do this and use it to their advantage.

You should too.

Note: Inversion is a formidable mental model for strategic decision-making. It’s a tool that offers a unique perspective that places equal emphasis on avoiding failure as it does on achieving success. But, like any tool, its effectiveness is contingent upon its appropriate application and context. Proper application requires further study and skill. As you learn and improve, you can try combining inversion with other decision-making models, exploring its scalability, and examining its utility in emergent fields like artificial intelligence and behavioral economics.

9. Hanlon’s Razor

You ever feel like everyone is out to get you?

Like the whole world is against you?

I think 2Pac summed it up best in his song “Me Against the World.”

When our brains are running on default settings, we typically tend to assume that when anything goes wrong, the reason is because there is some great conspiracy against us.

You didn’t get an invite to your friend’s wedding? They must hate you now. Your spouse didn’t respond to your text in time? They must be doing something shady. A co-worker didn’t send you the data you needed before a very important meeting. They must be trying to make you look bad and move up the ranks ahead of you. Your favorite sports team always blows it in critical moments? The system must be rigged. The coffee shop is out of the generic roast that you like? They must have stopped carrying it to get you to buy something more expensive.

We’ve all been there.

But the simple fact is that these conclusions, which we can jump to quite frequently, are often untrue.

It’s reasonable to assume that maybe your wedding invite was just lost in the mail. Maybe your spouse is on the way home and can’t text and drive. Maybe your co-worker thought your meeting was on a different day. Maybe your favorite sports team just sucks. Maybe the coffee you like is just so popular they actually did run out.

This is where Hanlon’s Razor comes in.

So, what is Hanlon’s Razor exactly?

Hanlon’s Razor is a mental model that postulates: one should “never attribute to malice that which can be adequately explained by stupidity.”

While the statement may appear flippant, its implications in strategy and decision making (especially in hostile warfighting domains like your job and your love life) are profound.

Applied broadly, the principle suggests that when assessing people’s actions, you should not assume that they acted out of a desire to cause harm, as long as there is a reasonable alternative explanation.

The model reminds us that people make mistakes.

It reminds us that not everything is done with ill intent.

It demands that we ask if there is another reasonable explanation for the events that have occurred.

Questioning our assumptions (is the negative outcome actually the fault of a bad actor?) we look for options instead of missing opportunities.

The explanation most likely to be right is the one that contains the least amount of intent.

I find a slightly adapted version to be just as useful in the modern world: “Never attribute to bad intentions that which can be explained by busyness.”

or for the econ nerds:

“Never attribute to stupidity or malice that which can be explained by structural alignment of incentives.”

Historical Context and Origin

A full understanding Hanlon’s Razor begins with a basic analysis of its historical context.

Although similar ideas can be traced back to Goethe and even Shakespeare, the maxim was popularized in a modern sense by Hanlon.

Goethe’s “The Sorrows of Young Werther” hints at the concept, suggesting that misunderstanding, rather than malevolence, is the root of many problems.

Shakespeare, in “Othello,” shows how the attribution of malice can lead to tragic outcomes.

German General Kurt von Hammerstein-Equord used Hanlon’s razor to assess his men, saying: “I divide my officers into four groups. There are clever, diligent, stupid, and lazy officers. Usually two characteristics are combined. Some are clever and diligent – their place is the General Staff. The next lot are stupid and lazy – they make up 90 percent of every army and are suited to routine duties. Anyone who is both clever and lazy is qualified for the highest leadership duties, because he possesses the intellectual clarity and the composure necessary for difficult decisions. One must beware of anyone who is stupid and diligent – he must not be entrusted with any responsibility because he will always cause only mischief.”

But it was Hanlon, in the late 20th century, who coined the term, and it has been a subject of study in fields like psychology, philosophy, and economics ever since.

Here are some applications of Hanlon’s Razor in different domains:

The Financial Markets: The 2010 Flash Crash in the U.S. stock market initially prompted theories of malevolent market manipulation. But an application of Hanlon’s Razor (probably) led investigators towards a more probable cause — a poorly-designed algorithm from a trading firm.

Crash Aspect	Malice	Incompetence
Rapid Price Change	No	Yes
Algorithm Failure	No	Yes

The Aerospace Industry: SpaceX’s initial failure to achieve orbit with Falcon 1 could be interpreted as corporate sabotage or espionage. But Hanlon’s Razor would suggest looking for operational inefficiencies or technical errors first. In their analysis, the SpaceX team was able to trace the failures back to a corroded nut and a faulty rate gyro assembly.

Failure Reason	Malice	Incompetence
Corroded Nut	No	Yes
Faulty Rate Gyro	No	Yes

Within the dynamic and complex landscape of aerospace, misunderstandings and misinterpretations can often lead to costly errors and unwarranted suspicions.

These types of situations are usually very stressful (the stakes are incredibly high) so if you ever find yourself in a situation like this it helps to have a tool that can help you properly analyze and fix the situation as fast as possible.

That said, here is a case study that presents a hypothetical scenario involving my company, to illustrate the utility of Hanlon’s Razor in decision-making and problem-solving within a high-stakes, high-risk working environment.

Case Study: Deimos-One’s EXO Venus Payload Drop

Mission Notes: Payload drops on celestial bodies like Venus require an amalgamation of engineering prowess and strategic planning (10). Every scenario cannot be modeled for or projected so one can reasonably expect things will go wrong. Managers and stakeholders should always prepare for the unexpected.

Mission Plan/Summary: Deimos-One is planning (a very complex mission) to deploy scientific instruments into Venus’s atmosphere, take measurements, and then drop them onto the surface using a high-altitude balloon. During the mission, an unexpected event jeopardizes the mission’s objectives. This case study will employ Hanlon’s Razor as a mental model for problem-solving and decision-making in this high-stakes situation.

Scenario: Venus Payload Drop Anomaly

Deimos-One has launched a balloon-borne mission to Venus designed to release a scientific payload for atmospheric sampling.

The mission is designed to leverage a unique, multi-dimensional viewpoint of the Venusian environment to study the poorly understood meteorology of the middle cloud region and search for macroscopic life signatures within the atmospheric habitable zone.

Unlike previous missions to the planet, which have relied on orbit insertion, the Deimos-One team plans to have their probe make direct atmospheric entry.

The mission sequence will consist of an Earth launch and escape, Venus arrival, direct atmospheric entry and descent, balloon deployment, balloon failure, and a surface landing.

When the balloon deploys, the probe will begin to survey and measure the composition of Venus’ atmosphere, collect samples, and capture high-resolution photographs while hovering roughly 55 km above the planet’s surface.

The balloon is engineered to float at a predetermined altitude within Venus’s extreme atmospheric conditions, and the probe will continue balloon-assisted hover operations before releasing the payload for surface sampling, where it will begin its descent and make surface landing for continued operations.

But the payload gets dropped sooner than planned, missing the intended collection zone. The mission control team is thrown into a dilemma: was it sabotage, was it an internal failure?

What the hell just happened?

Panic.

Initial Hypothesis: Sabotage or Data Manipulation

Given the importance of the mission, the cost and value of the potential data, there is heightened concern about external interference, possibly to derail the mission for geopolitical advantages.

“It can’t possibly be OUR fault, right?”

Failure Reason	Suspected Malice	Likely Incompetence
Premature Drop	Yes	Yes

Application of Hanlon’s Razor: Troubleshooting and Resolution

But before escalating to consider sabotage or espionage, the mission team (guided by Hanlon’s Razor obviously) decides instead to dig into the internal data and telemetry to search for potential points of failure.

And staying true to Hanlon’s Razor, the Deimos-One team holds off on any actions that assume intentional wrongdoing and instead focuses on the possible points of failure within their control.

After intensive analysis, the mission team discovers that the payload release mechanism was sensitive to Venus’s sulfuric acid clouds, something the team hadn’t been able to fully account for in their simulations.

Event	Ruled-Out Malice	Confirmed Incompetence
Premature Drop	Yes	Yes

Case Study Shitty Analysis: This (very basic) case study is purely speculative and hypothetical, but it demonstrates the utility of Hanlon’s Razor in identifying and solving anomalies in high-stakes, high-risk space exploration missions, such as our Venus Mission.

By eliminating suspicions of malice and focusing on the most likely explanations (human error, system faults, etc.) the team was able to navigate a challenging situation and avoid unnecessary and potentially damaging courses of action.

Plus, they were very likely able to retain stakeholder trust and extract valuable lessons for future missions – essential elements for the long-term success and credibility of any company.

This mental model can be a cornerstone in the strategic decision-making process for any organization involved in high-stakes operations (like expensive space missions, for example).

The application of Hanlon’s Razor was able to help the team solve a complex problem quickly and efficiently in a very critical, high-stress situation. The structured mental model (or tool, if you will) aided in loss mitigation and the retention of stakeholder trust, essential elements for the company’s long-term success and credibility.

Note: This case study is entirely speculative and hypothetical, meant solely for the academic discussion of illustrating the potential application of Hanlon’s Razor in a complex aerospace operation.

Final Thoughts and Future Research

In sum, Hanlon’s Razor serves as a valuable mental model in complex decision-making processes, especially in various high-stakes sectors (e.g. finance, aerospace, your love life, etc.) where there is a lot riding on the line.

But like any mental model, Hanlon’s Razor does have its limitations and it does have its fair share of critics. Some theorists say Hanlon’s razor is a naive idea that can expose you to threats and blind you to true acts of malice or ill intent.

While most humans have malicious intent much less than we think, it’s still something that we have to factor in. Also, some things that may look like incompetence or incompetence are in fact consciously or unconsciously malicious.

There are absolutely no absolutes 🙂

That said, while the limitations and criticisms of the model include excessive trust and the absence of incentive analysis (e.g. Hanlon’s Razor can theoretically make decision-makers too trusting, opening them up to real risks from malevolent actors; and the model can fail to take into account the incentive structures that might encourage malice or negligence) it can still be incredibly helpful when used properly and/or when put into context.

When we put it into context, taking into account all variables (evidence, logic, experience, hypothesis) this is where Hanlon’s Razor can be put to the best use.

So, I strongly suggest you think about making it a part of your arsenal of mental models.

Use it to consider incompetence before malevolence.

But, a word to the wise: its application should not be indiscriminate (aka don’t be a blind fool) because this can expose you to actual malice and behavior that is intended to be harmful.

That said, perhaps future research can focus on amalgamating Hanlon’s Razor with game theory and incentive analysis to create a more holistic decision-making framework.

I’ll be discussing Game Theory in Part 4.

So, what Mental Model has helped you the most?

Let me know on X/Twitter.

Follow me for more shitty analysis: twitter.com/jaminthompson.

Mental Models: Part 1 | Part 2 | Part 4

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Footnotes

1. Holiday, R. (2014). The Obstacle is the Way. Portfolio/Penguin.
2. Becker, L. (1998). A New Stoicism. Princeton University Press.
3. Taleb, N. (2012). Antifragile: Things That Gain from Disorder. Random House.
4. Munger, C. (1994). A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business. USC Business School.
5. Kaufman, J. (2018). The Personal MBA. Penguin Books.
6. Dweck, C. (2007). Mindset: The New Psychology of Success. Random House.
7. Clear, J. (2018). Atomic Habits. Penguin Random House.
8. Naval, R. (2019). The Almanack of Naval Ravikant. Magrathea Publishing.
9. Deutsch, D. (2011). The Beginning of Infinity. Penguin Books.
10. O’Rourke, J.G., Wilson, C.F., Borrelli, M.E. et al. Venus, the Planet: Introduction to the Evolution of Earth’s Sister Planet. Space Sci Rev 219, 10 (2023)