What if your biggest career unlock wasn’t in a course or a new strategy - but in how you think?

In our work with senior leaders, one idea keeps resurfacing: the most effective thinkers don’t just accumulate knowledge. They build a latticework of mental models - a set of lenses to better interpret the world and act wisely within it.

Few have championed this approach more eloquently than Charlie Munger, Warren Buffett’s long-time partner at Berkshire Hathaway. While Buffett often made the headlines, it was Munger’s razor-sharp reasoning - rooted in interdisciplinary thinking - that shaped many of their smartest moves.

Over the past decade, Munger’s mental models have changed how we coach, decide, build strategy, and lead teams. Here are five that transformed our work lives - and might just shift yours too.

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Why This Matters Now

As decisions grow faster and more complex, relying on gut feel or linear logic just doesn’t cut it. A 2023 McKinsey report found that executives who regularly apply mental models in decision-making are 2.5 times more likely to outperform peers on strategic goals.

Mental models act as filters. They help you ignore noise, frame trade-offs, and spot second-order effects before they turn into regrets. And in leadership, clarity is currency.

The Lattice of Five: Munger Models That Stuck

1. Inversion Thinking: Start with Failure

Munger said it best: “All I want to know is where I’m going to die, so I’ll never go there.”

Rather than asking “What will make this succeed?” we now often start with: “How might this fail?” In strategic planning, hiring, even product launches, we’ve embedded pre-mortems as a ritual. It’s helped us avoid preventable mistakes - like over-indexing on speed at the cost of adoption.

Try this:
Before finalising any plan, ask your team: “If this went horribly wrong in 12 months, what likely caused it?”
Capture. Prioritise. Safeguard.

2. Circle of Competence: Stay in Your Lane, Expand Deliberately

Munger often warned about the dangers of pretending to know more than you do. The “Circle of Competence” model reminds us to be honest about what we truly understand - and what we’re merely familiar with.

This clarity has reshaped how we delegate, hire specialists, and assess client fit. We’ve turned down lucrative projects that looked tempting but sat too far outside our lane. And we’ve grown by learning adjacent skills with intent rather than chasing every trend.

Reflection prompt:
Where are you mistaking confidence for competence?

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3. The Psychology of Incentives: Never Ignore What Drives People

One of Munger’s most repeated lines: “Show me the incentive, and I will show you the outcome.”

This model is now central to our culture work. We’ve seen cross-functional dysfunctions resolve not through conflict resolution, but by realigning misfiring incentives. We’ve also stopped being surprised when teams hoard information - because the bonus structure rewarded silos.

Understanding human motivation has been the backstage pass to shaping better systems, not just behaviour.

High-impact action:
Run a quarterly review: “What behaviours are we inadvertently rewarding or punishing?”

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4. The Map Is Not the Territory: Don’t Confuse the Model with Reality

Munger borrowed this idea from Alfred Korzybski, but made it timeless in business. Forecasts, dashboards, strategy decks - they’re helpful abstractions. But they aren’t reality.

We learned this the hard way in one client engagement. Their balanced scorecard looked flawless - until a frontline team pointed out that two KPIs incentivised opposing behaviours. We had optimised the map, not the terrain.

Today, we pair data reviews with field checks. We walk factory floors, shadow customer calls, and observe meeting dynamics. Context over reports.

Pro Tip:
Every month, meet someone two levels below your usual stakeholder. Ask: “What’s really happening?”

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5. Availability Bias: Beware the Loudest, Not the Truest

This one cuts deep. Munger constantly reminded us how easily our minds substitute vivid for accurate. The last bad client meeting, the one standout hire, the market narrative from last week’s LinkedIn post - these can all distort perception.

To fight this, we’ve baked in rituals that force a longer view. Decision logs. Checklists that flag recency traps. Retros with structured data and not just hot takes. It’s slow work, but it clears the mental fog.

Ask yourself:
Is this belief based on evidence - or just the most emotionally available memory?

Making This Operational

You don’t need a philosophy degree to apply these. Here’s how we embed Munger’s wisdom into everyday leadership:

• Monthly Mental Model Debrief
  
  
  • In leadership team meetings, pick one model to review. Ask: “Where did this help - or could have helped - this month?”
    
    
• Red Team Sessions
  
  
  • Quarterly, assign someone to poke holes in major assumptions using inversion, incentives, and availability checks.
    
    
• Hiring via Models
  
  
  • In interviews, ask candidates how they’ve applied first-principles thinking or navigated trade-offs between incentives and values.
    
    
• Build a Lattice Library
  
  
  • Curate a shared team doc of go-to models with 1-paragraph summaries and links to examples.
    
    

Pro Tip: Avoid mental model bingo. It’s better to apply five well than juggle 50 inconsistently.

What Derails Leaders (Even Smart Ones)

We’ve coached enough sharp executives to know: insight isn’t the blocker. Integration is.

Here are common traps:

• Model memorisation, not application
  – Quoting Munger in a keynote is not the same as redesigning your incentive system.
  
  
• Overreliance on one model
  – If every problem looks like a hammer-and-nail, check your toolkit.
  
  
• Ignoring team maturity
  – Not all teams are ready to engage with abstraction. Build buy-in by showing, not telling.
  
  
• Intellectualism without action
  – Smart slides don’t shift culture. Reinforcement does.
  
  

Executive Reflection Corner

What are three recurring decisions where your default thinking leads you astray?

Which of Munger’s five models do you most resist - and what might that resistance be protecting?

The ROI of Model-Based Thinking

When we adopted Munger’s approach seriously, we saw cascading gains:

• Better quality decisions with less backtracking
  
  
• Tighter alignment between strategy and execution
  
  
• Healthier team debates grounded in principles, not politics
  
  
• Sharper client outcomes - because we were solving root issues, not surface problems
  
  

Most importantly, we developed a culture of thinking. And that is compounding.

Your Strategic Move This Week

Pick one decision on your plate. Apply inversion and circle of competence to it.

What would failure look like?
Are you the right person to decide?
Would Munger nod - or shake his head?

Team SHIFT

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