Why?
It’s not just EQ, IQ, or past wins. It’s the invisible architecture in their minds - the mental models they use to interpret chaos, connect dots, and act decisively.

Let’s be honest: as senior leaders, we’re already making complex decisions daily. But what separates consistently effective leaders from the rest isn’t hustle or heroics. It’s rigour in thinking.

This post is a curated glossary of mental models that actually show up in boardrooms, offsites, and those 11 p.m. strategic rethink moments. We’ve seen these sharpen execution, cool egos, and unlock billion-dollar insights.

Let’s dive in.

Why Mental Models Matter (Especially Now)

Mental models are simplified representations of how the world works. They’re not perfect, but they help us focus on what matters, fast.

Charlie Munger put it best:

“You’ve got to have models in your head... You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life.”

In our advisory work with leadership teams, we’ve found mental models to be the backbone of effective strategic dialogue. They:

• Reveal blind spots faster than brainstorming ever will
  
  
• Help teams align on complex trade-offs
  
  
• Reduce noise during uncertainty
  
  
• Build a shared language for better decisions
  
  

McKinsey found that executives spend nearly 40% of their time making decisions - but only 60% of those decisions are actually effective. Let that sink in.

If you're leading without a mental model toolkit, you're steering with fogged-up glasses.

The Mental Model Vault: 12 We Use Weekly

Here’s our curated glossary. Some are classics. Others are lesser-known but high-impact. Each one earns its keep.

1. First Principles Thinking

Deconstruct to reconstruct.

Instead of reasoning by analogy (“How did others solve this?”), you break a problem into its fundamental truths and build up from there. Elon Musk used this to rethink the cost of space travel.

Use when: facing legacy assumptions, bloated processes, or cost barriers.

Try this: What are we assuming as ‘given’ here? What happens if we strip it away?

2. Second-Order Thinking

Then what? And after that?

It’s not enough to ask “What will happen?” Ask “What happens next because of that?”

Use when: rolling out a change, restructuring, or launching a product.

Pro Tip: Always follow an action with “And then what might happen?” three times. The third ripple is often where the real impact lives.

3. Inversion

Solve by flipping.

Want better team cohesion? Instead of asking “How do we build trust?”, ask “What would destroy trust here?” Then avoid those behaviours.

Use when: stuck, overloaded, or addressing risk.

Micro-action: Schedule a 30-minute "pre-mortem" next quarter. What would make this fail?

4. OODA Loop

Observe - Orient - Decide - Act.

Developed by fighter pilot John Boyd. It’s about processing reality faster than competitors. Not once, but on repeat.

Use when: in fast-moving markets or with high-stakes competition.

Reflection: How tight is your leadership OODA loop? What slows it down?

5. The Eisenhower Matrix

Urgent ≠ Important.

Sort tasks by urgency and importance. Kill the ‘busywork’.

Use when: firefighting becomes your default mode.

Reframe: What % of our leadership energy is spent in Quadrant 2 - Important but Not Urgent?

6. Probabilistic Thinking

Think in bets, not certainties.

Assign likelihoods. Embrace uncertainty. Plan accordingly.

Use when: making strategic bets or resource allocations.

Mini-exercise: For your top 3 initiatives, estimate:

• 70% chance of moderate success
  
  
• 20% chance of breakthrough
  
  
• 10% chance of failure
  What would you change with this framing?
  
  

7. The Map is Not the Territory

Models guide, but reality varies.

Your org chart isn’t your culture. Your pipeline forecast isn’t your market. Be humble about abstraction.

Use when: leading through complexity, applying frameworks, or reading dashboards.

Micro-action: Ask your team: “What are we not seeing because of how this is measured?”

8. Circle of Competence

Know what you know.

Great leaders outsource wisely because they know their lane. Average leaders pretend omniscience.

Use when: hiring, scaling, or entering new domains.

Prompt: What’s clearly outside our Circle of Competence? Who owns that instead?

9. The 80/20 Rule (Pareto Principle)

Not all inputs are equal.

Roughly 20% of efforts drive 80% of results. Same applies to clients, bugs, meetings, complaints.

Use when: you feel stretched thin.

Tactical tip: Every Friday, identify the one decision or action that will move the needle 80% next week.

10. Red Teaming

Stress-test your thinking.

Create a designated group to challenge your strategy, product, or plan. Their job is to break it.

Use when: finalising critical decisions or go-to-market plans.

Action: Rotate “red team” roles within your exec group quarterly. Bonus: builds empathy and rigour.

11. Hanlon’s Razor

Never attribute to malice what can be explained by incompetence.

Or bandwidth. Or communication gaps.

Use when: facing conflict, slow responses, or internal politics.

Reflection: Where might I be personalising something that’s just poor process?

12. Chesterton’s Fence

If you don’t understand why it’s there, don’t tear it down.

Before removing an old rule, team, or policy, investigate its original purpose.

Use when: modernising or simplifying systems.

Prompt: Who remembers why we did it this way? What risk was this fence meant to guard against?

Making Mental Models Operational: Start With These 3 Moves

Host a Leadership Model Jam
Block 90 minutes. Introduce 5 models. Have each leader pick one they use most, one they ignore, and one they want to explore. Discuss.

Tag Models in Debriefs
Add a column in your meeting notes: “Which mental model did this decision reflect?” This helps embed a shared language.

Build a Visible Model Wall
In your leadership Slack channel or Notion board, list your top 10 models with examples. Reference them in real decisions.

Pro Tip: Models gain power through repetition. Don’t treat them as novelty acts.

Where Even Seasoned Leaders Go Wrong

• Collecting, not applying
  Knowing 50 models but using none is like owning 50 cookbooks and ordering takeout every night.
  
  
• Overfitting
  Forcing one model onto every problem. Beware the hammer-nail syndrome.
  
  
• Ignoring team literacy
  Throwing around terms like "OODA" without onboarding your team creates disconnect, not clarity.
  
  
• Using models to avoid gut calls
  Analysis paralysis often hides behind a model. Models inform - they don’t make the decision for you.
  
  

The Thinking Leader's Check-In

Prompt 1: Which mental models do you instinctively use - and which ones make you uncomfortable?
Prompt 2: What would your team say is your dominant model of decision-making?

Take 5 minutes this week to journal. Better yet, share with a trusted peer and swap notes.

The Payoff: Less Drama, More Clarity

Leaders who embed these mental models into daily decisions don’t just look smarter. They are clearer, faster, and more aligned with reality.

They:

• Reduce decision fatigue
  
  
• Spot poor logic early
  
  
• Create space for others to think clearly
  
  
• Scale better through shared frameworks
  
  

And over time, they build a team that thinks with them - not just around them.

Your Next Strategic Move

Pick one model from this glossary and apply it to a live decision this week. That’s it.

If you’re curious about how to build a “Mental Model Operating System” for your leadership team, drop us a note. We’ve helped boards and exec teams embed this thinking into OKRs, decision logs, and team rituals.

Team SHIFT

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