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Building your mental model

img from indiafuturesociety.orgOur good buddy Greg over at Rightway posted on about Insight Seeing things others can’t see on the Rightway blog.

It got me pondering  how I think about strategy and making decisions.

I read many years ago, I remember it was back in Sugarland Texas in the early 90′s actually, a few parables that have stuck with me over years.

Preparation lets you take advantage of opportunity

and

It takes a year to become an expert on something

Becoming an expert in something is as simple as reading widely on a subject to get up to speed and then monitoring news and events about things that happen in that area. This can seem daunting at the beginning, but over time you begin to develop a model, or belief system about how things work.

Over time you gain confidence in your model. When events occur you think ‘I knew that would happen’ and after a while you can publicly make predictions. If you’re an entrepreneur you eventually start to bet on those models and can be rewarded for being right.

As each new fact appears you test it against your model.  The fact either confirms your model or challenges it. I love it when I find things that are inconsistent with my models. As an example when companies put out numbers that don’t feel right I love to dive deep to find out why that is? Why doesn’t it fit? Do I learn something new or have I found a misleading statement?

I love debating points with our team, because good discussion tests your model and makes you justify assumptions. I always learn things when others argue from a new perspective which tunes the model up further.

News on the Internet and especially news feeds (RSS)  have seen the number of facts you see multiplied substantially. I think that has accelerated testing and development of my mental models. I’ve been in technology for 27 years and have seen the big patterns many times. I’ve been reading RSS news feeds for over 10 years and active on the tech twitter stream so there’s not much tech news that gets by me. Each new fact I apply against my models, maybe hundreds per day. It’s not a conscious thing and it’s not onerous as I enjoy reading tech news.

To outsiders, entrepreneurs might look like they make big and bold decisions.  But to the entrepreneur that works this way you have simply gained confidence in your models. Perhaps it looks like insight but I think it’s more that  over time you’ve developed confidence in your own judgment and making a big decision is a simple and logical step.

Xero is like that for me. The move to the cloud felt obvious. The small business opportunity was clear and what we need to do to win feels pretty straight forward. It’s not arrogance, just confidence that you can see it all play out.

Our challenge to make sure we share the vision  through the team and empower our people to go as fast as they can.

So that describes how I think. Does that resonate or do others have different ways of thinking they can share?

 

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4 comments

Ricardo
5 April 2014 #

Rod, I like your statement; “The small business opportunity was clear and what we need to do to win feels pretty straight forward. Its not arrogance, just confidence that you can see it all play out”.

In my work / daily activities, I ensure to know the rules and play the game. I always plan and think ahead- anticipate of worst case scenarios- I have plan A, B & C. I am defensive if someone challenges me but also, Open-minded and listen to constructive criticism. I don’t procrastinate.

You wrote you want “to empower your people to go as fast as they can”. Please take caution of this step. Often times, If we do things very quickly, We tend to make mistakes. Please ensure that they get things right the first time to ensure great customer experience. It is important that Quality Assurance is in place in the company.

I wish Xero every success in its endeavours.

Elaine Mullen
5 April 2014 #

I completely agree with your thinking Rod. I sold my accounting practice in December and at 55 I’m still learning and contributing and empowering others to do their best. Being passionate about something you love and making money from it….it doesn’t get any better.

Julie
6 April 2014 #

Dear Rod,

This blog is great, thank you. You might also be interested in something radical that they are cooking up at the Kellogg School of Business:
http://m.youtube.com/watch?v=omvfL3ryBlk – this puts people and organizations at the source of having ideas work and thrive

Stu Pearse
30 April 2014 #

Resonated alright. Fished out this old article by Charlie Munger (business partner to Warren Buffett). A good read over coffee!

http://basehitinvesting.com/wp-content/uploads/2014/02/Charlie-Munger-Art-of-Stock-Picking.pdf

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