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Sheffield, U.K.
Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead. Tell me where I’m going to die, that is, so I don’t go there. – Charlie Munger
I did a search on Google for “Mental Models” today, little suspecting that would open up a rabbit hole that would suck in the rest of the day.
The results at first looked predictably predictable – lots of pages on lots of models – a few hundred or so that people have collected and put on display.
And then I came across a blog by Cedric or Eli on the second page – no, the third one that talked about how it was a really bad idea.
I have found that if you want to learn something you are probably better off reading what the critics say first.
I think this is because if the critic puts forward a clear argument as to the problems with the idea you are considering – then you can start reading the actual material ready to test whether the critic’s views are justified or not.
And, on Cedric’s blog I found an idea that resonated with me – the idea that it’s not enough to just put an idea out there.
You also need to know how to apply it – how to make it useful for you.
Without that, it’s just something floating out there – something that someone said.
You could memorise a hundred models and they would be of very little use unless you had some experience of real-world situations where you might find them useful.
When I did an MBA, for example, most students in the class talked about what they were going to learn from the MBA that would help them in the future.
For me, the content was most useful in explaining the experiences I had in the past – the theory helped make sense of what had already happened and let me figure out why.
A particular mental model that is often pulled out is in the quote that starts this post – Munger’s exhortation to “Invert, always invert.”
But what does that actually mean?
Cedric’s written a lot of stuff in his various blogs – and there are a lot of ideas that I think are good ones and worth exploring.
But, then I saw him write that “he disliked consulting as a business type”, which led me to his reasons why.
And this was interesting enough to just think about in some more detail – because it’s an important point if you’re thinking of starting a business.
Consultancy is not an inherently bad business model – Paul Graham of Ycombinator suggests that its a low risk way to start a business, especially if you have a mortgage and family.
Cedric’s argument is that certain types of consultancies have characteristics of commodity businesses and lists some of these.
In simple terms, a consultancy that operates like a commodity will offer services that are just the same as others, just like rice and beans are pretty much the same wherever they come from.
In such a business you can’t really increase value – you’re selling time and your income depends on your day rate and you can’t just triple that overnight.
If you want to make more money you have to sell more time – your time or your employee time.
And consultancy is a discretionary spend – it depends on the economy and whether companies have budgets to spend – so you’ll be the first to be cut when things go bad.
Cedric then ends by applying the inversion mental model – how you can build a consultancy “that isn’t a pain to run” by inverting this list.
I’ve adapted his words to do this formally – using a NOT gate: a logic structure that denotes inversion.
I think the graphic is an interesting artefact – because it helps you take a statement and formally invert it.
Basically, it helps you apply Munger’s mental model practically – you can draw out what someone says, draw a NOT gate and work out the opposite.
So, for each statement – if you are the same as others, what if you were very different?
What would it look like if it was easy to increase value?
What if you could sell more without doing more?
And what would it look like if your sales didn’t depend on the economy?
Now, I have some experience of the consulting business – and I can tell you that building a consulting business like this works.
It’s not easy to do and you have to figure out what makes you unique – but you can do it given enough time and effort.
Let me give you a flavour of what this looks like using this blog as an example for a couple of these factors.
Lots of people can write and do fancy presentations – but very few use hand-drawn models in the way you see here.
It meets the test of being different from what’s out there, especially in the sectors where I work.
In many consultancies time is what matters – you have to spend time creating and fine tuning presentations.
That’s pointless if you have any background in programming.
Why not automate everything that can possibly be automated?
If you can do that you can sell more without doing more – you spend your time focusing on clients and get the busywork automated away.
Now, there are lots of ways you can look at this in larger businesses – but everything is context dependent and skill dependent – so I don’t want to give you the impression that it’s easy to do.
It’s not – and that’s why many consultancy owners work very long hours and are quite stressed.
Too busy to find the time to sit down and see if they can use the “Invert, always invert” mental model.
And that’s the point.
Just telling you something isn’t enough.
You have to be able to use it to make a change that works for you.
But if you can do it you may also find that you change your life for the better.
Cheers,
Karthik Suresh
Handcrafted insight 