Below are 19 more mental models, concepts and frameworks I use to help me make sense of the world and make informed decisions.

Skin in the Game

People should be held accountable for the decisions they make; reaping both the rewards of skill and bravery—and the punishments of their foolish actions.

Why it’s important to know: Too many people are better at explaining than doing, particularly concerning areas of influence. We have social media ‘influencers’ giving us wealth advice who are barely even old enough to go to the cinema and watch an 18; politicians sending our troops to war who haven’t so much as had a bout of fisticuffs in their 50 years of being; and middle management—who aren’t brave enough to risk their own career, reputation or capital, trying their damned hardest to make sure that the staff below them don’t get “too big for their boots” and challenge their mediocrity.

The Lindy Effect

A model predicting that non-perishable things (ideas, technologies) will continue to exist proportionally to their current lifespan. If a book (the Bible) has been around for over two thousand years, it will more than likely be around for another two thousand.

Why it’s important to know: Not every new trend deserves your attention and fixation. There is first-mover advantage for those that actively seek the next hot thing (YouTube education channels, Bitcoin, NFTs), but most fads are just a temporary distraction. If you’re undecided on what to read, you’d be better off reading the classics over new novel “best sellers”.

The Map is Not the Territory

A model recognising that representations of our world (maps, plans, models) are always simplifications that can differ from actual reality. A breaking news event might be condensed into a 12-word headline or a 3-minute video, whereas the days, weeks, months or years leading up to the event may have involved billions of small interactions to make it happen.

Why it’s important to know: The world is complex, so we need to find ways to make it less complex. This is why we love to read books on Richard Feynman or famous entrepreneurs: we want the insights without the complexity of having to have actually studied PhD physics or turned a bootstrap company into a trillion-dollar behemoth.

Thought Experiment Framework

A structured method for exploring hypothetical scenarios and their consequences without real-world implementation. The Stoics practised Premeditatio Malorum, where they imagined negative events for themselves and loved ones to prepare for that eventuality. Charlie Munger’s book, Poor Charlie’s Almanack, also has a chapter on a hypothetical thought experiment.

Why it’s important to know: It’s not living in la-la land to sometimes sit there and deliberately daydream about something that’s important to you. That could be an acquisition you’re mulling over, moving to a different country, or deciding if the person you’re with is somebody you can imagine spending the rest of your life with.

Via Negativa

A model centred on improving knowledge through subtraction rather than addition. The strategy involves determining what doesn’t work to help reveal what is.

Why it’s important to know: It’s easy to want to find a solution to your problem by adding something to it—even if you think it’s helping. The problem with adding things to existing problems or systems that aren’t already working is that it will take time for the information to trickle back to you. If you want to lose weight, a good starting place is to cut your calories before you spend thousands on memberships, gym attire and personal trainers.

The Principal-Agent Problem

People who have their own capital, reputation or expertise at risk are more likely to behave in a manner that is beneficial to their business—even at times when it’s detrimental to them personally. These are called principals. People who don’t risk reputation, the clothes on their back or financial distress are more likely to professionally behave in a manner that is to their single benefit. These are called agents.

Why it’s important to know: Not everybody in a business can be an owner, but they can behave like one. It’s easy for personnel to be unmotivated and uninspired by their work, so it’s up to the owners to actively keep those employees who act more in keeping with a principal and remove those acting more like an agent.

The Search-Inference Framework

The search-inference framework states that all thinking can be modelled into a two-step process of search and inference:

1. Search – Involves scanning through potential ideas or solutions when seeking a desired outcome (goal) to a question at hand. You search through options, drawing on past experiences, knowledge and available resources. These are the possible solutions to the original question in service of achieving the goal.

2. Inference – Once the potential options have been gathered, the inference step involves evaluating each option and looking for any evidence that will either help or hinder you in trying to achieve your goal. To do this, you could use simple reasoning such as pros and cons for each option, or predict potential outcomes and weigh these against your desired goal. The quality of your decision hinges on how well you search in the first instance.

Why it’s important to know: This systematic approach might sound like something you already do, but often we take shortcuts when making decisions and lean on our schemas and biases to ease the cognitive load. We don’t like doing all of the nitty-gritty thinking—hence our AI usage—but this skill is now more important than ever.

The Sunk Cost Fallacy

The Sunk Cost Fallacy refers to the irrational decision to continue investing time, money, or effort into something simply because you’ve already invested resources into it, even when it no longer makes sense to do so.

Why it’s important to know: People cling to past commitments because of a psychological bias to avoid admitting failure or loss, even though the rational course of action would be to cut their losses and move on. This could fall under Charlie Munger’s Inconsistency-Avoidance Tendency or Simple, Pain-Avoiding Psychological Denial Tendency.

Mean Reversion

Mean reversion is the idea that extreme swings tend to move back toward average over time. If something shoots way up, or drops way down, it’s likely to eventually return closer to its normal level.

Why it’s important to know: It helps you avoid overreacting to unusual events. A basketball player who scores 50 points one game will probably score closer to their average next game. A stock that crashes might recover. Understanding this prevents you from assuming extreme situations will continue forever and helps you make better predictions about what happens next.

Mean reversion is the moving back towards equilibrium.

Anti-Library

Umberto Eco was a writer with a personal library of over 30,000 books. When people visited his library, they typically fell into a class of people who were impressed by his collection and asked him, “How many of these books have you read?” But a small few understood that a library is a research tool.

Why it’s important to know: There is far more to be learned from the unread books on your bookshelf than the ones you have already read. Books cost £5–£25 and have people’s entire life workings in them. It’s about as low-cost, high-payoff as you can get.

Anti-Knowledge

Anti-knowledge is the concept of understanding that there is more to be gained from what you do not yet know than what you do. Black Swans are inherently unpredictable, but by acknowledging their existence you can position yourself to positively benefit from them through small stakes but high-payoff trial and error.

Why it’s important to know: The concept of anti-knowledge teaches us that there is more to be lost (and gained) from the things we do not know. It’s not a case of predicting Black Swans, but of ensuring that when they do come along, your harm is kept to a minimum. This is similar to the unknown unknown quadrant from The Rumsfeld Matrix concept, where not knowing that there is an IED on the other side of the door you’re trying to kick down can blow you into a thousand pieces.

Creative Destruction

Creative destruction is when new innovations destroy old industries and jobs while creating new, better ones to replace them. Netflix destroyed Blockbuster video stores but created new jobs in streaming technology and content production. Cars destroyed the horse-and-buggy industry but created the automobile industry.

Why it’s important to know: It explains how economies progress and why change can be both painful and necessary. Old jobs disappear, which hurts people in those industries, but new opportunities emerge that often make society better off overall. Understanding this helps you adapt to change rather than resist inevitable progress.

Competition Neglect

Competition neglect is when people underestimate how many other people are thinking the same way they are, leading them to ignore how much competition they’ll actually face.

Why it’s important to know: It helps explain why people enter overly crowded markets, apply for long-shot opportunities without backup plans, and overestimate their chances in competitive situations. Over 90% of startups fail. Recognising this helps you make more realistic plans by remembering: if something looks like a great opportunity to you, it probably looks that way to many others too.

Goodhart’s Law

Goodhart’s Law says that when a measure becomes a target, it stops being a good measure—because people start gaming the system instead of actually improving what matters. You move from publishing one essay a week to two. If nothing has changed other than your appetite to release more content, then something has to give, and quality often has the biggest target on its back.

Why it’s important to know: It explains why so many well-intentioned rules and metrics backfire. Test scores, performance reviews, social media likes—once you make any of these the goal, people find ways to boost the number without actually achieving the underlying purpose. It reminds us to focus on what truly matters, not just what’s being measured.

Inside vs Outside View

The Inside vs. Outside View is about how you make predictions and judgements. The inside view focuses on the unique details of your specific situation—your plan, resources and circumstances. The outside view looks at what typically happens in similar situations by using statistical data and historical patterns from comparable cases.

Why it’s important to know: The inside view makes you overly optimistic because you focus on what makes your situation special while ignoring base rates. Most people naturally default to the inside view (”our project is different”), which is why projects run over budget and startups fail at predictable rates. Using the outside view helps you make more accurate predictions by grounding your estimates in reality rather than hope.

Prisoner’s Dilemma

The prisoner’s dilemma is a situation where two people can either cooperate with each other or betray each other, and the best outcome for both happens when they cooperate—but each person is tempted to betray because it could give them an even better individual result.

The classic example: Two prisoners are questioned separately. If both stay silent (cooperate), they each get 1 year in jail. If both betray each other, they each get 3 years. But if one betrays while the other stays silent, the betrayer goes free while the silent one gets 5 years.

Why it’s important to know: It explains why people and countries sometimes don’t cooperate even when cooperation would benefit everyone—because the fear of being betrayed or the temptation of individual gain gets in the way. It applies to everything from business competition to climate change agreements.

Second Order Consequences

When making decisions, it’s important to consider the ripple effects that your decision could have in the future. If you decide to spend all of your money on a new car but fail to consider the consequences that having no savings could potentially have in the future, you’re asking to be blindsided when something unexpected happens.

Why it’s important to know: It’s not that you have to overanalyse every decision to death, but you should at least think about how your decision today could impact events tomorrow. In business, a failure to think about the second order consequences of your decisions is the equivalent of playing Russian roulette.

Intellectual Humility

The concept of recognising the limits of one’s knowledge and remaining open to new information. Our brains are hard drives, and we often muddle up previous versions of our stories with the last time we told or remembered them.

Why it’s important to know: If you think you’re the smartest person in the room—great, good for you—but sad is the person who thinks there’s not a single person they can learn something from. Everybody has something to learn from somebody: even if that’s how not to do something.

De Bono’s Six Thinking Hats Framework

Edward de Bono’s Six Thinking Hats is a practical decision-making and problem-solving framework that encourages parallel thinking by having participants adopt specific roles or “hats,” each representing a different thinking style or perspective:

1. White Hat: Neutral, factual thinking (data and information).

2. Red Hat: Emotional, intuitive thinking (gut feelings and emotions).

3. Black Hat: Critical thinking (risks and caution).

4. Yellow Hat: Optimistic thinking (benefits and positive outcomes).

5. Green Hat: Creative thinking (ideas and alternatives).

6. Blue Hat: Organisational thinking (managing the thinking process itself).

Why it’s important to know: Making decisions—especially with others—can be difficult. If you’re a creative person but the boardroom meeting you’re sat in is being dominated by a black hat who mostly looks for risk, you will be disheartened. This framework offers a logical sequence of events whereby most of the human psychology that comes into play when making decisions gets its chance to communicate.

Until next time, Karl (The School of Knowledge).

Upgrade

Early zoologists classified mammals as those that suckle their young and reptiles as those that laid eggs. So when they came across the duck-billed platypus in Australia—an animal that laid eggs but also suckled its young—it created quite a paradox, with people claiming some sort of trickery or manipulation. Except there wasn't. The platypus wasn't doing anything exceptional, unordinary, or nefarious. It was doing exactly what it had done for millions of years: laying eggs and suckling its young. It was the zoologists' classification system that created the paradox.

So how did they come to terms with this unpredicted version of reality? They created a new classification—the Monotremata—that included the duck-billed platypus and the spiny anteater. That's it. That's how they circumvented the problem of the duck-billed platypus: they just made something else up.

Reality is formed by the language we use to describe it. Words and theories come and go, and the scientific theories that explain our world today will be obsolete tomorrow.

As humans, we crave understanding and even go as far as spending a lot of time and a lot of money trying to understand something that happened 13.8 billion years ago (the Big Bang). We're filled with dread when something happens that we aren't expecting (like finding a mammal that also lays eggs), so we have to tell ourselves all sorts of stories and reverse-engineer with the benefit of hindsight to conclude that actually, we did know that thing was going to happen, and of course mammals can lay eggs—we just need to say they can!

But what happens when you step outside of your ego and sincerely believe that you might not know everything, and recognise that learning to deal with uncertainty is far more important than knowing what you do know?

Here are 3 ways we fool ourselves about uncertainty:

1. You undervalue what you do not know

Anti-knowledge is a concept that teaches us that there is more to be lost (and gained) from the things we do not know. Umberto Eco was a writer with a personal library of over 30,000 books. When people visited his library, they typically fell into one of two types: those who were impressed by his large collection and asked him "how many of these books have you read?" and a small few who understood that a library is a research tool, not an ego-boosting showcase.

There is far more to be learned from the unread books on your bookshelf than the ones you have already read. Books cost you roughly £5–£25 and can contain entire lifeworks. It's about as low-cost, high-payoff as you can get. This isn't about reading 'a book a week', but recognising that the value of the knowledge you have yet to learn is worth more than your current understanding of reality.

2. You don't understand the importance of disconfirmation

You could see a thousand white swans but could never be sure that 'all swans are white', yet a single black swan could prove that not all swans are white in an instant. Disconfirmation is more powerful than confirmation. Just ask Darwin.

It's not a case of being able to predict Black Swans, but ensuring that when they do come along, the harm to you is minimised. This is similar to the 'unknown unknown' quadrant from the Rumsfeld Matrix concept, where an American Marine in Fallujah not knowing that there's an IED on the other side of the door he's trying to kick down could blow him into a thousand pieces.

3. How we rewrite history with the benefit of hindsight

Charlie Munger warned us to be wary of expert opinions, especially when they have incentives for you to believe what they said was true. How many 'experts' predicted the 2008 financial crash? How many predicted COVID-19? Or how about recent geopolitical conflicts?

We're generally terrible at predicting what will happen today, let alone tomorrow. Yet after every major unexpected event, these same experts emerge with detailed explanations of how the 'warning signs were obvious' and how they 'saw it coming all along'.

So the next time you catch yourself predicting something will happen, write it down in a notebook or in your phone. This way you can prove you're not just falling for hindsight bias but actually have some remarkable gift for prediction.

Final thoughts

These biases are insidious because they prevent us from learning. If we convince ourselves we 'knew it all along', we never develop better uncertainty-handling skills. We remain trapped in a cycle of overconfidence, surprise, and retrospective rationalisation—but never actually getting better at navigating an uncertain world.

Until next time, Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps you understand the world through practitioners. Those who try, fail and do (skin in the game). 📚💡

Join 6,941 of like-minded lifelong learners here:

Subscribe now

Upgrade now

Every decision you make is a gamble—but it's the blind spots, biases and poor information that end up costing you more than just your money.

Your brain is great at protection, with fact-finding often reduced to seeking information that confirms beliefs you already have about the world around you.

People tend to avoid questioning their decisions, especially poor ones. But what if there were a framework you could use that would do more than swing the odds back in your favour—it could give you the confidence to start making those tough decisions you've been putting off out of fear you'd get them wrong? It turns out the answer is rooted in one of my least favourite high school subjects—maths—and is called Bayesian thinking.

What is Bayesian Thinking?

When you say you believe something to be true, you are engaging in epistemic rationality. But how often do your beliefs match that of reality, and how often do your beliefs lead to you making better decisions in service of your goals? It's all well and good to believe something to be true, but it should be more important to believe in something that is true.

Typically, we state things. Binary—yes or no, true or false—but much in life swings like a pendulum with a lot of stuff in between the edges. What Bayesian thinking does is account for those swings by treating them as probabilities. Sometimes something looks to be one thing, but when new evidence becomes available, it can be another. The problem is that as people, once we've made our minds up, we're pretty terrible at wanting to change it. This was one of Charlie Munger's famed human tendencies—the inconsistency-avoidance tendency.

To change your mind about something is seen as inconsistent and somehow means you lacked knowledge about your claim in the first place. But Bayesian thinking, or updating as it can be called, is just that—updating. This simple word switch, from changing to updating, should be used to combat cognitive biases. You update your phone, your computer, your house, car and life, so why wouldn't you update your thinking?

So, how does it work?

Share

Bayesian Thinking as a Decision-Making Tool

Bayesian thinking offers a systematic framework for updating "degrees of belief" that combines prior knowledge with new evidence when it becomes available to attach a new likelihood (posterior) of that thing happening. It could look like this:

• Prior—What we initially believe. "I think there's a 30% chance of delays due to technical issues based on past projects."

• Evidence (Likelihood)—The new data or observation. "Given a delay, there's an 80% chance this specific issue shows up."

• Posterior—The updated belief after combining prior and evidence. "Now the chance of delay given the issue is 63%."

At the heart of the concept lies Bayes' Theorem:

P(Hypothesis|Evidence) = P(Evidence|Hypothesis) × P(Hypothesis) / P(Evidence)

By assigning a prior belief as a percentage, instead of "I think this" or "I believe that," you can update your thinking and results over time, enabling you to become more efficient at making decisions.

How to Apply Bayesian Thinking Practically

The Five-Step Bayesian Decision Process

First, define your prior beliefs by establishing initial probability estimates based on your previous knowledge, available data, or expert opinion. Second, gather new relevant evidence through data collection, observations, or new information that is brought to your attention. Third, apply Bayes' Theorem to update the probability of your prior now that new evidence is available. Fourth, update your beliefs by replacing your initial priors with these new posterior probabilities. Fifth, make decisions based on your updated understanding, which becomes the foundation for the next cycle.

From the information above, a practical example in words might look like this:

• Prior: "30% chance of delay on past projects."

• Evidence: "If delayed, issue shows up 80% of the time. If not delayed, it still shows up 20%."

• Posterior: "Given the issue, the chance of delay is now ~63%."

Or written in maths:

• Prior: P(Delay) = 0.3

• P(No Delay) = 0.7

• Likelihood: P(Issue | Delay) = 0.8

• False positive rate: P(Issue | No Delay) = 0.2

Step 1: Evidence (denominator)

P(Issue) = (0.8 × 0.3) + (0.2 × 0.7) P(Issue) = 0.24 + 0.14 = 0.38

Step 2: Posterior

P(Delay | Issue) = (0.8 × 0.3) / 0.38 = 0.24 / 0.38 = 0.63 or 63% chance of delay given that the specific issue has shown up.

By treating uncertainty as "degrees of belief" that can be quantified and mathematically updated, Bayesian thinking provides a framework that turns guesswork into calculated decision-making.

But there is a trap.

The rest of this post is available to paid members and explains the biggest trap with this framework, tips for mitigating against it, and provides a case study example of a multi-billion dollar company everybody is familiar with using the framework to keep users engaged.

Read more

Read more

In February 2009, I headed down south on a 5-hour train to join the Royal Marines. A few days earlier, I'd been accepted to work for a company that one of my best friends worked at, and still works for. Everything I'd known about myself (and others) prior to that decision told me it was a wasted journey, but I headed down nonetheless. I'd just turned 19, and it's not that I was an incapable person; I just wasn't remarkable. I was impressively average at everything I did.

The advert read: 99.9% need not apply.

Those 8 months (the shortest time it can take anybody to finish the world's longest basic military training) were a constant fight. I was fighting to stay awake, fighting to stay somewhat organised, fighting to learn and improve—fighting just to keep up.

The training was purposefully overwhelming on every front. Regular kit inspections would pick up even the minutest trace of carbon hidden away deep inside the barrel of your rifle or a deviation on an otherwise perfect crease down the centre of your bottom bed sheet.'Thrashed' was the term used for what the training team did to the recruits when they fucked up. And whilst this physical and mental beasting was playing out, you were constantly reminded just how worthless you were.

But, that time in my life was the most illuminating and beneficial 8 months in my 35 years. After training finished, life felt like a breeze. Going from having to do dozens, perhaps hundreds, of things a day perfectly, to considerably less was a blessing.

Over the years, my capability to handle things as an adult, both in my personal and professional life, has varied. Being highly efficient for some period of time doesn't translate to permanence. The training is purposefully hard to maintain standards, but 16 years later, I've figured out why Royal Marine training was so hard. Everything had to be perfect.

It was a high-entropy environment.

Entropy, a concept from physics, describes the natural tendency of systems to move from order toward disorder. Left unchecked, things fall apart: structures break down, spaces get messy, and our bodies decay. Put more simply, entropy is a measure of disorder. It's nature's way of moving something from one state to another. It increases chaos. While entropy originates in thermodynamics, it serves as a powerful metaphor for the challenges of maintaining order in our professional and personal lives.

Things naturally become less organised as the energy we put into keeping them in order decreases. This constant battle plays out in everyday life. Take your work desk. Your desk is cluttered, so you finally decide to get rid of all the mess, but it doesn't take long for the desk to accumulate clutter once again—a coffee cup, paper, pens, etc, until yet again, it's time for a big clean up. This basic example illustrates entropy and how, if things are left to their own devices, they naturally become disorganised unless something intervenes.

As Anton Chekhov put it, "Only entropy comes easy."

But why is disorder the natural state of affairs?

Disorder is the natural state of affairs because there are simply far more ways for a system to be disordered than ordered, and left alone, systems will tend to drift into one of those many disordered states. There's only one way to perfectly order a deck of cards (e.g. Ace to King in each suit), but there are millions of ways to shuffle them into disorder. So, if you randomly shuffle, the odds are overwhelmingly in favour of disorder—not order. That's why casinos hate people who can count cards. They understand which hands are worth playing and which are hopeless.

If you feel like you are constantly battling to keep on top of your projects, your housecleaning, your health—it's because you are. You are deliberately fighting against entropy and the natural tendency for things to head towards chaos. People say that "life is a battle," but more accurately, what you could say is "life is a constant battle against entropy."

The good news is that you can learn to anticipate entropy and put systems in place to keep chaos at bay, but also learn when adding a bit of chaos to your life can be beneficial.

The rest of this essay is available to paid subscribers. It includes practical mental models and tools to manage entropy intentionally, both professionally and personally, and an AI prompt to help you identify entropy hotspots. Get full access to all premium essays for just 26p a day.

The Universal Drift Toward Disorder

Entropy is a universal force present in all systems. Left to fate, our personal lives, our businesses and our thinking would decay. Energy has to be put into keeping entropy at bay, let alone making improvements. Some examples you may have noticed:

• Your body: You eat clean food, exercise regularly and have your sleep routine nailed down. You finally feel like you're starting to get somewhere, until suddenly you stop. The effort and sacrifices to get here, you decide, just aren't worth it anymore, so you let your hair down. Your body doesn't stay in the shape you got it into—it atrophies. Painfully quick as well. Muscle mass decreases, and fat increases. Without regular intervention, it will never be the other way around.

• Your habits: You decide to commit to a morning routine of learning a new language. You feel motivated at first, and so getting up in the morning isn't too bad. Besides, the words you're learning to start with are basic words and phrases. Over time, you have to put more effort into advancing, and you've made good ground thus far, but it's all getting a bit too much, so you decide to stop for a bit. Over time, the new skill you have learnt will begin to diminish. "What's that word, again?" will become a frequent phrase as you battle to try and remember what you once knew.

• Your projects: Every project you decide to start starts with goals, structure, and deadlines, but over time, entropy is working against you. There is a constant battle to stay organised whilst juggling your regular commitments with new ones. If processes aren't updated or you start missing deadlines, it's a slippery slope that fast turns into a giant snowball hurtling towards a cliff.

• Your knowledge: When you acquire new information, as much as some may want you to believe, it isn't stored in your mental hard drive ready for downloading when you need it. You have to work to understand the concept of what you have learnt and put that knowledge to work and get real-life feedback. Knowledge + Experience = Wisdom. If you are unleashing a barrage of information artillery on your mind, you won't have time to tend to any of it, and as a result, once again, entropy will come and take away from you what you do not guard.

I could write for days with examples of entropy at work, but the big takeaway is this: There are far more ways for you to be disorganised, imperfect and untimely than there are for you to be organised, perfect and timely. Entropy shows up as a loss of structure and efficiency everywhere in your personal and professional life.

How Entropy Creeps into Modern Professional Life

Entropy loves complexity because with complex systems comes the potential for more chaos. The system has to work harder to maintain order, and the slightest slip opens the door for chaos to come in and do its thing. Small, seemingly insignificant little breakdowns of order cascade over time. Compounding interest, as Einstein noted, is the "Eighth wonder of the world," but it works both ways—you can compound debt.

Below are some common ways in which entropy shows up in work and organisations:

• Clutter and disorganisation: Every modern organisation has to deal with emails, documents and clutter. If emails aren't read, documents filed, and clutter removed, chaos ensues. Ever had that dread of returning from holiday with hundreds of emails, meetings to catch up on and deadlines to meet? Your work just became a hundred times harder as a consequence of you wanting to take a break. That'll teach you! We've all searched in vain for something we can't find, or worked on the wrong document or process, and it's like pulling out teeth. It's incredibly frustrating, but it's also effortful and boring to "keep on top" of the admin. We hate being behind but also hate doing boring shit. It's just who we are. Regular clean-ups (just like mum made you do with your bedroom) are done for a purpose, and it should be no different with your professional environment.

• Slipping standards: One of the worst forms of entropy in any organisation is the slipping of standards. When a camel spider bites its prey, it slowly takes nibble after nibble, utilising digestive fluids to liquefy its flesh. The gradual relaxing of processes, preparation and quality is the equivalent of liquefying your standards into a mushy pulp. If you notice people are ignoring little rules or discipline is slipping, it's not because they're lazy—it's that maintaining the status quo requires active effort, and sooner or later that effort will give way to entropy.

• Communication breakdowns: Thriving organisations have clarity in their communication channels. Information is passed freely and timely from place to place and employee to employee, resulting in effective collaboration and up-to-date details. When information is constricted in the communication channels, it takes a lot of effort to unravel entropy's grip. If details are missing, people stop showing up to meetings, or assume somebody else was "picking it up," misunderstandings proliferate.

• Strategic drift: Imagine a basketball team doing drills on the court. This well-oiled machine knows exactly where each player is and has a multitude of plays that they can trigger. Teams practice drills relentlessly in any sport until it becomes second nature. But, imagine if somebody threw in 20 other basketballs—it suddenly would become nigh on impossible to execute the drill effectively. Everybody has to be moving in the same direction. Even if it's slow, because if you have people heading off on their own adventure, there won't be a natural place for anybody to arrive at. To keep entropy at bay—regularly course correct.

• Decaying networks: We've all had friends whom we've lost touch with. Slowly, over time, the distance between us has grown as they've gone one way in life and you've gone another. It's not that you weren't good friends, it's just…life! Networking, aside from cringe LinkedIn posts, is about fostering relationships, else they decay, and most people are on the lookout for how something can benefit them or their business. Building "contacts" is reduced to feeling like you're a SIM card collecting data on people you will never reach out to, but professional relationships—with colleagues, clients, mentors—require maintenance. However, you choose to build your network, it needs the same kind of attention a plant would need. Without the right kind of attention, plants die—as do relationships.

With all of these examples, it's clear: initial order and efficiency without regular course correction drifts into disorder. A classic systems trap and from which none are immune.

So far, I've talked about ways in which entropy can show up in your personal and professional life, but now I would like to discuss strategies and tools for maintaining order.

Managing Entropy

Establish Regular "Maintenance" Routines: Maintaining order is an ongoing process, not a one-time achievement. Set aside time, daily or weekly, to get your ship in order. Review your schedule, tasks, and clean both your physical and digital spaces. Delete or archive obsolete or out-of-date processes or documentation, and update any projects you are working on or collaborating on. This isn't sexy work, but there are plenty of frameworks out there, such as Getting Things Done, that can help you prioritise your time and energy effectively. Being organised, professionally or personally, enables you to go from running uphill to running downhill.

Simplify and Standardise Processes: Entropy loves complexity. If something doesn't have to be complex, then don't make it. Simplify wherever you can. Create checklists to combat memory fatigue or misinformation. Cut bureaucracy back to its bare bones. The world doesn't need more middlemen. Create standard operating procedures—not because you want to sound all cool and corporate (if that's even a thing,) but because they're easier to rely on than people. People, places and time change. How you operate and want others to doesn't have to.

Foster Clear Communication and Shared Vision: Miscommunication is entropy's best friend. Information must flow freely to hold off chaos and disorder, and having strong communication channels should be a common practice. If you have information silos then you need to think of a way to link those together both at work and at home. For this, I use Obsidian. Everything I ever write gets put into Obsidian and is linked to other notes and essays, which grows from an isolated seed into a stem, a branch, a tree. In the workplace, when everybody has the same shared vision, it's easier to course correct and catch the entropy drift in action when you have lookouts. Meeting notes, quick summaries and regular check-ins aren't micromanaging tactics—they remove ambiguity.

Embrace Continuous Improvement and Learning: Things naturally decay without regular intervention. A car bought today will not be the same car in 50 years, and regular maintenance and care is needed to keep it in good condition. The same applies to your systems. But that 2-litre engine in the car today can be upgraded to a V6 turbo if you wish, and the same philosophy should be instilled into everything you do. It's not hustle culture to say, "How can I shave 5 minutes off my 10K time?" or "Why is information not getting to those who rely on it at work, and how can we improve this?" Adopt a philosophy of continuous improvement and learning to avoid going stagnant.

Plan, Prioritise, and Be Proactive: There have been plenty of times in my life when my busyness has accelerated me closer to entropy. Being busy doesn't always translate to being effective. If you are the reactive type (a trait of mine I'm in constant battle with), then being busy may 'appear' to mean you're doing everything right. However, you could be inviting chaos to the table. If you don't pause and take stock of the situations you are in, you may as well put a bag over your head, because you're blind anyway. Take time to plan, to prioritise, to think. Even better, sometimes just do nothing—including thinking. Find a cadence that makes you think you're moving forward but not at a pace you can't keep up with. Proactive time-management tools such as time-blocking or task-batching can help add structure. If you are reactive, try conducting pre-mortems where you anticipate disruption in advance and try to deal with it before it comes to a head. We had a saying in the Marines that "Slow is smooth, and smooth is fast," and 16 years later, I still remind myself of that fact.

Build Resilience and Adaptability into Systems: "No plan survives first contact." Sorry, I know, another military quote, but in what environment is there such high entropy? Chaos that's out to do you harm. Hopefully, the entropy in your life isn't trying to kill you (any quicker than your decaying body is,) but no matter how well organised you are, life occasionally throws curveballs at you. I find they come in threes, but resilience is the ability of your systems to absorb disorder and keep going. To cultivate this, design your processes and teams with some redundancy and flexibility—elastic bands do snap, but they stretch beforehand. For example, avoid keeping critical knowledge in one person's head; do cross-training so others can step in (that way, one departure doesn't equal total chaos). Another technique is to document "Plan B" for common failures—ensuring you're not bumbling around in the dark when the lights go out. Never assume that something is "set it and forget it," and while some systems require an initial setup like cloud back-ups, others require active input to stay stable. This is the difference between active and passive stability. Aim to create both at home and at work, and if something can be automated (hello AI agents), then give it a go.

Address Problems While They're Small (Broken Windows): The broken windows theory is a concept that illustrates how small signs of disorder can lead to bigger problems—not just physically, but socially and systemically. Broken windows and boarded-up houses lead to more broken windows and boarded-up houses. "Why should I care? Nobody else does" is a catchphrase for those wanting to cause harm or havoc in areas where it already exists. Humans take cues from their environments, which creates a negative reinforcing feedback loop. Professionally, if you're a manager, you can see how quickly this type of behaviour would need stamping out. At home, a dirty bedroom might not seem too bad, but then it's your bathroom, your kitchen, your living room, your garden, your clothes, your attitude, your kindness—until why the hell should you care about anything? Nobody cares about you. But, by responding to and addressing small cracks, you're showing that you care to yourself and others around you. You're the elderly neighbour who still sweeps their front yard once a day.

Final thoughts: Entropy teaches us a humbling truth: there is no finish line to being organised. There is truly nothing that is completely "set it and forget it," and there is absolutely nothing that is off the table concerning entropy. Disorder is waiting, and it doesn't grow tired, old or frail. The only way to keep it at bay is to be prepared. Move and think like a boxer when trying to avoid a punch.

We’ve focused on avoiding entropy, but entropy is also the "leading edge of reality." It's where new patterns, ideas and understandings merge and collide. Without chaos, disorder and instability, life would grow stagnant—die. It becomes some sterile version of reality, not worth living anymore. Professionally and personally, the leading edge is where change happens. You have to step across the boundary—from known to unknown, because that's where evolution, innovation and creativity are waiting for you.

Do what you must to avoid chaos and disorder in your life, but now and again open up the door and step through it. You never know what life-changing thing is waiting for you behind it.

AI Prompt:

Entropy Hot Spot Detector

Instructions: Copy this prompt and customise the bracketed section with your specific area.

Read more

Welcome to the The School of Knowledge and this week’s free essay. Each Sunday, I send an essay to help you navigate your personal or professional transition, from those who have tried, failed and succeeded—those with skin in the game. If you want support on how to implement the mental models, frameworks, and systems, take part in Q&As and have access to our private chat, consider becoming a paid member.

Subscribe now

When facing life's complexities, you want to move beyond making decisions based solely on gut feelings. Your path forward isn't about gathering more information, but developing stronger mental processing systems that transform existing knowledge into better decision-making capabilities. Life is great at throwing curveballs at you, but by having frameworks, models and concepts to use at your disposal, you go from navigating in the dark to light.

When you start weaving these frameworks together, decision-making stops feeling like educated guesswork and starts feeling like something you can get good at.

Below are 21 mental models, concepts and frameworks I use to help me make better informed decisions and hopefully to get you thinking better:

1. Bounded Rationality

Humans make reasonable decisions based on their information, but they often fail to adjust, consider, or discount information that has not yet been seen (future) or exists in the distant past. We use the limited information available to make decisions we can live with, changing our behaviour only when necessary. People tend to exaggerate present information, such as current events, while discounting future risks that don't seem relevant to them. This is why individuals struggle to understand complex systems; they ignore the past and pay no attention to the future.

Why it's important: Traditional economics assumes people make optimal decisions with perfect information, but this concept, developed by Herbert Simon, shows why real human behaviour is different. Understanding bounded rationality helps explain why we use mental shortcuts (heuristics), why we sometimes make “irrational” choices, and why satisficing (finding something satisfactory) often beats maximising (finding the perfect option).

2. Circle of Competence

Your circle of competence represents the areas where you have genuine knowledge, expertise and judgement. It’s the edge of what you know you understand vs what you only think you understand.

Famed by the late Charlie Munger and business partner Warren Buffett, it reminds individuals to stick to what they know best. This isn't just true for investing but for all walks of life. You'd be foolish and, in fact, more than likely dead, if you tried to be an Alpine climber if you'd never climbed before.

Why it's important: It’s tragic to see mistakes being made by people who have no credibility or right in making those decisions in the first place. Yet in spheres such as politics, you have incapable people placing heavy bets with somebody else’s money. If you have people making big decisions in things they know little about, AND where the consequences of getting it wrong are personally small to nil, you don’t have a thunderstorm brewing—you have a category 5 hurricane.

3. Anti-fragility

Anti-fragility is a concept where things get stronger from stress, disorder or challenges. Nassim N. Taleb developed a triage for how things respond to stress:

• Fragile: Things that break under stress (like a glass vase that shatters when dropped)

• Robust: Things that resist stress and stay the same (like a rubber ball that bounces back)

• Anti-fragile: Things that improve under stress (like your muscles getting stronger after exercise)

Why it's important: This concept helps you understand that stress, chaos and challenges shouldn’t be something to be avoided, but in fact, welcomed. There are times when you shouldn’t seek chaos, such as in your relationships, but there are other areas of your life where growth, opportunity and chance meet at the intersection of what you think you are capable of and not. Overprotection of one’s ego, resources or commitments isn’t a show of organisational superpowers but a vulnerability for when the cards do fall.

4. Confirmation Bias

Confirmation bias is our brain's tendency to seek out evidence that supports our existing beliefs while ignoring or dismissing contradictory evidence.

People who favour one political party over another champion their side’s policies, regardless of whether they believe in them or not.

Why it's important: Confirmation bias powerfully shapes how we see the world without us realising it. It creates a distorted reality where we think we’re being objective, but we’re trapped in a loop of self-reinforcing beliefs. This affects everything from personal relationships to major societal issues like politics and science. Science once stood for absolute truth, but has become increasingly politicised because of people’s bias towards their parties.

We would all do well to learn from Charles Darwin, who spent the majority of his life trying to find ways in which what he believed was false.

5. Critical Path Method

A step-by-step project management framework for identifying essential tasks that determine the minimum project duration.

Imagine building a house: you can’t build the brickwork before the foundations have gone in, but you can paint different rooms, lay the floor, or hang doors at the same time.

Why it's important: The Critical Path Method helps you focus on the tasks that truly matter for staying on schedule. If tasks on the critical path get delayed, the whole project is at risk of being delayed as you fight to try and claw back time. This framework prevents wasting resources on less urgent tasks and helps identify which delays are worth worrying about. It's the difference between panicking over every small setback versus knowing exactly which problems need immediate attention to keep a project on track.

6. Decision Journal

A decision journal is a record where you write down important decisions before you make them, including what you expect to happen and why. Later, you come back and see if things turned out the way you thought they would.

Unlike a diary, where you write about your day, a decision journal is structured. You state a decision you are about to make, why you are making it and what you expect to happen and come back to it over time to see how it turned out in reality.

Why it's important: Our memories trick us. We often forget why we made decisions or convince ourselves we knew what would happen all along (when we didn't). A decision journal keeps a painfully honest record of your thinking process.

7. Deliberate Practice

A structured training methodology designed to improve performance through focused effort on specific weaknesses or areas needing improvement. Unlike regular practice, where you just repeat something you already know how to do, deliberate practice pushes you just beyond your current abilities, uses focused attention, and requires feedback on how you're doing.

Sport offers an easy analogy because it’s easy to visualise the Michael Jordans, Ronaldo’s and Tom Brady’s perfecting their craft one small iteration at a time for hours on end, but deliberate practice can be used for almost anything so long as it pushes you beyond your limits and has immediate feedback. Learning to play musical instruments is another example.

Why it's important: Deliberate practice explains why some people become extraordinary at what they do while others plateau despite years of “experience”. It’s important to note that simply doing a thing over time will not automatically make you great. It’s how you use that time that truly matters.

8. Growth vs Static Mindset

A concept that distinguishes between seeing abilities as dynamic versus static. Famed by Carol Dweck, a growth mindset is believing that your abilities are fluid and not fixed—they can change over time. A fixed mindset is believing that your abilities are fixed—what you're born with is what you have for life.

It’s easy to see the flaw in a fixed mindset from the get-go. As babies, we’re born with no talents. What we deem as our abilities as adults is a culmination of what we learnt as kids or early adults. If we have bad learning habits, it makes sense that we might be poor at something.

Why it’s important: You’re mindset has been proven to dramatically influence how you approach challenges and react to failures, and simply believing that your abilities can change for the better automatically puts you ahead of people who don’t.

9. Hanlon's Razor

This concept suggests we shouldn't attribute to malice what can be adequately explained by incompetence. Our brains are quick to assume bad intentions, and Hanlon’s Razor asks us to pause before jumping to negative conclusions and states that most mistakes people make can be attributed to carelessness, misunderstandings or thoughtlessness.

Why it’s important: Hanlon’s Razor helps you stay grounded and avoid paranoia by staying more rational and avoiding automatically believing that people always have bad intentions. A good one to remember for personal and professional relationships.

10. Ikigai

Ikigai is a Japanese idea that represents the sweet spot where four elements of your life overlap: what you love doing, what you’re good at, what the world needs, and what you can be paid for. It's often described as “your reason for being” or “what gets you out of bed in the morning.” The idea is that when you do activities that fit in the middle where all circles meet—things you love, excel at, can earn money from, and that helps others—you’ve found your Ikigai.

Why it’s important: The concept of Ikigai has been hijacked by Western thought, but it still offers a beautiful framework for finding a balanced and fulfilled life that goes beyond “making loads of money” or “just follow your passion.”

One of my most popular pieces discusses it in more detail below:

11. Epistemic Rationality

When you say “I believe there will be a world recession in 2026,” you are engaging in thinking that concerns epistemic rationality. But, how do you know what you believe is true? This skill, and that’s what this is, is about accurately matching your beliefs with that of reality. It’s about figuring out what’s true, rather than what you wish were true or what sounds popular.

Why it’s important: Our brains are full of biases and shortcuts that distort our thinking and understanding of reality. Today, more than ever, it’s dangerously important to make sure you back-check information you are told and information that you readily believe. For those interested, the following concepts help explore this topic in more detail: Bayesian reasoning, calibration training, falsification, steelmanning, double crux and explicit bet-making.

12. Instrumental Rationality

When you ask yourself, “How can I grow my business’s revenue?” you are engaged in thinking that is considered Instrumental Rationality or simply, how do I make better decisions to achieve my goals? It is the skill of taking effective actions to help you determine the most efficient path.

Why it's important: Having accurate beliefs (epistemic rationality) is only useful if you can translate those beliefs into effective action. Many people know what they should do, but still make choices that work against their own goals. Instrumental rationality provides frameworks for avoiding common decision traps such as preference clarification, value of information analysis, implementation actions and goal factoring.

If you’re interested in Epistemic and Instrumental Rationality and would like an essay diving deep into one of them, please let me know in the poll below:

13. Inversion

Legendary investor, Charlie Munger, is infamous for saying Whenever you face a problem, you should ‘Invert, always invert.’ Inversion is approaching problems backwards (what could make this fail?) rather than forwards, to identify hidden obstacles and blind spots to avoid.

Imagine planning a camping trip. Rather than itemise everything you can remember you need, inversion asks you to consider “what would ruin this trip?” You would automatically think of the weather and not having adequate clothing, running out of food or water, having no sleeping bag, etc, leading you to pack adequate clothing, food and a sleeping bag.

Why it's important: It’s a lot harder to sit there and think of how to do something. Questions such as “how can I lose 3 stone in 6 months,” or “how can I learn Spanish in 12 months,” can often lead to procrastination and overwhelm. It’s much easier to list all the things a healthy person would do, such as being aware of their calorie intake (and having the means to track it), eating whole foods over processed and exercising a few times a week. Likewise, what would somebody bad at learning Spanish do? They’d never practise deliberately. They’d go days or weeks in between sessions, and they wouldn’t reflect or test themselves to see if they’re making progress. In the first instance, do what a healthy person would do, and in the second, don’t do what somebody badly learning a language would.

14. Kintsugi

Kintsugi (“golden joinery”) is the centuries-old Japanese practice of repairing broken pottery by highlighting the areas of breakage with lacquer mixed with powdered gold, silver, or platinum. Unlike most repair methods that aim to hide damage, Kintsugi deliberately highlights the fractures.

Why it's important: We live in an age that promotes perfectionism. Our social media platforms are snippets taken only from the moments in life we want people to see. How vain have we become. Yet again, the Japanese offer a practical philosophy that focuses on highlighting the fractures rather than trying to hide their flaws. It’s a powerful metaphor for how we can approach life’s challenges and teaches us that our fractures, cracks and leaks don’t need to be hidden but can indeed become our greatest strengths.

My last post dived deeper into this topic:

15. Maker vs. Manager Schedule

A manager’s schedule is filled with hourly blocks, meetings and the coordination of people, resources and decisions. Their days can often be fractured. A maker’s schedule abhors such schedules and instead requires uninterrupted blocks of time to create things, with even one ‘quick’ meeting ruining their concentration and flow.

Why it's important: Understanding the difference between these two fundamentally different approaches to time management can help organisations design better workflows. The distinction helps individuals recognise which schedule type they need for different tasks, and the maker’s schedule offers a framework for structuring time according to different types of work requiring different attentional patterns.

16. Minimum Viable Progress

A concept for breaking down goals into the smallest meaningful steps that demonstrate forward momentum. Our brains love doing nothing at all (leading to procrastination) or trying to do everything at once (leading to burnout.) MVP is about finding a balance between doing nothing so small it feels pointless and something so ambitious you’ll never finish it.

If you decided to write a book, after the initial excitement, you might be met with dread and questions such as “how on earth am I going to finish this?” But a typical book is roughly 300 pages. If you wrote one page a day (about 250 words) in 300 days, you would have a draft for your book.

Why it’s important: Small steps in the right direction compound over time. The difference between doing nothing, too much or just enough to move the needle could be the difference between you achieving a goal or not. Smart investors don’t ask for 75% return on their pound a year; they ask for 10% over 40 years.

17. Negative Visualisation

Practised by the Stoics (premeditatio malorum) is the concept of imagining worst-case scenarios to develop appreciation and prepare for contingencies. Focusing on things which you wish would never happen might appear to be a sadistic exercise, but if done correctly (leaving you upset, anxious or terrified,) leaves you with a fresh perspective for that thing.

I encourage you to think deeply and imagine losing somebody you love more than anything in the world. Somebody that if they passed, you’re life would be hollow. Imagine their funeral, how they would look in the casket, cold, and be sad that you never got a chance to say goodbye to them and that you’ll never get the chance to tell them what they meant to you. You’re surrounded by your friends and family at the service, who tell you how sorry they all are for your loss, but there’s never be anyone in that room who can imagine the pain that’s hurtling through your body.

Why it’s important: We take things for granted. Every. Single. One of us, and it’s often only when life pulls the rug right from under our feet that we realise it. This brutal exercise offers you a fresh opportunity to appreciate everything life has to offer you before it all gets taken away for good.

Sorry, if you cried by the way!

18. OODA Loop

A four-step cyclic model for decision-making under pressure: Observe (gather information), Orient (analyse and understand the situation), Decide (choose your course of action), and Act (implement your decision, creating a feedback system for continuous improvement.

Developed by military strategist John Boyd, the OODA Loop recognises that situations change rapidly and that continuous adaptation beats perfect planning. I’ve just watched a documentary on the hunt for Osama Bin Laden, and when Seal Team 6 planned their operation, they went through rehearsals hundreds of times, planning for every type of situation. What they didn’t plan for was for one of the helicopters to crash outside the compound. After they gathered themselves, they tried to breach the compound using explosives to blow the door off, but the door was a false door. The team continuously adapted to their surroundings to complete their mission, and of course, the rest is history.

Why it’s important: This framework goes far beyond a military context and can be adapted to business, sports, personal conflicts or just about any competitive situation. The OODA Loop prevents you from staying stuck in outdated plans, with success often going to those who are readily adaptable and agile.

19. Opportunity Cost

Opportunity cost acknowledges that every choice you make means forgoing alternatives, making you more deliberate about how you allocate your time, energy, and resources.

If you decide to invest £5000 in a stock, the opportunity cost is everything else you forgo to make that investment. Maybe it’s a family holiday, home improvements or a rainy day pot.

Why it's important: Similar to inversion, opportunity costs asks us to think of the opportunities we could potentially miss out on as opposed to our traditional way of thinking, which is to think of the thing we want. It forces you to think of the whole picture in that given moment by considering alternatives. There is no such thing as a free lunch—everything has tradeoffs.

20. The Rumsfeld Matrix

Developed by former defence secretary Donald Rumsfeld, the Rumsfeld Matrix splits knowledge into four types: known knowns (things you know you know,) known unknowns (things you know you don’t know,) unknown knowns (things you don’t know you know) and unknown unknowns (things you don’t know you don’t know).

Aside from being a tongue twister, this framework is excellent for clarifying your current understanding of a topic or situation. It forces deliberate thinking, planning and risk management.

When the Americans were in Fallujah, Iraq, they were doing house-to-house fighting, and no other example exemplifies this matrix more so. Your known knowns are that you know you’re trained well and that somewhere in this city are people who want to kill you. Your known unknowns are that you don’t know how many, if they are male or female, what they’re wearing or how trained they are. Your unknown knowns are all the training and exercises you’ve forgotten about, but will come rushing back when you boot that door down and clear the room. The unknown unknowns are the things you don’t know you don’t know such as the booby trap you’ve just set off or the end of an AK47 that’s pointed right at the door ready to empty a magazine into your chest.

Why it’s important: The matrix helps you identify blind spots in your thinking and planning. If I were clearing that room, two grenades would be going in before me but even then there’s still a risk that there’s something I haven’t thought about. Not everything in life is life and death, but by acknowledging that there are things that can be planned for and things that can’t, you can build in buffers or think of ways to either mitigate or remove the risk. The Ukrainians have certainly learnt from the perils of house-to-house combat by using drone warfare—almost certainly an unknown unknown for how effective the Ukrainians will be at using them against the Russians when they crossed the Ukrainian border.

Interested in more? Check out my deep dive below:

21. Champion Bias

For every boxing champion we celebrate, thousands of others failed. Champion Bias occurs when we overestimate the likelihood of success by focusing only on the winners and ignoring all the failures. Mark Zuckerberg, a college dropout turned billionaire bro, created Facebook—the first social media platform that’s transformed how we interact online and in life. But, how many college dropouts does it take before you get a Mark Zuckerberg? How many college dropouts tried to start a tech company and failed, and how many just amounted to nothing or ordinary lives?

Where are their stories?

We all love success stories, especially rags-to-riches. Our screens are filled with the triumphs of champions, and we become their cheerleaders. Champion stories sell cinema tickets, books and sponsorship deals, not Steve the college dropout turned car mechanic.

Why it's important: Champion bias severely distorts our understanding of risk and probability. We naturally hear more stories about winners because they're inspiring and newsworthy, while failures remain invisible or forgotten. There’s nothing wrong with dreaming or shooting for the stars, but by focusing solely on the winners, you are choosing to have incomplete information from all the failures that people made before them. A smart strategy would be to seek out both.

Interested in more? Check out my deep dive below:

Until next time, Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps you understand the world through practitioners. Those who try, fail and do (skin in the game). 📚💡

Join our growing community of like-minded lifelong learners here:

Subscribe now

Subscribe now

When I buy plants for my home, I do so with a specific purpose in mind—usually a space I want to embellish. When the plant grows too big for that space, I cultivate it—cutting sections off and repotting it into a smaller container in the hopes that it grows into something beautiful. With the correct watering, food and sunlight, this cycle continues as the plant repeatedly outgrows its home.

I find it easy to get carried away and buy houseplants (I have about 40 in my home) because they immediately lift a space, a corner or an entire room. Ideas are like houseplants. For every beautiful plant I see there are a thousand great ideas I seemingly have. The problem with having too many house plants is that it's difficult to find the time between my job, sleeping, eating, having fun, doing nothing—and looking after them. They do need to be looked after—because they're attention seeking little bastards. They all want the sun, but not too much, watering, but not too much, and feeding but only at certain times of the year.

Great ideas demand similar attention. Without it, they wither as one promising concept is pushed aside for another, as my head, filled with dopamine, enthusiasm and anxiety battles to figure out what to do with all the information I just keep throwing at it.

If I went to a garden centre and somehow managed to bring home 6,000 plants. My wife would probably think I was having some kind of mental breakdown. She'd watch, eyes wide open, as I kept ferrying in one plant after another. “How many more do you have, Karl?” She'd ask. “All of them” I would exclaim. “I got as many as I could get my hands on.”

It's difficult to find an exact number because as you can imagine, it's a hard study to conduct, but the number of ideas we have per day is thought to be between 6,000 and 60,000. It's obviously a ridiculous idea for me to attempt to look after 6,000 plants, but it's not ridiculous for you to have 6,000 ideas jam-packed in your brain all competing for attention?

There's an old analogy to a cup of tea. If you want to drink new tea you have to get rid of the old tea that's in your cup, otherwise your cup just overflows and you get a wet mess. Your head is like that cup. It has a limited capacity and if you want to learn something about the world you should keep your head in order to learn it. It's very easy to spend your whole life swishing old tea around in your cup thinking it's great stuff because you've never really tried anything new, because you could never get it in, because the old stuff prevented its entry, because you were so sure the old stuff was so good, because you never really tried anything new... on and on in an endless circular pattern.

- Robert M. Pirsig

Consider your own experience with ideas and information. There comes a point where your time and attention just can't stretch anymore. It snaps. You might be able to tend to 5 concepts but what about 50, or 100? You just wouldn't have the time or bandwidth and if you did try to look after 100 ‘great’ ideas the care each received would diminish, as would other areas of your life as you attempted to keep up with your insatiable appetite.

Not every idea deserves space in your mental garden. You need to learn to cultivate ideas selectively and discover which conditions each idea thrives in. Some concepts flourish in the spotlight whilst others develop better in reflection. The plant/idea metaphor works because they both follow the same fundamental truth: they both can grow or die depending on how you care for them.

For £8 a month you'll get essays like this all year, plus access to member-only comments, private Substack chat and curated AI prompts that help you build the mental frameworks needed to navigate life's transitions with clarity and purpose.

Read more

Welcome to the 1,468 people who have joined my community since my last post. If you haven’t yet subscribed, join 4,479 lifelong learners here:

Subscribe now

“There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say, we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know.”

- Donald Rumsfeld

The term ‘Rumsfeld Matrix’ was coined in 2002 after Donald Rumsfeld, the then-US Secretary of Defence, held a press conference about the Iraq war. Initially, his words were met with confusion, but over time, they have been adopted and expanded beyond military strategy to business management, education, and personal development.

While Donald Rumsfeld popularised this framework in 2002 the idea of ‘known unknowns’ can be traced back to Socrates and his famous line, “I know that I know nothing.”

At its heart, the matrix operates at the intersection of epistemology (the theory of knowledge) and decision theory and reflects how individuals and organisations process information under uncertainty.

The matrix divides knowledge into four categories or quadrants:

Known Knowns: Things we explicitly know such as facts, information or skills we know we possess.

Known Unknowns: These are things we don’t know, such as gaps in our knowledge that we have already identified.

Unknown Knowns: Things we don’t know that we know.

Unknown Unknowns: Things we aren’t aware we do not know.

Using this tool to map out what you know and don’t know can enable you to make more informed and effective decisions under uncertainty.

Let’s review a basic example from my job this week.

My construction company is undertaking a large hardscaping project at a busy shopping centre. Information as to what existing underground services are in the area is unknown, which puts my team at risk of accidentally hitting a service, causing potential injury, property damage and losses for the shops that will have to temporarily close whilst it’s being fixed.

I used the Rumsfeld Matrix as follows:

Known Knowns: I know there has to be underground services within my working boundary, and that a risk assessment has to factor this in and control measures put in place.

Known Unknowns: The extent, type and location of services within my working boundary.

Unknown Knowns: Information that is held ‘somewhere’ detailing exactly what services are in the area as well as their location and depths.

Unknown Unknowns: Poor or incorrect workmanship and laying of services that could cause potential harm or delays.

From this, the first port of call was to ask the client for any information they had about the existing services– which was zero. The second reasonable step was to contact the energy and data service providers to get what information they had. Which was limited and insufficient. The only 2 reasonable steps left were to either perform an archaeological dig which would slow things down, cause delays and inflate costs or conduct a GPR (Ground Penetrating Radar) survey which would take 1 day and would accurately detail every single service in the area.

That was a fairly easy example, but going through the steps from known information, to unknown information, forces you to address the gaps in your knowledge. Typically we skip the step of identifying what we don’t know and focus only on what we explicitly do know, especially when facing uncertainty.

Share

The Unknown Known category, can naturally be difficult to grasp at first because if you know something then it’s not unknown right? A very basic analogy to help illustrate this concept could be riding a bicycle. I haven’t ridden a bike since I was in my late teens, but I know I could ride a bike if I jumped on one. I also don’t know the physics of riding a bike but again, I don’t need to to just ride the bike. A simplification of this concept could be to say, “Something that hasn’t yet been formalised.”

A person who wishes to become a writer might not have any formal writing education but may nevertheless have a natural talent and take to it like a duck in water. Speaking of ducks, they don’t go through duck swimming school, they are simply born and learn to swim. People have all kinds of capacity to do things that they don’t because they aren’t aware of it, and therefore don’t try.

The difficulty with unknown knowns is bringing them to light and turning them into known knowns so they can be shared and adopted by others.

Let’s walk through another example, but this time go into a bit more detail. Suppose I have a meeting with the two other co-owners of the company and we conclude that our aim over the next 3 years is to double our revenue. Let’s apply the Rumsfeld Matrix to the question “How do we double our revenue in the next 3 years?”

To double our revenue several things will need to happen in isolation or tandem;

Known Knowns: An increase in the number of projects, an increase in revenue per project, and an increase in staffing, resources and owned assets to fulfil the increased number of projects. The company will also need more cash to fund the new capacity requirements. We also know our current revenue figures, how much we’ve grown over the last 11 years, and what the industry average is.

Known Unknowns: Economic and industry volatility, new or updated regulations, staff turnover, future staffing capacity to deliver, labour shortages, tax increases, extreme weather events, material science advancements and what services will turn out most profitable.

Unknown Knowns: Underutilised relationships with existing partners or associates, hidden inefficiencies within the current organisational setup, tacit expertise within our current team that hasn’t yet been formalised, cost savings with existing or new suppliers, where leverage can be applied, and unrecognised competitive advantages to exploit.

Unknown Unknowns: Black swan events, emerging competitors, regulatory or client changes that could present opportunities, economic or social change that could create demand, materials that could deliver more efficiency or profitability, hidden market segments that are currently under delivered and novel business models such as the EV boom that has to be facilitated by construction workers installing the infrastructure.

There are a lot of potential avenues for my company to go there and I would argue that those answers would and could apply to most businesses or individuals. Are you a one-person content creator struggling to make a mark and be heard? What underutilised relationships are you not exploiting? If you don’t have any that’s fine because that’s your new starting point. Where are the inefficiencies in your current workflow? Cut before you add anything new or look for avenues to leverage your time and productivity.

One of the benefits of understanding your known knowns, and moving unknowns, to knowns, is that you can create systems around them. The curious mind can seek out these unknown knowns and turn implicit knowledge into explicit that can be shared, multiplied and leveraged.

Until next time, Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps you understand the world through practitioners. Those who try, fail and do (skin in the game). 📚💡

Join our growing community of like-minded lifelong learners here:

Subscribe now

Welcome to the 2,434 people who have joined since the beginning of the year. If you haven’t yet subscribed, join our growing community of over 3,000 lifelong learners here:

Subscribe now

Wisdom is the quality of knowledge, experience, and good judgement, and it is more important than ever when considering complex systems. From running multi-trillion-dollar businesses to becoming a gold-medal-winning Olympic athlete, the most successful people in the world don't rely on motivation—they rely on systems.

I previously explained how to become a systems thinker here and how to avoid systems traps here, but if you want to make meaningful changes in your life, master these 10 systems wisdoms:

Share

Get the Beat of the System

Data visualisation must precede any system analysis.

Plotted data helps differentiate between actual patterns and assumptions about system behaviour. You see the forest from the trees. Common claims, such as “lower taxes equal more growth,” can be verified. A system's history reveals its essential components: elements, flows, stocks, and feedback loops.

Historical analysis provides the key to system comprehension.

Expose Your Mental Models

Testing your mental models is crucial for validating your interpretation accuracy.

Mental models help simplify our interpretation of the world around us. They act as thinking tools to help us predict, define, or solve problems. These frameworks operate via positive feedback loops, producing specific outcomes and behaviours. The incorrect application or use of a mental model is the user's fault, not the mental model's.

If you want to use the mental model of inversion to solve a problem but fail to invert, it is not that inverting is bad at solving problems. It’s that you’re bad at inverting problems.

Expose and verify how mental models interact in the real world.

Distribute Information

Information holds systems together, but if there are delays, restrictions, or deliberate falsification of information, this can lead to systems exhibiting undesirable behaviours. Effective decision-making demands complete information for informed and timely decision-making processes. Therefore, one must actively seek out potential information delays, especially when parties are incentivised to withhold it.

Where information flows freely, systems flourish; where it stagnates, they fail.

Make System Concepts Part of Your Language

Language helps us understand and define our reality.

When I was in the Royal Marines, the Commando values of courage, determination, unselfishness and cheerfulness in the face of adversity became defining characteristics through their constant reinforcement. I became them. Almost 10 years after leaving the Marines, those words still reverberate around my head.

The evolution of words such as patriot and non-binary have undergone radical semantic shifts. Patriot, once a defender of nation, values and traditions has been hijacked by the far-right and non-binary, once related to mathematics, doesn’t even show up on Google search as anything to do with mathematics anymore.

Language shapes our boundaries of what things mean, and they are ever-changing and reforming. Integrating systems language into our daily language will help us talk about what we see.

Pay Attention to What is Important, Not Just Quantifiable

As a society, we value quantity over quality. You can make your mind up as to whether you think that’s good or not.

But, if quantity is what we seek as a society, are rewarded for, rate and compare ourselves against, then quantity is what our systems will produce. Systems will maximise numerical output. Remember, the language we use to define the goal of a system will shape its behaviour. Even in scenarios where mass production serves humanity- like a global vaccination programme- quality remains inextricably linked to quantity. Yet this relationship flows one way: while quantity often requires quality’s blessing, quality does not.

If a system is designed to weigh quality heavier than quantity, then quality is what it will produce.

Locate the Responsibility in the System

Modern society suffers from a critical disconnect between decisions and consequences.

Our world increasingly allows consequential decision-makers to avoid accountability, from high-level politicians to everyday workers. This fundamental principal-agent problem, when combined with the tragedy of the commons, creates what Charlie Munger termed lollapalooza effects. That is, exceptional events and consequences. When 2, 3 or 4 forces are moving in the same direction and they collide, the results aren’t linear, they’re exponential.

Look at the 2008 financial crash. Cheap and predatory lending driven by greed, envy and FOMO behaviour inflated the American housing market until the bubble burst, bringing (almost) everyone down with it. Thankfully, the perpetrators were swiftly brought to justice, and we all learnt our lesson.

Of course, that’s a lie.

One, I suppose you could say, unfortunate man, was arrested. That’s it. The film The Big Short with Christian Bale and Ryan Gosling is a great film for anybody wanting to get an idea of the impact these mega effects can have.

A lack of accountability breeds a drift to low performance and eroding values.

Stay Humble–Stay a Learner

Rigidity is a learning straightjacket.

Learning requires openness to being wrong and accepting failure. This mindset grants freedom to experiment and learn through trial and error, with each mistake offering valuable lessons, provided each misstep serves as a stepping stone rather than a stumbling block. Systems can be highly complex to see, let alone understand or influence, but approximate progress in the right direction trumps precise movement in the wrong one.

Expand Time Horizons

Systems remain indifferent to operational speed–they encompass multiple interconnected time scales.

Behaviours and outcomes can happen instantly or can take years to manifest the consequences of yesteryear's actions. This coupling and uncoupling of fast and slow, strong and weak, is constantly playing out like the ebb and flow of a tide.

Present actions cast long shadows through time, and second and third-order consequences should always be considered when designing systems or seeking to alter their behaviour.

Defy the Disciplines

Rarely will the behaviour of a system perfectly align with an academic discipline.

Be a truth seeker, not a staunch advocate. Systems, problems, and solutions often blur the lines between academic disciplines and rely on what Charlie Munger would call worldly wisdom. You should collect and store mental models and frameworks from which to shine a light on systems and follow your nose wherever it leads you.

After all, curiosity is a prerequisite for learning.

Don’t Erode the Goal of Goodness

If the standards we value today become yesterday’s memories and are replaced by broken and corrupt values, we fall into the classic system’s trap of the drift to low performance. Combined with the tragedy of the commons, we are left with zero-sum games everywhere as each person looks out for their own and only their best interests.

To combat this demise, the goal of the systems we create has to be incorruptible and unyielding, especially when we live in a world where bad behaviour is held up, magnified and exacerbated by social media.

Remember, there is plenty of goodness going around, but unfortunately, that doesn’t often lead to shareable content.

Final Thoughts

Learning any new skill is difficult, and that is especially true when learning about systems. It could take years to understand complex interwoven systems, but the work will be worth it, for you will begin to see things you have never seen before. You will have a new set of eyes from which to view and, hopefully, change the world.

Until next time, Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps you understand the world through practitioners. Those who try, fail and do (skin in the game). 📚💡

Join 3000+ lifelong learners here:

Subscribe now

Most failures in life aren't random—they're predictable patterns we keep repeating. The world in which we live is an accumulation of the systems we have built, purposefully or not. The outcome and behaviour of those systems meet at the intersection of our imagined, neat, linear worldview and a nonlinear, messy reality.

I previously explained how to become a systems thinker, but unless you understand how to spot system traps, you’ll be doomed to repeat them repeatedly.

While we yearn for predictable, linear relationships where cause leads directly to effect, real-world systems stubbornly refuse to follow our neat mental models. They engulf and entangle themselves messily in our nonlinear world. Some systems have behavioural patterns that are so undesirable that change or intervention is needed. We call these system archetypes.

Below are 8 system archetypes every system thinker needs to know.

Policy-Resistance

When multiple actors in a system have conflicting objectives, they often end up in a draining battle to maintain the status quo.

If one party were to increase their efforts, it would be met with equal or greater force, intensifying the cycle of escalation. This dynamic plays like a perpetual tug of war as each strains to pull the system toward their preferred state. This pattern manifests itself in everything from foreign policy, to bitter political standoffs and arms races.

You have to ask yourself who benefits from such a broken system that seems to satisfy nobody.

The Tragedy of the Commons

Ecologist Garrett Hardin described the commons system in a classic article in 1968. Hardin used as his opening example a common grazing land:

Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons... Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?"...Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1…Since, however, the effects of overgrazing are shared by all,…the negative utility for any particular decision-making herdsman is only a fraction of-1. The rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another…But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each, is locked into a system that compels him to increase his herd without limit-in a world that is limited.

Individual rationality in shared resources inevitably leads to collective disaster.

When faced with common resources like forests, fisheries, or clean air, humans consistently demonstrate a remarkable blindness to collective consequences. Each person’s seemingly innocent decision to take "just a little more" compounds with thousands of identical choices, creating a devastating cascade of overuse. This pattern of individual rationality leading to collective irrationality plays out across scales, from local fishing spots to global climate change.

The tragedy of the commons demonstrates our limited perspective on long-term consequences.

Drift to Low Performance

Past poor performance creates a dangerous self-reinforcing cycle in systems.

A reinforcing feedback loop of eroding standards continuously drags the system standards lower and lower. Each decline in performance makes the next decline more acceptable-this is how companies, relationships and values die. Putting the breaks on this drift can only be done from a commitment to continuous performance.

If mediocrity is what you accept. Mediocrity is what you will get.

Escalation

Escalation is one of the oldest tricks in the ‘Dick Swinging Competition Playbook.’

Unfortunately, when parties enter into competitive escalation, they trigger a dangerous feedback loop that grows not linearly, but exponentially. Escalation is how the Americans ended the Second World War at the expense of hundreds of thousands of Japanese people. It’s also likely that escalation is how something even more catastrophic will happen in future. What starts as a small slight can quickly become a major escalation of political and military might.

This pattern isn’t exclusive to foreign policy or war with the pattern repeating in countless human interactions ranging from playground disputes, gang warfare, smear campaigns, and arguments with loved ones.

The obvious answer to combat escalation is to never get involved in the first place. Even more obvious is just how difficult that is to put into practice.

The Competitive Exclusion Principle

In any shared ecosystem, competition for resources inevitably leads to domination by a single species. Cough!

One of the species will be more resourceful, will multiply more and will dominate the other species, often to local extinction. The competitive exclusion principle demonstrates how shared resource dependency leads to eventual dominance by a single species. This natural law shapes the distribution and survival of species across ecosystems.

Nature eliminates redundancy through competition. If the winners are allowed to continue winning unbounded, a reinforcing feedback loop will be introduced where it’s easier for the winners to keep winning and the losers to keep losing. A zero-sum game. Moving away from nature, you can see this play out with companies that are hit with antitrust lawsuits against them for monopolising sectors, industries or commodities.

Nature, and more so businesses, are brutal at eliminating redundant players.

Addiction

Surface-level solutions often mask deeper systemic problems while making them worse.

Quick fixes like drugs, money, or social media likes can provide immediate relief from discomfort, but only temporarily. Be on the lookout for symptom-relieving, or signal-denying policies or practices that do not truly intervene to disrupt the negative reinforcing feedback loop. The existing reinforcing feedback loop needs to atrophy and be replaced with a new reinforcing feedback loop that will contribute to the desired behaviour. As the system becomes more reliant on the new behaviour, the more the existing negative reinforcing feedback loop erodes.

True intervention comes from replacing broken cycles and not just treating their symptoms.

Rule Beating

When systems are perceived as unfair and they are disliked, humans become remarkably creative at circumventing them.

From corporate tax havens and the use of anonymous social media accounts to bullying and harassment, people will always think of ingenious ways to ‘beat the rules.’ The sophistication not only shows the creative plays people will use to go around the game, but the insidious ways that poor rules contribute to nefarious systems’ behaviour. I once watched in amazement at the speed and technicality of a bunch of lads stealing a car in the dark of night. Potential F1 pit team there I thought, if only they’d apply themselves.

If you have poor or unfair rules then people will play the game and find ways to manipulate them in their favour.

Seeking the wrong goal

You’ve probably heard the saying “Build systems, not goals?” I’ve said it myself, but it’s not 100% accurate.

Goals are the direction setters for systems. Systems need goals.

Without clear and definable parameters, the balancing and reinforcing feedback loops can not work to produce the desired outcome or behaviour. If the desired system state is a certain water level in a reservoir, and there is no monitoring or intervention system in place to stop it from dropping below that level, then water shortages will ensue. If your goal is to bring in more customers for your business, but your focus and resources are directed at profitability, then don’t be surprised if you have a different outcome from what you expected.

Clear goals enable systems to self-correct and maintain desired states.

When creating systems you need to be especially careful not to confuse effort with results, or else you will produce a system that produces effort and not results. Systems obediently follow the parameters you ask them to produce:

Once upon a time, people raced sailboats not for millions of dollars or for national glory, but just for the fun of it. They raced the boats they already had for normal purposes, boats that were designed for fishing, or transporting goods, or sailing around on weekends.

It quickly was observed that races are more interesting if the competitors are roughly equal in speed and maneuverability. So rules evolved, that defined various classes of boat by length and sail area and other parameters, and that restricted races to competitors of the same class.

Soon boats were being designed not for normal sailing, but for winning races within the categories defined by the rules. They squeezed the last possible burst of speed out of a square inch of sail, or the lightest possible load out of a standard-sized rudder. These boats were strangelooking and strange-handling, not at all the sort of boat you would want to take out fishing or for a Sunday sail. As the races became more serious, the rules became stricter and the boat designs more bizarre.

Now racing sailboats are extremely fast, highly responsive, and nearly unseaworthy. They need athletic and expert crews to manage them. No one would think of using an America's Cup yacht for any purpose other than racing within the rules. The boats are so optimized around the present rules that they have lost all resilience. Any change in the rules would render them useless.

The boats used for the America’s Cup demonstrate perfectly the example of correct goal setting, but demonstrate a horrifying fragility to the slightest of change. This advice should not be ignored when we create our systems.

Final Thoughts

Systems are incredibly complex even at a basic level. Getting them to ‘behave’ the way you want or expect them to is difficult even when measuring single stocks (parameters). On a global scale, this must be neigh on impossible. When I read about these traps I was reminded of the late Charlie Mungers insistence on inverting problems.

Therefore, if you want to build systems or look at ways to adapt them, ask yourself how picking undefined or misaligned goals from the get-go is going to help you. Ask yourself if the rules you have in place are fair and just and if not, would people likely try to get around them? Ask yourself if you take “just a little more” and other people are thinking the same, what might the consequences be? Ask yourself what continued poor performance might look like in achieving your desired outcomes. Both on a personal and professional level. And finally, ask yourself how putting a proverbial bandaid on your problems for a temporary reprieve is going to help you in the long run.

Until next time, Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps you understand the world through practitioners. Those who try, fail and do (skin in the game). 📚💡

Subscribe now

Join our growing community of like-minded lifelong learners.

Beyond Ghor, there was a city. All its inhabitants were blind. A king with his entourage arrived nearby; he brought his army and camped in the desert. He had a mighty elephant, which he used to increase the people's awe. The populace became anxious to see the elephant, and some sightless from among this blind community ran like fools to find it. As they did not even know the form or shape of the elephant, they groped sightlessly, gathering information by touching some part of it. Each thought that he knew something because he could feel a part...The man whose hand had reached an ear said: "It is a large, rough thing, wide and broad, like a rug." And the one who had felt the trunk said: "I have the real facts about it. It is like a straight and hollow pipe, awful and destructive." The one who had felt its feet and legs said: "It is mighty and firm, like a pillar." Each had felt one part out of many. Each had perceived it wrongly....

This ancient Sufi story was told to teach a simple lesson but one that we often ignore: You can not understand the behaviour of a system just by knowing the individual elements that make up the system.

You assume that because you understand ‘one’ and that one and one make two, you must understand ‘two’. But a system is more than just the sum of its parts. You need also to understand, ‘and.’

This is the foundation of basic systems thinking, which Donella H. Meadows lays out in her famous book, “Thinking in Systems.”

Today, we’ll learn what systems are, how to identify them and how an ignorance of systems understanding costs us every day.

Share

What is a System?

Systems are a set of things called elements that are interconnected and interact with each other to produce a response, behaviour or pattern over time. Systems can be influenced, driven, triggered or constrained by external forces, but their response to this is characteristic of the system itself and is seldom easily understood until retrospectively. This is why no one can predict inflation movement until inflation has happened, regardless of what people who want you to believe them say.

You can think of systems as living, breathing things that ebb and flow over time like the tide and can exhibit goal-seeking, self-preserving, dynamic and adaptive behaviour.

The elements in a system can change, but the system as a whole will not. Imagine a football team as the system, with the individual players as the elements. You can change a player, and the system remains mostly the same. When you change all of the elements (players), you may change the behaviour of that team, but you will still have a system. It’ll just act differently.

But to understand systems, you have to understand the relationship between the structure and its behaviour. Long ago, we had to understand complex systems in the world around us. Our bodies, new languages, currency, seasons, the Earth’s orbit around the sun, and which fruits you can eat and which will kill you are all examples of complex systems that people had to understand to get by.

A stock is the foundation of a system. Stocks are measurable elements of the system that have built up over time. A stock can be the stock price of a listed company, cows on a farm, points a football team have accumulated over a season, books in a library, or the population of a country. Stocks don't have to be physical, either. An anxiety about flying or your reputation as an arms dealer counts as stock.

Stock can change over time and are influenced by inflows and outflows. Think of the inflow of illegal weapons into a country that has overthrown its government as nefarious agencies wrestle for power or the outflow in the number of cows after a bout of mad cow disease. The stock level can dramatically change with flows. A stock at any given time represents the history of the flows within a system.

Through the inflow of water, a bathtub’s water level increases, but it takes time to fill it up to the desired level. It has a lagging effect. This is how reservoirs operate. When there’s a drought, you can’t crank up the inflow of rain, so what do you do? You reduce the outflow to keep the reservoir at a desired level. We find it easier to focus on inflows rather than outflows, but you can often get the same result by adjusting either. If you are struggling to ‘find the time’ to do something, perhaps you could look at adjusting the inflow from other activities and tasks you are currently doing.

It's important to understand how lagging flows can affect systems. Because the behaviours take time to adjust to the flow rate of a system, it can offer stability and opportunity, so long as you understand how long that lag should be.

You don't give up too soon.

If a farmer in Norway wants to start a company that sells Christmas trees, she’ll more than likely need to start planting trees a few years before she can even sell her first tree. She will also need to keep planting trees (inflow) each year for when her stock depletes as people buy their Christmas trees (outflow) from her. If she had given up after one year, it would have been a complete waste of time and shortsightedness on her behalf. A better system would be to find an existing farmer to buy and upsell Christmas trees from as her stock grows in the first few years.

When you begin to notice the behaviour of a system, you will start to notice that there are things that can affect the level of a stock. These are called feedback loops, and in systems, there are typically two kinds.

1. Balancing feedback loops are designed to keep the stock at a desired level. With digital thermostats today, when your thermostat is set to 21 degrees and this temperature is reached, it will turn off. It doesn’t let it skyrocket up infinitely. Balancing feedback loops is goal-seeking or stability-seeking.

2. Reinforcing feedback loops are self-enhancing and can lead to exponential growth or rapid collapses. These are found when the stock can reproduce itself. When governments heavily quantitive ease, which is to say, print money, it is quite often followed by a rapid balancing loop such as inflation. The Zimbabwe government famously hit hyperinflation in 2008, where inflation hit 79.6 billion percent!

So now you understand the effect the inflows, outflows and two feedback loops have on the behaviour of a system. What’s even more important to understand is that the behaviour is only seen once it has occurred. When you notice the behaviour of a system as a consequence of the flow rates and feedback loops, adjusting either of them will not stop that current behaviour. At least not yet. Remember the lagging effect?

Going back to the quantitive easing analogy, when governments print (make up) money and distribute it to its people, such as when Covid kept us all from working, it can’t go on forever. There had to be a balancing loop. The money becomes less valuable because more people have it. When more people have more money, but the distribution of products and services remains the same or decreases, prices go up. When prices go up, the people who can afford them pay for them, and people who can’t demand wage increases. When they get a pay rise, they begin to pay for things again, and thus, this cycle of price wars, wage increases, and inflation continues until the good old bank of wherever raises interest rates to curb the exponentially growing inflation.

So why is it that somebody had to write a book about systems thinking when we were pretty good at it already way back then? Well, the world is just far more complex than it’s ever been, and the systems are so interconnected together it’s like a giant spider web interleaved around the Earth. When we were hunter-gatherers, we needed to deeply understand the systems around us because our lives literally depended on it. Eating the wrong fruit or not being prepared for adverse weather was the difference between life and death. Understanding how more money for more people leads to more inflation for more people isn’t on the same level, but a lack of systems understanding does make people poorer, more miserable and slaves to their lack of systems understanding.

If you’re unhappy and want to know how you can change that, having a basic understanding of systems can help you. Your happiness (stock) is affected by the totality of things (elements) in your life. You know that to have more of one, you need to adjust the inflow rate or decrease the outflow rates of others. You also know that there are reinforcing feedback loops to help you crank something up and balancing feedback loops to help you constrict or stabilise another.

James Clear summed up the importance of systems thinking brilliantly:

Until next time, Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps you understand the world through practitioners. Those who try, fail and do (skin in the game). 📚💡

Join our growing community of like-minded lifelong learners:

Subscribe now

Read more

When it comes to making decisions, especially big or complex ones, we are often bombarded with information causing crippling analysis paralysis that often leads to more questions than answers, such a…

Read more

I’m drowning in highlights, scattered insights, and endless notes, and I’m beginning to feel overwhelmed and disconnected from them. Despite thinking I’m collecting valuable information, it’s frustrating when those ideas slip through the cracks, especially, when I need them the most.

But the problem I now think, isn’t that my highlights are poor; the problem is I haven’t been connecting them sufficiently to extract their true value.

I can now see a path to turn that overwhelming flood of information into a vault of organised, interconnected insights.

The solution lies in knowledge clusters, a simple yet powerful way to organise, connect, and expand one's learning.

By creating an interconnected system, I will begin to see hidden connections between dormant insights, leading to a richer, more creative output. I’m not entirely sure I know what I’m doing yet, but for those of you who are struggling with this too, I can hopefully shed some light on how we can get out of this together.

Let’s discuss my 5-step-process to create knowledge clusters:

Read time: 3 minutes

1. Forming Knowledge Clusters

Think of your highlights as thematic clusters rather than the isolated passages they currently are. These clusters can be built around any ideas, insights, problems or questions you have. For example, if you’re interested in decision-making you could cluster ideas and passages from behavioural science, philosophy and economics.

• Action: Identify the major areas you frequently highlight and create clusters of these themes you can build your knowledge system around.

2. Tagging Your Clusters

It’s important to have a multi-layer tagging system that indicates major areas of interest and subtopics attached to them. For example:

• Primary tag (major areas): Decision-making

• Secondary tags (subtopics): Cognitive biases / Ethics / Game theory

A subtopic can belong to more than one major area. For example, game theory could belong to the major areas of “decision-making” and “economics.”

3. Cross-Pollination Between Clusters

Since multidisciplinary learning thrives on combining insights from different fields, look for opportunities to cross-pollinate between clusters. For example, a highlight tagged under “Innovation” could be cross-linked to another under “Systems Thinking” to explore how innovation happens in complex systems.

• Action: Periodically search across clusters using a combination of different tags (e.g. “Innovation + Systems Thinking”) to discover unexpected and new connections. This can work for both major areas and subtopics.

4. Concept Mapping for Clusters

Export your tagged highlights into a concept mapping tool to visualise how different ideas and insights relate to one another. Visualising your tagged highlights this way can help you spot connections that you otherwise may have missed by using text-based analysis alone.

• Action: Use mind-mapping tools or apps to create knowledge maps where clusters of highlights from various fields visually intersect, aiding in idea synthesis. Obsidian is a popular choice.

5. Reviewing and Strengthening Clusters

Regularly review, refine and reinforce your knowledge clusters. Over time, as you add more highlights, review your clusters to see how ideas have evolved. This helps to ensure that older highlights stay relevant and continue to shape new insights. When you add personal summaries or anecdotes to the notes, it helps entrench them even further into your memory.

By organizing your highlights into knowledge clusters and encouraging cross-disciplinary connections, you can better manage your growing database and ensure that the ideas you capture remain accessible, interconnected, and useful in your writing.

Until next time, Karl (The School of Knowledge).

P.S

If you haven’t already check out my Personal Board Meeting Template I use for keeping myself accountable. It’s free.

Whenever you’re ready

The School of Knowledge helps entrepreneurs and professionals convert worldly wisdom from books into actionable insights📚💡

Consider joining our growing community of like-minded life-long learners.

Subscribe now

Photo by Nothing Ahead: https://www.pexels.com/photo/stacks-of-books-4836585/

“Arm yourself with specific knowledge, accountability, and leverage.”

- Naval Ravikant

Read time: 4 minutes

Accountability forces people to take responsibility for their actions (or lack thereof) and not blame some external force. It gives you skin in the game.

Shunning from responsibility does the opposite. You let bad habits and bad judgement steer your professional and personal life always looking to blame someone or something else.

In life, people who hold themselves accountable are less likely to let complacency creep in. They see accountability as a stepping stone for growth, not a crutch.

Here are 3 mistakes lifelong learners need to avoid to become more accountable:

1. You Don’t Test Critical Thinking

Lifelong learners pull ideas from multiple disciplines, which increases the complexity of their thinking. You think that by having models in your head, ready and waiting to be used when a problem arises you are gaining knowledge. This is incorrect. Prescriptions for models are typically based on general consensus and may have no bearing on your individualistic problem. It may hinder you.

Solution:

Reading books, papers, blogs or indeed listening to and watching audio are all glorified methods of accumulating ‘knowledge.’ The only way to test if you understand something is to put it to use. Or, teach it as Feynman suggests. Testing your theoretical knowledge and applying it to your individualistic scenario you get individualised feedback. Not some anecdote. You test the model’s accountability.

Example:

You come across a popular economic theory but realise it clashes with another discipline such as psychology. What are you to do? Do you take the popular economic theory at face value or do you dig down into the research of both disciplines and find ways to test validity?

2. You Ignore New and Better Ways of Thinking

As a lifelong learner, you accumulate knowledge and guard it with your life. It is holy. There will always be some new fad or trend but your way of working, operating and thinking is tried and tested. Concrete.

Solution:

Lifelong learning is just that-learning. You must be ready to throw away (or alter) your trusted and deep-rooted beliefs. Learning isn’t and shouldn’t be a dogmatic process and indeed finding new areas of knowledge that have only just opened up should be seen as exciting, not as conflict. By holding yourself accountable to the truth you become indifferent.

Example:

You take a course on data science but are struggling with the programming side of things. The options are to give up and admit the course isn’t for you due to its complexity or put in the extra time required to spot and get up to speed where you are falling short.

3. You Go It Alone

Some people dedicate their whole lives to a single problem or question and being collaborative would only hinder them. I’m willing to bet that you’re not a Darwin or Einstein.

Solution:

Whether or not our world is truly more complex than ever is up for debate but it is certainly more connected and it certainly is more fast-paced. Collaborative learning fosters accountability in the sense that other people rely on you for your insights just as much as you rely on other people for theirs.

Example:

You run a construction firm involved in building a multi-storey apartment in the city centre. Before there’s any work on-site collaboration is required between the engineers, architects and contractors to ensure the building design is as per what the client has asked, within budget and to building and planning regulations. Throughout the process, each team has tasks they need to finish and pass on so other people can complete their tasks and pass them back around.

Accountability is a currency. It’s a currency with other people, but more importantly, it’s a currency that you can withdraw as dividends for yourself in years to come.

I created this simple monthly accountability tracker called The Monthly Personal Board Meeting borrowed from Matt Gray.

You can download it for free here.

Until next time,

Karl (The School of Knowledge)

Whenever you’re ready

The School of Knowledge helps entrepreneurs and professionals convert worldly wisdom from books into actionable insights📚💡

Consider joining our growing community of like-minded life-long learners.

Subscribe now

Photo by Benjamin Farren: https://www.pexels.com/photo/directional-sign-on-roadside-13582220/

Some of you might say Lynch or Soros or Ben Grah…

Read more

“I have pointed out that any superior record which we might accomplish should not be expected to be evidenced by a relatively constant advantage in performance compared to the average. Rather it is …

Read more

“Recognize reality even when you don't like it—especially when you don't like it”​.

- Charlie Munger

It’s 11 pm, you’re tired and angry and all you want to do is close your laptop and go to bed.

But you can’t.

With the deadline (self-imposed) fast approaching you’re in this until it’s finished. You’ve invested too much time, effort, and resources to quit now.

And besides, you aren’t a quitter, are you?

This scenario could be one of infinite possibilities where you feel you must follow through with X because you’ve invested Y. This is the workings of the Sunk Cost Fallacy.

Today, we’ll learn what it is, how to spot it and know when to quit.

What is the Sunk Cost Fallacy?

The “Sunk Cost Fallacy” refers to the irrational decision to continue investing time, money, or effort into something simply because you’ve already invested resources into it, even when it no longer makes sense to do so.

People cling to past commitments because of a psychological bias to avoid admitting failure or loss, even though the rational course of action would be to cut their losses and move on. This could fall under Charlie Munger’s Inconsistency-Avoidance Tendency or Simple, Pain Avoiding Psychological Denial Tendency.

However you choose to label it, it’s a problem.

Here are some examples:

1. You continue a course or project you no longer wish to complete despite losing interest.

2. You continue to read a book because you’re halfway through it even though it bores you to tears.

3. You invested in a stock that has underperformed for years. Instead of admitting you may have got it wrong, you ‘hope’ that it’ll turn around (for the sake of your pride).

4. You continue a relationship you know is either harmful, going nowhere, not for you or worse, all three because you feel ‘trapped.’

5. You continue a career path out of obligation to student debt, peer pressure or family scrutiny.

These are not ‘out there’ examples. People are living these scenarios day in and day out. In work today, look around at your peers and someone will be going through this.

Let’s look at fixing this.

How to Spot the Sunk Cost Fallacy

There is a difference between not wanting to continue a project that work requires you to do and a personal one. The Sunk Cost Fallacy mainly refers to the pressure you put on yourself, although, you could also feel this as a result of time, money or other investment in you by somebody else i.e. your work!

When you feel that you might be under the spell of the Sunk Cost Fallacy a simple way of knowing is to ask yourself one of the most beautiful questions one can ask-why.

Why am I doing this? Why is it important to me? Why do I feel compelled to do this?

Why did I not ask why, earlier?

A lot of the time you won’t know. You’ll say “I don’t know” and then, more than likely you’ll probably say something like “Because I have to” or “Because X needs me to do this.”

If your answer isn’t “Because I want to do this” or “Although I’m not enjoying this now, I know there’s something at the end of it for me” like completing a marathon then what’s the reason you’re doing it?

Spotting the Sunk Cost Fallacy requires introspection and self-reflection. It also requires honesty and integrity. For most people, these are pretty standard principles they follow most of the time when dealing with others but when it comes to being honest with ourselves it’s a bit more murky. We really can pull the wool over our own eyes!

So, when is it ok to quit and when is it not?

Knowing When to Quit

Rightly or wrongly we live in a society that champions winners and deplores losers. Nobody wants to be a loser and as far as I know, there aren’t any Hollywood films about the wars we didn’t have!

A helpful starting place for helping you get out of the pickle you find yourself in is twofold. Understand both these mental models:

1. Cost-Benefit, &

2. Opportunity Cost

Cost-Benefit refers to the previous cost of the investment (project, book, relationship, education etc) and weighing them against the remaining future costs (continuing) and potential benefits of doing so.

You could surmise that finishing your last year of university has the potential for a better career. If this is important to you, then finishing the last year, although hard, might be worth doing.

In regards to the poor relationship you’re in, you could say that promises were made years ago that it would get better and it simply hasn’t. If anything it’s got worse, therefore I’m not going to wait around for another set of promises to be broken in a few more years. See ya later!

Opportunity Cost is another important concept that focuses not only on what you’re losing by sticking with a bad decision but what you are foregoing by not pursuing better alternatives.

Instead of continuing to work in a career you despise because of external or financial pressures, Opportunity Cost suggests that staying in that career means you miss out on the growth, fulfilment, and potential income from switching to a more promising or fulfilling path. Every day you stay in a dead-end job is a day not spent building skills or relationships that could open better opportunities.

It's not just about the effort you've already put in; it's about what you're not gaining by switching.

Until next time,

Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps entrepreneurs and professionals convert worldly wisdom from books into actionable insights📚💡

Consider joining our growing community of like-minded life-long learners.

Subscribe now

Photo by PHILIPPE SERRAND: https://www.pexels.com/photo/shipwreck-sinking-in-the-water-20253983/

Success is often celebrated as the ultimate validation of talent and hard work. But what if your greatest achievement is also your greatest blind spot?

Before you let your victories define your strategy, ask yourself: is success the best teacher?

The success you take pride in could cloud your judgment, pushing you to repeat decisions that were shaped more by luck than skill. This might be hard for you to believe but this is the perils of champion bias—a seductive trap that leads you to overestimate your control over outcomes, ignore external factors and fall victim to overconfidence.

People tend to understate what they’re good at and overstate what they’re bad at. We’ve all been in a scenario where someone ‘high up’ says something that makes you internally go, ‘What the fuck are you on about, mate?’

We tend to believe that because we are good at X we must also be good at A, B, C, D, E, F and so on. History is full of examples of people who were highly successful in one area and assume they’ll be great in another, especially if the two look closely related. Take Michael Jordan, for example, who believed he could be an amazing baseball player because he was one of the greatest basketball players ever. They might look the same (sport, played with hands, in stadiums etc) but they are not. They are chalk and cheese.

And let’s not mention his acting career!

We do this with people too. We believe more in people’s abilities or something someone says because they are deemed successful. So how can we avoid this pitfall?

Here are a few strategies that can help you avoid Champion Bias:

1. Invert

Charlie Munger was infamous for turning any problem upside down. Instead of asking, “How can I gain X,” he would advise us to ask, “How can I guarantee I won’t get X.” It’s far easier to avoid stupid mistakes than it is to make a brilliant decision.

2. Ask Why, a Lot

Asking ‘why’ has a multitude of benefits in general, but when you take an assumption you have, such as “I’m one of the greatest basketball players ever-therefore I can use that skill to be great at baseball,” you should be able to reduce your argument down to the fact that you think you will be great again because you are great at something else.

This works great on other people as well. Asking someone to explain what they mean may seem rude or anti-authoritarian but if you work in an environment where the people you question make you feel like that, it’s probably not a great place to work anyway.

3. Adjust for Luck

People don’t like to think of luck because it’s abstract. It’s hard to quantify and predict, but luck is all around us every day. If you disregard luck and attach skill to everything you do, then one day, you’re likely to blow up. Ask yourself, “Can this be repeated, and how much did luck play in the outcome.”

4. Don’t Ignore Contradictory Evidence

If something worked once, you become blind to evidence that suggests a different strategy might be better for future situations. You trust your own past too much. Just like Charles Darwin, you should be explicitly looking for disconfirming evidence. This is how knowledge grows.

Recap

Individually, Champion Bias works by causing people to attribute their own or others’ success solely to personal abilities, decisions, or virtues, while discounting the role of external factors like timing, luck, or help from others. When someone achieves success, they (or those around them) tend to believe that it’s all due to their brilliance, hard work, or strategy. This can lead to overconfidence and an inflated sense of control over future outcomes.

Until next time, Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps entrepreneurs and professionals convert worldly wisdom from books into actionable insights📚💡

Consider joining our growing community of like-minded life-long learners.

Subscribe now

As lifelong learners, it’s important to have mental frameworks capable of taking in new information, digesting it, and putting it to work.

Richard Feynman’s Technique on how to learn anything allows you to do just that.

Here’s how it works:

1. Choose a Concept to Learn: Pick a concept or topic you want or need to learn. Write down everything you think you know about it.

2. Teach It to a Child: Imagine teaching the concept to someone without background knowledge, like a child. This forces you to break down complex ideas into simpler terms, revealing gaps in your understanding.

3. Review Your Gaps: As you teach, you’ll identify parts you don’t fully understand. Go back to your source material, study those parts, and fill in the gaps in your knowledge.

4. Simplify Further: After filling in the gaps, try explaining the concept again, using even simpler language or analogies. The goal is to be so clear that the explanation is easily grasped by anyone.

A good place to start is by trying to grasp the foundational knowledge of the topic you’re curious about. Understanding the basics of something may sound like obvious advice, but so many people try to understand the big complex stuff first and work backwards. This is not how intelligence works.

Feynman’s genius lay in his ability to cut through complexity, focusing on clarity and fundamental understanding. This technique is an excellent way to ensure you've truly learnt something, rather than just memorising information.

Example

Let's go through a challenge many solopreneurs face: digital marketing.

Here’s how the Feynman Technique can help:

1. Choose a Concept to Learn: You’re trying to understand SEO (Search Engine Optimisation) to drive traffic to your website but feel overwhelmed by the jargon and technical aspects.

2. Write it Down or Teach it to a Friend: Imagine explaining SEO to a friend who runs a completely different type of business or even to yourself on paper. You might start by saying: “SEO is the practice of making your website easier to find in search engines by using keywords, quality content, and backlinks.”

3. Review Your Gaps: As you explain, you might notice you don’t fully understand what backlinks are or how on-page optimisation works. This shows you where your understanding is weak. Review your resources, articles, or tutorials, and fill in those gaps. Study how backlinks from authoritative websites can improve your ranking or how to optimise your website’s structure for search engines.

4. Simplify Further: Once you’ve deepened your understanding, go back and explain it again in even simpler terms: “Backlinks are like votes of confidence from other websites. The more high-quality sites that link to yours, the better your website looks to search engines. On-page optimisation is how you organise your website’s content and code so it’s easier for search engines to understand.”

After using the Feynman Technique to learn SEO, you might apply it by creating a simple SEO strategy. You’d focus on optimising your website for a few high-impact keywords, writing blog posts around those topics, and reaching out to other businesses for backlinks (recommendations on Substack). Breaking it down and learning step by step, you can manage your SEO without feeling overwhelmed.

Until next time,

Karl (The School of Knowledge).

Whenever you’re ready

The School of Knowledge helps entrepreneurs and professionals convert worldly wisdom from books into actionable insights📚💡

Consider joining our growing community of like-minded life-long learners.

Subscribe now