🔵 Construct Guide: Mental Models That Actually Work PART 2

The 7 Mental Models That Handle 90% of Life's Problems

Author

Joshua Hale
May 27, 2025

Estimated Read Time: 6min

TL;DR

  • The $10K marketing mistake that could've been avoided

  • 7 mental models that solve most problems

  • When to use each one (with real scenarios)

  • AI prompts for every situation

Hey Strategic Thinker,

Ready to build a decision-making toolkit that actually gets used when the pressure's on?

The Million-Dollar Client and My $10K Blind Spot

Back when I was running my marketing agency, I landed what seemed like the perfect client—a company doing serious revenue, ready to scale big. They wanted the full treatment: brand strategy, marketing funnels, content systems, the works.

I was pumped. This was going to be our biggest project yet.

So I dove in headfirst, building elaborate strategies based on what worked for other successful companies. I studied their competitors, copied what looked like winning moves, and created this beautiful, complex marketing machine.

Three months and $10,000 in work later, it was clear: nothing was working.

Their audience wasn't responding. Their industry had different rules. What worked for Company A was poison for Company B.

Straight Up Science: I was using the wrong mental models—or more accurately, I wasn't using mental models at all. I was just copying what looked successful without understanding the underlying principles.

Here are the mental models that handle 90% of business and life decisions. Master these, and you'll avoid most expensive mistakes:

1. First Principles Thinking

When to use: Breaking down complex problems The question: "What are the basic truths here?" Real scenario: Instead of copying competitors, I should have asked: "What does THIS audience actually need?"

2. Second-Order Thinking

When to use: Any major decision The question: "What happens after what happens?" Real scenario: Taking on a huge project = great revenue (first order) = overworked team and quality drops (second order)

3. Circle of Competence

When to use: Before taking on new challenges The question: "Do I really understand this space?" Real scenario: I knew marketing, but I didn't know THEIR industry. Should've partnered with someone who did.

4. Survivorship Bias

When to use: When studying "successful" examples The question: "What am I not seeing?" Real scenario: I looked at successful companies but ignored the failures. Turns out, most companies that tried those strategies actually bombed.

5. The Map is Not the Territory

When to use: When applying frameworks or advice The question: "Does this actually fit my situation?" Real scenario: My "proven strategies" were maps that didn't match their territory.

6. Inversion

When to use: Planning anything important
The question: "How could this fail spectacularly?" Real scenario: If I'd asked "What would make this marketing completely flop?" I'd have spotted the misalignment early.

7. Probabilistic Thinking

When to use: Making decisions with uncertainty The question: "What are the odds, really?" Real scenario: I assumed 90% chance of success based on other companies. Reality? Maybe 30% given the industry differences.

The Quick Reference System

AI Prompts for Each Model

Ready to put these to work? Here are the exact prompts:

First Principles:

Use First Principles framework. Help me break down this problem to its core elements: [YOUR SITUATION]
What are the fundamental truths I need to consider? What assumptions should I question?

Second-Order Thinking:

Use Second-Order Thinking framework. I'm considering [DECISION]. Help me map out:
1. Immediate consequences (first-order)
2. What happens because of those consequences (second-order)  
3. Long-term ripple effects (third-order and beyond)

Circle of Competence:

Use Circle of Competence framework. I'm facing [SITUATION]. Help me assess:
1. What knowledge/skills does this require?
2. How qualified am I in each area (1-10 scale)?
3. Where should I get help vs. handle myself?

Survivorship Bias Check:

Use Survivorship Bias Check framework. I'm looking at [SUCCESSFUL EXAMPLE/STRATEGY]. Help me consider:
1. What failures am I not seeing?
2. What factors made this work that might not apply to me?
3. What's the full picture beyond the success story?

Map vs Territory:

I'm applying Map vs Territory to [MY SITUATION]. Help me check:
1. What details might this framework miss?
2. How is my situation different from where this advice originated?
3. What adjustments do I need to make?

Inversion:

Use Inversion framework. I want to achieve [GOAL]. Help me think backwards:
1. What would cause complete failure?
2. What mistakes should I absolutely avoid?
3. How can I prevent these failure modes?

Probabilistic Thinking:

Use Probabilistic Thinking framework. I'm deciding on [DECISION]. Help me assess:
1. What's the realistic probability of success?
2. What could change these odds?
3. What's my backup plan if the odds don't work out?

The Real Power Move

That $10K lesson taught me something crucial: Mental models aren't just nice-to-know concepts. They're decision-making insurance.

Every expensive mistake I've made—and I've made plenty—could have been prevented by running the situation through 2-3 of these models first.

The successful companies I've helped hit their first million? They weren't necessarily smarter. They just had better thinking systems.

Tomorrow, I'm giving you something even better: a custom AI coach that knows when to use which mental model for your specific problems. No more forgetting to use these when you need them most.

P.S. Pick one decision you're facing right now and run it through the Inversion prompt. Just asking "How could this fail?" will probably save you more headaches than you realize.

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