5 Mental Models to Think Like a Strategic Genius

Naval Ravikant said in an age of infinite leverage judgment not work determines success or failure. And what is good judgment if not the ability to think clearly and strategically and then make good decisions. Now I think about this a lot in my own life because it's just been so damn true. See throughout my 20s I busted my ass I worked really hard but because I had poor judgment I made bad decisions and I applied my efforts towards low leverage opportunities. All that I had to show for that work was $80,000 of debt and a 13 passenger van parked in downtown Oakland that I got to call home. Now the problem for most of us is that we're never really taught how to make good decisions. So as a result we tend to make decisions based on emotions and then justify them with logic and that's probably not going to get you very far in life at least it didn't for me. But here's what did. I started using mental models for thinking more strategically. Now a mental model is nothing more than a pre-designed framework that you can pull out whenever a situation requires a decision. You just plug in the different variables and out pops an answer and voila just like that you've systematized a process of developing good judgment. Now as I started looking around my life for mental models that I could steal I realized that I was sitting on a treasure trove of strategic frameworks that I developed over years of playing competitive chess. And once I started regularly tapping into these frameworks the quality of my decisions and ultimately my results those started to improve as well. So in this video I'm going to break down how to become a more strategic thinker in business and in life through five mental models I learned from playing chess. So let's dive into our first framework of strategic thinking. It is control the center. This is perhaps one of the most fundamental rules of high level chess. The player controlling the four squares in the middle of the board has a advantage because from here your pieces have maximum influence across the battlefield. Just think of it like the high ground. The reason the high ground is so important is because it gives you more reach without necessarily exposing yourself to more risk. Anakin Skywalker had to learn this the hard way so let's take a lesson from his book. All right so let's illustrate this point to really drive it home. Imagine a knight positioned in one of the four key squares in the center of a chessboard. From here it exerts influence on eight different squares. But if you take that same knight and you put it into the corner for example now it only influences two squares. And the same can be said for the bishop. From the center of the board they control 13 squares whereas from the corner they only control seven. Okay so the question to ask yourself when using this frame to make a decision is this. Where is the center of the board and what do I need to do to get pieces there so that they have maximum influence. So let's break this down into two examples. One from the game of life and one from the game of business to show how you might think through this in real time. Okay so first in the game of life let's say you're trying to lose 15 pounds. The strategic way to think through this is to identify those few squares on the board that are going to give you the most influence. Now when it comes to losing weight you got all sorts of options. You could go on a diet, you could work out more, you could focus on getting better sleep, or go on a fast, you could take a dieting pill, get liposuction, like there's thousands of squares on the board. But which is at the center? Well when you really boil it down to its essence, weight loss comes down to two things. Either you burn more calories or you consume fewer calories. If you do that you're gonna lose weight. But let's say you're a busy bee and you can only commit to one of these two options. Which is the better square? Exercise or nutrition? So thankfully the science on this is pretty clear. You can't outwork your mouth. For example one butterfinger is 275 calories and to burn an equivalent amount you'd have to go for a two and a half mile run. Good luck. Exercise alone ain't gonna get you there. Then again good nutrition can practically win the game on its own. So the correct strategic decision, if you can only choose one, is to focus on your nutrition. All right so now let's apply this framework to your business by asking where is the center of your board? Now as I see it there's three key squares to control inside of a business. You have marketing, that is how are you getting customers. You have operations, which is what is the actual product and how do you deliver it to your customers. And then you have finance, which is how do you manage the bank accounts to make sure you don't run out of money while you do number one and number two. If you're just starting out and you have limited resources you'll probably not be able to focus on all three squares simultaneously. Which means you'll have to decide which is the priority at any given moment. Now if you don't have a product to sell don't worry about finance and marketing. If you have a product but no customers well then focus there. In the beginning of every business you the founder are literally every piece on the board and unfortunately you can't be everywhere all at once. But hopefully this framework of controlling the center it gives you a useful frame for discerning where your focus should be at any given moment until you can get to that point where you can start hiring other people to control squares on the board for you. And once you get to that point it's time to master the next framework which is to understand the true value of a piece. One of the first things you learn in chess is that all pieces have a different value. Pawns are worth like a point, knights are usually worth three points, bishops are three to three and a half points, rooks are worth five, the queen is worth nine and the king is priceless because if you lose him you lose the game. Now this is just a quick easy way to calculate who has the stronger army at any given moment. For instance you could trade a knight and a bishop which together are worth about six points for a rook and a pawn which are also worth about six points. Or you could trade two rooks for a queen and a pawn all of which are combined worth about 10 points. All right so this is a good starting point but it's just the beginning because a piece's true worth is actually relative to something called board dynamics. Again think back to controlling the center. A knight in the center of the board has more reach and influence and therefore is more valuable than a knight in the corner. Now one of the best examples I've ever seen of this was in the 1985 world championship match when Garry Kasparov showed us that a single knight, if positioned correctly, can dominate a queen and two rooks simultaneously. That legendary little horsey was dubbed the octopus knight and he lives on in infamy to this very day at least amongst a very small cabal of chess nerds like myself. So here's how to use this frame to think strategically inside of your business. The value of your people is dependent on what they're capable of and where you put them on the board. Jim Collins famously expressed this as getting the right people on the bus into the right seats. And when you do this it's amazing how much easier the game actually gets. But this doesn't just apply to business. This frame can also work in your personal life. For example if you're struggling with a problem, let's say weight loss, the question we often ask is how should I solve this? But perhaps the better question is who do I know that could help me solve this? Maybe your best friend's brother is a nutritionist and you could reach out for guidance and accountability. Boom the problem just became that much easier to solve. Now a really great resource if you want to go deeper on this topic is the book named Who Not How by Benjamin Hardy and Dan Sullivan. Highly recommend you check that out. All right let's move on to the third frame for thinking through problems strategically. This one is called position before submission. So in chess there's a few different ways to determine who's winning at any given moment. The most obvious way is you count the pieces. Generally whoever has the more powerful army has the advantage. But not always. Because like we just learned in the previous two frames, a smaller army occupying better terrain can hold off a vastly superior force. And we've seen this multiple times throughout history. Like a really classic example is the story of the 300 Spartans holding back the Persian Empire at the Battle of Thermopylae. Now granted they did eventually lose so maybe that's not the best example. But regardless this is called having the positional advantage. And regardless of how big your army is you should always be thinking how can I control the position. Because if you do that winning just gets that much easier. I actually relearned this lesson a couple of years ago when I started training Brazilian jiu-jitsu. Which is really just you know a bunch of grown men wrestling around on the mats trying to submit one another. One of the biggest differences I noticed almost immediately is that when you wrestle with lower belts like a white belt or a blue belt they're constantly looking for the submission. And you see the same tendency when people first learn boxing or Muay Thai. They're constantly looking for that one punch kill shot that's going to end the match instantly. It doesn't matter where these people are in the position. They're just throwing haymakers praying something lands. And if you compare this to the more skilled fighters, the black belts for example, you notice a very very different strategy. The upper belts pretty much only ever go for submissions after they've thoroughly dominated the position. They get to a dominant position sitting on your chest. You got your arms spread over your head all willy-nilly. And then they finally reach down and choke you out with practically no effort. The same thing happens in chess, in business, and in life. New players fixate on attacking the opponent's king at all costs. And in the process of hunting that checkmate they compromise their position. Advanced players understand that if you control the position first the submissions will naturally appear. Now I get it, it's human nature to want the easy solution, that one shot kill. Which is why trillions of dollars are poured into miracle fat loss pills, get rich quick schemes on YouTube, and the lottery. Somehow we think that if we can just find that one little hack, everything in our life will fall into place. Now I hate to be the bearer of bad news, but there is no hack. Not only that, but spending all your time looking for one is what's keeping you from doing the laborious work of controlling the position that would, if you give it enough time, lead to success. So the question to ask in all domains of your life and business is, what's it mean to control the position here? For me, I like to think a lot about the concept of environment design, which is all about setting up your life in such a way that it creates a slippery slope towards your goals. Now I unpack this concept in greater detail in the video called How to Unfuck Your Life, which I'll put a link for it down in the description. But before you check that out, let's move on to our fourth mental frame for thinking strategically. And spoiler alert, this one is by far my favorite because it's the one people think about the least. I call it owning the initiative. All right, so we've already discussed two ways of determining who has the advantage in a game of chess. You can count pieces to figure out who has the more powerful army, or you can look at who's controlling the position. And these are fairly straightforward and easy to determine, which is why most people default to using them. But there's another way, a top secret way that grandmasters use to evaluate a position. And in my experience as the ninth grade South Dakota state chess champion, this advantage is typically the one that decides the game. It's called the initiative. And it's determined by which player is dictating the action. That is, which player is acting and which is reacting. If you can answer that question, then you can reliably predict with a high degree of certainty, which player is ultimately going to arise The classic example of this in my mind is Napoleon, who always just seemed to have the initiative. He dictated where, when, and how the action would unfold. And as a result, despite often having vastly inferior forces, he still managed to win time and time again. In business and in life, a lack of skills or experiences can often be overcome with the appropriate amount of gusto. And the reason for this is because the initiative leads to momentum. And momentum is one hell of a thing. It is the cure to procrastination, to overwhelm, to overthinking. And more importantly, it's often the X factor of success. The reason it tends to be so powerful is because it taps into a fundamental law of the universe, which is an object in motion tends to stay in motion. But here's the problem. And it's the reason most of us struggle. The reverse is also true. An object at rest tends to stay at rest. And if you've ever found yourself feeling stuck in the mud of life, like you just can't get traction, can't get moving forward, it's not your fault. Getting momentum is the hardest part because it requires an outsized amount of what's called activation energy. Once you've inserted that into the system, the energy required to sustain progress substantially decreases. I call this maintenance energy. And it's the reason why it's easier to maintain your current trajectory in life than it is to change paths. Okay. So the way we can use this mental frame in the context of thinking strategically is to understand that when we're comparing two courses of action, often we'll overvalue the amount of activation energy required to get traction and undervalue the amount of maintenance energy required to sustain. For instance, getting a W2 job requires far less activation energy than starting your own business. However, the day you stop injecting maintenance energy into your job is the day you stop getting paid. So you have to pay this cost of maintenance energy into perpetuity. Whereas in business, if you build it correctly, the amount of maintenance energy that you'll personally have to inject into the machine is going to gradually decrease over time and potentially even get to the point of requiring zero energy from you. And this is when you're finally playing in the arena of passive income or what I prefer to call leveraged income. But that's a different conversation entirely. If you want to learn more about leveraged income, I'll drop a video for that down below. But before you go check that out, I want to share with you one more frame for thinking strategically. And this one is quite important because it is, as the name implies, the hardest move to find. One of the greatest players to never win a world chess championship was a guy you probably never heard of named Vasil Ivanchuk. I think a lot about this guy because he said something that stuck with me over the years. He said, the hardest move to find is a night retreat, which in my experience is true. But the question I always come back to is why is it so hard to find? Well, there's really two reasons. First, tactical retreats in games and in life are always hard to see because we often equate forward motion with progress. If we're not moving directly towards a goal, it can often feel like a waste of time and energy. Now, the second reason that a night retreat is so hard to find is the result of the fact that the knight itself moves in a completely different way than any other piece on the board. In particular, there's one aspect of the knight's movement pattern that can really screw with your mind. That is, it can jump over other pieces. When we combine these two things, we now have a piece that moves in a very strange way away from our goals. As a result, most people never stop to even consider these moves. But the truth is, sometimes taking a step back is in fact the fastest way to move forward. For instance, one of my businesses back in 2018 was hyper-focused on growth. We had poured a ton of money into infrastructure and machines for producing our products. Now, we have to drive a lot of revenue to cover those expenses. Now, at that time, we had one massive customer in particular who accounted for nearly 10% of our yearly revenue. As you can imagine, we were terrified of losing these customers. We would do pretty much anything and everything to keep them happy. The problem was, they were impossible to make happy. They called me at all hours of the night. They sent dozens of stressful emails every single day to our shipping manager. And it got to the point that my team and I were spending more time dealing with them than we were with all of our other customers combined. Eventually, we got to the point where we finally saw the one move we'd been overlooking the entire time, the tactical retreat. That is, we fired that customer. And overnight, our revenue plummeted by 10% at a time when we really needed that money. But the result of that retreat was that it freed up so much of my team's time and mental bandwidth that we can now pour into the other 90% of our customers, which led to a massive spike in revenue that far surpassed the 10% we'd given up only a few months prior. Now, the moral of this story is that sometimes taking a step back is in fact the fastest, and in many cases, the only way to move forward. So the question I like to ask myself is, what is the move that I'm not even considering right now because it just looks so wrong? Maybe that's quitting your job. Maybe it's moving to another city. Maybe it's ending a relationship that no longer serves you. Regardless of what it is, answering that question is often the key to finding the winning move.