Boost Your Business Genius by 24% (Because You Care About Being Smart)

_{[Read time: 7 minutes]}

I know you.

Don’t believe me?

Watch this:

• You’re super smart, multi-skilled, and insightful (but also you overthink, especially when it comes to yourself)

• You have high energy and motivation, but it’s methodical (not chaotic)

• You prefer to operate as a lone wolf even though you don’t actually admit to it — but also have the awareness that business is a people game, so you can turn on your charisma and extrovert skills when you need to

• You’re a thinker-type (a bit obsessive-brained, analytical, and creative) who is great at distilling information, especially by thinking out loud or writing it out

• You’re deeply aware of your perfectionism, imposter syndrome, and self-sabotage (and they eat at you — but don’t stop you)

• You have a chip on your shoulder, but you know it’s better to focus on being unique and different (even though you aren’t exactly clear on how to achieve that)

• You’re awesome at seeing problems and giving advice to others, but you get stuck when you try to solve your own (and what’s worse is you get frustrated at yourself for being that way)

You’ve done enough to survive but aren’t truly matching your potential and thriving…but you know it’s there, so close.

• Being smart matters to you

• Being successful matters to you

• Being known as creative, thoughtful, and profitable matters to you

This is why you’re reading this.

You opened it because it said “business genius.”

And that phrase matters to you.

You want to build your mental firepower and turn it into your unfair business advantage.

That term “business genius” (when said out loud) may sound corny to you, but I know it resonates.

The truth is that as a founder, CEO, business owner, or professional, you’re the sum of your decisions and actions—and that requires you to be a business genius.

Back to the whole genius thing.

How do you become a business genius?

Mental models.

Yeah, you’ve heard me talk about them before (and yes, I will talk about them again).

Why?

The most successful people and brilliant minds know how to use these to understand the world around them.

• Charlie Munger was the king of mental models (you know him best as Warren Buffet’s business partner)

• Richard Feynman is super famous for using them (he’s a Nobel-prize physicist and every thinker’s favorite thinker)

• Gabriel Weinberg wrote the book on mental models (literally my go-to reference book)

What are mental models?

They are frameworks that simplify decision-making and problem-solving.

You can think of them as mental shortcuts.

When understood, they give you a mental image to apply familiar concepts to unfamiliar situations or topics.

Why do they matter?

Well, let’s first talk about the 3 types of knowledge:

1. Borrowed Knowledge

   • This is learning from consuming

   • You gain this from reading, listening, watching

2. Experiential Knowledge

   • This is learning from doing

   • You gain this from failing, executing, acting

3. Derivative Knowledge

   • This is learning from re-applying

   • You gain this from connecting (dots), remixing ideas, using one subject to define another

All are super valuable, but most people believe experiential is the most important.

I disagree 1,000%!

Derivative knowledge is most important because it amplifies all your borrowed and experiential knowledge.

Mental models tap into that derivative.

You literally take something you’ve never consumed or experienced before and apply derivative knowledge to make it make sense.

There are hundreds of mental models.

But today, here are 3 that you can use every day:

Mental Model #1 — Tipping Point

The model comes from sociology.

The tipping point is the moment when an idea, trend, or behavior gains momentum (and becomes adopted) — in other words, when something minor becomes substantial.

To leverage this effectively, identify the key factors that drive adoption in markets or society. I stress “key factors” because not everyone adopts things in the same way.

Let me give you an example of how to use this in your business:

Let’s say you’re an executive coach launching a new cohort-based service offering.

If you want this service to become viable and long-lasting, you must reach a tipping point of demand (otherwise, you waste time and resources and must resort to what you had before).

A common mistake when sharing a new service is diversifying marketing efforts across your niche.

It’s a mistake because not everyone wants to be the first to try something new (even if the service is a perfect fit).

Some customers need to know it worked for others before joining themselves. They wait for the tipping point of social proof.

So, instead of spreading your marketing dollars across your niche, pour your resources into your “megaphones.”

Megaphones are the people with these 3 characteristics:

• they are a good fit for your service

• they love being known as ‘early adopters’

• they talk loudly enough to influence other people

With enough megaphones, they will drive adoption from the more risk-averse/need-more-proof crowd.

Now that the tipping point pushed you over the edge to keep reading…let’s go to #2.

Mental Model #2 — Decision Fatigue

The model comes from psychology.

Decision fatigue is the idea that the quality of your decisions deteriorates as you make more decisions.

Think of your brain as a decision battery. With every decision, the battery depletes, and eventually, your decision-making power becomes less effective.

Here’s some proof this is real:

A 2011 study assessed the impact of decision fatigue on judges when granting parole. The study found that the percentage of favorable rulings decreases from around 65% to nearly 0% as judges progress through their session, then abruptly returns to about 65% following a break. This indicates that the quality of decision-making declines as judges handle more cases consecutively.

This is from decision fatigue.

But you’re in business, so here’s an example of how you can apply this:

Let’s say you run a small marketing agency with 14 highly active customers and provide comprehensive services (ranging from strategy to operational tasks).

More customers + a more comprehensive range of services = more daily decisions

That means your day can quickly lead to burnout and poor judgment (for you and your customers).

Instead of doing more (or brute forcing your way through your obligations), use decision fatigue as a mental model for strategically structuring how and when you make decisions:

1. Schedule meetings with high-stakes decisions in the morning

2. Implement standard operating procedures for routine decisions or frequently asked questions (or administrative work)

3. Incorporate physical activity into breaks to refresh the mental battery

Consistent good decisions will create a tipping point for good results.

Mental Model #3 — The Rule of Three

The model comes from communication and marketing.

The rule of three suggests that grouping information into three makes it more appealing, memorable, and effective.

To apply this model, structure presentations, marketing messages, and processes in sets of three, which enhances clarity, retention, and persuasiveness.

• “Just Do It”

• “Easy as 1-2-3”

• “Location, Location, Location”

These are all well-known phrases, but let’s use another business example (this time with a more tactical scenario).

You're an IT consultant hired to implement a new state-of-the-art accounting system for a 99-person organization. If you’ve ever been a project manager, you know the most challenging parts are getting buy-in and coordination among users.

That said, you, as the consultant, can use the rule of three to make the rollout plan more compelling and understandable. Showcase three memorable features (especially those that address the pain points) such as:

• The automation tools will save you 4 hours per week by removing repetitive manual entries

• The data analytics function will provide you with quantitative insights to back up your already-intelligent ideas with objective proof

• The user-friendly design will minimize the need to re-explain everything to your boss

I used the rule of 3 in this letter.

1-2-3.

Thank you for reading.

See you next week.

— Peter

P.S. I’m offering “mental model power sessions” exclusive to Impact Thinking readers for 30 days (from now until Aug 18, 2024).

We will tackle a business decision or problem you’re wrestling with using mental models.

In 60 minutes, we will think out loud to:

• deconstruct it (…with mental models)

• get clear on its impact (…with mental models)

• formulate a decision (…with mental models)

P.P.S. Don’t forget to download your gift.