As we begin resumption of our Real Estate practice after the pandemic lockdown, many of us will be thinking of resuming our way of work. However many things have changed, chief among them are i) There are new Protocols for Real Estate in keeping with proper health guidelines ii) The economy has changed and bank practices have changed along with them iii) Buyers and Sellers have changed their outlook. It may not be business as usual for a long time.
How do we change our way of work, in keeping with these new realities, when we have grown accustomed to the success it has brought in previous years? This is where mental models come in. We all operate with our own set of mental models of how things operate. A mental model is an explanation of how something works. The phrase “mental model” is an overarching term for any sort of concept, framework, or worldview that you carry around in your mind.
Mental models help you understand life. For example, supply and demand is a mental model that helps you understand how the economy works. Game theory is a mental model that helps you understand how relationships and trust work. Entropy is a mental model that helps you understand how disorder and decay work. Mental models also guide your perception and behaviour. They are the thinking tools that you use to understand life, make decisions, and solve problems. Learning a new mental model gives you a new way to see the world.
You can train your brain to think in different ways, outside of the box of your mental models. One of the best ways to do this is to expand the set of mental models you use to think. The process of accumulating mental models is somewhat like improving your vision. Each eye can see something on its own. But if you cover one of them, you lose part of the scene. It’s impossible to see the full picture when you’re only looking through one eye.
Similarly, mental models provide an internal picture of how the world works. We should continuously upgrade and improve the quality of this picture. This means reading widely from good books, studying the fundamentals of seemingly unrelated fields, and learning from people with wildly different life experiences.
The mind’s eye needs a variety of mental models to piece together a complete picture of how the world works. The more sources you have to draw upon, the clearer your thinking becomes. As the philosopher Alain de Botton notes, “The chief enemy of good decisions is a lack of sufficient perspectives on a problem.”
As we resume work with the new realities listed at the beginning of this article, it would be good to think about your Real Estate practice with new mental models. Think about all the subjects you learnt in school, the good books that you have read, and list on a piece of paper some of the mental models contained in them. One by one, use these new mental models to examine your practice. Then you will have new perspectives on your Real Estate practice. You will begin to see your practice with out-of-the-box thinking.
A good example of using ‘the first principles mental model of physics’ is the one used by Elon Musk to begin Space X, which just recently created a rocket that docked with the international Space Station. Here is his story in his own words:
I discovered the cost of purchasing a rocket was astronomical—up to $65 million. Given the high price, I began to rethink the problem.
I tend to approach things from a physics framework, Physics teaches you to reason from first principles rather than by analogy. So I said, okay, let’s look at the first principles. What is a rocket made of? Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber. Then I asked, what is the value of those materials on the commodity market? It turned out that the materials cost of a rocket was around two percent of the typical price.
Instead of buying a finished rocket for tens of millions, Musk decided to create his own company, purchase the raw materials for cheap, and build the rockets himself. SpaceX was born.
Can you apply this sort of thinking to your Real Estate practice? Wishing you success with your new mental models.