From the New York Times bestselling author of Clear Thinking and Farnam Street founder, Shane Parrish. The third book in the timeless Great Mental Models series. Time and time again, great thinkers such as Charlie Munger and Warren Buffett have credited their success to mental models–representations of how something works that can scale onto other fields. Mastering a small number of mental models enables you to rapidly grasp new information, identify patterns others miss, and avoid the common mistakes that hold people back. Volume 3 of The Great Mental Models series focuses on systems and mathematics, simplifying more than twenty-four key concepts from these technical fields into easy-to-understand terms. It provides insights into the unseen mechanisms that influence our environment and teaches you how to apply these principles to benefit your life. Some of the mental models covered in this book include: Margin of Safety : Engineers design for extremes, not averages. To create a robust system, ensure a meaningful gap between what the system is capable of handling and what it is required to handle. Compounding : The most powerful force in the universe can work in domains other than money. - The law of diminishing returns : Inputs to a system lead to more output, up until a point where each further unit of input will lead to a decreasing amount of output. - Regression to the mean : Above- or below- average performance tends to correct towards the average over the long term. The Great Mental Models series demystifies once elusive concepts and illuminates rich knowledge that traditional education overlooks. This series is the most comprehensive and accessible guide on using mental models to better understand our world, solve problems, and gain an advantage. “I’m really glad this exists in the world and I can see that I will be recommending it often.” — Matt Mullenweg, co-founder of WordPress, founder and CEO of Automattic “If you’ve read Charlie Munger’s Almanack this is the book you deeply crave in its wake. … Learn the big ideas from the big disciplines and you’ll be able to twist and turn problems in interesting ways at unprecedented speeds. … You owe yourself this book.” — Simon Eskildsen “This is what non-fiction books should aspire to be like. Informative, concise, universal, practical, visual, sharing stories and examples for context. Definitely, a must-read if you’re into universal multi-disciplinary thinking.” — Carl Rannaberg “I can truly say it is one of the best books I’ve ever had the pleasure of getting lost in. I loved the book and the challenges to conventional wisdom and thinking it presents.” — Rod Berryman “Want to learn? Read This! This should be a standard text for high school and university students.” — Code Cubitt Shane Parrish is the author of the New York Times bestseller Clear Thinking . He is an entrepreneur and wisdom seeker behind the popular website Farnam Street, where he focuses on turning timeless insights into action. His work has been featured in nearly every major publication, including The New York Times , The Wall Street Journal , and The Economist . His weekly newsletter, Brain Food , has captivated the minds of over half a million subscribers worldwide and his podcast, The Knowledge Project , is one of the most popular in the world. Systems In spite of what you majored in, or what the textbooks say, or what you think you're an expert at, follow a system wherever it leads. It will be sure to lead across traditional disciplinary lines. -Donella H. Meadows Feedback Loops Listen and incorporate. Feedback loops are everywhere in systems, making them a useful mental model. Think of feedback as the information communicated in response to an action. Whether we realize it or not, we give and receive different forms of feedback every day. Sometimes feedback is more formal, as is the case with performance reviews. Other times, it is less so. Our body language is a form of feedback for people interacting with us. The tone you use with your kids is feedback for them. A feedback loop is a process in which the output of a system also acts as an input to the system, helping to refine and improve the system over time. It's like a conversation in which each reply helps to shape the next question and answer, making the discussion better and more focused. Once you start looking for feedback loops, you see them all over the place, giving you insight into why people and systems react the way they do. For example, much of human behavior is driven by incentives. We want to take actions that lead to us getting something good or avoiding something bad on a range of timescales. The incentives we create for ourselves and other people are a form of feedback, leading to loops that reinforce or discourage certain behaviors. If you get visibly upset whenever someone at work offers you constructive criticism, you'll incentivize your colleagues to only tell you w