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Mental Model Summary: Advantages of Scale

By Andrew McVagh, last updated June 4, 2018 1 Comment

Mental Model

Advantages of Scale, Economies of Scale

Summary

Advantages of Scale refers to the idea that as an organization performs more and more of the same type of work it will tend to acquire efficiencies over time.

There are a wide range of efficiencies that can be gained as the organization grows, from workers becoming better at their craft to the ability to order materials in bulk.

The key idea is that as an organization becomes more efficient at a task it often gains a Competitive Advantage as a result. [Read more…]

Mental Model Summary: Law of Small Numbers

By Andrew McVagh, last updated May 31, 2018 Leave a Comment

Mental Model

Law of Small Numbers

Summary

The Law of Small Numbers is the concept in Probability that says you will see the most variation in small sample sizes.

This is the opposite of the Law of Large Numbers where, over time and/or with a large enough sample size, outcomes will converge on their true probability.

The key idea is that small sample sizes will have results that vary wildly and can be misleading. [Read more…]

Mental Model Summary: Division of Labor

By Andrew McVagh, last updated May 30, 2018 Leave a Comment

Mental Model

Division of Labor, Specialization

Summary

Division of Labor refers to the idea that when each person in a group specializes in a different set of skills the effectiveness of the group will be higher than if everyone tried to be self-sufficient and do a little bit of everything themselves.

Because each person has the time to master a few skills, they can trade the results of those skills with people who have mastered other skills and everyone will benefit.

The key idea is that specialization tends to increase the productivity of a group. [Read more…]

Mental Model Summary: The Complete List

By Andrew McVagh, last updated June 4, 2018 Leave a Comment

Below is a list of all the Mental Model Summaries I’ve put together so far. As I create new summaries I will list them here as well.

If you have a particular Mental Model you would like me to cover, please contact me and let me know.

Enjoy!

Mental Model Summary: Inversion

By Andrew McVagh, last updated May 24, 2018 Leave a Comment

Mental Model

Inversion

Summary

Inversion is the idea that to solve a problem sometimes you can find the solution easier if you think about how not to solve the problem.

In other words, if you start thinking about the things that won’t get you where you want to go it may give you more insight into ways that will.

The key idea is that if you are stuck, you can flip the problem on its head and figure out what not to do. [Read more…]

Mental Model

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Mental Model

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