Mental Models: A guide to Enhance Decision-Making for Product Managers

Welcome back. This is part 2 of the series I am writing on Mental Models, their importance, and their use as a product manager. (You can read part 1 here.)

Today, I will focus on the last step in the process – helping you understand how I use some mental models in my daily life as a product leader. I will focus on three very critical aspects of our job:

1. Prioritisation
2. Ideating and innovating
3. Cross-functional alignment

Prioritisation

I use the Second Order Thinking and Scale mental models while prioritising features on my roadmap.

Before I jump into which mental models make prioritisation effective, I will quickly define prioritisation so we're all on the same page.

Simply put, prioritisation is creating the sequence in which you will execute specific tasks. Typically, there is sound logic behind making the sequence. 

I use a simple logic: we should develop features with high impact sooner than those with less impact. I then adjust the sequence based on the cost of building the feature.

The logic is simple, but measuring impact in a logical, scalable, and meaningful way is not.

Understanding the concept of "Second Order Thinking" is essential in this situation.

Second order thinking

When making critical decisions, it's essential to think about the long-term effects holistically and not just what's happening right now. If you only focus on the immediate impact, you will miss important information and make mistakes. 

For example, let's say you're a Uber product manager and have just added a new feature that tells drivers when and where demand is highest. Before making any decisions, consider how this feature will affect drivers and passengers in the long run.

First-order thinking:

Drivers will optimise their day to be available during the peak hours in the hope of getting more rides and earning more.

Second-order thinking:

As more and more drivers (in a given location) get access to this information, all of them become available during the "peak hours." This leads to oversupply during those hours. All of a sudden, the peak hours are not peak any more.

Now, the drivers expecting to earn more are earning less because they are now competing with a larger pool of drivers. 

Lesser rides lead to more idle time for the drivers. More idle time leads to dissatisfaction, which leads to churn.

See where this is going?

Always consider the second and third-order impact when making decisions. This will give you a complete understanding of the full impact of any action.

When thinking of impact, force yourself to go beyond the first-order impact, and ask what other things the first-order impact can lead to. Repeat this 3-4 times to create a holistic picture of the impact.

Scale

Let's now think of the cost side of the equation.

Scale mental model helps me accurately think of cost while prioritising.

As product managers, we need to remember that systems do not work the same way at different levels of scale.

Let's take the example of Instagram. When Instagram was a new platform, most users followed accounts of friends, family, acquaintances, or other people they knew. 

As the platform grew, there was a clear need to help users discover new accounts beyond their immediate network. 

As users started following more accounts, they had overwhelming amount of content on their feeds. 

Knowing that millions of users were going through this problem, the product team decided to take an algorithmic approach that would categorise and recommend content to users depending on their preferences, usage patterns, and relevancy.

As you see, the problem statements kept changing with changing scale. 

As a product manager, it is critical to:

1. Evaluate the problem statements you're focusing on depending on the level of scale you're at.
2. Anticipate (as much as possible) how the current problem statement will change at a different level of scale.

To put #2 in perspective, think of the times when big tech companies like Flipkart and Zomato failed during their highest traffic days despite all the efforts and planning that went into preparation for the special days.

Ideating and Innovating

As product managers, we are constantly required to generate big, new, innovative, and disruptive ideas. 

However, this can be challenging, especially for those who are left-brained. I rely on two mental models in these cases: the Circle of Competence and Thought Experiments.

Circle of competence

There are a few product areas, industries, and geographies that I am very familiar with. Either because I've worked in them or because I learn about them from other sources.

For example, I understand the different user personas ordering food online in India because I headed Retention Growth for Zomato. My work involved understanding the users deeply to create personalised experiences for them on and off the App. 

If I were to brainstorm ideas on a particular problem in food delivery, I would have great ideas. And I'd be very comfortable solving challenging problems in the space.

But if I'm brainstorming ideas for an app in the healthcare space in Germany, I'll struggle. I have never worked in healthcare, and while I've lived in Germany, I need help understanding the cultural nuances.

And in this case, I'd prefer working with someone familiar with healthcare, Germany, or both.

The point is that there will be areas in which you are an expert, and that is your circle of competence. Similarly, there will be areas where you're not the expert and that will be out of your circle of competence. You should know which is which. 

If you're out of your circle, involve others who have operated in that circle and can make better decisions and think of innovative ideas.

Thought experiments

We all use this mental model more often than we realise.

How often have you asked or answered questions that sound like the ones below?

1. If you had all the time in the world, what would you do
2. If money was not a constraint, what would you do
3. If you could breathe underwater, what would you do
4. What would the world look like if Adolf Hitler did not exist
5. What would you do if you were in my place

If I were to guess, pretty often.

All of these questions are thought experiments. 

They force us to challenge our status quo by thinking of scenarios we avoid considering due to specific constraints. I can't imagine a world where money will not be a constraint for me or where I have all the time.

But, if I were to imagine a world where I did have all the money and think of all the choices I would make concerning my life, career, family, etc. I will know what I value most and where I should focus more. 

Removing the limiting constraint from the equation unlocks exponentially better thinking and creativity.

I use thought experiments very often as a product leader. 

Any time a PM on my team is struggling to think of innovative ideas; I ask them, "What do you think is limiting you to think bigger?" and more often than not, the answer is something related to a constraint like engineering bandwidth, missing skill set, limited expertise, etc.

And then I guide them into a thought experiment – "If you had all the engineers in the world, would you still stick with the original idea set?"

This exercise forces them to remove all constraints and think big. 

The ideas they come up with in such scenarios are at least 10x better and bigger. I am not lying. 

Once we have all the big ideas, we work backwards and ask ourselves – "What can we do to make this idea happen, given the current constraints?" And that is where the magic happens. Now the PMs have an excellent idea and think of ways to make it happen in the constraints.

Cross-functional alignment

The Incentives mental model is the most underutilised yet has the highest impact.

Humans only do things when we have an incentive to support them.

And this behaviour is even more dominant as professionals. 

Everyone is doing things for a reason – the next sale, the next promotion, the next house, the next EMI.

All we need to do is determine the incentive and align our ask to it.

As a product leader, I know other leaders have different goals than me. The sales head wants more revenue, which gets her more commission, the next promotion, or both. The operations head is trying to create more efficiency, reduce costs, and increase the ROI of the team. 

If I were to approach the sales head for support, I would appeal to her incentives. Instead of asking her to "Help me to make our product better," I would ask her to "Help me because it would improve our product, which will guarantee more sales and help her meet her targets."

That is it for this series. I hope you enjoyed learning about the different mental models and how you can use them to make better decisions as a product manager.