Tuesday, October 24, 2017

Combinations and permutations

Combinations and permutations are very important in calculating probabilities. In this text, we will not go into probabilities at all. We will also try to live without any mathematical formulas. The idea is to focus on the combinations and permutations of the mental models. Lets start with definitions.

Definitions

Combinations can be defined in many ways. Here is one: ”A joining or merging of different parts or qualities in which the component elements are individually distinct.”

Permutations can be defined in many ways. Here is one: ”Each of a several ways in which a set of number of things can be ordered or arranged.” In mathematics, the notion of permutation relates to the act of arranging all the members of the set into some sequence or order.

Combinations of the mental models

We need to forget mathematical meanings when we are talking about combinations of the mental models. We could also talk about multiplications when all the mental models are working towards the same direction. For example, when we talk about brands, we talk about many psychological tendencies/biases moving to the same direction. Many biases like social proof, availability bias, authority bias, etc. together are creating a connection between the product and customer´s mind. A strong need to buy a particular brand is the product of the biases. The strength of each bias is different in the minds of different customers. In reality, mental models never have effects only on one direction. For example, social proof from a person a customer hates moves his/her decision to a negative direction and from a person he/she likes moves to a positive direction. Sometimes different models will lead people into separate directions.

Permutations and mental models

The biggest difference between combinations and permutations of the mental models is that in permutations the order of the mental models matter. This means less choices. Without a right order, it is not possible to get the wanted results. For example, we cannot introduce new habits without the right order. Habits have three components. First is trigger, which offers us a clue to execute an action. Then, there is the action. The reaction for the action is a reward. Reward is really a source of motivation. When we want to establish a new habit, we need to have all the components in the right order. There is no action without the reward or clue. The most important things in establishing a new habit is that the source of motivation is very rewarding. The action should be as achievable or easy as possible at first. A trigger should be as available as possible.

Lollapalooza-effect is one kind of combinations of mental models

When the most mental models such as, psychological biases, Inertia, the path of least resistance, and so on, and their strongest effects leads us to the same direction, we can talk about Lollapalooza-effect. This mental model is invented by Charlie Munger. He only talks about everything moving to the same direction, but it is basically the same thing as having big effects compared to small effects. Munger uses a simplified model. That is maybe a better approach than mine. All the billion dollar brands, the most successful companies and people are the results of the Lollapalooza-effects. We will get to these things later. For example, I will show how Apple and its products can be understood better through mental models.


We have just scratched a surface as always. All these models are a little bit simplified, because reality is too complex to understand. I hope we are a little bit wiser after these text.


-TT

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