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Mental Models

A mental model is a simplified explanation of how something works.

V2 | Physics | Leverage

“Leverage is the force multiplier of the world, the principle that allows the small to move the large and the few to influence the many. It’s the idea that a little force, strategically applied, can yield outsize outputs.

At its core, leverage is amplification. Think of a crowbar prying two boards apart or a pulley system hoisting a heavy load. In each case, the applied force is multiplied. But leverage isn’t just useful in physics. Rather, it’s a principle that applies across our lives.

Leverage lurks in the background of nonlinear outcomes. Consider the author who took the ideas in their head, put them in a book, and sold millions of copies, or the Wall Street investor who made a single decision that resulted in billions. Or even the CEO who directs the people working for them. All of these examples are leverage in action.

In personal development, leverage is about identifying the key habits, skills, and relationships that will impact your life and work most. It’s about focusing your energy on the critical few rather than the trivial many, about finding the points of maximum leverage where small changes can cascade into massive results.

An example of personal leverage is an employee who learns to use AI to amplify their impact on the organization far beyond their experience or effort. While labor is still a form of leverage, it can often be done with silicon chips. In this sense, the person who can leverage technology can compete in a way never imaginable.

However, leverage is not without its risks and responsibilities. Just as a small action can have an outsized positive impact, so can it have negative consequences. If you borrow too much money against your house and it turns out to be less valuable than assumed or interest rates change, the downside of leverage can quickly wipe you out.

Good ideas taken too far often cause unanticipated consequences. Wielding leverage to maximum effect all the time, as the West Virginia mine owners did, sows the seeds of ongoing unrest that undermines one’s ability to be truly effective. No one wants to feel exploited, and those who are never give their loyalty or their best work.

The key is to use leverage wisely and judiciously by understanding the systems you want to influence and considering the second- and third-­ order effects of your actions.

Leverage is a tool, not a toy, and like any tool, it requires skill, judgment, and respect.”

— Source: The Great Mental Models v2: Physics, Chemistry, and Biology

Reading

A fascinating pattern emerges when studying outliers of the Gilded Age – their real education often came through reading to their elders.

Consider this note in David Cannadine’s biography of the Mellon family: “Andrew [Mellon] read extensively to the Judge [his father], and may thereby have learned more than he did by formal education.”

This wasn’t unique to Mellon. Hetty Green, the richest woman in America, followed the same path. As Charles Slack writes in his biography Hetty: “From a young age Hetty read the financial news to her father, and to her maternal grandfather, Gideon Howland, a partner in the firm. She read shipping statistics, tariff news, currency debates, the latest on securities and investments, and trade news from New York. She absorbed everything. By the time she was fifteen, by her own reckoning, she knew more about finance than many financial men.”

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