Shared Mental Models for Boardrooms

How to keep stakeholders on the same page in times of exponential change

  • 50+% of the respondents said their pack was 200-plus pages and in extreme examples nudged 1,000 pages
  • Directors spent an average of four hours reading a board pack (up 30% from 2011)
  • Directors digested 30 pages per hour of information, which implies that majority of the board pack goes unread
  1. Management’s curse of knowledge: managers spend more time with a problem which causes them to assume many facts as highly obvious. As a result, Management teams struggle to provide boards with sufficient context.
  2. Board’s cognitive biases: board members have to contend with a number of biases including Framing Bias, Bandwagon Bias and Pro-innovation bias. As a result, boards struggle to provide meaningful insights.
  3. Information’s shelf life: based on my experience of serving on five company boards, I found that Management presented new information on the day of meeting ~80% of the time. This is because content in board papers and pre-agreed templates go obsolete quickly.
  1. Define what shared mental models are
  2. Describe a process to create a shared mental model for boardrooms
  3. Share an example of a shared mental model I use for my company NetEquity

What is a Shared Mental Model?

Mental models are hypothesized knowledge structures used to reason about the world, to make inferences based on available information, and to make predictions about future states (Held et al., 2006). The general concept of mental models was extended to teams based on the notion that team members have elements of their individual mental models in common, the shared mental models (Cooke et al., 2003). Academic research points to four types of Shared Mental Models.

Simply put, companies with shared mental models will win

How to create Shared Mental Models in boardrooms?

Almost all video games come with an engaging tutorial. This tutorial allows a player to become familiar with a game’s environment. A tutorial is not action packed by design because to go fast, you must go slow initially. This concept is best captured by how Josh Waitzkin mastered chess. When Josh started learning chess he only played with a pawn and a king until he had a complete and clear mental model of possible moves. Once he mastered pawn and king moves, he added more pieces (see this video to understand better).

The “pawn-king” mental model
Mikhail Tal’s mega complex chess board — 1959

Implication: boardrooms need a “pawn-king” version of a financial model to build a shared mental model.

“Cone of possibilities” mental model

How to build a “pawn-king” financial model?

Imagine a single sheet financial model that uses ~25 rows and ~13 columns only. This model must be designed in a way that it creates user-engagement. Simply put, the model users must play with a model for a while to start forming some type of mental model. Adding buttons and graphs will usually do the trick. Key is to avoid temptation to add more complexity. When in doubt, it’s important to remember that complexity is the enemy of execution.

  • Imagine asking your friend “what do you want for dinner”, usual answer “I’m easy, whatever you want”. This creates unnecessary delays
  • A computationally kind approach is to give a few choices such as “hey, would you like burgers or desi for dinner?”

NetEquity shared mental model

NetEquity is a start-up that wants to make Internet for all a reality by 2028. Creating a shared mental model for NetEquity required creating three separate mental models:

  1. Initial conditions or problem statement
  2. Technical insight
  3. Solution

The initial conditions model

  • 5 million cell towers provide mobile Internet coverage to 90% of the human population, yet 50% are not online
  • Only 10% cell towers are fiberized and almost all of them are in urban areas
  • Increasing network capacity in rural areas through “fiberization” is not financially feasible for the telecom industry

The technical insight model

  • 80+% of cell towers are connected to the electrical grid
  • The electrical grid’s topology is very similar to a telecom network
  • Following the electrical grid to deploy fiber is a viable strategy

The solution

  • Fiberizing rural towers will require bringing predictable, non-telecom cash flows to finance fiber builds
  • Unlocking capital will require bankable contracts which will require aligning incentives and establishing trust

The “pawn-king” spreadsheet

Note: this spreadsheet is now obsolete and does not represent NetEquity’s actual model which financed a fiber network like a true public utility.
  • Fits easily on a 13.5 inch laptop screen
  • Creates the necessary conditions for a shared mental model to emerge



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