How To Think Like Charlie Munger
Charlie Munger, the outspoken partner of Warren Buffet, is well known for using a multi-disciplinary approach to making better decisions. According to him, learning how to overcome behavior that drives poor choices is the key to making better decisions. He is an incredible learning machine and his attitude can be summed up in his own words:
Nothing has served me better in my long life than continuous learning. I went through life constantly practicing (because if you don’t practice it, you lose it) the multi-disciplinary approach and I can’t tell you what that’s done for me. It’s made life more fun, it’s made me more constructive, its made me more helpful to others, its made me enormously rich. You name it, that attitude really helps.
In 1996, Charlie Munger gave a talk about how he may have pitched Coca-cola using 5 basic constructs- Simplify the problem, use numerical fluency, invert the problem, apply basic knowledge, and watching for lollapalooza effects. He also spoke (video)at Harvard Faculty Club on the psychology of human misjudgment. Here are my favorite quotes from his talk:
To the man with a hammer, everything’s a nail
Don’t be the one-legged person in an ass-kicking contest
Here are a few things I learnt from Charlie Munger:
- Set aside a good chunk of time every day to think
- Set aside considerable amount of time everyday for reading
- Use multiple mental models to make intelligent decisions
- Ask questions
- Use checklists
- Adopt a multi-disciplinary approach to solving problems
- Learn from your mistakes as well as from other’s mistakes
- Simplify the problems
- Practice inverting the problem
- Ask why?
The above lessons look deceptively simple but its the practice that makes them very hard. Charlie Munger spent decades practicing them before becoming an expert. If you are interested in learning more from Charlie Munger, I recommend you read the book ‘Poor Charlie’s Almanack’ available on Amazon.
Here are a few things I thought were worth sharing this week:
Peter Sims: Little Bets: Based on deep and extensive research, Peter Sims offers engaging stories of breakthrough innovators at HP, Pixar, Amazon and others. His key takeaway is that these companies achieved remarkable results by taking small experimental steps rather than plan a whole project in advance. It all starts with a little bet! A great example of a little bet is how Katrina Lake built Stitch Fix.
Simon Sinek: The Finite and Infinite Games of Leadership: Simon Sinek applies game theory to leadership. If you are an infinite player playing with finite players in life/work, you need to listen to this talk.
Microsoft’s Next Act: In this McKinsey podcast, Satya Nadella discusses culture change, digital disruption, business units vs. capabilities, aligning incentives and many other topics.
Savind Diamond, Ruby, Sapphire, Emerald, and Jade: A Story on Survival and Lessons for Leaders: My colleague Ajay Raina comes back with another great story that bridges his personal life with leadership lessons for work.
High-performing Teams Need Flexible Leaders: This is an article I wrote earlier on high-performance teams using popular team maturity models.
