Friday, July 13, 2007

Success Secrets: Munger on Mistakes

I am continually delighted to find much material on the wisdom of billionaire Charlie Munger so freely available eon the Internet. Munger is a rarity: a master in his field who also reflects on his own methodology and thought patterns. Rather than just “catch more fish”, he focuses continually on “how to make better nets”.

How often do any of us examine and improve the processes behind the actions we take? Yet small changes in our methodologies and thought patterns will create huge changes in he patterns of our lives.

Here is the first installment of an ongoing analysis of Munger’s concepts.

Concept : Keep Track of Mistakes

This is derived from a short article about Charlie Munger from Morningstar

In the Army they call it an After Action Review. For fighter pilots it’ s a Debrief. Some investors, says Munger, keep a “Temple of Shame”. Whatever you call it, a constant review of your mistakes (and your successes) creates a laser-focused target for individual improvement in all areas. As a trader, I have a debrief form which I fill out for any significant event in my trading. I review the debriefs once per month and keep a “lessons learned” file to refer to. (See also: Murphy’s “Flawless Execution") .

It is also helpful to review one’s life in the light of various success principles. For instance, if you are reviewing a list of interpersonal skills , the goal would be to reflect: “How did I fail in reference to these skills?” What opportunities did I miss because I lacked empathy? Self-control? Couldn’t keep my mouth shut?” etc. I have ample oppportunities for this type of reflection. Unfortunately.

The good news about this is that, since we are keeping our own list, the lessons “hit hard” and sink in quickly. Also, a lot of mistakes don’t have to happen twice. Once we install a f"eedback loop" to recognize a mistake, and actually benefit from it, we begin to see that we can improve our results, and we enjoy finding new ways to improve.

Keeping track of mistakes is a humbling experience. But much less humbling than making them over and over again.


1 comment:

Matthew Cornell said...

Great article and pointer - I like the attitude very much - thanks!

Two related articles you might like: Some thoughts from tracking "lessons learned" for a year and A key to continuous learning: Keep a decision log.