Thursday, August 23, 2007

Success Secrets: Charlie Munger and Decision Trees

I have recently been exploring the ideas of Charlie Munger, associate of Warren Buffet, and himself a billionaire. Munger’s work is a good example of why I got interested in creating the Success Books blog. I started this site because of my interest in achievement and self improvement. One of the things I cam constantly discovering is that a lot of the more popular books on achievement, goal-setting, etc, are, in essence, “doorways” from the world of business and scientific thinking, where results are often the key between success and failure, and where results are often measured more carefully than in our personal lives. These techniques for achievement are more available than ever to tose of us who seek them, because the web is bursting with experienced, generous and brilliant individuals who are eager to pass along these techniques to the rest of us.

Decision trees are one such technique.

In many of his lectures, Charlie Munger has mentioned Warren Buffet as “thinkng naturally in terms of decision trees”. Decision trees essentially allow one to compare the potential outcomes of different paths of action.
As I have discovered before, the web is bursting with high-quality sites that include excellent expositions of the Decision Tree method.

One is the Hong Kong University Open Courseware site on Critical Thinking, Logic, and Creaivity. Besides the Decision tree example, The site has courseware on such useful basic thinking skills as

Strategic Reasoning

Creative Thinking

Fallacies and Biases

Basic Logic

… and many more.

This site complements a lot of what Munger has to say about the roots of success (and failure). One of Munger’s core concepts is that that mind can achieve magnificent results if it is magnified through basic logical and thinking tools, and, furthermore, through identifying the weak points that cause our judgments to err, such as biases, fallacies, etc. The Hong Kong site contains tutorials on just these subjects, and many related ones.

Another site which I found through my Decision tree search was the excellent Quality Tools site

The site contains hundreds of pages on dozens of topics that can translate from the world of business to personal success. The site is the work of quality expert David Straker.

Here are a few of the topics he covers:

Activity Network
Affinity Diagram
Bar Chart
Cause-Effect Diagram
Check Sheet
Control Chart
Decision Tree
Design of Experiments
Failure Mode and Effects Analysis (FMEA)
Fault Tree Analysis (FTA)
Flow Process Chart
Force-Field Diagram
Gantt Chart
Line Graph
Matrix Data Analysis Chart (MDAC)
Matrix Diagram
Nominal Group Technique (NGT)
Pareto Chart
Prioritization Matrix
Process Capability
Process Decision Program Chart (PDPC)
Relations Diagram
Scatter Diagram
String Diagram
Tree Diagram
Value Analysis

I look forward to exploring both of these sites in depth over the next few months.


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