Success Secrets - Chalie Munger and Creative Destruction

I’d like to discuss in detail one of Charlie Munger’s many insights into human thought processes as they relate to success. This is the kind of thinking that can get us ahead not only in our professional lives, but in every aspect of our lives. I am constantly amazed at how our current technology can literally deliver , in quantity, the insights of a billionaire, right to our desktop. What might have been the contents of, maybe, a single weekly magazine article, or a three minute evening news sound bite only 20 years ago, instead, is a vast treasure trove of Charlie’s wisdom, scattered all over the Net. I am finding articles and speeches by Munger every day and, as they aggregate, it is a marvel to see the totality of the man’s wisdom.

In this post, I am going to discuss Charlie’s concept of the Destruction of Ideas and one of it’s main obstacles: the Bias From Consistency.

The concept of Creative Destruction is usually attributed to economist Joseph Schumpeter, and this concept also figures highly in the thought of billionaire Charles Koch. It is crucial to disgard ideas that are inefdfective. To regularly review the internal models that you are using to guide your behavior. Consider a few of these ideas:

Nerve cells can’t regenerate
Gold reserves are the measure of a country’s wealth
Humans will die if they travel at speeds over 30 miles per hout
Your company will take care of all your retirement needs

A lot of misery would be generated by holding on to such ideas, and it is important that they be discarded.

Buffett and Munger taught the world about creative destruction of ideas as they went beyond the investment theories of Benjamin Graham, one of their idols, to other, broader methods of finding underprices assets.

I believe John Templeton highy successful investor and mutual fund magnate, after a lifetime of only being long the market, went massively short at the top of the tech bubble. Clearly his advanced years had not dimmed his ability to cratively destroy one idea in favor of another , more effective one.

And look at China. No country was more ideologically based than Maoist China. As such they were sickeningly poor and backward, deliberately imprisoning and degrading their best and their brightest. And then, when they were able to move past their strict agrarian/communist mindset, one of the world’s most amazing transformations took place, bringing in one of the greatest economic transformations in the history of the world, lifting untold millions out of poverty.

Just because of the Creative Destruction of an idea.

What kinds of embedded ideas within ourselves need to be examined?

“My house is my bank account”
“I’m a night person not a morning person”
“My belief system is unchanged since my college years”
“Sex, Drugs, and Rock ‘N Roll, man!”
"The Bee Gees are the pinnacle of music”

I think one of the most harmful ideas that needs to be changed, almost at every level is : “This situation can’t get better”. This could be short-term or long-term. Days, weeks, or a lifetime, financial or personal, health-related, education related, etc. It is a small voice found inside many of us and it is, almost always, manifestly, provably false. It is realy a manifestation of laziness or pessimism. A perverse comfort-zone , actually. Or perhaps a “discomfort zone”.

So, why do we hold ideas long past their usefulness? Munger identifies the Bias from Consistency as one of the main causes. We strive to be consistent with our past selves, especially when we strongly identify with certain ideas we have held. It takes a special kind of humility, or a strong incentive to change ideas we have loudly or consistently embraced.

A lot of our habits, ideologies, musical tastes, clothing preferences, status symbols, personal idols, etc may have been formed early in our lives, and may be sorely in need of change. But we have held on to them , and nurtured them, and it is a wrenching and sad process to say good-bye to them. But to hold on may be utterly disastrous, or at a bare minimum, consign us to far fewer opportunities than we might experience if we open our minds and challenge our beliefs.

Next: Identifying and changing ineffective ideas.

Some Munger references:

The Psychology of Human Misjudgment

An Afternoon With Charlie Munger

Techtags: Warren Buffett Charlie Munger Charles Koch Joseph Schumpeter Investing Creative Destruction

Success Videos - The Wisdom of Charlie Munger

I have frequently posted on the need for lifelong learning, and for constant reading as a key method of personal success.

Charlie Munger, investment partner of Warren Buffet, spoke of this necessity recently at the USC Law School Commencement. The video is here.

I recommend people listen to this address once per month. It is so loaded with wisdom and experience that multiple listening are necessary to take it all in.

Here are a few quotes:

“I constantly see people rise in life who are not the smartest, sometimes not
even the most diligent, but they are learning machines. They go to bed every
night a little wiser than they were when they got up and boy does that help,
particularly when you have a long run ahead of you.”

“What will
really fail in life? What do you want to avoid? Such an easy answer: sloth and
unreliability. If you’re unreliable it doesn’t matter what your virtues are.
Doing what you have faithfully engaged to do should be an automatic part of your
conduct. You want to avoid sloth and unreliability”

A rough transcript of the address is available here.

Techtags: Charlie Munger Warren Buffett Success Reading Wisdom

Success Videos -Google's Eric Schmidt

A fascinating interview with Google's Eric Schmidt. He tells us that the basic nature of innovation is unchanging, even going back hundreds of years. Some great insights into the characteristics of entrepreneurs (the drive and passion are immediately recognizable and can't be taught), and a great insight into Google's seemingly chaotic business model (the creative side is wide open, the "business guts" are highly organized). A truly enjoyable video:





Techtags: Eric Schmidt Google Entrepreneur

Success Secrets - Client Service = Marketing

I am enjoying a terriffic site I just discovered: http://www.salestrainingadvice.com which features adive from sales pros such as Brian Tracy, Bob Burg and many others. This quote from Tom Hopkins really struck me:

clipped from http://www.salestrainingadvice.com/ One of the biggest challenges facing any business is keeping in balance. In many businesses, more emphasis is put on getting new business than serving existing clients. Next to sales functions, customer service functions are vital to overall success and must be given appropriate emphasis.

In my opinion, sales can be rapidly accellerated through superb servicing of the current client, and this is essentially done with zero marketing dollars. Rapid turnaround of jobs, proposals, phonecalls, etc combined with a "service attitude" may in fact be one of the best forms of "marketing" around. Furthermore, great service has none of the "sleaze effect" of insistent phonecalls, "entertainment", corporate gifts, etc. In fact, don't you really want clients who come for the right reasosns (i.e. good service) rather than any other "fleshier" reasons?

Success Book Reviews - Gitomer on Persuasion Part 2

This is Part two of my review of Jeffrey Gitomer’s Little Green Book of Getting Your Way: How to Speak, Write, Present, Persuade, Influence, and Sell Your Point of View to Others Part 1 is here. The next portion of the book continues with its exploration of the success factors of persuading others. Over and over again, Gitomer proves to us that we are human beings first, and sales prospects second. In effect, we are selling ourselves first. Gitomer cites three key elements in your presentation skills inventory that , to me, seem unrelated to selling anything except ones self: Sincerity, Believability, and Storytelling Skills. These key skills certainly relate to selling, but they are the selling of one’s own character. These skills contradict the smarmy, hyper-aggressive image of the “super salesman” in favor of someone you’d really like to get to know.

Later in the book he adds that humor, and “looking good” are part of the arsenal of presentation skills. It seems to come down to this: the sales presenter has to be someone you would like to listen to even if they weren’t selling you anything.

On another topic, Gitomer is relentless: you need to practice. And practice some more. He repeatedly states that people with stage fright are often those who do not know thei material “cold”. And this makes a lot of sense. He strongly recommends recording your presentation: audio and video. He suggests you practice in front of people who are willing to evaluate you, and he reminds us: when you tape yourself, make sure you watch the tape multiple times!.

This is all crucial knowledge from a man who gives hundreds of talks per year.

More in Part 3 .

Back to Part 1

Techtags: Gitomer Sales success Selling power Success factors

Success Book Reviews - Gitomer on Persuasion Part 1

I’ve been reading master salesman Jeffey Gitomer’s Little Green Book of Getting Your Way: How to Speak, Write, Present, Persuade, Influence, and Sell Your Point of View to Others. The book, at least the part I’ve read so far, appears to be geared toward improving presentation and persuasion skills, particularly in selling.

I am impressed with what I have read so far. A few of the more fascinating ideas are, if not counterintuitive, then certainly unobvious. For instance

Persuasion starts with excellent listening. With your ability to discover and ask the right questions.

When one thinks of it, how can you sell anything to anyone if you don’t know their problems? If you don’t know what they want to buy? At a deep level, persuasion is consultative, involving an empathy and study of others’ situation and needs.

In my previous career in a creative field, I noticed that I was almost the only one taking notes in client meetings. Sometimes it was not so much a client’s stated needs, but a turn of phrase, or perhaps a description of what was said in THEIR client’s meeting that allowed me to conceive of targeted solutions. To a carpenter, all solutions might look like a hammer, but we cannot think in such black-and white terms. We need to creatively engage with the client to find unique solutions. Only then can the client persuade himself to buy.

Persuade Yourself First. Gitomer contends that persuasion comes from people who believe in themselves: yourself, your product, your company. I have a friend who is a world-class salesman. One of the reasons he is so good is that he knows that his company provides one of the best solutions in the country for his particular niche. Not only that, but he has educated himself about the entire product production process, so he knows how to get great results from his suppliers. And he can also depend on himself to watch over things: he knows he takes an “ownership approach” to everything he sells. Naturally, this strong belief, which is grounded in hard-earned reality, allows him to project confidence and reliability to his million-dollar clients. It all starts with belief in what you are selling. And that includes YOU.

But Gitomer doesn’t stop there. He tells us ho to make OURSELVES a better product before we can persuade others. He mentions Credibility, Stature, (previous) Success, and Reputation. In my current field as trader, I have found that the books that help me the most are written by…duh…great traders! Although there are a lot of books by great seminar leaders, famous people, guys with great websites, etc, I have found that I have learned the most from those with demonstrated previous success.This point is particularly important coming from a salesman like Gitomer. The core of sales is delivering results, not "selling" in the commonly-understood sense. That’s why an ex-president or person of similar stature can command a speaking fee 100 times more than a person who has been speaking for 25 years…but who hasn’t truly accomplished nearly as much. It’s the credibility. The previous, demonstrated success. The reputation.

If we work on ourselves first, the selling comes a lot easier.

More in Part 2

Techtags: Jeffery Gitomer Selling Persuasion Presentation Skills

Success Tools - Simple*Ology

Zen Habits has a review of Mark Joyner’s Simpleology: The Simple Science of Getting What You Want , a life/goals management system which seems to have a number of interesting techniques. I was particularly impressed with this comment:

The system first asks you to define your Ultimate Life, then asks you to choose
one Long-term Target (6-12 months away), one Medium-term Target (1-6 months
away) and one Short-term Target (2 days to 1 week away). Only one of each,
because if you choose more, you cannot maintain sufficient focus and energy to
get to your target.

This tightly-focused approach is refreshing in the light of how many goals we can generate for ourselves. I remember times when I put my goals on a series of spreadsheets. I found myself overwhelmed and depressed. Currently, I do a lot of GTD techniques, but I have found that I get more done, with less “overwhelm”, if I limit the actual items on my planner to a few, carefully-chosen tasks from my much larger GTD "next-action" list. If I run out of “actions” before I run out of “day”, I can always go back for more.

I look forward to reading Joyner’s book. It seems to have a great grasp of reality.

Techtags: SimpleOlogy Mark Joyner GTD Goals

Success Secrets - Rebalance Your Portfolio

The stock market is really going strong. But this may be the time to SELL and not buy. Am I a doomsayer? Hardly. One of the best-proved investment philosophies involves adjusting the allocation of your assets (stocks, bonds, etc) when one asset class gets too large or too small. Over time, you have a safer and healthier portfolio, and you get a lot more sleep at night.

Here is a great Asset Mix Calculator you can use to perhaps plan in advance for the next wild swing of the market.



Techtags: Portfilio Asset mix Asset allocation

Success Secrets - Resistance Excercise

Scientists have discovered that resistance excercise can help reverse the effects of aging, right down to the cellular level.

clipped from http://www.medicalnewstoday.com/healthnews.php?newsid=71904 Scientists in Canada suggest that twice weekly sessions of resistance exercise training using standard gym equipment can reverse the signs of ageing in the skeletal muscles of the over 65s. 14 of the old adults then completed a 26-week whole body resistance exercise-training programme based on stretching and weight-bearing exercise on gym equipment that involved 3 sets of 10 repetitions for each muscle group, including for instance leg press, chest press, leg extension, leg flexion, shoulder press, and lat pull-down. Melov and his team found that the old adults improved their strength significantly compared to the young adults

Techtags: Excercise Ageing Success