Shape the Future Series: Charlie Munger

Shape the Future Series: Charlie Munger

IMG_5571In our previous post we outlined one of the 5 Pillars of the Foundation, namely, Intellectual Imagination.  For this Shape the Future Series post we look at the attitude of Conceptual Ability which forms part of the Synthesising mindset under the pillar of Intellectual Imagination.

The 3rd of May , as many in the investment and financial services industry will know, is the Berkshire Hathaway annual general meeting in Omaha.  Many investment professionals will make the annual trek to Omaha to have an audience with not only Warren Buffet, the CEO of Berkshire Hathaway but also with his slightly lesser known partner, Charlie Munger.  It is Charlie Munger, who for us, personifies the attitude of Conceptual Ability.

Conceptual Ability is the attitude of working comfortably within the realm of ideas, being able to build, stretch and manipulate them into new and different forms.

Munger is the Vice-President of Berkshire Hathaway and Warren Buffet calls Charlie Munger his “partner” for good reason.  During the period 1962 to 1975 Munger’s investment partnership generated compound annual returns at more than three times the average of the New York Stock Exchange.

Charlie Munger is not a celebrity or household name.  He hasn’t won the Nobel Prize or the Pulitzer Prize.  He’s never been a great writer, a rousing speaker or a legendary sportsman.  As he says: “I was very lucky in my life, because every place I looked, at the pinnacle there was a guy better than I was”.  And yet, Charlie Munger is a polymath, defined as a person of great learning in several fields.

Munger puts his investment success down to his “latticework of mental models”.   This really is another way of saying his “conceptual ability”.  Munger’s conceptual ability has led to him being the inspiration for a book on thinking called “The Art of Thinking Clearly” by Rolf Dobelli as well as a collection of Munger’s speeches in the book by Peter D. Kaufman called Poor Charlie’s Almanack.

Charlie Munger is a strong proponent of what he calls elementary, worldly wisdom.  What exactly is elementary, world wisdom?  In Munger’s own words: “Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ‘em back.  If the facts don’t hang together on a latticework of theory, you don’t have them in usable form.”

Through this latticework of theory or mental models, Munger says that you are then able to “make the mind reach out to the idea.”  In other words, the more you know, the more you are able to spot opportunities or efficiencies which lead to more ideas which lead to more solutions which again leads to more questions, both in a good way and a bad way depending on the outcome.

And before I ponder my way into what Munger calls the Lollapalooza Effect whereby all that I know about entrepreneurial learning actually makes me create a viewpoint based on my own biases and leads to more questions, I will stop!

And leave you to ponder the realms of your own conceptual ability with his wise words, “Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.”

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