Charlie Munger reminds us that inversion helps us to solve problems we may not be able to solve in other ways. As an example, he says if you want to help India it’s helpful to first ask “what’s doing the worst damage in India….and how do I avoid it?” Said in a personal way: What will lead to failure in life? His top three are: sloth, unreliability, and intense ideologies. Being unreliable and lazy cancels out your virtues, and intense ideologies lock up your mind and make you less likely to change when confronted with new evidence.
Moving to the domains of finance and healthcare:
- How can I be ordinary? Following the latest buzzy “best-practices” is usually the first step. It’s often marked with consultants’ approval and great charts.
- If I want to get ripped off, what costs and ROI basic math calculations should I avoid? Ones that include user non-user biases (self-selection) and crazy savings that can’t be substantiated by units of care analyses. Real ROI metrics, including opportunity costs and deflation for solar panel installations. Any logic of Timeshares being an investment.
- What’s the best way to waste money? Not growing personally (you are your most prized asset). Spending a lot of borrowed money on big depreciable assets.
- What things are most likely to decrease morale?
- How can I best promote overuse and over diagnostics in medicine?
- What are the best ways to not differentiate my product?
Screening for what doesn’t work, cutting the fat or tired ideas, could lead to innovation. I call it Innovation by Subtraction.