4 Lessons Entrepreneurs Can Learn From the Wisdom of Charlie Munger Millions of people pay close attention to what Warren Buffett has to say. This is who Buffett listens to.
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Charlie Munger is one of the greatest business minds of the past century. He is the vice chairman of Berkshire Hathaway and right hand man of Warren Buffett. Throughout his career, Munger played a key role in Buffet's success.
An interesting thing about Munger is he became one of the world's most revered businessmen without taking a single class in business, economics, marketing, finance, or anything else of that nature. His formal education included meteorology at Cal Tech and law at Harvard.
Over the years, Munger has provided countless insights that entrepreneurs from all corners of the business world should keep close. While there are many, many lessons that can be taken away from Munger's wisdom, I have chosen four of my favorites.
1. Develop a healthy relationship with the truth.
"I think that one should recognize reality even when one doesn't like it; indeed, especially when one doesn't like it." -- Munger
As an entrepreneur, it's surprisingly easy to develop tunnel vision -- keeping your eyes glued to the prize. As a result, you can grow ignorant to the ugly facts and truths surrounding you. A huge aspect of running a business is being able to face harsh realities and fight through them.
Between 1992 and 1995, Munger gave a number of speeches that dealt with psychology and economics. In one of the speeches, he talked about how avoiding the truth is how people create false realities. He gave an example of a student athlete flying over the Atlantic and never coming back. His mother simply did not accept the reality and never believed him to be dead. Munger described how this form of psychological denial can lead to numerous problems down the road.
Now, getting back to the (less morbid) business world, getting into a cycle of denial that blinds you from the harsh truths is a toxic trait that must be avoided. You need to be able to take a step back and critically examine the flaws of your business, no matter how big they might be.
2. Success stems from divergence.
"Mimicking the herd invites regression to the mean." -- Munger
When you look at the most successful business leaders in the world, perhaps the most common pattern is they brought something new to the table; whether it was through innovation or disruption.
In a digital world, where people have access to just about every piece of information, there is a fine line between true innovation and adding to the noise. A huge part of Munger's messaging deals with breaking norms and avoiding the "average." The ability to move away from the average label is dependent on the ability to diverge.
We see this all the time in marketing. The most impactful brands are able to take an idea and bring it to the next level. One of my favorite examples of this is GoPro. Now video cameras. When GoPro came on the scene in the early 2000s, it was clear they were bringing something unique to the world of video. While there are many elements that make this company stand out, one of the key differentiators is the unspoken culture they sell with their products. This culture revolves around being adventurous and showcasing your experiences. A critical contributor to this culture is the GoPro Channel, a page on the website where people can submit their GoPro videos. The coolest ones are shown on the channel.
In many ways, this concept puts pressure on the customer to go out and do something extraordinary. So, when someone buys a GoPro, they are buying more than just a camera; they are buying a mindset of being awesome.
Ultimately, it doesn't matter what your product or service is, there is always room for divergence. Your ability to find this special something and add a new twist is the key to success.
3. Keep your ego in check.
"Smart people aren't exempt from professional disasters from overconfidence." -- Munger
Munger is a huge believer in self-awareness and avoiding overconfidence, especially in this current era of constant connectedness. This is one of my favorite business tips that gets overlooked time and time again.
Unchecked egos are everywhere in the business world. This is especially true for companies in the midst of rapid growth. When business is booming, it's very easy to get carried away and assume you can take on more and more challenges. For example, let's say you're an agency specializing in content marketing and have seen a great deal of success in recent years. It might seem like a natural progression to use your excess revenue to expand to other areas of marketing like PPC, display advertising and social media. If you saw success in one area of marketing, doing the same in other areas shouldn't be a problem, right?
Truth be told, you might not have the same expertise in other, similar subsets of marketing. Therefore, you will need to bring in people who do. This is where things can get hairy. When you have an unchecked ego during rapid business growth, the ability to listen to others and accept their expertise over your own can be very difficult. However, failure to do so can easily run your operation into the ground.
Ultimately, it doesn't matter how well your business is doing, do not let it go to your head, for this is the origin of countless failures.
4. Always maintain the student mindset.
"Go to bed smarter than when you woke up." -- Munger
One of the things I like most about Munger is his mindset that one should never stop learning. Ultimately, it doesn't matter who you are or what you've done, no one has all the answers. However, the ones who commit to a lifetime of learning have way more than those who don't.
I firmly believe that every single day is an opportunity to become smarter and more aware of the world around you. As the business world is constantly changing and evolving, this is an especially important mindset to have as an entrepreneur. Otherwise, growth is simply not possible.
Fortunately, there are many daily habits to help cement the student mindset. Start your mornings by taking 30 minutes or so to read up on the latest industry news or trending blog posts. Another thing you can do is keep a journal at the end of each day and write down two to three new tidbits or insights you picked up. If you can commit to this, it will become natural to think like a student throughout the day.
Learning goes way beyond the classroom. If you can properly foster this mindset and remain open to new ideas and approaches, your business will reap the benefits.
Munger is a true inspiration, whether you are in the business world or not. The wisdom he has shared throughout his illustrious career can be applied to all walks of life.
As an entrepreneur, the ability to rationalize, innovate, stay humble and retain a student mindset are some of the most important ingredients to achieving long term success. This post hardly scratches the surface of the wisdom Munger offers. If you haven't read up on his words to live by, do yourself a favor and Google his name.