Words of wisdom from Charlie Munger

Gone but not forgotten   

“If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation.”

Charlie Munger’s many incisive one-liners are being shared on news coverage and media feeds worldwide for us all to remember the wise words of the legendary investor, vice-chairman and business partner of Warren Buffet at Berkshire Hathaway, who died on Tuesday, November 28^th.

I credit my own awareness of Charlie Munger’s words of wisdom to David Senra’s post on Linkedin with his comprehensive notes from Poor Charlie’s Almanac. (See Below)

Another example: Market Watch article by Nicole Lyn Pesce – 9 of Charlie Munger’s best investing lessons and words of wisdom:

1. “Lifelong learning is paramount to long-term success.
2. Every time you hear EBITDA, just substitute it with bulls—.
3. If you’re not willing to react with equanimity to a market price decline of 50% two or three times a century, you’re not fit to be a common shareholder and you deserve the mediocre results you’re going to get.
4. Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.’” 
5. The best thing a human being can do is to help another human being know more.
6. The world is not driven by greed. It’s driven by envy.
7. The best armor of old age is a well spent life preceding it.”

Do you have your own favourites? Or contradictory advice?

Be better. Do Better. Be an Enlightened Entrepreneur.

Del Chatterson, your Uncle Ralph

Note: David Senra’s post on Linkedin with his comprehensive notes from Poor Charlie’s Almanac: The Wit and Wisdom of Charlie Munger turned into maxims:

1. Find a simple idea and take it seriously.

2. Good ideas are rare. When you find one bet heavily.

3. Humans have been writing down their best ideas for 5,000 years. Read them.

4. Avoiding stupid mistakes is more important than being smart.

5. Don’t work with anyone you don’t admire.

6. Don’t sell anything you wouldn’t buy.

7. Avoiding a bad habit is easier than breaking a bad habit.

8. Work on your best idea. Don't diversify

9. Incentives rule everything around you. Look for them.

10. Great businesses are built by going ridiculously far in maximizing or minimizing one or a few things. Think Costco.

11. Learning is changing behavior.

12. Do the unpleasant tasks first.

13. Charlie has read hundreds of biographies. Do the same.

14. Stop multitasking. Concentrate.

15. Many hard problems are solved best when approached backwards.

16. Think of ideas as tools. When a better tool comes along use it.

17. Clip your business and personal expenses. Small leaks sink big ships.

18. Make friends with smart dead people. Adam Smith, Darwin, Cicero, Ben Franklin —whoever interests you. Read their writing. Steal their ideas. They don’t need them anymore.

19. Don't confuse intelligence with invincibility.

20. Bad things will happen to you. It’s inevitable. When they do get up and keep going and remember the next maxim.

21. Self pity has no utility.

22. Find out what you are best at. Then pound away at it. Forever.

23. Only plays games where you have an edge.

24. Avoid mob rule. Avoid demagogues. Avoid dogma. Avoid bureaucracy.

25. Optimize for independence.

25. Use money to buy freedom.

26. Develop durability.

27. What do you have an *intense* interest in? Do that for money.

28. Self improvement has no end.

To tip or not to tip?

�It�s a good question ���

�You know the difference between a Canadian and a canoe, eh? A canoe tips.�

I enjoy destroying that myth.

Sharing the wealth and adding a generous tip is a pleasure for me and may improve the day for somebody else. It feels like a gesture of solidarity and support for other hard-working people trying to get the job done. It�s not meant as a reward for exceptional service to be held back if the service is unfriendly or inefficient. There may be a reason they�re not having a good day. You can make it better.

You might argue that management should pay them more so you don�t have to. Paying the minimum wage does seem to add insult to injury. �We�d like to pay you less but we can�t.�

And it is annoying when the payment terminal suggests 18%, 20% or 25% on counter service for a five-dollar coffee from an automated coffee-maker and a stale seven-dollar breakfast sandwich wrapped in plastic. That spoils the pleasure for both of us.

Do you want your own employees working for tips? Probably not. But they should be trained to deliver friendly efficient service as if they are. The whole company benefits when customer service staff create loyal satisfied customers who are happy to pay more for the pleasure of doing business with you.� And that allows you to share the wealth by paying them better than the competition and attracting and retaining talented and motivated employees.

Keep on tipping generously.

Be better. Do Better. Be an Enlightened Entrepreneur.

Del Chatterson,�your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com

Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

Read more Blog posts at: LearningEntrepreneurship Blogs.�

• The Seven Biggest Mistakes and How to Avoid Them

• Find the Exit before it's an Emergency

• When to Launch Your Business

• The Four P�s of Salesmanship: �You wanna buy a book?�

 

Too proud of your stuff?

Be careful.

Success and self-confidence can deteriorate into arrogance and complacency.�

Sometimes success goes to your head and can make you a little crazy. You start to forget how hard it was and how much luck had to do with it. You started with humility, now you think you should be respected like the genius hero that you are.

Maybe not you, but you�ve seen it in somebody else? It can be the beginning of the end.

It�s best to remain humble and respect the fact that talent and hard work are necessary but not sufficient to be a consistent winner and world class performer. Preparation and opportunity need to meet and that takes new skills, more effort, and a lot of luck. You cannot take all the credit for your success and you cannot take it for granted that it will continue.

Arrogance and complacency are easy excuses for your team members and your supporters to abandon you. You�re just not fun to be with anymore.

Get over yourself. Look around and show gratitude and appreciation for all the people and the pieces of the puzzle that came together to get you to this point. You�ll be more likely to retain the support you�ll need to get to the next level.

Be better. Do Better. Be an Enlightened Entrepreneur.��

Del Chatterson,�your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

�Read more Blog posts at: LearningEntrepreneurship Blogs.�

• The Seven Biggest Mistakes and How to Avoid Them

• Find the Exit before it's an Emergency

• When to Launch Your Business

• The Four P�s of Salesmanship: �You wanna buy a book?�

 

Biggest Entrepreneur Mistake #6:�Let�s do it again

Maybe not.

(An extract from DON�T DO IT THE HARD WAY � Avoid the Seven Biggest Mistakes that Entrepreneurs Make.)

You may have thought, or heard other entrepreneurs say, �I already built one successful business and now I have the time and the money to start something new and do it again. I need a new challenge to keep from getting bored and I don�t want to spend every day in retirement watching my money ride the stock market roller coaster.�

Beware, take care. Look for an opportunity that really leverages your unique skills, knowledge, experience and contacts. Isn�t that what worked for you the first time? Remember what I�ve said many times to other successful businessmen: Making money doesn�t make you smart. �Before you throw your energy and money into a new venture, ask yourself a few important questions.

Another checklist from your Uncle Ralph!�

Let�s call it the Encore Performance Checklist.�

If you�re determined to boast that you�re a successful serial entrepreneur, not just a one-hit wonder, then ask yourself these questions before you get started on your next venture:

• What was it that made you succeed in your first business? Did you build your business on your unique knowledge or ability, a new product idea, a preferred customer or supplier relationship? Which of these will apply to the new business?
• What mistakes have you avoided in the past? Are you about to make those mistakes now?
• What new risks and challenges are you encountering for the first time?
• Is now a good time to start something new? Are there no challenges left in your current business?
• How much will a new initiative impact your current business and the demands on your time and resources?
• Is your past success really transferable to the new business?

Many successful entrepreneurs have made the mistake of jumping into a new venture � merger, acquisition, restaurant franchise or real estate investment � and blown away the equity value they spent to much time and effort building in their original business. It�s another costly mistake to avoid.

Don�t make the Biggest Entrepreneur Mistake #6 � Let�s do it again

Be better. Do Better. Be an Enlightened Entrepreneur.

Del Chatterson,�your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

�Read more Blog posts at: LearningEntrepreneurship Blogs.�

• The Seven Biggest Mistakes and How to Avoid Them

• Find the Exit before it's an Emergency

• When to Launch Your Business

• The Four P�s of Salesmanship: �You wanna buy a book?�

 

Entrepreneur Mistake #2

Neglecting strategic leadership

The Entrepreneur�s Biggest Challenge: Strategic Leadership + Management Effectiveness

The Entrepreneur�s Biggest Mistake #2 � Neglecting strategic leadership

It�s a non-stop challenge for every entrepreneur to continuously balance the demands for strategic leadership and management effectiveness.

It�s easy for any owner-manager to become pre-occupied with operating issues and short-term problem solving and neglect to provide strategic leadership to the organisation. But it can be a fatal mistake to get lost in the depths of operating details and fail to regularly raise the periscope and scan the horizon for oncoming threats.

Remind yourself of your strategic objectives and long-term goals. Assess performance against the relevance of the operating plans and strategies in place against current market and economic conditions. Keep your eye on both competitive threats and changing customer demands and be prepared to respond.

Management effectiveness and operating efficiency must be continuously adjusted and aligned to point in the right direction to achieve your long-term vision and objectives.

Don�t make Entrepreneur Mistake #2 - Neglecting strategic leadership.

Be better. Do Better. Be an Enlightened Entrepreneur.

Del Chatterson,�your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

�Read more Blog posts at: LearningEntrepreneurship Blogs.�

• The Seven Biggest Mistakes and How to Avoid Them

• Find the Exit before it's an Emergency

• When to Launch Your Business

• The Four P�s of Salesmanship: �You wanna buy a book?�

 

 

Manage like a Hockey Mom

But in a good way

(An extract from Uncle Ralph�s Random Ramblings in Part V of DON�T DO IT THE HARD WAY � 2020 Edition)

Hockey games are always exciting and entertaining, whether it�s the NHL or kids in minor hockey, and they often provide inspiration and ideas applicable beyond the hockey rink.

At a grandson�s Peewee hockey tournament in Montreal, the welcome brochure included the Quebec Hockey Association�s Code of Ethics for Parents (also useful for grandparents) to encourage responsible behaviour and allow both players and their parents to simply enjoy the game.

In reading it, I realized it could be adapted as a useful guide for business owners and managers. Here is my adaptation.

The Code of Ethics for Entrepreneurs

As a business owner and responsible manager, I recognize that I have the potential and the opportunity to make an important contribution to the personal development and well-being of the individuals who choose to work with me and I accept that as a priority over �winning the game.��

I will therefore ensure my conduct continually demonstrates the following principles:

�I understand that my employees are here for their benefit and pleasure, not mine.

1. I consider winning as part of the pleasure of playing the game; I will not exaggerate the pain of failure; and I will recognize errors as a necessary part of the learning experience.
2. I will respect the efforts and the decisions of the supporters and supervisors and of the outside authorities responsible for enforcing the rules and regulations. I will do my best to understand and accept the rules and regulations applicable to my business.
3. I will recognize and respect good performance on the part of any individual employee, as well as that of the individuals on competing teams.
4. I accept each individual�s limitations and will not project my own ambitions or unreasonable expectations upon anyone. My expectations will be appropriate to the qualifications, experience and training of each individual.
5. I will demonstrate and expect from all employees a reflection of the important values of respect, discipline, effort and loyalty.
6. I will not encourage or tolerate any level of personal harassment, conflict or aggressive behavior.
7. I will encourage and support the personal development of skills and capabilities for every individual.�����

�Good advice from responsible hockey moms.

(I do notice that a lot gets ignored during the playoffs when winning is everything, but that�s another issue for a future article. Meanwhile, the hockey analysts are all over it.)

Be better. Do better.� As a responsible hockey parent and as an enlightened entrepreneur.

Del Chatterson,�your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

�Read more Blog posts at: LearningEntrepreneurship Blogs.�

• The Seven Biggest Mistakes and How to Avoid Them

• Find the Exit before it's an Emergency

• When to Launch Your Business
• The Four P�s of Salesmanship: �You wanna buy a book?�

They�ve already decided

Don�t waste your time

Early in my career, I learned an important lesson about the ability to change minds with� facts and logical reasoning.

Based on my original degree in mining engineering followed by an MBA, I was recruited by an international firm to do management consulting � often for mining companies. One assignment during a labour dispute at a mine in Ireland required us to do an exhaustive industrial engineering study on the production methods and the bonus compensation system used to pay the miners for higher efficiencies. After weeks of data collection and analysis we presented our detailed analysis and conclusions separately to the union and to management for their negotiations. Interestingly, they both came to the same conclusion. �I knew the bastards were cheating us!� Exactly what they thought of each other before we started.

I see the same decision-making process in current headlines about the pandemic lockdowns. Based on analysis of the same widely shared statistics, health care professionals conclude we have saved millions of lives around the world, while some economists conclude we have paid a huge economic price with very little effect on the rates of infection and death. The differences in conclusions arise from different perspectives, different value systems, and different assessments of personal self-interest versus the public interest.

If you want to successfully change minds and behaviour, or achieve reasonable compromises, you need to ask yourself a few questions before you start your own persuasive presentation:

• Who am I talking to?
• What are their belief systems? Shared values?
• Will facts and logical reasoning be considered?
• Should I make a more emotional, personal appeal?
• Do we have a common goal, in spite of our differences?
• Can they be persuaded or have they already decided?

It may be time to accept they are not going to change and you will have to carry on without them.�Not everyone can be persuaded to be reasonable and do it your way.

C�est la vie. Life goes on, and we go our separate ways.

Be better. Do better.�

Del Chatterson,�your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

�Read more Blog posts at: LearningEntrepreneurship Blogs.�

• The Seven Biggest Mistakes and How to Avoid Them

• Find the Exit before it's an Emergency

• When to Launch Your Business

• The Four P�s of Salesmanship

 

 

 

 

Becoming a More Humane Leader

Or more Enlightened?

I was recently sent a Harvard Business Review article that presented research to prove the obvious �� wise and compassionate leaders have more productive employees. Maybe not obvious? It�s worth reminding ourselves what style of leadership is most effective for delivering better results.

The authors describe the wise and compassionate humane leader as a better alternative than the tough, impersonal leader who is entirely focused on management direction and control to pursue organisational goals. But that stereotype has long ago been discarded by intelligent, enlightened managers, entrepreneurs, and organisation leaders who have learned a better approach. Effective leadership requires understanding employee needs and providing the support and development necessary for them to work toward achieving the organisation�s goals.

Effective leadership requires more than the suggestion to remember the Golden Rule: Do unto others as you would have others do unto you, which is now considered insufficient for good management as it assumes that others want what you would want. Modern management applies the more effective Platinum Rule: Do unto others as they would have you do unto them. Let them tell you what they want to succeed, and listen carefully. Then apply the wisdom you acquire with the compassion you�ve already shown and you too will have happier, more engaged and productive employees.

Hard decisions will still have to be made, but you will not have to give up your humanity to implement them effectively.

Be better. Do better.

Del Chatterson, Your Uncle Ralph

Learn more about Enlightened Entrepreneurship at: LearningEntrepreneurship.com Read more of Uncle Ralph's advice for Entrepreneurs in Don't Do It the Hard Way & The Complete Do-It-Yourself Guide to Business Plans - 2020 Editions.

�Read more Blog posts at: LearningEntrepreneurship Blogs.�

• The Seven Biggest Mistakes and How to Avoid Them

• Find the Exit before it's an Emergency

• When to Launch Your Business
• The Four P�s of Salesmanship: �You wanna buy a book?�