Munger's mental models #3: The most important question of all

Mental models

In this short series of blogs and videos, in honour of the late Charles Munger, I take a look at some of his most powerful mental models.

The most important question of all

Those of you will younger siblings may remember how young kids often have that annoying habit of asking "why?" over and over again.

At some point along the way, they're told to stop asking "why?"...and so they do.

But when it comes to business, life, and investing decisions, asking "why?" several times over may prove to be the most important question of all...

Asking why

How many times do people make life-changing decisions without properly or rationally thinking through what they are doing?

I know I've done it enough times myself, and often live to regret it later!

For example, any investment decision should ideally be so simple and obvious that anyone can easily explain or understand the premise. 

And yet, how often do we truly think through what we are undertaking?

In Munger's own words from a Berkshire Hathaway annual conference:

"If you want to get smart, the question you've got to keep asking is: Why? Why? Why? Why? Why?"

Too often the real answer would be "because that's how it's always been done", or we rely upon the half-baked opinions of others, whether they are well founded or not. 

In business, finance, and professional services roles it's surprisingly common to hear people say they understand something rather than admit they don't know the answer, which itself can lean into a general human over-confidence bias. 

Assumed or common knowledge

Assuming things should be done a certain way is something I grappled with myself a little as I went through schooling, higher education, and my professional career.

You have to work hard to get top grades. But why?

So you can go to a top University. Why?

Then you'll get accepted for a professional graduate role. Why?

Because then you can...

And on it goes.

Much of our path in life can apparently be determined by where we are born, what our parents did, and their general beliefs, for example.

If you ask the question "Why?" at least five times you may just begin to get to the nub of it all.

What are we on this planet for? Why?

What makes us happy? Why?

What do we find easy that others find difficult? Why?

And so on...

Open minds become smarter

In today's polarised planet, it seems increasingly common that people will go to almost any lengths to defend a conviction or previously held position, rather than question themselves or learn anything worthwhile at all.

To get smarter, we must keep asking questions, rather than accepting things for how they are presented to us. 

Study the outliers, said Munger, and instead of dismissing them, ask why they are the outliers.

Try to think a bit more like the young kid who's questioning why things are happening a certain way.

Therein lies the path to wisdom in this world. 

I discussed this a little further in the short video below:

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