Category: Thought and Opinion

My Berkshire Hathaway Reflections

After a decade of attending the Berkshire Hathaway annual shareholders meeting, these are the thoughts and experiences that stand out the most to me.

(My essay appears in the The Warren Buffett Shareholder.)

I’ve been going to the Berkshire Hathaway annual shareholders meeting almost yearly since 2008. My routine might be familiar to many – maybe uncomfortably so — and yet that routine is part of the experience.

After missing the meeting one year because of a cancelled Friday flight, I decided to start adding a bigger margin of safety and arriving on Thursday. If the flight is on time, it gives me two days to hang out before Saturday’s meeting, and I put that time to good use. Usually the meals leading up to the meeting are filled with friends, FS readers, and business partners.

When the big day finally arrives, I get up as early as my friends allow and drag everyone to the meeting, waiting in line at the CenturyLink Center’s south entrance to get a good seat. The crowd at the door is full of hedge fund managers, teachers, small investors, technology entrepreneurs, college students, people from all over — Buffett and Munger junkies all. It’s a motley crew, to say the least.

As a group, we’ve all got some peculiar wiring. More than once, we’ve sat out there in the rain, more or less oblivious to the bad weather, as we discussed such topics as first-conclusion bias, insurance float, the intricacies of goodwill accounting, the merits of the latest acquisition, and the future of discount furniture retailing.

As the meeting gets started, I listen as intently as I can, but like most people in the audience, I find myself drifting from time to time. The bland questions seem to repeat year after year and offer the same predictable answers as the year before. Fortunately, the questions have improved since Warren changed the meeting format by inviting analysts and reporters.

So sleepy or not, I listen, I write down notes, I laugh, I rummage around the Convention area and eat Dilly Bars and See’s Candy, I return to the meeting and learn some more. Write, eat, write, whisper, laugh, write, whisper, laugh, write. At some point, the day is up and it feels like we’ve barely scratched the surface. What about last year’s unusually high amortization charge?

After the meeting, it’s time for a drink at the hotel across the street. All I want to do is take a nap, but that’s not what I’m here to do. I try to meet with one particular person, but I see someone else, and of course he’s got a friend in tow. Then I see an employee from Berkshire whom I want to ask a question, so I ditch my friends for a minute. Then I see the professor I met that one year. Then I see… This goes on for a few hours, until dinnertime.

Left to right: Ted Seides, Shane Parrish, Brent Beshore, Eric Jorgenson, And Patrick O’shaughnessy

Dinner, of course, is simply more of this. More friends; more talking about business, investing, learning, and mental models; more catching up. On Sunday, I get up early again and go to another breakfast, or perhaps a brunch meeting. I meet up with more old friends, more new acquaintances.

The Berkshire Hathaway annual meeting is an excuse to gorge — not just on Dilly Bars, See’s Candy, and steak, which I wholeheartedly consume, but also on friends, conversation, and learning. The whole experience is intensely stimulating, in the mildly stressful “these people are a lot smarter than me; I really need to read more” kind of way.

More important, the annual meeting offers a reminder of what matters. The world we live in is full of 24/7 noise — full of people who are trying to tell us to learn about the new and novel, people telling us we can get something for nothing, people trying to tell us the unknowable, people who won’t do the work. When you’re living in the moment, it’s hard to see that you’re in this system. It’s only when you step back that you realize that your mind has become cluttered and you’ve lost a sense of what’s important and what’s meaningful.

Omaha is a reminder of what’s important in relationships. The local residents are enormously kind and tolerant of over 50,000 people swooping in for a weekend. They are so kind, in fact, that I call them honorary Canadians. The people who come to the meeting tend to be part of a unique subset of society. While they might be bankers, teachers, businesspeople, or even unemployed, they share the same values of delayed gratification, integrity, and generosity. They share the same desire for learning. Everyone is happy. What you won’t find in Omaha are complainers, people trying to scare you, or people seeking to get rich overnight. In essence, you find yourself surrounded by the people you want to become.

Guy Spier and Shane Parrish

When you’re listening to Warren and Charlie talk, the noise of the unimportant vanishes. In its place, you find the same topics year after year. The same phrases. The same patterns. The same predictable answers. Even the same basic eating habits. So why go if the answers are always the same? After all, I’ve been attending for nearly 10 years; by now, haven’t I heard most of what Warren and Charlie have to say?

The point is that the answers stay the same. Warren and Charlie talk about the same invariant general principles every single year without fail. What I’ve learned most from Warren and Charlie over the years is the beauty of what doesn’t change. When you learn something that doesn’t change, you can step off the treadmill of keeping up and start to compound your knowledge. While this compounding may slow you down at first, it offers exponential returns. After all, what better investment can you make than learning, with deep fluency, timeless principles like second-order thinking, something that applies to a wide variety of situations and is likely to remain constant?

You can see in real time how Warren and Charlie adapt their timeless principles to the reality of the day. There is no wishful thinking, just a lens into the world. By applying timeless concepts to whatever is topical, they show a deep, multi-layered understanding of what’s happening in the world. Implicit in all of this is how they work with the world rather than against it.

And Warren and Charlie are not the only ones I learn from. I also learn from the hedge fund managers, teachers, small investors, technology entrepreneurs, and college students who are waiting outside the arena in the rain. I learn from the friends and acquaintances at the breakfasts, brunches, lunches, dinners, and cocktail hours. I learn from the Berkshire employees and the professors-I-met-that-one-year, and the guy who knows more about insurance than I’ll ever hope to know.

The world becomes clear after I leave Omaha. My sense of what’s important is renewed — what might have been the most urgent thing in the world on Thursday now seems to fade into the distance as unimportant. I make better decisions, I become a better person, and material concerns fall by the wayside. There is nothing missing. And because what’s important has been amplified, I’m better able to make the decisions I’ve been postponing. When I’ve been surrounded by so many people, my sense of the person I want to become improves.

I don’t go to Omaha looking for answers; I go for the pursuit. I go there to deepen my understanding of the key ideas that matter in work and life. It’s almost like changing your oil. As the year goes on, little bits get in your oil. At first, if you don’t change your oil often enough, your engine runs suboptimally. Eventually, however, if you still don’t change your oil, your engine seizes. Going to the meeting is my oil change.

Charlie has always called Berkshire a “didactic” enterprise. For a while, I wasn’t sure what he was talking about. (I had to look up “didactic,” too.) But I get what he means now. The annual letter, the meeting — partially, these serve to inform the shareholders. But let’s be honest, it’s about more than that. Warren and Charlie don’t need to make such a production of the annual meeting. It’s a platform for the two Wise Men of Omaha to tell us the way it is and show us how it could be. (The maddening thing is that they’re usually right.)

The Street in Omaha where we got our name.

And that’s the way many shareholders see it, too. Berkshire isn’t just a company that’s made us a great deal of money. And it hasn’t just provided a way to learn how to make more money. Berkshire is a philosophy of life — a philosophy of trust, a philosophy of lifelong learning. Mainly, a philosophy of rationality and independent thinking in a crowd.

Charlie likes to say that if he and Warren had stopped learning when they were young, Berkshire would be a shadow of its current self. And I realize that is the lesson I relearn every year in Omaha, among the chained-together meetings and the lack of sleep. We’re all trying to create positive outcomes and to do that in the right way, with humility, gratitude, and rational thought. We’re trying to grow.

Because what else would motivate a bunch of nutcases to fly 400 or 500 or 2,000 miles (or 2,004 kilometers) to eat candy and listen to a couple of old men talk about business?

After nine years, I still don’t quite know the answer. All I know is that I’m one of those nutcases. And I’ll keep coming back as long as Berkshire Hathaway will have me.

***

Members can discuss this on the Learning Community Forum.

Understanding Speed and Velocity: Saying “NO” to the Non-Essential

It’s tempting to think that in order to be a valuable team player, you should say “yes” to every request and task that is asked of you. People who say yes to everything have a lot of speed. They’re always doing stuff but never getting anything done. Why? Because they don’t think in terms of velocity. Understanding the difference between speed and velocity will change how you work.

I once worked for someone who offered me the opportunity to work on a new project nearly every day. These projects were not the quick ones, where you spend 15 minutes and crank out a solution. They were crap work. And there were strings: my boss wanted to be informed about everything, and there was no way I’d get credit for anything.

I remember my response: “That sounds amazing, but it’s not for me. I’m busy enough.”

Saying no to your boss, especially as often as I did, was thought to be risky to your career. I was the new kid, which is why I was getting all of these shit jobs thrown at me.

The diversity of skill sets needed to accomplish them would have made me look bad (perhaps the subtle point of this initiation). Furthermore, my already heavy workload would have gotten heavier with projects that didn’t move me forward. This was my first introduction to busywork.

My well-intentioned colleagues were surprised. “You’re not going to get anywhere with that attitude,” they’d pull me aside to tell me. The problem was that I wasn’t going to get anywhere by saying yes to a lot of jobs that consumed a lot of time, were not the reason I was hired, and left me no time to develop the craft of programming computers, which is what I wanted to do.

I had turned down a job offer for three times what I was being paid at this job because I wanted to work with the best people in the world on a very particular skill — a skill I couldn’t get anywhere but at an intelligence agency. Anything that got in the way of honing that craft was the enemy.

Over my first seven years, I’d barely leave my desk, working 12- to 16-hour days for six days a week. Working that hard with incredible people was amazing and motivating. I’ve never learned so much in such a short period of time.

“The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything.”

— Warren Buffett

Certainly, offers of work are good problems to have. A lot of people struggle to find work, and here I was, a few weeks out of university, saying no to my boss. But saying yes to everything is a quick road to mediocrity. I took a two-thirds pay cut to work for the government so I could work with incredibly smart people on a very narrow skill (think cyber). I was willing to go all in. So no, I wasn’t going say yes to things that didn’t help me hone the craft I’d given up so much to work on.

“Instead of asking how many tasks you can tackle given your working hours,” writes Morten Hansen in Great at Work, “ask how many you can ditch given what you must do to excel.” I did what I needed to do to keep my job. As John Stuart Mill said, “as few as you can, as many as you must.”

Doing more isn’t always moving you ahead. To see why, let’s go back to first-year physics.

The Difference Between Speed and Velocity

Velocity and speed are different things. Speed is the distance traveled over time. I can run around in circles with a lot of speed and cover several miles that way, but I’m not getting anywhere. Velocity measures displacement. It’s direction-aware.

Think of it this way: I want to get from New York to L.A. Speed is flying circles around Manhattan, and velocity is hopping on a direct flight from JFK to LAX.

“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things I have done. Innovation is saying ‘no’ to 1,000 things.”

— Steve Jobs

When you’re at work, you need to know what you need to do to keep your job. You need to know the table stakes. Then you need to distinguish between tasks that offer a lot of speed and those that offer velocity.

Here are three ways you can increase your velocity:

  1. To the extent possible, ruthlessly shave away the unnecessary tasks, priorities, meetings, and BS. Put all your effort into the projects that really matter.
  2. Don’t rely on your willpower to say no; instead, create systems that help you fend off distractions. I have two friends who were about the same weight several years ago. Around that time, one of them was diagnosed with celiac (gluten intolerance). He immediately started to lose weight after changing his diet. Upon seeing this, my other friend decided that he, too, would go on a diet to lose weight. Because they both ate out a lot, they both were frequently in situations where they would have to make healthy choices. The person with celiac developed “automatic behavior“; he had to avoid gluten if he wanted to stay healthy and pain-free. The other person, however, had to keep making positive choices and ended up falling down after a few weeks and reverting to his previous eating habits. Another example: One of my management principles was “no meeting mornings.” This rule allowed the team to work, uninterrupted, on the most important things. Of course, there were exceptions to this rule, but the default was that each day you had a three-hour chunk of time when you were at your best to really move the needle.
  3. And finally, do as I did, and say “no” to your boss. The best way I found to frame this reply was actually the same technique that negotiation expert Chris Voss mentioned in a recent podcast episode: simply ask, “how am I supposed to do that?” given all the other stuff on your plate. Explain that saying no means that you’re going to be better at the tasks that are most important to your job, and tie those tasks to your boss’s performance.

Members can discuss this post on the Learning Community Forum.


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Footnotes
  • 1

    The difference between speed and velocity first came to me from Peter Kaufman.

Friction: The Hidden Reality of What Holds People Back

How is it that two people delivering the same value to organizational outcomes, in the same role at the same pay, can have a massively different value to the organization itself?

***

Here’s a common problem that a lot of people are unaware of: John is a remarkable employee. He delivers day in and day out. Jane is equally remarkable and delivers just as well. They’re identical twins except for one difference. That one difference makes Jane incredibly valuable to the organization and makes John much less valuable.

That difference is friction.

To get John to do what he’s supposed to do, his boss comes in and hits him over the head every day. John can’t keep track of what he’s supposed to do, and he does things only when instructed.

Jane, on the other hand, shows up knowing what she’s supposed to do and doing it. She delivers without any added work from her boss.

John and Jane have the same boss. The amount of effort required to get John to do something is 10 times the amount of effort required to get Jane to do something.

***

Let’s shift our perspective here.

From John’s point of view, he’s competent and capable, even if he’s not ambitious or highly motivated.

From Jane’s point of view, she’s equally competent and capable and wonders why she’s treated the same as John when she does the same amount of work with way less hassle.

From the boss’s point of view, they’re both valuable employees, but they are not equally valuable. Jane is much more valuable than John. If one of them had to be let go, it’d be John.

***

Let’s invert the problem a little. Instead of asking what more you can do to add value you can ask what you can remove.

One of the easiest ways to increase your value to an organization is to reduce the friction required to get you to do your job. You don’t need to learn any new skills for this; you just have to shift your perspective to your boss’s point of view and see how hard it is for them to get you to do something. Like nature, which removes mistakes to progress, you can remove things to not only survive but thrive. (This is one of the ways we can apply via negativa, an important mental model.)

Think about it this way. Your boss, like you, has 100 units of energy a day with which to accomplish something. If you both spend 10 units on getting you to do the thing you already know you should be doing, you’re making yourself look bad, despite the amazing quality you deliver. And you’re making your boss look less productive than they really are in the process.

When we think of improving our value to an organization, we often think about the skills we need to develop, the jobs we should take, or the growing responsibility we have. In so doing, we miss the most obvious method of all: reducing friction. Reducing friction means that the same 100 units of energy are going to get you further, which is going to get your boss further, which is going to get the organization further.

***

Members can discuss this post on the Learning Community Forum

The Generalized Specialist: How Shakespeare, Da Vinci, and Kepler Excelled

“What do you want to be when you grow up?” Do you ever ask kids this question? Did adults ask you this when you were a kid?

Even if you managed to escape this question until high school, then by the time you got there, you were probably expected to be able to answer this question, if only to be able to choose a college and a major. Maybe you took aptitude tests, along with the standard academic tests, in high school. This is when the pressure to go down a path to a job commences. Increasingly, the education system seems to want to reduce the time it takes for us to become productive members of the work force, so instead of exploring more options, we are encouraged to start narrowing them.

Any field you go into, from finance to engineering, requires some degree of specialization. Once you land a job, the process of specialization only amplifies. You become a specialist in certain aspects of the organization you work for.

Then something happens. Maybe your specialty is no longer needed or gets replaced by technology. Or perhaps you get promoted. As you go up the ranks of the organization, your specialty becomes less and less important, and yet the tendency is to hold on to it longer and longer. If it’s the only subject or skill you know better than anything else, you tend to see it everywhere. Even where it doesn’t exist.

Every problem is a nail and you just happen to have a hammer.

Only this approach doesn’t work. Because you have no idea of the big ideas, you start making decisions that don’t take into account how the world really works. These decisions ripple outward, and you have to spend time correcting your mistakes. If you’re not careful about self-reflection, you won’t learn, and you’ll make one version of the same mistakes over and over.

Should we become specialists or polymaths? Is there a balance we should pursue?

There is no single answer.

The decision is personal. And most of the time we fail to see the life-changing implications of it. Whether we’re conscious of this or not, it’s also a decision we have to make and re-make over and over again. Every day, we have to decide where to invest our time — do we become better at what we do or learn something new?

If you can’t adapt, changes become threats instead of opportunities.

There is another way to think about this question, though.

Around 2700 years ago, the Greek poet Archilochus wrote: “the fox knows many things; the hedgehog one big thing.” In the 1950s, philosopher Isaiah Berlin used that sentence as the basis of his essay “The Hedgehog and the Fox.” In it, Berlin divides great thinkers into two categories: hedgehogs, who have one perspective on the world, and foxes, who have many different viewpoints. Although Berlin later claimed the essay was not intended to be serious, it has become a foundational part of thinking about the distinction between specialists and generalists.

Berlin wrote that “…there exists a great chasm between those, on one side, who relate everything to a single central vision, one system … in terms of which they understand, think and feel … and, on the other hand, those who pursue many ends, often unrelated and even contradictory, connected, if at all, only in some de facto way.”

A generalist is a person who is a competent jack of all trades, with lots of divergent useful skills and capabilities. This is the handyman who can fix your boiler, unblock the drains, replace a door hinge, or paint a room. The general practitioner doctor whom you see for any minor health problem (and who refers you to a specialist for anything major). The psychologist who works with the media, publishes research papers, and teaches about a broad topic.

A specialist is someone with distinct knowledge and skills related to a single area. This is the cardiologist who spends their career treating and understanding heart conditions. The scientist who publishes and teaches about a specific protein for decades. The developer who works with a particular program.

In his original essay, Berlin writes that specialists “lead lives, perform acts and entertain ideas that are centrifugal rather than centripetal; their thought is scattered or diffused, moving on many levels, seizing upon the essence of a vast variety of experiences and objects … seeking to fit them into, or exclude them from, any one unchanging, all embracing … unitary inner vision.”

The generalist and the specialist are on the same continuum; there are degrees of specialization in a subject. There’s a difference between someone who specializes in teaching history and someone who specializes in teaching the history of the American Civil war, for example. Likewise, there is a spectrum for how generalized or specialized a certain skill is.

Some skills — like the ability to focus, to read critically, or to make rational decisions — are of universal value. Others are a little more specialized but can be used in many different careers. Examples of these skills would be design, project management, and fluency in a foreign language.

The distinction between generalization and specialization comes from biology. Species are referred to as either generalists or specialists, as with the hedgehog and the fox.

A generalist species can live in a range of environments, utilizing whatever resources are available. Often, these critters eat an omnivorous diet. Raccoons, mice, and cockroaches are generalists. They live all over the world and can eat almost anything. If a city is built in their habitat, then no problem; they can adapt.

A specialist species needs particular conditions to survive. In some cases, they are able to live only in a discrete area or eat a single food. Pandas are specialists, needing a diet of bamboo to survive. Specialist species can thrive if the conditions are correct. Otherwise, they are vulnerable to extinction.

A specialist who is outside of their circle of competence and doesn’t know it is incredibly dangerous.

The distinction between generalist and specialist species is useful as a point of comparison. Generalist animals (including humans) can be less efficient, yet they are less fragile amidst change. If you can’t adapt, changes become threats instead of opportunities.

While it’s not very glamorous to take career advice from a raccoon or a panda, we can learn something from them about the dilemmas we face. Do we want to be like a raccoon, able to survive anywhere, although never maximizing our potential in a single area? Or like a panda, unstoppable in the right context, but struggling in an inappropriate one?

Costs and Benefits

Generalists have the advantage of interdisciplinary knowledge, which fosters creativity and a firmer understanding of how the world works. They have a better overall perspective and can generally perform second-order thinking in a wider range of situations than the specialist can.

Generalists often possess transferable skills, allowing them to be flexible with their career choices and adapt to a changing world. They can do a different type of work and adapt to changes in the workplace. Gatekeepers tend to cause fewer problems for generalists than for specialists.

Managers and leaders are often generalists because they need a comprehensive perspective of their entire organization. And an increasing number of companies are choosing to have a core group of generalists on staff, and hire freelance specialists only when necessary.

The métiers at the lowest risk of automation in the future tend to be those which require a diverse, nuanced skill set. Construction vehicle operators, blue collar workers, therapists, dentists, and teachers included.

When their particular skills are in demand, specialists experience substantial upsides. The scarcity of their expertise means higher salaries, less competition, and more leverage. Nurses, doctors, programmers, and electricians are currently in high demand where I live, for instance.

Specialists get to be passionate about what they do — not in the usual “follow your passion!” way, but in the sense that they can go deep and derive the satisfaction that comes from expertise. Garrett Hardin offers his perspective on the value of specialists: 

…we cannot do without experts. We accept this fact of life, but not without anxiety. There is much truth in the definition of the specialist as someone who “knows more and more about less and less.” But there is another side to the coin of expertise. A really great idea in science often has its birth as apparently no more than a particular answer to a narrow question; it is only later that it turns out that the ramifications of the answer reach out into the most surprising corners. What begins as knowledge about very little turns out to be wisdom about a great deal.

Hardin cites the development of probability theory as an example. When Blaise Pascal and Pierre de Fermat sought to devise a means of dividing the stakes in an interrupted gambling game, their expertise created a theory with universal value.

The same goes for many mental models and unifying theories. Specialists come up with them, and generalists make use of them in surprising ways.

The downside is that specialists are vulnerable to change. Many specialist jobs are disappearing as technology changes. Stockbrokers, for example, face the possibility of replacement by AI in coming years. That doesn’t mean no one will hold those jobs, but demand will decrease. Many people will need to learn new work skills, and starting over in a new field will put them back decades. That’s a serious knock, both psychologically and financially.

Specialists are also subject to “‘man with a hammer” syndrome. Their area of expertise can become the lens they see everything through.

As Michael Mauboussin writes in Think Twice:

…people stuck in old habits of thinking are failing to use new means to gain insight into the problems they face. Knowing when to look beyond experts requires a totally fresh point of view and one that does not come naturally. To be sure, the future for experts is not all bleak. Experts retain an advantage in some crucial areas. The challenge is to know when and how to use them.

Understanding and staying within their circle of competence is even more important for specialists. A specialist who is outside of their circle of competence and doesn’t know it is incredibly dangerous.

Philip Tetlock performed an 18-year study to look at the quality of expert predictions. Could people who are considered specialists in a particular area forecast the future with greater accuracy than a generalist? Tetlock tracked 284 experts from a range of disciplines, recording the outcomes of 28,000 predictions.

The results were stark: predictions coming from generalist thinkers were more accurate. Experts who stuck to their specialized areas and ignored interdisciplinary knowledge faired worse. The specialists tended to be more confident in their erroneous predictions than the generalists. The specialists made definite assertions — which we know from probability theory to be a bad idea. It seems that generalists have an edge when it comes to Bayesian updating, recognizing probability distributions, and long-termism.

Organizations, industries, and the economy need both generalists and specialists. And when we lack the right balance, it creates problems. Millions of jobs remain unfilled, while millions of people lack employment. Many of the empty positions require specialized skills. Many of the unemployed have skills which are too general to fill those roles. We need a middle ground.

The Generalized Specialist

The economist, philosopher, and writer Henry Hazlitt sums up the dilemma:

In the modern world knowledge has been growing so fast and so enormously, in almost every field, that the probabilities are immensely against anybody, no matter how innately clever, being able to make a contribution in any one field unless he devotes all his time to it for years. If he tries to be the Rounded Universal Man, like Leonardo da Vinci, or to take all knowledge for his province, like Francis Bacon, he is most likely to become a mere dilettante and dabbler. But if he becomes too specialized, he is apt to become narrow and lopsided, ignorant on every subject but his own, and perhaps dull and sterile even on that because he lacks perspective and vision and has missed the cross-fertilization of ideas that can come from knowing something of other subjects.

What’s the safest option, the middle ground?

By many accounts, it’s being a specialist in one area, while retaining a few general iterative skills. That might sound like it goes against the idea of specialists and generalists being mutually exclusive, but it doesn’t.

A generalizing specialist has a core competency which they know a lot about. At the same time, they are always learning and have a working knowledge of other areas. While a generalist has roughly the same knowledge of multiple areas, a generalizing specialist has one deep area of expertise and a few shallow ones. We have the option of developing a core competency while building a base of interdisciplinary knowledge.

“The fox knows many things, but the hedgehog knows one big thing.”

— Archilochus

As Tetlock’s research shows, for us to understand how the world works, it’s not enough to home in on one tiny area for decades. We need to pull ideas from everywhere, remaining open to having our minds changed, always looking for disconfirming evidence. Joseph Tussman put it this way: “If we do not let the world teach us, it teaches us a lesson.”

Many great thinkers are (or were) generalizing specialists.

Shakespeare specialized in writing plays, but his experiences as an actor, poet, and part owner of a theater company informed what he wrote. So did his knowledge of Latin, agriculture, and politics. Indeed, the earliest known reference to his work comes from a critic who accused him of being “an absolute Johannes factotum” (jack of all trades).

Leonardo Da Vinci was an infamous generalizing specialist. As well as the art he is best known for, Da Vinci dabbled in engineering, music, literature, mathematics, botany, and history. These areas informed his art — note, for example, the rigorous application of botany and mathematics in his paintings. Some scholars consider Da Vinci to be the first person to combine interdisciplinary knowledge in this way or to recognize that a person can branch out beyond their defining trade.

Johannes Kepler revolutionized our knowledge of planetary motion by combining physics and optics with his main focus, astronomy. Military strategist John Boyd designed aircraft and developed new tactics, using insights from divergent areas he studied, including thermodynamics and psychology. He could think in a different manner from his peers, who remained immersed in military knowledge for their entire careers.

Shakespeare, Da Vinci, Kepler, and Boyd excelled by branching out from their core competencies. These men knew how to learn fast, picking up the key ideas and then returning to their specialties. Unlike their forgotten peers, they didn’t continue studying one area past the point of diminishing returns; they got back to work — and the results were extraordinary.

Many people seem to do work which is unrelated to their area of study or their prior roles. But dig a little deeper and it’s often the case that knowledge from the past informs their present. Marcel Proust put it best: “the real act of discovery consists not in finding new lands, but in seeing with new eyes.”

Interdisciplinary knowledge is what allows us to see with new eyes.

When Charlie Munger was asked whether to become a polymath or a specialist at the 2017 shareholders meeting for the Daily Journal, his answer surprised a lot of people. Many expected the answer to be obvious. Of course, he would recommend that people become generalists. Only this is not what he said.

Munger remarked:

I don’t think operating over many disciplines, as I do, is a good idea for most people. I think it’s fun, that’s why I’ve done it. And I’m better at it than most people would be, and I don’t think I’m good at being the very best at handling differential equations. So, it’s been a wonderful path for me, but I think the correct path for everybody else is to specialize and get very good at something that society rewards, and then to get very efficient at doing it. But even if you do that, I think you should spend 10 to 20% of your time [on] trying to know all the big ideas in all the other disciplines. Otherwise … you’re like a one-legged man in an ass-kicking contest. It’s not going to work very well. You have to know the big ideas in all the disciplines to be safe if you have a life lived outside a cave. But no, I think you don’t want to neglect your business as a dentist to think great thoughts about Proust.

In his comments, we can find the underlying approach most likely to yield exponential results: Specialize most of the time, but spend time understanding the broader ideas of the world.

This approach isn’t what most organizations and educational institutions provide. Branching out isn’t in many job descriptions or in many curricula. It’s a project we have to undertake ourselves, by reading a wide range of books, experimenting with different areas, and drawing ideas from each one.

Still curious? Check out the biographies of Leonardo da Vinci and Ben Fraklin


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Charlie Munger on the Medical System

Long a fount of wisdom, Charlie Munger provided us fascinating insight on everything from energy policy and mental models to how good gamblers think and making effective decisions.

At the Daily Journal Meeting (held March 25th, 2015), Munger answered a question on Obamacare:

Of course the system of medical care, as evolved under the United States, has much wrong with it.

On the other hand, it has much that’s good about it. All the new drugs and devices, and new operations, medicine has taken more territory in my lifetime than it took in the whole previous history of mankind. It’s just amazing what’s been done.

A lot of it is obvious and simple, like inoculating the children against infantile paralysis, scraping the tartar off your teeth so you don’t wear plates when you’re 55 years old, and so on. People now take those benefits for granted, but I lived in a world where a lot of children died. Every city had a tuberculosis sanitarium, and half the people who got tuberculosis died. It’s amazing how well medicine has worked.

On the other hand, compared to the best it can possibly be, the American system is pretty peculiar. It’s very hard to fix. One kind of insanity is to say, “We’ll pay you so much a month for taking care of the people, and everything you save is yours.”

That is the system the government uses in dealing with the convalescent homes. That’s a great name, a convalescent home. You convalesce in heaven. You don’t convalesce them at home. [laughs] It’s attempting to have a euphemistic name.

That creates huge incentives to delay care and keep the money. The government has strict rules, compliance systems, and so forth. If we didn’t have that system, the cost of taking care of the old people in convalescent homes would be 10 times what it is. It was the only feasible solution.

The rest of the world is going in that direction, because the costs just keep rising and rising and rising.

If the government is going to pay A anything he wants for selling services to B, who doesn’t have to pay anything, of course the system is going to create a lot of unnecessary tests, unnecessary costs, unnecessary procedures, unnecessary interventions.

Psychiatrists that keep talking to a patient forever and ever with no improvement, of course that system is going to cause problems. The alternative system also causes problems.

Add the fact you’ve got politicians and add the fact you’ve got existing players who are enormously rich and powerful, who lobby you like crazy. A state legislature, now, is just 19 percent or whatever it is of GDP going to the medical system, imagine what the lobbying is like.

We get these Rube Goldberg systems. We get a lot of abuse of various kinds. There’s hardly an ethical drug company that hasn’t created multiple gross abuses, which are in substance growing through the bribery of doctors, which, of course, is illegal.

You have all these ethical companies. Ethical meaning it’s the designation of a drug company that has patented drugs. They’ve all committed big follies. The device makers of anything have been worse. There’s been a lot of abuse and craziness, and the costs, of course, just keep rising and rising.

That’s in a system that every child has been the greatest achiever in the history of the world. It’s very complicated. I think it will get addressed more because…We probably will end up with systems that are more like we do with the convalescent homes.

If you look at medicine, what’s happening is that more and more they’re going to a system where they pay somebody X dollars and everything they save, they keep. That system has some chance of controlling the cost. If you go into a great medical school hospital today, and you’re within a day of dying of some obvious thing like advanced cancer, the admitting physician is very likely to ask for a test of your cholesterol or any other damn thing. All the bills go to the government. As long as the incentives allow that, people will do it and they’ll rationalize their behavior. Something has to be done along that and more than is now being done.

I think the drift will be more in the direction of the block care. I don’t see any other system that would have controlled cost in the convalescent homes.

By the way, your doctor can’t just walk by every bed in the convalescent home and send the bill to the government. That’s not allowed by the law. But if you transfer the patient into a hospital, he can walk by the bed five times every day and send a $45 bill to the government.

If the incentives are wrong, the behavior will be wrong. I guarantee it. Not by everybody, but by enough of a percentage that you won’t like the system.

I think that’s enough on a subject that’s so difficult. I think we can see where it’s going. We may end up with a whole system that’s…In the Netherlands, they have a system where the same people are giving a free system to everybody and a concierge system to the others. It’s working pretty well.

Transcript Source.