Do Not Have a Master Plan
Munger warns against master plans that take on a life of their own and resist new information. The account pairs that flexibility with habits of honesty, reliability, and rational judgment.
THE IDEA
Charlie Munger stated at the 2004 Wesco annual meeting: “And there has never been a master plan. Anyone who wanted to do it, we fired because it takes on a life of its own and doesn’t cover new reality. We want people taking into account new information.”
The account links Buffett and Munger’s willingness to act on opportunities with habits of honesty, reliability, and rationality. These principles can guide choices while plans change.
Warren Buffett elaborated on Ben Graham’s childhood practice: “When he was twelve years old, he sat down and made a list of the qualities he admired in other people, and he made a list of the qualities he found unattractive in other people. He decided that it was just an act of will and habit to develop those attractive qualities and get rid of the unattractive qualities. Anybody can show up on time, they cannot claim credit for ideas that are not their own, they cannot cut corners, they can avoid envy. All these things are doable and they make an enormous difference in how you function, not only in your job but in society subsequently.”
Buffett then presents a thought experiment: Imagine you could pick any classmate to receive 10% of their lifetime earnings. You would not choose based on IQ or grades, but on who would function best—those with admirable, attainable qualities that become habits. “The chains of habit are too light to be felt until they’re too heavy to be broken.” The person you would pick is someone you can emulate yourself.
One friend noted that in hiring they look for intelligence, energy, and character. Without character, the first two will kill you—if someone lacks character, you better hope they are dumb and lazy, because smart and energetic without character cause all kinds of trouble.
When to use it
When developing a business strategy, state which assumptions would require revising the plan and review them as new information arrives.
When evaluating a potential partner or employee, assess their character and habits (reliability, honesty) rather than just credentials or IQ.
Apply the ‘classmate lottery’ exercise to your own life: identify the traits you would want in a person you invest in, then cultivate those traits in yourself.
In decision-making, consciously break the habit of sticking to a predetermined course; actively seek out new information that may change your direction.
FROM THEORY TO EVERYDAY LIFE
In practice
Picking a Classmate for 10% of Earnings
Imagine you could choose any classmate to receive 10% of their lifetime earnings. You would not pick based on IQ or grades, but on qualities like reliability, honesty, and character—habits that lead to effective functioning.
Ben Graham's Childhood Lists
At age 12, Ben Graham listed qualities he admired and found unattractive in others. He decided to cultivate the admirable qualities by will and habit, showing that character traits are attainable and habit-forming.
A MOMENT TO REFLECT
Put it to work.
What rigid master plans have you followed that failed to adapt to new information? How could a flexible approach have improved outcomes?
List three qualities you admire in others. How can you turn those qualities into daily habits?
In hiring or collaboration, do you prioritize character over intelligence and energy? Why or why not?
Often confused with
CONTINUE THE CONVERSATION
Source texts
- The Art of Being Rational Charlie Munger