Munger on “the Shoe Button Complex.”
Charlie Munger has been Warren Buffett’s partner in Berkshire Hathaway for decades, and is a justly influential business thinker in his own right. In this tidbit from Alice Schroeder’s biography of Buffett, The Snowball, Munger gives a name to a poisonous syndrome that I’ve witnessed many, many times in my own career, worst of all among top managers.
But while [Munger] considered himself an amateur scientist and architect and did not hesitate to expound on Einstein, Darwin, rational habits of thinking, and the ideal distance between houses in a Santa Barbara subdivision, Munger was nonetheless wary of venturing very far from what he had spent some time to learn. He dreaded falling prey to what a Harvard Law School classmate of his had called “the Shoe Button Complex.”
“His father commuted daily with the same group of men,” Munger said. “One of them had managed to corner the market in shoe buttons — a really small market, but he had it all. He pontificated on every subject, all subjects imaginable. Cornering the market on shoe buttons made him an expert on everything. Warren and I have always sensed it would be a big mistake to behave that way.”
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Related posts:
- Marc Andreessen and Charlie Munger walk into a bar . . .
- Irrationality in investment decisions.
- Confirmation bias: fight the Procrustean instinct.
- Company of the Day (09/05/2007): Berkshire Hathaway.
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It’s great to have a phrase for this all-too-common flaw. I’ve seen two promising companies flounder because founders believed their depth of knowledge and high level of intellect qualified them to weigh in on every decision, often times contradicting those with more knowledge and experience with the topic at hand.
It’s a valuable lesson for all of us to keep in mind – we may be smart, or even experts in our chosen field(s) but that doesn’t translate to other areas and we need to respect our limited knowledge, rely on those who aren’t as limited and work to improve the interconnections between what we know and what we do not.
LOL.
Sometimes I think that worst example could be me. Whenever it is, whenever I corner a market on my shoe-buttons…that market always crashes.
It’s a great learning process.
It happens less and less. Does that mean I’ve learned most of the lesson? Or I’m slower at cornering my learning lessons?
Great post. Great question.
Alex — I like what you say about “interconnections.” The best executives use the expert knowledge & advice of those working for them, then *integrate* that at a higher level into company strategy. So, they might still tell you “We’re not going to go in that direction,” but they’ll have a legitimate reason such as, “I like what you’re suggesting, but from what you’ve told me about the likely costs and the time to implement it, it’s not practical for us to implement now.”
This is a heck of a lot better than “Because I said so” or “My gut tells me” reasoning.
Zane — “Learning process” is, indeed, the key. The truly great, transcendent performers (and I would argue that Munger & Buffett belong in that group) are aware of the reality that, for all they’ve learned, the learning process doesn’t stop. Schroeder’s biography makes it clear that both men still consume gigantic amounts of information about the markets and current events every day — because they’re still looking for what they *don’t* know.
This is a great topic Tim. As a student and a professor, you know this all too well. Being able to put ego aside in corporate US is no easy task for some, however for those that can and do, the benefits can have a huge positive impact on the organizations that they lead. I think this could also be a discussion around Politicians’ leadership styles and the effects that resonate from said style.
[...] BIZ: Munger on “the Shoe Button Complex.” [...]
[...] not qualified to pontificate on starting or selling a company. That feels like a version of the shoebutton complex, and there are much better places to look than my little backwater [...]