The Inversion Thinking Model

How Charles Munger’s The Inversion Thinking Model Made Berkshire Hathway Fortune worth $630 Billion

It was a cool breezy morning, I was sitting along with my mentor Venki in a coffee shop.

We were waiting for Anirudh (Ani) to come

Ani came in a while with a cheerful face. He said, hey Venki, I am all done. My start-up is all set to launch. The plans are clear. Now tell me when we can launch this business.

Venki asked, Ani, tell me how this busines will fail

Ani’s face turned red, Venki what are you saying

Venki said I am not saying I am asking you “how this busines will fail ‘he uttered slowly word-by-word

I was watching what was happening. I know Venki has something to share, otherwise, he will not be asking this kind of negative question.

Ani said “hey Venki, as per your advice, I did the marketing planning, did BMC, completed budgeting. What else do you want, Venki? Why are you asking this, why should this business fail., I am hugely disappointed, Venki.

Venki said, “Hey buddy, don’t take it personally. ‘come on, I will explain to you, this is called inversion thinking model, the way world’s greatest thinkers think, Warren Buffett uses this decision-making model for his investment planning

Still, I couldn’t understand Venki, Ani said

Let me explain to you a famous story we all know

Chhatrapati Shivaji had built his dream fort, after its completion, he didn’t straight away go for the house warming celebration,

He called for a competition, Shivaji announced whoever breaks into my fort, or finds a way to reach the top of the fort, I will award 1000 grants to the winner.

Hundreds of youths tried to penetrate the fort, at last, only one Youngman could break into the fort

Shivaji asked how he got the way, the Youngman showed the hole in which he entered, Shivaji thanked him, gave 1000 grant to him

And finally closed that gap too. The path of failure, where his enemies could enter.

This is inversion thinking, instead of thinking how I will win, think how I will fail, invert the problem. If you close the failure path, success is automatic.

Though we know this for many years, it’s always when westerners came with some English names we will give respect, this theory is popularized by Charles Munger the partner of Warren Buffett for over 60 years who used this in his investment decisions to create a $60 billion empire

In Munger’s words, ‘Get ready for the worst, and you will work toward achieving the best.’

According to Charles Munger, the most effective way to accomplish success is to eliminate failures. He said, “Hathway’s success was not because of some brilliant decisions. We avoided stupidity at all costs.

Warren Buffett said the same “Charlie, and I learned to avoid stupidity at all costs”.

Now Ani had a super keen look on his face, and he said, “Tell me more about this Inversion Thinking Mental Model.”

Yes Said Venki, listen carefully. This is slightly tricky but if you understand it is the most powerful in business, this avoids you from many failures and problems.

The Inversion Thinking Model, concept finds its roots in how mathematicians solve complex problems. Look at any problem backward and turn the situation upside down to find the solution.

Also, don’t confuse with reverse engineering, in reverse engineering we work backward from an achieved solution say, for example, you want to achieve a target of 10 customers you work from reverse, say to get 10 clients I need to submit  30 proposals, then to give 30 proposals I have to prospect  100 customers and for that every day I should meet 5 customers; this is simple reverse engineering, reversing from a positive result

But Inversion thinking, you consider the opposite of what you want is known as inversion. What if the opposite was true? What if I focused on a different side of this situation?

Let us see the

sequential Process for Inversion Thinking

Step 1: Determine what you want to accomplish.

Step 2: Now, invert it. What is that you don’t want? Say, for example, you don’t want to fail in business, but ask yourself what is that you should do to fail in these businesses.

Step 3: What are the chances of the worst-case scenario occurring?

Step 4: What steps must you take to avoid the worst-case outcome?

Let us apply Inversion Thinking in Sales discussion (this is a real scenario, happened to me with one of my VP)

Sales Coach: Tell me how you can lose this opportunity

Salesperson: Our pricing is too high (this is a usual response from a salesperson)

Sales Coach: don’t worry pricing will be taken care of by the company, you will not lose because of pricing, otherwise how  will you lose this opportunity

Salesperson: sir, I don’t know the decision-maker, he may not support me

Sales Coach: OK, then

Salesperson: I don’t know who the competition is, what strategy they are working on, what pricing they will offer

Sales Coach: what other ways you will lose

Salesperson: he went on to explain how he will lose that opportunity …

As you list all the answers, try to avoid or eliminate them. You will get what you want.

Now let us see one more example of a new product launch

MD: Tell me how this new product fails

Product Manager: Customer is not aware of this product usage

Then

PM: Customer may find it hard to change from the old product to this new one

Then

PM: Our product is technically complex, users may find it hard to use

Now you have identified the gaps, the exact ways the product could fail. The idea is to identify challenges and points of failure so now you can develop a plan to prevent them ahead of time.

The best part is that we can apply inversion thinking to just about anything. From your investment portfolio, Your Health from everyday life issues to how to make your dreams come true, follow this inversion process, identify and minus what you do not want, naturally you will get what you want.

Makes sense?

Inversion is a powerful thinking tool because it brings out the hidden or the blind spots that cannot be seen at first glance. The method that geniuses use–Avoid stupidity instead of seeking greatness?”

Thanks, Venki, I got it. Ani went home with a big smile.

So, what do you think–are you ready-to-use inversion thinking model to grow your business? Do you need a mentor to invert your problems?

yes?

We are just a call away   

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