Video Link: https://youtu.be/_YNhR6xnV64
In this episode, Charlie Munger talks about the importance of answering/explaining "why."
In this episode, you’ll learn:
The importance of answering/explaining "Why."
How to persuade someone?
To check out all Collection: Charlie Munger <click here>
CHARLIE MUNGER 00:08
Mental confusion caused by information not arrayed in the mind and theory structures creating sound generalizations, developed in response to the question why. Also mis-influence from information that apparently but not really answers the question why. Also, failure to obtain deserved influence caused by not properly explaining why.
Well we all know people who’ve flunked, and they try and memorize, and they try and spout back, and they just … doesn’t work. The brain doesn’t work that way. You’ve got to array facts on theory structures answering the question of why. If you don’t do that, you cannot handle the world.
Now we get to Feuerstein, who was the general counsel of Salomon when Gutfreund made his big error. And Feuerstein knew better. He told Gutfreund, “You have to report this as a matter of morality and prudent business judgment.” He said, “It’s probably not illegal. There’s probably no legal duty to do it, but you have to do it as a matter of prudent conduct and proper dealing with your main customer.”
He said that to Gutfreund on at least two or three occasions, and he stopped. And, of course, the persuasion failed, and when Gutfreund went down, Feuerstein went with him. It ruined a considerable part of Feuerstein’s life.
Well Feuerstein, was a member of the Harvard Law Review, made an elementary psychological mistake. You want to persuade somebody, you really tell them why. And what did we learn in lesson one? Incentives really matter. Vivid evidence really works. He should have told Gutfreund, “You’re likely to ruin your life and disgrace your family and lose your money.” And is Mozer worth this? I know both men. That would’ve worked.
So Feuerstein flunked elementary psychology, this very sophisticated, brilliant lawyer. But don’t you do that. It’s not very hard to do, you know, just to remember that “Why?” is terribly important.