"Whenever you’re betting against the consensus there’s a significant probability you’re going to be wrong, so you have to be humble."

The key to having enduring, extraordinary performance is to do what others won’t or can’t AND to be right.It requires:<ul><li>Courage to stand up against the herd when you’re right and everyone else is wrong</li><li>Access to or understanding of information that other people don’t have</li><li>Unique ways of analyzing that information</li></ul>

Independent Thinking

<ol><li>List the ways the project could fail</li><li>Assign a probability to each possibility</li><li>Prioritize actions that can be taken to avoid failure</li></ol>

Pre-mortem process to use Inversion

<ul><li>They <a href="http://onforb.es/1OQLxlx">value relationships over pure achievement</a> and are willing and able to invest in the relationship</li><li>They are <a href="http://onforb.es/1H92ipy">givers</a></li><li>They are open to being <a href="http://bit.ly/1OQLBBU">vulnerable</a> and to sharing their true experiences</li><li>I genuinely enjoy spending time with them</li><li>They are constantly growing and learning</li><li>They share <a href="http://www.forbes.com/sites/michaelsimmons/2014/02/26/the-most-important-decision-you-need-to-make-when-building-a-network/">similar values</a></li><li>They’re also able to invest time in maintaining and growing the relationship.</li></ul>

Characteristics for filtering professional network

is the information that only exists in people’s heads. Getting access to this ‘dark net’ information from people who have accomplished what you want to accomplish is extremely valuable and will help you <a href="http://onforb.es/1IZl9nc">think independently</a>. The ‘dark net’ includes people’s lessons learned and hacks, topics that are too sensitive to talk about because they make someone look bad, and tacit knowledge (knowledge that people have but aren’t able to articulate)

Dark net

<a href="http://onforb.es/1HXEzsp">Many people work with the same people over and over in their careers</a>. In the information age, one of the best ways to get information is not from just being better at searching Google, it’s from learning how to build a network and get the information you need through that network.

Build deep and long-term relationships

Find and focus on what does not change. Become the best in one core area by continually investing in it over time, rather than jumping from trend to trend and starting over each time.

Invest in what will NOT change

Become the best in one core area by continually investing in it over time, rather than jumping from trend to trend and starting over each time.

Invest in one core area

"Failure for me became not trying, versus the outcome."

"Ten extremely informed individuals who are happy to share what they know with you when you engage them can tell you a lot more than a thousand people you only know in the most superficial way"

<ol><li>Be extremely picky about whom you spend a lot of time around.</li><li>Invest the time.</li></ol>

Two keys on building long-term relationships

"If things are not failing, you are not innovating enough."

The only way to protect yourself from failure is to not try, or to not try anything hard at least, both of which are sure and direct routes to mediocrity. The only way you can achieve anything big is by daring to try big things, and if you do that failure is inevitable.

Train yourself to love failure

Use storytelling to make your vision more compelling. According to <a href="http://snip.ly/rL7f">academic studies on storytelling</a>, great stories transport others into a whole other world and, in doing so, alter their beliefs, cause a loss of access to real-world facts, evoke emotions, and significantly reduce their ability to detect inaccuracies.

Make a vivid image of your vision

Developing an analytical advantage

"You can’t make money agreeing with the consensus view."

1–800-GOT-JUNK strategy <ul><li>Retreat: First, grab a notebook and find a quiet space where you don’t have any distractions from your daily life.</li><li>Visualize: Transplant yourself five years into the future. See yourself looking around at your life and your business. Imagine that you’re really in that place where the future HAS already happened. For example, if you have a five-year old child, imagine your child is now ten. Then, imagine yourself five years older.</li><li>Ask: Once you’ve transported yourself to that place, ask yourself some questions that will help you “crystal ball” the future. Here are some key questions to ask yourself:</li></ul> - What is your top-line revenue?- How many people are on your team?- How would your people describe the culture of your company when talking to a family member?- What is the press saying about your business? Be as specific as possible: what would your local paper say about your company? What would your favorite magazine say?- What do your people love about your vision and where the company is headed?- How would a customer describe their experience with you? What would they say to their best friend?- What accomplishment are you most proud of? What accomplishment are your people most proud of?- What do you do better than anyone else on the planet?- Describe your office environment in detail.- Describe your service area. Who are your customers and how do they feel?

Turn Your Vision Into A Detailed Story And Picture

Decision trees are particularly useful for avoiding stupid risks and big bets that aren’t likely to succeed.

Use Decision Trees

<ul><li>Understand the different outcomes that could happen (both positive and negative)</li><li>Calculate the expected return or loss of each outcome:</li><li>Attach a probability to each outcome</li><li>Understanding the magnitude of the return or loss</li><li>Multiple the probability by the magnitude (probability of winning * value of win) — (probability of losing * cost of the loss)</li><li>Add up and subtract all of the expected returns and losses</li></ul>

How to use decision trees

We must use it to avoid stupid mistakes. People, especially smart people, make them over and over. Ignorant mistakes happen when you don’t know better. Stupid mistakes happen when you do know better.

Checklists

They consistently do simple things that matters most. <ol><li>Charlie Munger: Analyze what can go wrong instead of what can go right.</li><li>Warren Buffet: Use checklists to avoid stupid mistakes.</li><li>Ray Dalio: Learn how to think independently so you can be smarter than everyone else.</li><li>Jeff Bezos: Invest in what will NOT change instead of only what will change.</li><li>Steve Jobs: Use storytelling to make your vision more compelling; not mission-speaks.</li><li>Reid Hoffman: Build deep long-term relationships that give you insider knowledge.</li><li>Elon Musk: Use decision trees to make better decisions.</li><li>Sara Blakely: Train yourself to love failure rather than to fear it.</li></ol>

8 Unique things

Practices daily comfort zone challenges.

Standing up against the herd

"Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead — through sloth, envy, resentment, self-pity, entitlement, all the mental habits of self-defeat. Avoid these qualities and you will succeed. Tell me where I’m going to die so I don’t go there."

It is to think through what can go wrong because things can go wrong no matter how smart and hardworking you are.Being both pessimistic and optimistic is better than just being optimistic. One of the best ways to win is not to lose.

Inversion

<ol><li>Brainstorm. Dream up as many possible solutions as you can. This helps you avoid <a href="http://snip.ly/9JYS">availability bias</a>, which often results in us choosing the first solution that comes to mind rather than the best solution.</li><li>Test. Test as many potential solutions as you can afford to. This avoids the <a href="http://snip.ly/S56h">confirmation bias</a> of rationalizing the one solution you chose.</li><li>Evaluate. Have a minimum success criteria for each experiment. This allows you to avoid doubling down on bad ideas that aren’t working in an effort to recoup <a href="http://snip.ly/JUMT">sunk costs</a>.</li><li>Learn. Dive deeply into the data and learn from EVERY experiment, not just the one that worked best. Avoid taking mistakes personally and feeling shame over something that did not work.</li></ol>

Problem-solving checklist

<ul><li>Build deep relationships with people who have accomplished the goals you want to accomplish. By building relationships based on mutual trust and respect, where others want you to succeed, people share information they never would publicly. For more on this strategy, read <a href="http://www.inc.com/michael-simmons/what-self-made-billionaire-reid-hoffman-does-differently.html">Reid Hoffman’s strategy</a>.</li><li>Learn from other fields and bring the insights into your own. Most people focus on learning about their own field, even though other fields have proven insights that are applicable. </li><li>Build a lab, not an experiment. Entrepreneurs who can conduct more experiments will discover more new data and therefore have a big advantage. These entrepreneurs look at their business as a lab where they constantly run experiments. Many entrepreneurs fail here because they look at their business as one big experiment to test just one idea.</li><li>Be good at pulling out the wisdom of others. Many successful people are not able to articulate how they do what they do. They just do it. Asking the right questions can help bring to the surface this tacit knowledge. One way that famous technology investor, Peter Thiel, uncovers this knowledge is by asking the founders he backs <a href="http://onforb.es/1SEvzZE">what they strongly believe that no one else does</a>.</li></ul>

Developing an information advantage

"We try more to profit from always remembering the obvious than from grasping the esoteric."

Fascinated by this question for my whole career as a serial entrepreneur and writer, I’ve read more billionaire entrepreneur biographies than I can count, researched what they have in common, and met…

CHARLIE MUNGER

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