Greg McKeown:
Welcome. I’m your host, Greg McKeown. And I’m the author of a couple of New York Times bestsellers, Effortless and also Essentialism. And I am here with you on this journey to learn how to understand each other so that we can operate at our highest point of contribution. Have you ever underinvested in your personal development? Have you ever been too busy living to think about life? Today, I’m going to share an inspiring story and something counterintuitive that I’ve learned, and some actionable advice. By the end of this episode, you will be able to take advantage of what might be the highest leverage activity on earth. Let’s begin.
If you want to learn faster, understand more deeply and increase your influence all at the same time, teach the ideas in this podcast to someone else within the next 24 to 48 hours.
The more that I work with executives in the world right now, the more I hear from them about the relevance of the 10X dilemma. That is hardworking, intelligent, talented people who want to achieve 10X results, seriously improve the results they’re getting in quantity but also in quality. So motivation is already there. The effort is already there, but then if I ask the second question, you know, who here can work ten times harder, nobody can. And that’s almost certainly true for you as well. You want 10X results. You cannot work ten times harder. So what do we do about that? What is the solution to the 10X dilemma? The key isn’t to try to put more effort in, to push ourselves even further, because then you burn out and you still haven’t achieved the results that you want to achieve.
Instead, we have to make that major shift from doing those things that achieve linear results. That is one-time effort for a one-time reward to those things where you can achieve residual results. You put in one-time effort, but you create a system that produces results that flow to you. And one of those principles, one of those levers, is learning because as you learn, your personal capability compounds over time. Wisely developed and synthesized knowledge doesn’t just have a linear relationship. It’s not just as you learn more; you can achieve more. It follows something closer to an exponential curve.
Just think of the Vice Chairman of Berkshire Hathaway. 98 years old, Charlie Munger. He’s Warren Buffet’s right hand, man, but he’s also an investing legend in his own, right. In the 1960s and 70s, Mungerwe ran a firm that achieved returns of over 24% per year. Anyone who’s interested in financial management already knows who Charlie Munger is, but would certainly be thrilled at that kind of return on investment. But think of this, if you and I invested a hundred dollars in Berkshire stock the day Munger came on board, we’d have over 1.8 million today.
So most professional investors become experts in financial markets. They study the economic forces that drive booms and busts. They learn all there is to know about bond yields, macroeconomics, and small-cap stocks. But Charlie Munger took a different approach to learning. Isaiah Berlin’s original 1953 essay, The Hedgehog and the Fox, revived the saying by the ancient Greek poet Archilochus, the fox knows many things, but the hedgehog knows one big thing. And Jim Collins, of course, famously favored the hedgehog’s approach to succeeding in the business world. Arguing that foxes lack focus and waste their energy.
But Archilochus’s comparison was always meant to suggest that the fox would fare better if it didn’t simply know many things but knew how to connect those things together. Munger is a fox who connects many things. Munger’s approach to investing and life is the pursuit of what he calls worldly wisdom. He believes that by combining learnings from a wide range of disciplines, psychology, history, mathematics, physics, philosophy, biology, and more, we produce something that is greater than the sum of its parts. Munger sees isolated facts as useless unless they hang together on a latticework of theory. Different ideas in isolation represent linear knowledge, but those same ideas form residual knowledge when interconnected.
One of Munger’s acolytes, Tren Griffin, gives this example, a business raises the price of its product yet sells more of that product. This does not make sense if you consider only the discipline of economics and its rule of supply and demand. But if you also consider the discipline of psychology, you understand that buyers think that a higher price means higher quality and therefore buy it more. The entire luxury market exists within that approximate logic. It’s not about simple economics, only. It’s about psychology. It’s about how people work. And it’s that combination of understanding that makes sense of a world more complex than any single discipline.
Often the most useful knowledge comes from fields other than our own. There are researchers from Northwestern University’s Kellogg School of Management who found in analyzing almost 18 million scientific papers that the best new ideas usually come from combining existing knowledge in one field with what they said is an infusion of unusual combinations from other disciplines. This is why Munger is wise to believe in the discipline of mastering the best that other people have figured out. As he puts it, “I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.”
The exchange of ideas across disciplines breeds novelty, and turning the conventional into something novel is often the key to effortless creativity, not only in science but in areas ranging from investing to music to making movies. Before they became household names best known for Hollywood hits like Fargo, directors Joel and Ethan Cohen’s first blockbuster film was there in 1984, Neo-noir crime movie Blood Simple. When the brothers first read the screenplay, though, they were concerned that it followed the pattern of conventional who done it. So they took out a pair of scissors and cut up each paragraph from each page of the script. They placed each scrap of paper in a brown paper bag, shook the bag, and tossed the scraps into the air. Then they picked the scraps up off the floor, put them back together randomly, and rewrote the script on that basis. Blood Simple became known for its conventional Neo crime feel heightened by unpredictable twists and turns that were unusual for the genre. Northwestern professor, Brian Uzi describes this approach as taking extreme novelty and embedding it in deep conventionality.
So, where do we start on our journey to greater worldly wisdom? One answer is to learn, to read more books, and to do it in a way that we get the most out of it. Reading a book is among the most high-leverage activities on earth. Let me say that again. Reading a book is among the most high-leverage activities on earth. For an investment, more or less equivalent to the length of a single workday, plus a few dollars, you can gain access to what the smartest people have already figured out. Reading, reading to really understand, delivers residual results by any estimate. Unfortunately, even now, very few people take advantage of this. The typical American reads or partially reads only four books a year. More than a quarter of Americans don’t read books at all. And this trend is worsening.
To get the most out of your reading, I recommend the following principles. The first is to use the Lindy effect. This law states that the life expectancy of a book is proportional to its current age. Meaning the older a book is, the higher the likelihood that it will survive into the future. So prioritize reading books that have lasted a long time. In other words, read the classics and the ancients.
Two, read to absorb rather than to check a box. There are books that I’ve technically read, but I can’t tell you anything about them. On the other hand, there are books I may not have read cover to cover ever, but I have returned to certain chapters or passages so often, they have become a part of me, a part of my way of thinking and seeing the world. So reading a book to earn the right of displaying it on your shelf misses the real point of the exercise, but absorbing yourself fully in a book changes who you are just as if you had lived the experience yourself.
And then third, distill to understand. When I finish reading a book, I like to take 10 minutes to summarize what I’ve learned from that book in a single page, in my own words. If you summarize the key learnings from a book that you’ve just read, you absorb it more deeply. The process of summarizing it, of distilling it to the essential essence, helps me, at least, turn information into understanding and understanding into unique knowledge. And that’s the kind of unique knowledge that approximates Charlie Munger’s pursuit of worldly wisdom.
So if you are like the many executives and CEOs that I work with, who really do desire to increase significantly the results, both in terms of quality and quantity, that they’re getting in their lives, but also feel themselves running out of space, feel that there’s no way they could work ten times harder. If you feel that, then you have to orient your life differently. In fact, the whole of Essentialism and the whole of Effortless are two research and writing projects that I have pursued in order to help people solve the 10X dilemma and to help me solve it too so that I can make a higher contribution. If you feel likewise, then invest in the asset that is you. Make lifelong learning, especially through reading high-quality books, a key part of your strategy. I’ve heard the old rule of thumb and believe it, that we will be the same people we are today, unless for the people we meet and the books that we read, that these things will shape who we will become into the future.
I should say, also at this juncture, that if you haven’t yet read Effortless, if you haven’t yet read Essentialism, now is the time to do it. If you have read them, now is a time to be able to share it with other people, to teach the ideas, because that will push these ideas deeper into you, make them your own. Imagine, seriously, what would happen in your life if the Essentialism paradigm and the Effortless paradigm became yours, that this just became a way of living, of doing, of thinking. Think of what that would do for you. Think of what would happen if you could identify what was essential and then build the systems to make those essential results happen, whether you are thinking consciously of them or not. That could change your life. That would change your life. It does change one’s life.
Thank you, really, thank you for listening. If you haven’t subscribed yet, please subscribe right now. Make this effortless for yourself to get new episodes for free on Tuesdays and Thursdays. Remember that if you want to learn faster, understand more deeply and increase your influence at the same time, teach something from this podcast to someone else within the next 24 to 48 hours. If you’ve found any value in this episode at all, please write a review on Apple Podcasts. The first three people to write a review of this episode will receive free access to the Essentialism Academy. Just go to essentialism.com/podcastpromo for more details. I’ll see you next time.
