Practical thought #1

Seeing Beyond the Hammer: A Journey to Better Decision-Making

I recently read Poor Charlie’s Almanack, a book about Charlie Munger that sparked a series of reflections on decision-making—why people think the way they do, and why it's often so difficult to change someone else’s mind, or for them to change yours.

A person’s life is shaped by the series of decisions they make. While a single choice may not always matter in the grand scheme, small improvements in each decision over time creates a profound impact. If we can learn to make better decisions by adopting a stronger decision-making model—we can also create a better life.

Throughout the book, Munger emphasises a concept he calls "multi-disciplinary decision-making." He often illustrates this with the adage: “To a man with a hammer, every problem looks like a nail.”

I understood the concept in theory, but I didn’t really grasp it. What did it actually mean? How did it apply to my life? After thinking it over for a while, I finally had an "aha" moment that opened my eyes to many past experiences. Here’s what I learned.

To illustrate, I’ll start with a story. My family ran a small but relatively successful business, which they and a few others built from the ground up. Growing up, I saw firsthand how acting in the best interests of the business had an immensely positive ripple effect on the community. My parents were able to support me financially, provide jobs for fellow immigrants who lacked education or experience, and even offered help to friends and family during tough times. With my own eyes, I saw this small business support many families, made customers happy and helped popularise Chinese cuisine in a small western city.

I believe a large part of what made the business successful was that my parents were good bosses who treated people fairly and didn’t exploit employees or the community. As a result, no single party took an outsized share; everyone benefited. Although there were times when my parents could have taken a bigger slice for themselves—or others could have acted selfishly (and at times this did happen), but, over time, acting in the best interests of the business led to the best outcomes.
So, what’s the point of this story?

When I make decisions whether personal, career or business, my instinct is to prioritise the company and community. So when I hear arguments about blindly raising the minimum wage or adding employee benefits to fight the big bad corporate bosses, my immediate reaction is skepticism. Surely, I think, if we prioritise employee benefits at the expense of employers, eventually, there comes a point where business owners will wonder why they’re taking on all the risk for diminishing rewards. In that case, why not just close down the business and work for someone else? And if that happens, everyone loses their jobs.

Sometimes, I’d find myself in debates with people on the opposite side of these issues, and we could never reach a common ground. Eventually, I just concluded, in my own mind, that I must be smarter than they were—that they just didn’t get it (in reality I just thought that I was a genius, and they’re idiots).

However, after reflecting on Munger’s multi-disciplinary decision model, I think I finally understand the root of these disagreements. In my version of reality, prioritising the business is the best decision because that’s what I know. But perhaps the person I’m debating with grew up in a different environment. Maybe their parents were employees who worked for bosses that didn’t care, who exploited workers and the community. For them, the best choice isn’t to act in the interest of the company; it’s to protect themselves and prioritise the welfare of employees, because they see bosses as inherently exploitative and that is their version of reality.

The takeaway here is that, in debates, it’s often impossible to change someone’s mind because each person’s perception of reality is different. People carry biases shaped by their unique experiences, which can be difficult to overcome because they conflict with everything that person knows and believes.

Perhaps an easier example to illustrate this concept is if I’m from Earth, where water is cold, and someone else is from Mars, where water is hot. We could never convince each other otherwise. If we’re then placed on a third planet, this becomes risky—we might assume water is cold and jump into boiling water, or vice versa.

As humans, we all have cognitive biases shaped by our own versions of reality, and these biases are hard to overcome if we’re not aware of them. I believe Munger’s point is that if we don’t consider other possible realities, our decisions may be limited or even wrong, because we’re trying to fit a unique situation into a single model. By being open to alternative perspectives and learning decision-making frameworks from other disciplines, we can achieve better outcomes.

Another example that I frequently see in the real world; if you put a doctor, accountant, psychologist, athlete, and scientist in a room and ask them to solve the same problem, each would approach it differently based on their expertise. The best solution might come from one profession, but more likely, it would require a blend of skills. By drawing on multiple disciplines, we can ultimately make better decisions.

This concept has made me realise that there have been many times in the past when I was certain I was right—but I could have been wrong. It’s also made me aware that when I debate or discuss issues, whether online, at work, or in my personal life, I often assume I can change someone’s mind. In reality, it’s as if I’m trying to convince them that the water in the ocean is boiling—it’s nearly impossible if our realities don’t align.

Another area where I’ve seen this dynamic is in debates about athletes. I’ve always believed Messi is better than Ronaldo, and that Kobe surpasses LeBron. Some people agree with me, and just as many disagree—but anyone who’s been in these debates knows there’s no changing people’s minds. I was 100% convinced I was right, but now I realise it’s simply a matter of what people value and what they think defines greatness.

I’d even gone as far as studying some of these athletes and compared them to myself and my life. I come from a family where both my parents contributed equally, so no one had to carry a "heavy load" alone. This dynamic is different from that in many other families, especially more traditional Asian families where the father may carry the financial burden while the mother manages the home. I realised that Messi, who grew up in a poorer family but had equal support from both parents, and Kobe, who grew up in a wealthier family with the same balance, might have been more open to "buying into a system" because of this.

I know this could spark debate, as Kobe is often labelled a ball hog while LeBron is seen as the pass-first guy. But for my purposes, the details of that debate aren’t as relevant. The point is, Messi was a key part of Barcelona’s system, and Kobe excelled in the Triangle offense. Both players, interestingly, stayed with one team for most of their careers (until Barcelona let Messi go), while Ronaldo and LeBron frequently moved between teams.

In contrast, I used to think of players like Ronaldo and LeBron as selfish. Yes, LeBron is known for being a pass-first player, but I often wondered, why does one player need to lead in rebounds, assists, and scoring? Why not just focus on your role and let your teammates handle theirs? But now I realise it’s more complex than that. Now I do not know any of this for a fact, it is just a mere observation but interestingly, LeBron and Ronaldo both grew up with single mothers, so perhaps their reality was shaped by the need to do it all themselves. Their mindset might be: “I need to do this all myself or we will all sink”.

So, rather than being selfish, LeBron and Ronaldo genuinely believe that doing it all themselves leads to the best outcome for the team. Meanwhile, Messi and Kobe believe that the team is strongest when everyone buys into the system. It’s worth noting that when Kobe felt he had a weak team, he played more like Ronaldo, doing everything himself. But when he was part of a solid system, he adapted and embraced that approach—this adaptability is one of the reasons I think Kobe is great.

So where does this leave me? Rather than simply concluding that Messi and Kobe are better, I realised I needed to assess the situation—or the "third planet." On a team that isn’t championship-level, Ronaldo and LeBron’s “I need to do it myself” mentality might work better, making them the better players in that context. But on a team with a strong system and other skilled players, I believe Messi and Kobe would thrive more.

How can I use this insight to improve my decision-making model? Going back to the "third planet" example, instead of blindly jumping into water that I assume is cold, I should stop, assess that third planet by dipping my toe in, and see if it’s hot or cold before making my decision. In the same way, when assessing a company or deciding how to act as a business owner or employee, I need to evaluate the specific situation rather than assuming that acting in the company’s best interest is always the right path. If the company has strong leadership, my usual model might work well. But if the management, conditions, or culture are very different from what I’m used to, it may be wiser to adjust my approach. This extra layer of critical thinking applied to each situation could have a profound impact on my life.

I had always known I was quite stubborn, but when presented with strong arguments I believed I was always open enough to change my mind. Upon realising the above, being more ‘open-minded’ has become much easier as I now understand that there is rarely a one-size-fits-all answer and that every situation can be different.

It is important to assess that situation properly before applying my potentially biased decision-making framework. By being open to new perspectives and adjusting my decisions based on the specific context, I can make choices that are not only smarter but also more adaptable to the complex realities of life.

In addition, if we go through life with only one discipline, we are heavily restricting our ability to make the best decision. Through learning, people can easily broaden, or strengthen their decision-making framework by learning and adapting concepts from other disciplines - psychology is an easy one, that Munger constantly points to.

Similar to games, if people can level up their ‘skill’ or in this case decision-making, they can level up what they achieve in life (or in games, we call it ranking up).

Lastly, the one that probably saves me the most time is that I have realised I can not always change someones mind, as it is the same as telling them that the water in the ocean is boiling hot.