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There is a big difference between academia and the business world. Academia rewards the individuals who are best able to remember, understand, and apply concepts and information. The business world rewards individuals who understand their strengths and weaknesses and collaborate well with people who are strong where they are weak.
This comes to mind in considering the sad news of Charlie Munger's passing last month. Munger - who graduated Magna Cum Laude from Harvard Law School without a college degree and gave up his law firm to collaborate with Warren Buffett - was ruthlessly self-critical, according to the Wall Street Journal.
Here is how Munger and other leaders applied this principle.
Munger's life set an example of "how to think clearly, deal fairly and live fully. He took nothing for granted," noted the Journal. "Munger possessed what philosophers call epistemic humility: a profound sense of how little anyone can know and how important it is to open and change your mind."
In 2014, Munger cited Confucius as an inspiration who said, "Real knowledge is knowing the extent of one's ignorance.... Knowing what you don't know is more useful than being brilliant," the Journal reported.
Munger and Buffett deemed this concept "the circle of confidence" - noting the importance of not deluding yourself into thinking your circle's diameter is wider than it is. They turned this idea into one of their investing tactics - creating a "too-hard pile" for investment opportunities they did not understand. Munger prided himself on avoiding mistakes by destroying his own "best-loved ideas," the Journal wrote.
Munger is not the only person who knew his limits. This August I interviewed Hubert Joly - the CEO of Best Buy who turned around the company between 2012 and 2019 -- and now teaches at Harvard Business School. He joked to me that he would like to introduce himself saying, "My name is Hubert and I don't know."
When he became CEO in 2012, Best Buy had gone sideways. "The company had become complacent and needed a new purpose, strategy, and culture," Joly said. "You need to replace it with intellectual humility and curiosity. When I became CEO, I knew nothing about retail. I was humble. I asked questions in the stores. Not knowing anything was a huge advantage."
Intellectual humility was important to Joly in picking his successor, Corie Barry whose willingness to take risks and character he admired. "How does a tortoise move forward? It sticks its next out. I gave her stretch assignments and she knocked them out of the park," Joly said. "Ultimately, [the decision to make her CEO came down to] character, learning agility, curiosity, humility, and how she dealt with stretch assignments."
His final comment? "People confuse perfection with performance. Companies need leaders who can be vulnerable."
Another leader who values cognitive hunger is Udy Mokady who spent 18 years as CEO of CyberArk, a cybersecurity company he cofounded, took public, and ran for 34 quarters before becoming the company's Executive Chair.
How did he go from founding a startup to running a successful public company? When I interviewed him in May, he used the metaphor of riding a bicycle up a long, steep hill. "On the road from Tel Aviv to Jerusalem there is a hill called Motza. My brother biked up the hill on the highway. I asked him how he did it. He said, "I put my head down, I didn't look up or down. I stayed to the left of the line," Mokady said.
Many years after CyberArk's 2014 IPO, Mokady asked himself 'Can Udi be CEO forever?' As Mokady told me, "Nine out of 10 CEOs wait for an external event to solve that problem. I decided to make the change when the sky was blue. I hired a strong chief operating officer -- Matt Cohen. We worked together to create a well-defined role which puts him in day-to-day charge of customers, partners, and strategy."
Mokady's ability to let go sprang from his desire to develop people who were willing to grow. "I could not understand why venture capital firms put caps on what an executive could do. I think people are always growing. I would help someone grow from an engineer, to a sales engineer, to chief revenue officer. I wanted to develop people who were willing to grow, learn, and seek mentors -- to always be learning," he said.
Leaders should answer this question: What is the true diameter of my circle of competence?
A refreshed look at leadership from the desk of CEO and chief content officer Stephanie Mehta
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Charlie Munger's Greatest Lesson For Leaders
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08.12.2023
How to Train Your Brain to Better Accomplish Your 2024 New Year's Resolutions
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How Jennifer Garner Teamed Up With an Organics Star to Tackle the 'Every Mom' Problem of Easy, Fresh Kids' Foods
Best in Business 2023: Meet 215 Companies That Tap Profits to Make a Positive Impact
There is a big difference between academia and the business world. Academia rewards the individuals who are best able to remember, understand, and apply concepts and information. The business world rewards individuals who understand their strengths and weaknesses and collaborate well with people who are strong where they are weak.
This comes to mind in considering the sad news of Charlie Munger's passing last month. Munger - who graduated Magna Cum Laude from Harvard Law School without a college degree and gave up his law firm to collaborate with Warren Buffett - was ruthlessly self-critical, according to the Wall........
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