January 15, 2025

Charlie Munger's Inversion Technique

A practical guide to using Charlie Munger's inversion technique for better decision making.

Want to make better decisions? I've been using Charlie Munger's inversion technique for a while.

Last night I spent some time at The Collective where we discussed and worked through some of the biggest challenges facing our businesses, nonprofits, and communities in 2025.

One of the things I was able to share with the group that others found meaningful was Munger's advice to "avoid stupidity first." He did it through a very simple technique called inversion.

Here's how to use it:

  1. Name a goal: "I want a healthy business."
  2. Now, invert the goal: "How can I wreck this business?"
  3. List the things you'd screw up not to hit the goal: bad hires, ignoring customers, over-expansion.
  4. Avoid those things like the plague.

Real world example:

  • Goal: "Grow my brand."
  • Inversion: "What would kill my brand?"
  • Disasters: Poor service, shady marketing, ignoring feedback.
  • Corrective Moves: Improve service, use honest marketing, get customer feedback.

It's so easy. And so powerful.