Irresistible Influence: How Munger’s Mind Tricks Magnetize Clients

Unlocking Client Commitment: Applying Munger's Psychological Strategies
Austin Homolka
January 02, 2024

Conscious & Non-conscious Superpowers

Imagine discovering a superpower — not for leaping tall buildings or running faster than a speeding bullet, but for something far more lucrative: compelling clients to choose you. This power doesn't come from a mythical source; it's rooted in the practical world of psychology.

Charlie Munger, a mastermind in the art of influence, unveils this power through what he calls the 25 Tendencies. These psychological insights are your arsenal for persuasion, your toolkit for growth. Today, we'll talk about four of these tendencies (and how you can use them to acquire more clients)… Here they are:

  1. The Reward & Punishment Superresponse Tendency
  2. The Liking/Loving Tendency
  3. The Disliking/Hating Tendency
  4. The Doubt-Avoidance Tendency

Before we delve into how each of these tendencies can be leveraged to attract and retain clients, let's first take a moment to understand the man behind these concepts — Charlie Munger.

What You Need To Know About Charlie Munger

  • Born January 1, 1924, in Omaha, Nebraska.
  • Admitted to Harvard Law School post-WWII (without an undergraduate degree).
  • Moved to California, became a real estate attorney.
  • Founded Munger, Tolles & Olson LLP.
  • Ran a successful investment partnership.
  • Gave his share of profits to a partner's widow.
  • Partnered with Warren Buffett in Berkshire Hathaway.
  • Known for wise business insights.
  • Advocated for honesty and good choices in business.
  • Skilled at selecting top companies.
  • Lived modestly in the same house for 70 years.
  • Valued patience in business decisions.
  • Focused on traditional, understandable businesses.
  • Helped grow Berkshire Hathaway to over $780 billion.
  • Died at age 99.

#1: Reward & Punishment Superresponse Tendency

This first tendency is overlooked and underrated. We tend to forget how motivated we actually are by rewards and punishments. Here's what you need to know about this tendency:

  • People really care about rewards (like treats or money) and punishments (like fines or getting in trouble).
  • If you do something good and get a reward, you want to do it again. If you do something bad and get punished, you don’t want to do it again.
  • Sometimes, people can get too focused on rewards and do silly things just to get more of them, like selling stuff that’s not good just to make money.
  • Good rewards can make you work better and faster, but bad rewards can make you do bad work.
  • Munger says we should remember what Ben Franklin said: If you want to make someone do something, don’t just tell them why it’s good, but also make it good for them somehow.

In his book, Poor Charlie's Almanack, Munger talks about Federal Express. FE was having an extremely hard time getting the night shift to get all the packages out on time. They tried so many different things, but nothing seemed to work. This is what happened. The company switched to paying the night shift per shift instead of by the hour, focusing on completing the task regardless of time taken. Workers got the job done fast because they got the same pay even if they finished early, so they worked more efficiently and go home early - win, win!

There's a story in the book about a cat that sat on a hot stove and then never sat on a stove again, hot or cold. This shows how a single bad experience can lead to overly cautious behavior. The idea: while punishment can teach us to avoid certain actions, it can also make us too scared to try things that might actually be okay, like avoiding all stoves even when they're not hot. This can be thought of as a downside of punishment—it might stop us from doing something bad again, but it can also stop us from doing something that could be good.

To attract more clients, consider leveraging the Reward and Punishment Superresponse Tendency: offer compelling rewards for choosing your services or products and highlight what they stand to lose by not choosing you. This strategy can effectively motivate potential clients to engage directly with your business.

#2: Liking/Loving Tendency

Here’s the thing about the Liking and Loving Tendency: we tend to like people and things that we find nice or good.

  • If we like someone or something, we often ignore any bad things about them.
  • When we really like someone, we sometimes do things just to make them happy, even if it's not the best choice.
  • Liking can also make us stick with our ideas or things, even if there are reasons we should change our mind.

Fun fact! Charlie Munger and Warren Buffet used to work at Buffet's grandfather's grocery store (Ernest Buffet). This was way in advance to their future partnership. Fred Buffett (Warren's uncle) was extremely involved in operations at the family grocery store. He ran the grocery store with such cheerfulness and hard work that both Warren and Charlie admired him greatly, even from a safe distance. Liking and admiring someone can have a strong influence on us, making us view them and their work in a very positive light.

To leverage the Liking/Loving Tendency in your business, focus on building genuine, positive relationships with your clients. Show them kindness and understanding, and they are more likely to overlook minor flaws in your services or products, stay loyal, and make decisions that favor your business due to their fondness for you.

#3: Disliking/Hating Tendency

Munger loved the concept of inversion.Invert, always invert.” - Carl Jacobi

Disliking/Hating Tendency is essentially the inversion of Liking/Loving Tendency.

  • When we don't like someone or something, we often only see the bad parts and not the good parts.
  • If we really don't like them, we might not listen to their ideas or believe anything they say.
  • Sometimes, not liking someone can make us treat them unfairly or be mean to them without a good reason.

Expanding on the example, Munger illustrates how intense dislike can distort our thinking and judgment. After the World Trade Center attack, because of deep-rooted dislike, many Pakistanis immediately believed that the Hindus were to blame, while others with different biases quickly pointed fingers at the Jews.

This showcases how people often jump to conclusions that fit their existing dislikes without proper evidence, leading to false associations and reinforcing their negative views, even when the real facts may be quite different. This example demonstrates how strong feelings of dislike can cause people to incorrectly assign blame and hold onto false beliefs, just because it aligns with whom or what they already dislike.

To defend against the Disliking/Hating Tendency when others use it against your business, focus on Liking/Loving Tendency. Work to build a strong, positive reputation and providing clear, factual information about your services or products. By consistently demonstrating integrity and quality, you can counteract negative biases and ensure that even those predisposed to dislike you have access to objective, positive data to reconsider their stance.

#4: Doubt-Avoidance Tendency

People don't like to feel uncomfortable, and uncertainty can certainly feel uncomfortable! This next tendency talks about how people don't like to feel uncertain or have open loops in their mind.

  • People don't like feeling unsure, so they make decisions quickly to feel better.
  • Making a quick decision stops the worrying and stress of not knowing what to do.
  • Sometimes quick decisions are good, but sometimes they can be bad if we don't think enough about them.

Munger provides an example from the history of the Defense Department procurement process to illustrate the Doubt-Avoidance Tendency. He explains how the Defense Department had terrible experiences with contractors because the contracts were set up in such a way that motivated misuse, paying a cost-plus-a-percentage-of-cost, which led to inefficiencies and overbilling.

This system inherently discouraged questioning and doubt, as it rewarded contractors for avoiding scrutiny and maximizing their billable costs. It was only after these contracts were recognized as problematic and changed to a fixed price that more rational and efficient behavior was encouraged, showing how altering the system to encourage doubt and scrutiny led to better decision-making.

To utilize the Doubt-Avoidance Tendency for efficient decision-making, particularly in key moments, focus on providing clear, concise information and reassuring confidence to alleviate any uncertainties your clients might have. This approach involves understanding their concerns and offering straightforward solutions or options that help them feel more secure in making a decision. By reducing the complexity of the decision and emphasizing the benefits and safety of the choice, you can gently guide them towards a timely and positive decision without being manipulative.

How to Use These 4 Tendencies to Get More Clients

  1. Reward and Punishment Superresponse: Offer attractive rewards for using your services and highlight potential losses for not choosing you, to motivate engagement.
  2. Liking/Loving Tendency: Build strong, positive relationships with clients, showing kindness and understanding to foster loyalty and favorable decisions.
  3. Disliking/Hating Tendency: Cultivate a robust, positive reputation and provide clear, factual information to neutralize biases and win over skeptics.
  4. Doubt-Avoidance Tendency: Provide clear, concise information and reassuring solutions to help clients make quick, confident decisions in critical moments.

Thanks for reading and we’ll see you in the next post!

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