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Charlie Munger Explains Why Bureaucracy is not Shareholder Friendly

Charlie Munger, the billionaire partner of Warren Buffett at Berkshire Hathaway, explains why bureaucracy is not shareholder friendly:

The great defect of scale, of course, which makes the game interesting—so that the big people don't always win—is that as you get big, you get the bureaucracy. And with the bureaucracy comes the territoriality—which is again grounded in human nature.

And the incentives are perverse. For example, if you worked for AT&T in my day, it was a great bureaucracy. Who in the hell was really thinking about the shareholder or anything else? And in a bureaucracy, you think the work is done when it goes out of your in-basket into somebody else's in-basket. But, of course, it isn't. It's not done until AT&T delivers what it's supposed to deliver. So you get big, fat, dumb, unmotivated bureaucracies.

They also tend to become somewhat corrupt. In other words, if I've got a department and you've got a department and we kind of share power running this thing, there's sort of an unwritten rule: “If you won't bother me, I won't bother you and we're both happy.” So you get layers of management and associated costs that nobody needs. Then, while people are justifying all these layers, it takes forever to get anything done. They're too slow to make decisions and nimbler people run circles around them.

The constant curse of scale is that it leads to big, dumb bureaucracy—which, of course, reaches its highest and worst form in government where the incentives are really awful. That doesn't mean we don't need governments—because we do. But it's a terrible problem to get big bureaucracies to behave.

So people go to stratagems. They create little decentralized units and fancy motivation and training programs. For example, for a big company, General Electric has fought bureaucracy with amazing skill. But that's because they have a combination of a genius and a fanatic running it. And they put him in young enough so he gets a long run. Of course, that's Jack Welch.

But bureaucracy is terrible …. And as things get very powerful and very big, you can get some really dysfunctional behavior. Look at Westinghouse. They blew billions of dollars on a bunch of dumb loans to real estate developers. They put some guy who'd come up by some career path—I don't know exactly what it was, but it could have been refrigerators or something—and all of a sudden, he's loaning money to real estate developers building hotels. It's a very unequal contest. And in due time, they lost all those billions of dollars.

Munger is perhaps the only person I know who reads more than we do. In fact, we get a lot of our reading off his book recommendations.


You can learn a lot from Warren Buffett and Charlie Munger. Reading all of the Berkshire Hathaway Letters to Shareholders was better than my MBA. I'm serious.

The Best Books of 2013: Your 10 Overall Favorites

From philosophy and friendship to idea creation and building daily routines.

You are a well read bunch so I was looking forward to compiling the second annual look at your favorite reads featured on Farnam Street in 2013.

While I never had any doubt that Farnam Streeters are the smartest people on the internet, the data once again tells that story too.

1. Seeking Wisdom: From Darwin to Munger

Seeking Wisdom: From Darwin to Munger, Peter Bevelin

Peter Bevelin begins his fascinating book with Confucius’ great wisdom: “A man who has committed a mistake and doesn’t correct it, is committing another mistake.”

This book is for those who love the constant search for knowledge. It is in the spirit of Charles Munger, who says, “All I want to know is where I’m going to die so I’ll never go there.” There are roads that lead to unhappiness. An understanding of how and why we can “die” should help us avoid them. We can’t eliminate mistakes, but we can prevent those that can really hurt us. Using exemplars of clear thinking and attained wisdom, Bevelin focuses on how our thoughts are influenced, why we make misjudgments and tools to improve our thinking. Bevelin tackles such eternal questions as: Why do we behave like we do? What do we want out of life? What interferes with our goals? Read and study this wonderful multidisciplinary exploration of wisdom. It may change the way you think and act in business and in life.

2. It’s Not All About Me

It’s Not All About Me

I’m not quite sure how I came across Robin Dreeke’s It’s Not All About Me but I’m glad I did.

Dreeke is the lead instructor at the FBI’s Counterintelligence Training Center in all behavioral and interpersonal skills training. And he wrote an awesome book on how to master the skills of communication.

This is a modern version of the timeless How to Win Friends and Influence People.

3. How to Read a Book: The Classic Guide to Intelligent Reading

How to read a book

How to Read a Book, originally published in 1940, has become a rare phenomenon, a living classic. It is the best and most successful guide to reading comprehension for the general reader. And now it has been completely rewritten and updated.

You are told about the various levels of reading and how to achieve them — from elementary reading, through systematic skimming and inspectional reading, to speed reading, you learn how to pigeonhole a book, X-ray it, extract the author's message, criticize. You are taught the different reading techniques for reading practical books, imaginative literature, plays, poetry, history, science and mathematics, philosophy and social science.

Finally, the authors offer a recommended reading list and supply reading tests whereby you can measure your own progress in reading skills, comprehension and speed.

4. Manage Your Day-to-Day: Build Your Routine, Find Your Focus, and Sharpen Your Creative Mind

Manage your day-to-day

Are you over-extended, over-distracted, and overwhelmed? Do you work at a breakneck pace all day, only to find that you haven’t accomplished the most important things on your agenda when you leave the office?

The world has changed and the way we work has to change, too. With wisdom from 20 leading creative minds, Manage Your Day-to-Day will give you a toolkit for tackling the new challenges of a 24/7, always-on workplace.

5. The Moral Sayings Of Publius Syrus: A Roman Slave

A Syrian slave, Syrus is full of timeless wisdom. Want an example? “From the errors of others, a wise man corrects his own.” Here is another “It is not every question that deserves an answer.” Ok, one more? “To do two things at once is to do neither.” And he didn’t even know of Facebook and Twitter. You can read this book in under an hour but spend the rest of your life trying to learn and apply his wisdom.

6. Letters from a Stoic

I came to Seneca a few years ago. It’s clear from reading Seneca that he’s full of wisdom. His letters deal with everything we deal with today: success, failure, wealth, poverty, grief. His philosophy is practical. Not only will reading this book help equip you for what comes in life but it’ll help you communicate with others.

A philosophy that saw self-possession as the key to an existence lived ‘in accordance with nature', Stoicism called for the restraint of animal instincts and the severing of emotional ties. These beliefs were formulated by the Athenian followers of Zeno in the fourth century BC, but it was in Seneca (c. 4 BC – AD 65) that the Stoics found their most eloquent advocate. Stoicism, as expressed in the Letters, helped ease pagan Rome's transition to Christianity, for it upholds upright ethical ideals and extols virtuous living, as well as expressing disgust for the harsh treatment of slaves and the inhumane slaughters witnessed in the Roman arenas. Seneca's major contribution to a seemingly unsympathetic creed was to transform it into a powerfully moving and inspiring declaration of the dignity of the individual mind.

7. Meditations


Marcus Aurelius Antoninus (a.d. 121–180) succeeded his adoptive father as emperor of Rome in a.d. 161—and Meditations remains one of the greatest works of spiritual and ethical reflection ever written. With a profound understanding of human behavior, Marcus provides insights, wisdom, and practical guidance on everything from living in the world to coping with adversity to interacting with others. Consequently, the Meditations have become required reading for statesmen and philosophers alike, while generations of ordinary readers have responded to the straightforward intimacy of his style. In Gregory Hays’s new translation—the first in a generation—Marcus’s thoughts speak with a new immediacy: never before have they been so directly and powerfully presented.

8. The Art of Worldly Wisdom

The Art of Worldly Wisdom

The Art of Worldly Wisdom: A Pocket Oracle is a book of three hundred aphorisms for making one’s way in the world and achieving distinction.

It provides advice not only for modern “image makers” and “spin doctors,” but also for the candid: for those who insist that substance, not image, is what really matters. “Do, but also seem,” is Gracián’s pithy advice

The book was imitated by La Rochefoucauld, cherished by Friedrich Nietzsche, and translated into German by Arthur Schopenhauer. Nietzsche observed that “Europe has never produced anything finer or more complicated in matters of moral subtlety.”

9. A Technique for Producing Ideas

A Technique for Producing Ideas

This short but powerful book has helped thousands of writers, artists, scientists, and engineers to solve problems and generate ideas. Now let James Webb Young's unique insights help you be more creative in every area of life. Advertising mogul William Bernbach wrote, “James Webb Young is in the tradition of some of our greatest thinkers when he describes the workings of the creative process. The results of many years in advertising have proved to him that the key element in communications success is the production of relevant and dramatic ideas. He not only makes this point vividly for us but shows us the road to that goal.”

10. Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

poor charlie's almanack

Pound for pound one of the most important books I've ever read. To those of you who claim this book is too expensive I say ignorance is even costlier.

Is Our Faulty Memory Really So Bad?

“Though the behaviors…seem perverse, they reflect reliance on a type of navigation that serves the animals quite well in most situations.”
— Daniel Schacter


[This is the first of a four part series on memory. Also see Parts One, Two, and Three on the challenges of memory.]

The Harvard psychologist Daniel Schacter has some brilliant insights into the human memory.

His wonderful book The Seven Sins of Memory presents the case that our memories fail us in regular, repeated, and predictable ways. We forget things we think we should know; we think we saw things we didn't see; we can't remember where we left our keys; we can't remember _____'s name; we think Susan told us something that Steven did.

It's easy to get a little down on our poor brains. Between cognitive biases, memory problems, emotional control, drug addiction, and brain disease, it's natural to wonder how the hell our species has been so successful.

Not so fast. Schacter argues that we shouldn't be so dismissive of the imperfect system we've been endowed with:

The very pervasiveness of memory's imperfections, amply illustrated in the preceding pages, can easily lead to the conclusion that Mother Nature committed colossal blunders in burdening us with such a dysfunctional system. John Anderson, a cognitive psychologist at Carnegie-Mellon University, summarizes the prevailing perception that memory's sins reflect poorly on its design: “over the years we have participated in many talks with artificial intelligence researchers about the prospects of using human models to guide the development of artificial intelligence programs. Invariably, the remark is made, “Well, of course, we would not want our system to have something so unreliable as human memory.”

It is tempting to agree with this characterization, especially if you've just wasted valuable time looking for misplaced keys, read the statistics on wrongful imprisonment resulting from eyewitness miscalculation, or woken up in the middle of the night persistently recalling a slip-up at work. But along with Anderson, I believe that this view is misguided: It is a mistake to conceive of the seven sins as design flaws that expose memory as a fundamentally defective system. To the contrary, I suggest that the seven sins are by-products of otherwise adaptive features of memory, a price we pay for processes and functions that serve us well in many respects.

Schacter starts by pointing out that all creatures have systems running on autopilot, which researchers love to exploit:

For instance, train a rat to navigate a maze to find a food reward at the end, and then place a pile of food halfway into the maze. The rat will run right past the pile of food as if it did not even exist, continuing to the end, where it seeks its just reward! Why not stop at the halfway point and enjoy the reward then? Hauser suggests that the rat is operating in this situation on the basis of “dead reckoning” — a method of navigating in which the animal keeps a literal record of where it has gone by constantly updating the speed, distance, and direction it has traveled.

A similarly comical error occurs when a pup is taken from a gerbil nest containing several other pups and is placed in a nearby cup. The mother searches for her lost baby, and while she is away, the nest is displaced a short distance. When the mother and lost pup return, she uses dead reckoning to head straight for the nest's old location. Ignoring the screams and smells of the other pups just a short distance away, she searches for them at the old location. Hauser contends that the mother is driven by signals from her spatial system.

The reason for this bizarre behavior is that, in general, it works! Natural selection is pretty crafty and makes one simple value judgement: Does the thing provide a reproductive advantage to the individual (or group) or doesn't it? In nature, a gerbil will rarely see its nest moved like that — it's the artifice of the lab experiment that exposes the “auto-pilot” nature of the gerbil's action.

It works the same way with us. The main thing to remember is that our mental systems are, by and large, working to our advantage. If we had memories that could recall all instances of the past with perfect precision, we'd be so inundated with information that we'd be paralyzed:

Consider the following experiment. Try to recall an episode from your life that involves a table. What do you remember, and how long did it take to come up with the memory? You probably had little difficult coming up with a specific incident — perhaps a conversation at the dinner table last night, or a discussion at the conference table this morning. Now imagine that the cue “table” brought forth all the memories that you have stored away involving a table. There are probably hundreds or thousands of such incidents. What if they all sprung to mind within seconds of considering the cue? A system that operated in this manner would likely result in mass confusion produced by an incessant coming to mind of numerous competing traces. It would be a bit like using an Internet search engine, typing in a word that has many matches in a worldwide data base, and then sorting through the thousands of entries that the query elicits. We wouldn't want a memory system that produces this kind of data overload. Robert and Elizabeth Bjork have argued persuasively that the operation of inhibitory processes helps to protect us from such chaos.

The same goes for emotional experiences. We often lament that we take intensely emotional experiences hard; that we're unable to shake the feeling certain situations imprint on us. PTSD is a particularly acute case of intense experience causing long-lasting mental harm. Yet this same system probably, on average, does us great good in survival:

Although intrusive recollections of trauma can be disabling, it is critically important that emotionally arousing experiences, which sometimes occur in response to life-threatening dangers, persist over time. The amygdala and related structures contribute to the persistence of such experiences by modulating memory formation, sometimes resulting in memories we wish we could forget. But this system boosts the likelihood that we will recall easily and quickly information about threatening or traumatic events whose recollection may one day be crucial for survival. Remembering life-threatening events persistently — where the incident occurred, who or what was responsible for it — boosts our chances of avoiding future recurrences.

Our brain has limitations, and with those limitations come trade-offs. One of the trade-offs our brain makes is to prioritize which information to hold on to, and which to let go of. It must do this — as stated above, we'd be overloaded with information without this ability. The brain has evolved to prioritize information which is:

  1. Used frequently
  2. Used recently
  3. Likely to be needed

Thus, we do forget things. The phenomenon of eyewitness testimony being unreliable can at least partially be explained by the fact that, when the event occurred, the witness probably did not know they'd need to remember it. There was no reason, in the moment, for that information to make an imprint. We have trouble recalling details of things that have not imprinted very deeply.

There are cases where people do have elements of what might seem like a “more optimal system” of memory, and generally they do not function well in the real world. Schacter gives us two in his book. The first is the famous mnemonist Shereshevski:

But what if all events were registered in elaborate detail, regardless of the level or type of processing to which they were subjected? The result would be a potentially overwhelming clutter of useless details, as happened in the famous case of the mnemonist Shereshevski. Described by Russian neuropsychologist Alexander Luria, who studied him for years, Shereshevski formed and retained highly detailed memories of virtually everything that happened to him — both the important and the trivial. Yet he was unable to function at an abstract level because he was inundated with unimportant details of his experiences — details that are best denied entry to the system in the first place. An elaboration-dependent system ensures that only those events that are important enough to warrant extensive encoding have a high likelihood of subsequent recollection.

The other case comes from more severely autistic individuals. When tested, autistic individuals make less conflagrations of the type that normally functioning individuals make, less mistaking that we heard sweet when we actually heard candy, or stool when we actually heard chair. These little misattributions are our brain working as it should, remembering the “gist” of things when the literal thing isn't terribly important.

One symptom of autism is difficulty “generalizing” the way others are able to; difficulty developing the “gist” of situations and categories that, generally speaking, is highly helpful to a normally functioning individual. Instead, autism can cause many to take things extremely literally, and to have a great memory for rote factual information. (Picture Raymond Babbitt in Rain Man.) The trade is probably not desirable for most people — our system tends to serve us pretty well on the whole.


There's at least one other way our system “saves us from ourselves” on average — our overestimation of self. Social psychologists love to demonstrate cases where humans overestimate their ability to drive, invest, make love, and so on. It even has a (correct) name: Overconfidence.

Yet without some measure of “overconfidence,” most of us would be quite depressed. In fact, when depressed individuals are studied, their tendency towards extreme realism is one thing frequently found:

On the face of it, these biases would appear to loosen our grasp on reality and thus represent a worrisome, even dangerous tendency. After all, good mental health is usually associated with accurate perceptions of reality, whereas mental disorders and madness are associated with distorted perceptions of reality.

But as the social psychologist Shelley Taylor has argued in her work on “positive illusions,” overly optimistic views of the self appear to promote mental health rather than undermine it. Far from functioning in an impaired or suboptimal manner, people who are most susceptible to positive illusions generally do well in many aspects of their lives. Depressed patients, in contrast, tend to lack the positive illusions that are characteristic of non-depressed individuals.

Remembering the past in an overly positive manner may encourage us to meet new challenges by promoting an overly optimistic view of the future, whereas remembering the past more accurately or negatively can leave us discouraged. Clearly there must be limits to such effects, because wildly distorted optimistic biases would eventually lead to trouble. But as Taylor points out, positive illusions are generally mild and are important contributors to our sense of well-being. To the extent memory bias promotes satisfaction with our lives, it can be considered an adaptive component of the cognitive system.

So here's to the human brain: Flawed, certainly, but we must not forget that it does a pretty good job of getting us through the day alive and (mostly) well.

This is the first of a four part series on memory. Now check out Parts One, Two, and Three on the challenges of memory.


Still Interested? Check out Daniel Schacter's fabulous The Seven Sins of Memory.

Why Nations Fail

An interesting opinion piece by Thomas Friedman in the New York Times on the new book Why Nations Fail, co-authored by the M.I.T. economist Daron Acemoglu and the Harvard political scientist James A. Robinson.

The more you read it, the more you appreciate what a fool’s errand we’re on in Afghanistan and how much we need to totally revamp our whole foreign aid strategy. But most intriguing are the warning flares the authors put up about both America and China.

The book argues the key differentiator between countries is their institutions. Nations fail when instituions concentrate power in the hands of only a few.

The authors write

Inclusive economic institutions that enforce property rights, create a level playing field, and encourage investments in new technologies and skills are more conducive to economic growth than extractive economic institutions that are structured to extract resources from the many by the few.

“Inclusive economic institutions, are in turn supported by, and support, inclusive political institutions,” which “distribute political power widely in a pluralistic manner and are able to achieve some amount of political centralization so as to establish law and order, the foundations of secure property rights, and an inclusive market economy.”

Back to Friedman in the Times

The lesson of history, the authors argue, is that you can’t get your economics right if you don’t get your politics right, which is why they don’t buy the notion that China has found the magic formula for combining political control and economic growth.

“Our analysis,” says Acemoglu, “is that China is experiencing growth under extractive institutions — under the authoritarian grip of the Communist Party, which has been able to monopolize power and mobilize resources at a scale that has allowed for a burst of economic growth starting from a very low base,” but it’s not sustainable because it doesn’t foster the degree of “creative destruction” that is so vital for innovation and higher incomes.

“Sustained economic growth requires innovation,” the authors write, “and innovation cannot be decoupled from creative destruction, which replaces the old with the new in the economic realm and also destabilizes established power relations in politics.”

“Unless China makes the transition to an economy based on creative destruction, its growth will not last,” argues Acemoglu. But can you imagine a 20-year-old college dropout in China being allowed to start a company that challenges a whole sector of state-owned Chinese companies funded by state-owned banks? he asks.

Afghanistan was a fool's errand

The post-9/11 view that what ailed the Arab world and Afghanistan was a lack of democracy was not wrong, said Acemoglu. What was wrong was thinking that we could easily export it. Democratic change, to be sustainable, has to emerge from grassroots movements, “but that does not mean there is nothing we can do,” he adds.

As for America

Acemoglu worries that our huge growth in economic inequality is undermining the inclusiveness of America’s institutions, too. “The real problem is that economic inequality, when it becomes this large, translates into political inequality.”

Continue Reading

Still curious? Looks like Why Nations Fail: The Origins of Power, Prosperity, and Poverty would be an interesting read.

What to read next?
Jared Diamond — How Do Great Societies Collapse?
Documentary: Guns Germs and Steel
Why Societies Collapse
Is America A New Rome

Two Strategies to Outsmart Liars

We all want to know when someone is lying. The problem is that cues to deception are typically faint and unreliable.

One way to try to ascertain whether someone is lying is to actively elicit and amplify verbal and nonverbal cues to deceit. How?

The short answer is by increasing the cognitive load on the possible liar.

Despite its impressive abilities, the human mind has a limited capacity for how much thinking it can handle at any time. If you can increase the cognitive burden, it is possible to compromise normal information processing.

Increasing the cognitive burden makes it harder for liars to lie because this affects liars more then truth-tellers and results in more and, importantly, more blatant detectable behavioral clues to deception.

Here are two strategies to increase the cognitive burden on the potential liar:

One intriguing strategy is to demand that suspects tell their stories in reverse. Narrating backward increases cognitive load because it runs counter to the natural forward sequencing of events. It also disrupts the normal reconstruction of past events using mental schemas, which give coherence to isolated events. Since liars already have depleted cognitive resources, they should find this unfamiliar mental exercise more taxing than truth tellers do—which should increase the likelihood that they will somehow betray themselves. And in fact that’s just what happens in the lab: Vrij ran an experiment in which half the liars and truth tellers were instructed to recall their stories in reverse order. When observers later looked at videotapes of the complete interviews, they detected more clues to deceit in the liars who were burdened by this mental task. Indeed, observers correctly spotted only 42 percent of the lies in the control condition—way below average, which means they were hard to spot—but a remarkable 60 percent when the liars were compromised by the reverse story telling.

Another strategy for increasing liars’ cognitive burden is to insist that suspects maintain eye contact. When people have to concentrate on telling their story accurately—which liars must, more than truth tellers—they typically look away to some motionless point, rather than directly at the conversation partner. That’s because keeping eye contact is distracting, and makes narration more difficult. Vrij also tested this strategy in the lab, and again observers detected more clues to deceit in those who were required to look the interrogator in the eyes.

Source and Outsmarting the Liars: Toward a Cognitive Lie Detection Approach.

Shaun McNiff: Mistakes and the Creative Process

I came across this passage in Shaun McNiff’s Trust the Process: An Artist’s Guide to Letting Go that speaks to the tension between fear of making mistakes and the necessity of them in the creative process.

When asked for advice on painting, Claude Monet told people not to fear mistakes. The discipline of art requires constant experimentation, wherein errors are harbingers of original ideas because they introduce new directions for expression. The mistake is outside the intended course of action, and it may present something that we never saw before, something unexpected and contradictory, something that may be put to use.

Management, generally by its nature and incentive system, attempts to remove variability and thus mistakes. Yet mistakes are a necessary component of creativity.

Fear also plays an important role in the creative process and how we come up with creative insights.


David Foster Wallace: The Future of Writing In the Age of Information

David Foster Wallace remains both loved and hated. His wisdom shows itself in argumentative writing, ambition, and perfectionism, and perhaps one of the best, most profound, commencement addresses ever. He's revered, in part, because he makes us think … about ourselves, about society, and about things we don't generally want to think about.

In this interview from May of 1996 with Charlie Rose, Wallace addresses “the future of fiction in the information age.” His thoughts highlight the difficulties of reading in an age of distraction and are worth considering in a world where we often prefer being entertained to being educated.

On commercial entertainment for the masses and how it changes what we seek, Wallace comments:

Commercial entertainment — its efficiency, its sheer ability to deliver pleasure in large doses — changes people’s relationship to art and entertainment, it changes what an audience is looking for. I would argue that it changes us in deeper ways than that. And that some of the ways that commercial culture and commercial entertainment affects human beings is one of the things that I sort of think that serious fiction ought to be doing right now.


There’s this part that makes you feel full. There’s this part that is redemptive and instructive, [so that] when you read something, it’s not just delight — you go, “Oh my god, that’s me! I’ve lived like that, I’ve felt like that, I’m not alone in the world …

What's tricky for me is … It would be one thing if everybody was absolutely delighted watching TV 24/7. But we have, as a culture, not only an enormous daily watching rate but we also have a tremendous cultural contempt for TV … Now TV that makes fun of TV is itself popular TV. There’s a way in which we who are watching a whole lot are also aware that we’re missing something — that there’s something else, there’s something more. While at the same time, because TV is really darn easy, you sit there and you don't have to do very much.

Commenting on our need for easy fun he elaborates

Because commercial entertainment has conditioned readers to want easy fun, I think that avant garde and art fiction has sort of relinquished the field. Basically I don't read much avant garde stuff because it's hilaciously un-fun. … A lot of it is academic and foisted and basically written for critics.

What got him started writing?

Fiction for me, mostly as a reader, is a very weird double-edged sword — on the one hand, it can be difficult and it can be redemptive and morally instructive and all the good stuff we learn in school; on the other hand, it’s supposed to be fun, it’s a lot of fun. And what drew me into writing was mostly memories of really fun rainy afternoons spent with a book. It was a kind of a relationship.

I think part of the fun, for me, was being part of some kind of an exchange between consciousnesses, a way for human beings to talk to each other about stuff we can’t normally talk about.

​​(h/t Brainpickings)

William McKnight: The Basic Rule of Management that Propelled 3M

In 1907 William L. McKnight joined Minnesota Mining and Manufacturing Co (3M) as an assistant bookkeeper. He rose quickly through the ranks and became president in 1929 and chairman of the board in 1949. His timeless management philosophy laid out below, encouraged 3M management to “delegate responsibility and encourage men and women to exercise their initiative.”

The Basic Rule of Management

As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women, to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way.

Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs.

Management that is destructively critical when mistakes are made kills initiative. And it's essential that we have many people with initiative if we are to continue to grow.

“If you put fences around people, you get sheep. Give the people the room they need.”

— William L. McKnight


Still curious? Pair with David Packard's 11 Simple Rules For Getting Along With Others.


Philosopher Kahlil Gibran on The Tension Between Reason and the Silence Required for Thinking

Kahlil Gibran (1883–1931) published his masterpiece, The Prophet, in 1923. The work endures as a timeless meditation on the art of living. Gibran's thoughts on love and giving offer a glimpse into his genius.

Reminding one of the struggle most of us have with the three marriages, Gibran illuminates the beautiful struggle that exists within all of us between reason and passion.

Your soul is oftentimes a battlefield, upon which your reason and your judgment wage war against your passion and your appetite.
Would that I could be the peacemaker in your soul, that I might turn the discord and rivalry of your elements into oneness and melody.
But how shall I, unless you yourselves be also the peacemakers, nay, the lovers of all your elements.

Your reason and your passion are the rudder and the sails of your seafaring soul.
If either your sails or your rudder be broken, you can but toss and drift, or else be held at a standstill in mid-seas.
For reason, ruling alone, is a force confirming; and passion, unattended, is a flame that burns to its own destruction.
Therefore let your soul exalt your reason to the height of passion, that it my sing.
And let it direct your passion with reason, that your passion may live through its own daily resurrection, and like the phoenix rise above its own ashes.

As for his final piece of advice, on the tension between reason and passion, Gibran suggests something we should all take to heart, “rest in reason and move in passion.”

Just as there is a required solitude in leadership, there is a silence required for thinking. Increasingly, however, we use devices from iPhones and Echo's to entertain and reduce our ability to be present with ourselves. When it comes to Speaking and Talking, Gibran offers:

You talk when you cease to be at peace with your thoughts;
And when you can no longer dwell in the solitude of your heart you live in your lips, and sound is a diversion and a pastime.
And in much of your talking, your thinking is half murdered.
For thought is a bird of space, that in a case of words may indeed unfold its wings but cannot fly.

There are those among you who seek the talkative through fear of being alone.
The silence of aloneness reveals to their eyes their naked selves and they would escape.
And there are those who talk, and without knowledge or forethought reveal a truth which they themselves do not understand.
And there are those who have the truth within them, but they tell it not in words.

The Prophet goes on to explore love, marriage, children, crime and punishment and so much more. Complement with German Philosopher Arthur Schopenhauer on the Dangers of Clickbait.

An FBI Agent Reveals 5 Steps To Gaining Anyone’s Trust

I had an opportunity to ask Robin Dreeke a few questions. Robin is in charge of the Federal Bureau of Investigation’s elite Counterintelligence Behavioral Analysis Program and the author of It’s Not All About Me.

Robin combines science and years of work in the field to offer practical tips to build rapport and establish trust. In this brief interview he discusses building relationships, how to approach someone you don't know and ask for a favor, and the keys to establishing trust.

A lot of people are interested in strengthening and furthering relationships. How can people do this?

This is the most important aspect of everything we do in life. I'm going to give some light science behind each of my answers but to me it just explains the subjective simple explanations behind naturally great trusting relationships.

Both anecdotal (evidence) as well as science supports the fact that the greatest happiness is found in positive social interactions and relationships. The simplest answer to this is to “make it all about them.” Our brain rewards us chemically when we are able to talk and share our own views, priorities, and goals with others… long term, short term, etc. Our brain also rewards us when we are unconditionally accepted for who we are as a human being without judgement.

Both of these concepts are genetically coded in each of us (to varying degrees) because of our ancient survival instincts (ego-centrism) as well as our need to belong to groups or a tribe (tribal mentality for survival and resources). When you put these simple concepts together the answer is simple to understand, but oftentimes difficult to execute…. Speak in terms of the other person's interests and priorities and then validate them, their choices, and who they are non-judgmentally. Some people do this naturally, for the rest of us you can build this skill and it eventually becomes second nature.

Trust is a foundation to most situations in life. How can we develop trust? What are the keys?

I can only answer from my own background and experience because trust is a very difficult thing to measure and define and each individual's definition can vary and our brain takes in much more than verbal information when determining trust. For me and what I teach I start with what I said in question one. Trust first starts with a relationship where the other person's brain is rewarding them for the engagement with you by doing what I outlined above.

Part two of my trust process is to understand the other person's goals and keeping their goals and priorities on the top of my list of goals and priorities. By making the other person's goals and priorities yours, trust will develop. Over time (some people faster than others) a need to reciprocate the kindness and relationship will build. In other words, trust is built faster and stronger when there is no personal agenda.

What's the best way to approach someone you don't know and ask them for a favor?

Using sympathy and seeking help is always the best. If you can wrap the help / favor you are looking for around a priority and interest of the individual you are engaging, the odds of success increase. Add social proof (i.e., others around you helping already or signed a petition etc.) and you increase it even more. Again, focus on how you can ask a favor while getting their brain to reward them for doing so.

What are some strategies to build rapport while giving a talk, presentation, or interview?

Ego Suspension / self-deprecating humor… Make it all about them! How is the information you are chatting about going to benefit them? Talk about the great strengths and skills they each have already and that all you hope to do is to have them understand their strengths even better and be able to pass them on to others more effectively if they want to. Validate every question and opinion non-judgmentally. If you don't happen to agree, simply ask “that's a fascinating / insightful/ thoughtful opinion… would you mind helping me understand how you came up with it?” Again, their brain will reward them on multiple levels for this.

I suspect you spend a lot of time trying to figure out if people are manipulating you or the situation? Can you talk about this? How can you tell when people are attempting to manipulate you?

I'll start by saying I don't like the word manipulate. The word tends to objectify people and removes the human being from the equation. When people feel they are objects, trust will not be built. I tend to not think of anyone trying to manipulate me but at times a very self-serving agenda becomes evident. This is what manipulation generally is…. a self-serving agenda where the other person feels used with no reciprocity. When I notice that there may be an overabundance of a self-serving agenda (manipulation) I don't judge the person negatively. I try to explore two areas in order to understand them better. (go back to my first answers here… this process begins to build a relationship and trust :)) I try to understand what their objective is and why that is their objective. What are they trying to achieve, etc. I will also attempt to understand why they felt a certain way of communicating with me would be effective for them in the situation. I tend to ask questions to help them think about how they might be more successful in their objectives using other methods… such as I outlined above. In other words, help them achieve whatever objective with me they had…. because wasn't that their goal after all? :) See… keep it always coming back to them.

If you had to give a crash course in building a relationship with someone, what are the top 5 things people need to do? What carries the bulk of the freight so-to-speak?

1) Learn… about their priorities, goals, and objectives.
2) Place… theirs ahead of yours
3) Allow them to talk…. suspend your own need to talk.
4) Seek their thoughts and opinions.
5) Ego suspension!!! Validate them unconditionally and non-judgmentally for who they are as a human being.

If you haven't already, check out Robin's Ten Techniques for Building Quick Rapport With Anyone.