Inverting a problem to find solutions is a concept I heard from Charlie Munger. Inspired by the mathematician Carl Jacobi, he said:
Invert, always invert: Turn a situation or problem upside down. Look at it backward. What happens if all our plans go wrong? Where don't we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead - through sloth, envy, resentment, self-pity, entitlement, all the mental habits of self-defeat. Avoid these qualities and you will succeed. Tell me where I'm going to die, that is, so I don't go there. - Charlie Munger
Warren Buffett has a similar take:
Charlie and I have not learned how to solve difficult business problems. What we have learned is to avoid them. - Warren Buffett
Munger says that the best way to achieve success is by avoiding failures. He implies that it is not brilliance that made Berkshire Hathaway succeed. They consistently avoided stupidity.
It is easier to avoid failures, than to strive for success directly.
Looking at problems and scenarios from a different perspective helps us to identify obstacles in a better way.
Step-by-step guide to inversion
We can summarize inverted method to problem solving as below:
Let's look at some real-life examples:
How to drive safe? By avoiding accidents. How do you avoid accidents? Here is how:
Want a good life? Avoid what could cause misery.
How do you make your customer happy? By preventing occurrence of mistakes. So, think how you can prevent them.
Want to achieve something? Try to understand what is preventing you from achieving that.
Want to solve a social problem? Try to understand what is the obstacle to solving the problem.
Applicability in investing
Take your favorite investment idea and think like this:
This helps you to think through what all could go wrong.
Another way to do this is to think "why this is not a good investment?".
Keep these things also in mind:
Success in investing is more about avoiding losers, than finding winners.
This article was originally published in my blog My Investing Life.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.