Model #1: Betting on newspapers in two-newspaper town
Model #2: Low priced item + global marketing advantage
Model #3: The cancer surgery formula – GEICO : cut all cancer parts and leave only good parts
Model #4: think in term of decision tree
Model #5: advantage of scale —> enable company to do complicated things in more and more volumes for cheaper price
Sam Walton had a very interesting competitive strategy in early days. He was like a prizefighter who wanted a great record so he can be in the finals and make a big TV hit. He went out and fought 42 palookas. And the result was knockout, knockout, and knockout 42 times.
Jack Welches : To hell with it, we are going to be #1 or #2 in every field we are in or we are going to be out. I dont care how many people I have to fire and what I have to sell. We are going to be #1 or #2 or out.
Figure out where you have an edge – stay there (Circle of competence)
It’s obvious that winner has to bet very selectively. When you get a few, you really need to load up. (Pari-mutuel system)
“Well, I am like a guy who is prospecting for gold along the banks of the Sacramento River in 1849. With a little intelligence, I can reach down and pick up big nuggets of gold. And as long as I can do that, I am not going to let any people in my department waste scarce resources in placer mining”. And that’s the way Thomas Hunt Morgan got through life.
Einstein : Everything should be made as simple as possible, but no more simple.
Keynes: it’s not bringing in the new ideas that’s so hard. It’s getting rid of the old ones.
Better roughly right than precisely wrong
If a thing can’t go on forever, it will eventually stop.
“My God, they are purple and green. Do fish really take these lures?”, the fish tackle saleman said “ Mister, I dont sell to fish”.
We can consider bass fishing. You can go on the bass fish tours and catch basses and win prizes. Or you can go into the business selling tackle and giving advice to bash fishermen. They are two different businesses. The people who chose the later wouldn’t be very good at catching bass. That’s how Warren and I view things. We want to win the bass fishing tour. We are not interested in selling tackle, we are interested in catching bass.
Spend each day trying to be a little wiser than you were when you woke up.
“To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world.
One of the advantages of a fellow like Buffett is that he automatically thinks in terms of decision trees and the elementary math of permutation and combination.
Carl Braun’s Five Ws: Who, What, Where, When, and Why – you have to tell who was going to do what, when, where, and why. People will understand better, consider it more important, and will be more likely to comply if you always tell them why.
“Are any muskies caught in this lake?” asked Hoskins
“More muskies are caught in this lake than in any other lake in Minesota. This lake is famous for muskies.”
“How long have you been fishing here?”
“How many muskies have you caught?”
It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. “It’s the strong swimmers who drown.”
“I discovered at Harvard that simple is always better than complicated” – Jorge Paulo
The safest way to try to get what you want is to try to deserve what you want. It is such a simple idea. It is the golden rule. You want to deliver to the world what you would buy if you were on the other end.
You must have confidence to override people with more credentials than you whose cognition is impaired by incentive-caused bias or some similar psychological force that is obviously present. Nevertheless, there are also cases where you have to recognize that you have no wisdom to add – and that your best course is to trust some expert.