Liquor, Ladies, & Leverage OR The Iroquois Traditions

I've written in the past about the infinite game and the importance of staying in the game. Business is an infinite game not a finite game. Stewards play the infinite game. A game where there is no clear time horizon. Charlie Munger (Berkshire Hathaway) and Yvon Chouinard (Patagonia) check the boxes for being good stewards.

Munger and Chouinard have always been focused on survival. Berkshire Hathaway and Patagonia are focused on sustaining incremental growth so the power of time is on their side. The great leaders of business allow time to be an ally.

What's amazing to me as I learn about Munger & Chouinard, they are both playing the infinite game but come from COMPLETELY different directions to get to the same result.

BERKSHIRE HATHAWAY APPROACH: WHAT NOT TO DO

In some of my readings this past week, Munger was focused on what NOT to do. Munger states, "smart men go broke in three ways: Liquor, Ladies, & Leverage." Munger continues, "more money has been lost reaching for yield than at the point of a gun. Cash ensures your survival. You have to stay in the game long enough to get lucky."

Munger is acutely aware of what NOT to do. Berkshire's track record proves they respect the landmines of of too much debt and the pitfalls of human nature. Berkshire Hathaway stays in the game and hangs around the hoop to pick up the rebounds.

PATAGONIA: CREATE EMOTIONAL CONNECTION TO THE FUTURE

Yvon Chouinard, founder of Patagonia, has always been a free spirit. He is a man connected with nature and would much rather be surfing than stuck in a board room. As he states in his autobiography, he's a reluctant businessman.

Chouinard writes about survival: "The sooner a company tries to be what it is not, the sooner it tries to 'have it all,' the sooner it will die."  I think Chouinard's point here validates the importance of having a vision and values so it's clear where one is going and what the spirit of one's organization is so it is possible to have clarity of when one "tries to be what it is not."

Chouinard continues, "We had to look to the Iroquois and their seven-generation planning and not to corporate America, as models of stewardship and sustainability. As part of their decision process, the Iroquios had a person who represented the seventh generation in the future… we had to make all our decisions as though we would be in business for a hundred years." Corporate America plays the finite game while the Iroquois played the infinite game.

Imagine having someone at your leadership meeting focused on the operations in the year 2123!… how would that change your decision making?

Munger and Chouinard are coming from different angles, but they are certainly building organizations for the infinite game.

Which approach resonates most for you? Are you more of a Munger thinker or a Chouinard thinker?

I love business and leadership because there are so many different ways to approach. It is an art. Chouinard and Munger are certainly artists of their crafts.

Onward,
Matt