Abraham Maslow famously said in 1966,
“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”
Charlie Munger (better known as the partner of Warren Buffett at Berkshire Hathaway) refers to this as ‘Man with a Hammer Syndrome’.
What can this mean to you? It may result in you receiving advice tailored to the skills of your advisor rather than the needs of you and your business.
Let’s say that you have a business challenge or opportunity.
To a lawyer it may look like a contract issue; to an accountant, a structure or tax issue, to an M&A specialist, a business sale transaction waiting to happen, to a financial advisor, a retirement income stream sufficiency issue, to an HR specialist, a staffing issue.
Munger has given many talks lamenting the lack of a multidisciplinary approach in academia, where each faculty overuses their own models and underutilises the important models from other disciplines. He has been a lifelong advocate of the ‘multiple mental models’ approach, sometimes referring to it as a latticework of the most important models taken from key disciplines. He credits it as a key reason behind his success, despite not formally studying the disciplines from which he borrows.
The models he uses include the redundancy/backup system from engineering, the compound interest model from mathematics, the breakpoint/tipping point from science, cognitive misjudgements from psychology and network effects from IT. By taking the multidisciplinary approach, it often totally changes the perspective, revealing second order or ‘ripple’ effects.
George Bernard Shaw said that ‘every professional is a conspiracy against the laity. Tim Harford argued the following in his 2006 book The Undercover Economist: “… doctors, actuaries, accountants and lawyers maintain high wages through… erecting virtual ‘green belts’ to make it hard for competitors to set up shop. Typical virtual green belts include very long qualification periods and professional bodies that give approval only to a certain number of candidates per year. Professional bodies put forth to protect us from ‘unqualified’ professionals preserve the high pay rates of the ‘qualified’ to whom we are directed.”
At Hamilton Rich we acknowledge that we do not have every skill but to have a confidential discussion, please contact