Ep 382 | To a Man with a Hammer, Everything Looks Like A Nail

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Today I want to talk about a phrase that I've heard from none other than amazing investor, great mind Charlie Munger, and that phrase is, "To a man with a hammer, everything looks like a nail." To a man with a hammer, everything looks like a nail. Charlie made this concept pretty popular. What he was talking about is this idea that relying too heavily on a single tool or a single perspective or a single solution Doing that sort of thing when they're not the best fit can lead to cognitive bias, could lead to the over-application of familiar skills and, and/or approaches to different problems, and it can lead to failure as a result. The Man with the Hammer technicality. It occurs when someone Specifically, or especially a specialist, I should say, becomes overconfident in their expertise and defaults to using their preferred method or their preferred tool to solve a wide range of problems, even when that sort of method or strategy or tool is not appropriate. So whether it's in business or in investing or in decision-making, this sort of bias this sort of hammer can lead to narrow thinking. And when you have narrow thinking, it could potentially lead to different poor outcomes because it limits the ability to see problems from different angles. And if you can't see problems from different angles, it's tough to find the best solution for a situation. Charlie would tell you that successful decision-making requires a broad mental toolkit, something that draws on various disciplines and different approaches to complex problems. That's what it's going to take to be effective. So, we've got to broaden our mental toolkit. So many of us, you know, many of us here at No Days Off and the No Days Off Nation, we have spent years in a specific field or industry or in a specific role. And odds are we've mastered elements of that role or components of that industry. We've mastered it because we've spent so much time and energy developing the skill set. However, what Charlie would tell you is that if you rely solely on that, that focused skill set you might very much look like this man with a hammer. And again, to a man with a hammer, everything looks like a nail. In other words, every problem might look the same. Let's give some business examples, right? And then we're going to talk about how to overcome this. We've talked about this company here at No Days Off a number of times, and that company's Kodak. Many of you may remember Kodak and the digital camera. The hammer in this particular case, Kodak was a, was a leading player in the traditional film photography world, and it was very, very deeply invested in film-based technology. Kodak was everything film. That was the hammer. Now, the nail, despite inventing the first digital camera in 1975, Kodak's leadership kept pushing on film because film was their core business. They could not fully embrace digital because that would mean that they'd have to get away from their entire framework for profitability. Remember, all of their profitability revolved around film. So in order for them to embrace digital, they'd have to shift, and they were unwilling to do that. What was the outcome? Well, Kodak's reluctance really to adapt, it ultimately led to their decline. And digital photography eventually became a dominant medium. See, they applied the hammer of their film business to the nail of digital photography, and they missed a massive technological advance or tech technological change. Kodak, like some of the other companies we're about to talk about, could have won this game. They were in, they were in different verticals like the cloud space that could have helped them win this digital game, but they relied so heavily on print and so heavily on ink. The hammer and the nail. Maybe another good example of this is BlackBerry. You may remember BlackBerry. Some of you may, may not, may not have had a BlackBerry, BlackBerry, but I'm guessing a lot of the No Days Off Nation remembers their BlackBerrys fondly. I miss mine for sure. And BlackBerry, their response to touchscreen phones is a good example of hammer and nail. The hammer— BlackBerry had built its success on secure email and these physical keyboards. Like, if you remember your BlackBerry, it had physical buttons on it. And BlackBerry became a dominant player in the, in the smartphone market. I think it had 70-75% market share at one time. Now, the nail was when Apple released the iPhone and it had a touchscreen and it had this, this app ecosystem. BlackBerry, though, chose to stick to its hardware-centric, keyboard-focused approach. The leader of BlackBerry was seen like he was— he showed up lots of places trying to say, hey, this touchscreen is flawed. And people wanna feel, you know, the keys and we're gonna win this. Well, that mentality led to BlackBerry failing to adapt to changing customer preferences. Sticking with the familiar hammer, which was the physical keyboard and the enterprise email, led to BlackBerry being overtaken by the touchscreen smartphone from Apple, then eventually from Android. So the hammer was the physical keyboard and the secure email. The nail was, was this new touchscreen app ecosystem. BlackBerry tried to approach that new touchscreen app ecosystem with its, you know, firm stance on being hardware-centric and keyboard-focused, and it didn't serve them very well. The last one I'll mention just for sake of conversation, I think it's quick, Uh, General Motors and electric cars. The hammer, GM, was built on gasoline-powered vehicles. That's where all of its effort was at. The nail, electric vehicles, started to gain traction. So General Motors really downplayed their significance, relied on their, their expertise in gas-powered vehicles. The outcome, Tesla and a bunch of other automakers started gaining really significant market share in the electric car segment. And GM is still trying to catch up. The hammer was its— the business it knew, and the nail was this innovation, this change. GM's still trying to overcome that. So, I think you get the point around the hammer and nail. Now, what do we do as business owners, as entrepreneurs, to make sure that we don't suffer in that we're leveraging a hammer and everything looks like a nail? Right? You got to broaden your mental toolkit. How do you go about doing that? Number one, I think you've got to take a— or develop a multidisciplinary thinking process. So what do you do? Charlie Munger would tell you, you got to learn across fields. You've got to study other disciplines— psychology, economics, math, physics, history, whatever it may be. You've got to expose yourself to a wide range of subjects. So what would my guidance be to you? If you're gonna get some training or go to some conferences in the next 12 months, let's say, maybe attend some things that are outside your industry. Maybe go to something that's entirely different or new, something that's gonna give you a fresh perspective. In addition, maybe read some different things. Charlie Munger was an avid reader, and he did, you know, he really spent deep dives into subjects that he knew, but he dove even deeper in these other ideas, these things he didn't know. He regularly read books and articles from different fields. The idea was to expand his perspective. You could do the same. In addition, if you wanna broaden your mental toolkit, you've gotta work on broadening your understanding of different mental models. We've talked a ton about mental models, inversion, understanding opportunity cost, first principles thinking. Bottom line, mental models are these frameworks that help you understand and approach the world. So leverage or figure out how to better use these mental models so that you're able to better analyze different real-life scenarios outside the domains that you may know. You got to stay open-minded to, to changing your mind from time to time. Right? I think we've got to avoid at all costs confirmation bias. In other words, we got to seek out information that's going to contradict our own thinking. So, if you're looking at a situation and you think you have a solution for that situation, before you take action, find someone to challenge your current thinking, somebody that's going to contradict it, a black hat. Avoid the trap of only seeing what confirms your views. We need somebody else to challenge that. The last thing that comes to mind for me, adopt long-term thinking. Just as you would in investing, we gotta compound our knowledge. As you continue to learn, your ability to make well-rounded decisions grows exponentially. So, the more experience you get, the more exposure you get to decision-making or making decisions within your business or world, The more you learn, the better you're going to be. Make decisions that are benefiting your long-term goals rather than, than chasing short-term gains. In other words, think in terms of sustainability. These are the things we've got to do to broaden our mental toolkit. So in incorporating these practices in your routine, you're going to expand that toolkit and it's going to give you a more flexible framework for decision-making, which is exactly what our buddy Charlie advocates for. So the focusing question for you today: where are you showing up like a man with a hammer? Where's everything looking like a nail for you? If in fact you're showing up this way, and we all probably are doing this from time to time, how do you change that? How do you take action today so that you broaden your mental toolkit, you have a wider range of understanding and knowledge, and you don't rely so heavily on a single tool or single track or solution or perspective, getting over your, you know, cognitive bias or overapplying these familiar skills that you have. What do you do? How can you do that? And I think some of the things we talked about here today are probably action steps you could take. That's all I have for you today. It's No Days Off Podcast. Thank you so much for listening. And remember, every single day brings a new opportunity to get better. So let's get after it.