Obtaining Necessary Knowledge

The book Poor Charlie’s Almanack is about the
life and beliefs of Charles T. Munger, who was once
reported richest man in the world. He died in
November of last year at the age of ninety-nine and had a
net worth of 2.6 billion dollars. He was cochairman of
Berkshire Hathaway and a partner with Warren E. Buffett.
The book includes Charlie’s business and life philosophy
along with reprints of many of his speeches he gave at
college commencements and other events. We are telling
you about this book because his philosophy expresses our
similar view about what you should know and practice in
your management of the purchasing profession or any other
business activity.

Charlie Munger was a well-educated lawyer who also
studied engineering, finance, economics, history,
mathematics, psychology, accounting, history, and art. He
believed that knowledge of all these subjects and others
was important to help conduct business and solve associated
problems. He referred to this process as using
interdisciplinary knowledge. This idea of applying the
knowledge that you learn from many other subjects helps
you buy better, manage, and solve purchasing and supply
related problems.

Charlie Munger read widely. He read the great books
written by the scientists, philosophers, and authors from the
earliest history to the present. They included Aristotle,
Galileo, Newton, and Darwin, among many others. He
particularly appreciated reading the writings of Benjamin
Franklin.

He felt that the knowledge and use of psychology was
especially useful in conducting relationships with other people
in business, friends, and family. He discussed how sales
and marketing uses psychology to influence buyers. Charlie’s
lectures and writings illustrated how he used psychology in
dealing with large companies, which must have contributed
to his phenomenal business success.

The book lists twenty-five psychological tendencies that
every person who deals with others should know. For
example, one psychological tendency is illustrated when
someone gives a gift or punishes someone, the tendency is
to do the same to them in return. Knowledge of these and
the other human nature tendencies helps when negotiating
or doing business.