Supported by Greenhaven Road Capital, finding value off the beaten path.
This was originally published on Medium. Moving here for linking convenience.
In episode 55 Jocko Willink answered “questions from the interwebs” and there were 3 things that stuck out.
- Firm goals, flexible means.
- Margin of safety in battle and investments.
- Feel the real winds (get out of the C-suite).
1/ Firm goals, flexible means.
Jocko calls this “commander’s intent.” The big goal.
If you want to be healthy (the goal), it doesn’t matter that much if you run, lift gym weights, life home weights, lift body weights or do jiu-jitsu (the means). If you want to be wise (the goal), it doesn’t matter if you listen to podcasts, audiobooks, take college courses, enroll in MOOCs, or read physical books (the means).
It’s better if you are actually flexible on the means. As Adam Carolla says, life isn’t like putting together an IKEA nightstand.
Jocko, for example, now has his own line of tea. Not what you expect from a former Navy SEAL. He also runs events, writes books, hosts a podcast, and creates merchandise. Those are all – wide ranging – means that lead to a singular goal.
In Grit, a book about how people successfully achieve things, Angela Duckworth writes;
“Ideally, even if you’re discontinuing one activity and choosing different lower-order goals, you’re still holding fast to your ultimate concern.”
Duckworth’s research suggests firm goals, flexible means. It looks like this:
2/ Margin of safety.
A listener writes in that he was driving home with his wife and kid in the car when a drunkard stepped out in front of him. The imbiber hooted and hollered at the car. After a minute of this, the driver went around the man. He wanted to know if he did the right thing. Was he was teaching his son the wrong lessons in not standing up to the drunk?
Yes, Jocko says, you did the right thing.
Here’s an incomplete list of the things that could have gone wrong if the driver stepped out of his car. The drunk is sick and a two hit fight kills him. The driver is charged with manslaughter, hires a lawyer, pays for legal fees, borrows money, and ultimately cleared but in debt.
To engage in a street fight you need a margin of safety. Do the good outcomes outweigh the bad?
The same idea applies to investing. A street fight won’t be clean choreography (like in the movies), and an investment won’t just go up and to the right no matter what you hear on TV. Joel Greenblatt wrote that you start with MOS in mind.
“A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable, and rapidly changing world.” Seth Klarman
This idea applies at the collective level too. In With The Old Breed, author E.B. Sledge wrote about the battle of Peleliu and — with hindsight — the invasion was a terrible idea. Did McArthur really need this island to secure his flank? Was it worth ten thousand American casualties?
Before you engage in street fights, investments, or battles, ask if 10% goes wrong is this still worth it? What about 50%?
3/ Leaders must feel the winds of the real world.
One of Jocko’s roles during his military career was Admiral’s Aide. It wasn’t his favorite job, but he learned from the Admiral to focus on the people on the ground. In planning meetings, the admiral would ask, “how does this affect the guys in the field?”
The best leaders answer this question.
- “Our IT manager said, ‘Well, that guy is always the last to know.’ He, like most CEOs, is in the center of a fortified palace, and news from the outside has to percolate through layers of people from the periphery where the action is.”
- “We need to expose ourselves to our customers…We need to expose ourselves to lower-level employees…We must invite comments even from people whose job is to constantly evaluate and critique us, such as journalists and members of the financial community.”
- You have to spend more time with people who spend their time ‘outdoors,’ wrote Grove, “where the winds of the real world blow in their faces.”
Jocko points out that it’s because the people in the field that the people are in the meeting. If plumbers don’t plumb, salesmen don’t sell, or soldiers don’t soldier on, nothing else matters.
Being out there also gives information and builds a deep understanding. You can’t enter planning or high-level meetings, says Jocko, and demand change. No. “The way you get ready for it, is to have ammunition.” Jocko says, “You gotta have your ducks in a row.”
That means knowing what it’s like where the winds of the real world blow. You have to know your BATNA. You have to bring options to the table. You have to be able to answer the five whys. Being there helps you do these things.