Using Inversion (Action Sheet)

Technique Name: Negative Filters

Origin: Using Inversion.

Technique Goal: The original blog post presents a practicable instance of Charlie Munger's ‘inversion’ technique. Often, you do not want to get involved with troublesome people or with terrible companies. Avoiding these bad career situations is often easier than figuring out good opportunities, for the same net benefit. The technique is motivated by the insight that it is easier to look for disqualifying criteria than qualifying criteria. You may apply this to:

1. Looking for people to work for/with.
2. Looking for companies to work for. (See also: head-fake questions).

Technique Summary: When picking someone to work with, look for disqualifying criteria instead of qualifying criteria. In other words, ask yourself:

• “Is this person bad” instead of “Is this person good?”
• “Is this person incompetent?” instead of “Is this person competent?”

The reason this works is because people who fail your bar for quality are almost certainly terrible to work with. On the flip side, people who slip by are not guaranteed to be great (they may still suck), but you’ve narrowed the range of possible bad outcomes. That is the goal of this technique. You may apply this to individuals, bosses, and companies.

A variant of this is to look out for ‘violations’. For instance, let's say that you know the following facts are true:

• When startups grow rapidly, their organisational systems will break.
• Someone has to fix the organisational problems within the startup as it grows. Otherwise, things will continue breaking and people will burn out or leave.

Therefore, a startup that is growing rapidly must be dysfunctional. If you are interviewing at a fast-growing startup, you should:

• Find out what those dysfunctions are. (If they do not tell you what is broken, either the startup is not growing that quickly, or they are lying to you.)
• Ask what they've already done or are planning to do to fix it. (Reveals to you the sophistication of the managers. In good startups, there is usually a small handful of people who are savvy enough to fix these things. It is your job to figure out if they exist in this particular company, and if so, who they are.)

Again, good answers don't guarantee that all is good. But bad answers almost certainly indicate that something is bad.

Possible Preconditions: You'll need to have some experience with your work to be able to use this idea. Effective negative filters reflect some understanding of how things work in your industry.

As an exercise:

1. (Easy) Can you think of a negative filter that you (or your colleagues or your boss) already use at your work? File that away and aim to use it at the next opportunity that presents itself to you.
2. (Hard) Think about your career. What have you observed to be true about the worst people in your workplace? How might you turn that into a disqualifying test or question for the future?

Originally published 06 October 2020, last updated 25 October 2020.