TFYW#069: The Single Framework To Better Decisions

Jan 5, 2024

This week, I want to dive into increasing the success rate when making new decisions.

Bad Fraud Detectors

In 2011, I attended an fraud audit training session. It was a CPA educational requirement.

Our instructor was an eccentric guy who had crazy fraud stories about everything.

It was clear he had seen some bizarre stuff.

We were at the end of the day, and he stopped speaking and got serious.

He sensed that we were mentally checking out after 6 hours of audit talk.

He started to rant.

He told us we were young and naive.

He said we were terrible auditors and couldn’t detect fraud.

We were ‘borderline useless’.

The class became uneasy. We were a bunch of fresh-faced audit staff just trying to pass the fraud and audit course.

He continued – we were incapable of detecting fraud because we had never done anything truly wrong in our lives.

We didn’t even know how to think deceptively.

He wasn’t wrong.

To him, the methodology only worked in conjunction with out-of-the-box thinkers because the methodology was built on past technologies and techniques.

We had to conceive new ideas to keep pace with new fraud types.

To detect fraud, we’d have to invert how we, straight-laced young professionals, viewed intentions and opportunities.

We needed a framework to prevent us from defaulting to ‘safe’, natural thinking patterns.

It was less about the methodology and more about our thoughts.

For me, the instructor succeeded in his job that day – both in how I viewed fraud detection and in how I approached my limitations.

Inversion Mental Models

Charlie Munger was Warren Buffet’s long-time partner and the vice chairman of Berkshire Hathaway. Munger passed away this past November.

One of Munger’s quotes I like discusses the work of Carl Gustav Jacob Jacobi:

“[Jacobi] knew that it is in the nature of things that many hard problems are best solved when they are addressed backward…”

Munger was saying we find better solutions when we examine the unsuccessful path and work backwards.

Humans are often better equipped to know what won’t work than what will, simply based on our experience.

Some people describe inversion thinking as avoiding stupidity instead of seeking brilliance.

If we list how not to succeed and then actively not do that, we are more likely to find success.

 

If you don’t remember anything else from this week’s newsletter, remember this:

 

Many firm problems can be solved by intentionally avoiding known negative results rather than seeking uncertain positive results. 

 

Our next step remains conjoined to what we know we shouldn’t do.

 

Applied In Our Firms

Inverting the problem is not a silver bullet to solving firm problems but a starting point to navigate areas we’ve never been in before.

Start with what we know will drive certain firm aspects into the ground the inverted actions.

Here are three systems and what I think classify as inverted thinking.

Lead Generation

Goal: Lead generation system to create a pipeline of ideal clients

Inverted actions:

  • Talk to no one about your services – Do not get visible online.
  • Poor or adverse online presence (website and social media)
  • Do not research lead generation systems for accounting firms.
  • Passively wait for referrals and do not set up a referral system.

Hours spent working

Goal: To reduce the hours spent on service delivery and general hours working.

Inverted actions:

  • Spend as much time working on client work
  • Spend no time designing workflows to delegate work
  • Complete no active planning to transition away from service delivery, client communication and team management
  •  Do not invest (time or resources) in talent recruitment and development.

Tech + Process Development

Goal: Increase profitability and reduce errors through tech and innovation

Inverted actions:

  • Dedicate no time to research technology
  • Do not make tech + process a strategic pillar in your firm
  • Do not follow app updates or attend webinars or conferences
  • Do not allow your team to spend time investigating different solutions

Looking back at these three lists, what I deem as inverted actions now were, in some instances, fundamental ‘positive’ actions I completed in my firm.

Take the time to review what you know would prevent the change you want in your firm. You may have to go down two or three layers of what you wouldn’t do.

Then, compare that list with your actions.

Build The Firm You Want.

Mark

P.S. Email Mark@FirmNexus.com with something that you want me to talk about. I’ll add it to the list. 

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