Use Munger Latticework Prover with your AI.

Validate munger latticework

Think like Charlie Munger. apply multiple mental models: (1) INVERSION. "Invert, always invert." How will this FAIL? List 5 catastrophic failure modes. Pre-mortem, not post-mortem. If you cannot find 5, you have not thought about it, (2) SECOND-ORDER EFFECTS. what happens AFTER the first effect? Trace 3 orders of consequences. First order is obvious. Second order is where strategies die. Third order is where companies die, (3) INCENTIVE ARCHITECTURE. "Show me the incentives, I show you the outcome." Map every stakeholder. Where do incentives CONFLICT with desired behavior? Incentives predict outcomes better than intentions, (4) CIRCLE OF COMPETENCE. "Know the edge of your circle." Where are you reasoning with genuine expertise? Where are you at the edge? Where are you outside. and who should you defer to?, (5) MARGIN OF SAFETY. what if you are 50% wrong? Base case, bear case (-30%), worst case (-50%), break-even. Does the strategy survive the worst case? A strategy that only works in the base case is a bet. If rejected, fix the specific mental model gap. Structured reflection capability for multi-disciplinary strategic reasoning. forces inversion thinking, second-order consequence tracing, incentive architecture mapping, competence boundary honesty, and margin of safety verification before any major strategic decision. Models Charlie Munger's latticework of mental models: the world is not divided into disciplines, and the strategist who only uses one mental model is "a man with a hammer. everything looks like a nail." Catches Forward-Only Thinking (planning only for success without mapping failure. "Invert, always invert." A startup plans to scale from 10 to 100 employees in 12 months. The plan describes: office expansion, hiring pipeline, culture initiatives, revenue targets. The inversion question is never asked: "How will this company die?" Answer: (1) burn rate exceeds runway at month 8 if revenue misses by 20%. (2) Key engineer quits. she wrote 60% of the payment integration, undocumented. (3) The largest client (42% of revenue) has a 90-day termination clause. (4) AWS bill compounds 3x with user growth because of N+1 queries nobody profiled. (5) The co-founder equity split is verbal, not documented. litigation risk at Series A. If you cannot list 5 catastrophic failure modes, you have not thought about your strategy), First-Order Fixation (seeing only the immediate effect without tracing consequences. "We will reduce prices by 30% to increase market share." First order: sales volume increases 40%. Good. Second order: competitors match the price cut within 2 weeks. Net market share gain: 3% instead of projected 15%. Third order: the new price becomes the anchored market price. Raising prices back is now a 25% increase that customers perceive as a betrayal. The price cut is permanent. Margins never recover. Amazon's free shipping threshold was a first-order decision that created a third-order expectation: "shipping should always be free"), Incentive Blindness (ignoring that people respond to incentives, not speeches. "Show me the incentive and I will show you the outcome." A sales team is incentivized on new revenue. Result: they sell 12-month contracts at 40% discount to hit quarterly targets. Customer Success team is incentivized on retention. They inherit clients acquired at unprofitable margins. Churn is 60% at renewal because the value proposition never matched the discounted price. Sales celebrates. CS fires. Finance bleeds. The incentive structure guaranteed the outcome. the people were rational actors), Competence Overreach (reasoning confidently outside your expertise. "Knowing what you don't know is more useful than being brilliant." A software engineer confidently designs a HIPAA compliance strategy for a healthcare startup. They encrypt data at rest and in transit. They add role-based access control. They miss: Business Associate Agreements with every vendor, breach notification procedures within 60 days under 45 CFR § 164.404, physical safeguard requirements for on-site servers, and minimum necessary access standards. The engineer was competent in security. but the question was regulatory compliance, not security), and Fragility Tolerance (building a strategy with no margin for error. "The best idea or opportunities are only available at a particular price." A real estate developer finances a project at 95% LTV assuming 8% rental yield. Base case: 12% IRR. Beautiful. What if interest rates rise 200 bps? IRR drops to 3%. What if vacancy is 15% instead of 5%? Negative cash flow from month 6. What if construction runs 30% over budget? The equity is wiped out. A strategy that only works in the base case is not a strategy. it is a bet. Margin of safety means: the strategy survives even if you are 50% wrong). Call once per strategic decision, investment thesis, or business plan