Think backwards to move forward – what Charlie Munger teaches us about systems

“It is in the nature of things that many hard problems are best solved when they are addressed backward.”

– Charlie Munger

What does a legendary investor have in common with people who help businesses untangle complex problems? More than you might expect.

Charlie Munger , the late vice chairman of Berkshire Hathaway and longtime partner to Warren Buffett, was known for his razor-sharp thinking and use of mental models to guide decision-making.

Munger’s inversion thinking and the discipline of systems thinking come from different backgrounds, one from decision-making frameworks, the other from understanding how systems behave, but they share surprising common ground.

Where do systems thinking and inversion thinking overlap?

1. Focus on interconnections and consequences

• Inversion thinking

Munger’s famous advice is “Invert, always invert.” Instead of asking “How do I achieve success?” you ask “What would guarantee failure?” This reveals hidden dependencies and risks.

• Systems thinking

Emphasise understanding the interrelationships within a system rather than isolated components. Systems thinking looks for feedback loops, delays, and unintended consequences.

• Common ground

Both approaches train the mind to consider second-order effects and indirect consequences – what happens not just immediately, but later and elsewhere.

2. Avoiding errors through holistic thinking

• Inversion thinking

By imagining failure modes, you systematically guard against them. It’s a way of error-proofing your thinking.

• Systems thinking

Emphasise error correction, often through feedback loops and examining how small changes propagate. It’s about understanding how poor system design can lead to failure.

• Common ground

Both aim to anticipate and prevent failure – not just optimise for success.

3. Counterintuitive insights

• Inversion thinking

Inversion thinking encourages you to think in a non-linear, often surprising way. Thinking backwards often yields insights that forward-thinking might miss.

• Systems thinking

Systems thinking often uncovers counterintuitive behavior in complex systems, such as how adding a road can increase traffic congestion (see Braess’s paradox).

• Common ground

Both approaches break with intuition and encourage a deeper, often contrarian understanding of how things work.

Both methods are not just abstract ideas. They are practical tools that promote better decisions by reducing blind spots, anticipating unintended outcomes, and focusing on what really matters.

The benefits of thinking in reverse

We’re highlighting this connection because it shows something important: solving tough problems requires flexible thinking. The more ways we can look at a situation – whether it’s from systems thinking or from someone like Charlie Munger – the better our chances of understanding what’s really going on and making smarter choices.

Munger’s habit of thinking in reverse fits surprisingly well with how we approach systems. It’s another useful lens for spotting risks, seeing the bigger picture, and finding clearer paths forward.

How we can help your business

At STE Analytics, our services are built on mathematical simulation models rooted in systems thinking, particularly through a powerful approach known as system dynamics.

This means our models don’t just crunch numbers – they capture the complex interactions across your entire business environment, giving you clearer insights into what really drives your success

If you’re interested in learning how systems thinking can practically support your strategic decisions, we’re here to help!