I read with great interest a recent article in the Wall Street Journal which describes long-time Warren Buffet colleague (and business partner with Berkshire Hathaway) Charlie Munger’s final few years.

Munger died two years ago just weeks shy of his 100^th birthday. Even at that advanced age, Munger remained actively involved in evaluating business and advising others of the same. While there is much to learn from Munger’s approach to business (and to life in general) one thought stands out: focus on what is working best.

When asked about Berkshire Hathaway’s extraordinary success over a long period of time, Munger had this to say, “Take out Berkshire’s top five investments and its returns are pretty middling”, stressing that success is often found by focusing relentlessly on “the relevant few” while minimizing time spent on “the trivial many”.

During a breakfast meeting with business executives, he surprised a senior executive of Ford with his detailed knowledge of Ford’s profitability, by each of their product lines. He told the executive “I don’t know why you guys bother making cars,” knowing that Ford’s profits come from primarily from trucks. Which poses an important set of questions for business owners and executives.

Where are your profits made? Most likely, from your best products, customers, and team members. Where do your profits go? Most likely to under-performing products, customers, and team members.

The process of strategy and planning provides an opportunity to assess these factors in detail. Too often, businesses take the considerable profits made from what is working best and distribute them across a myriad of products, services, customers and yes, team members that are “pretty middling” or worse. This may not be done with intention. It is the result of a lack of awareness and absence of a structured process for detailed assessment.

For more information on getting your planning aligned and better informed, contact me at joe@ajstrategy.com or visit my website at ajstrategy.com.