Drawing on Charlie Munger's wisdom, investment management problems often stem from misaligned incentives. Instead of trying to change people's actions directly, leaders should redesign the incentive structure. Rational individuals will naturally align their behavior with well-constructed incentives that drive desired client outcomes.

Unlike surgery or engineering, success in finance depends more on behavior than intelligence. A disciplined amateur who controls greed and fear can outperform a PhD from MIT who makes poor behavioral decisions. This highlights that temperament is the most critical variable for long-term financial success.

Munger notes that many large law firms compensate senior partners equally, regardless of their individual contributions. This seemingly inefficient structure is a deliberate defense mechanism to prevent the powerful and destructive force of envy from creating disorder and tearing the firm apart.

A highly successful salesperson, unmotivated by money, was reignited by a specific, tangible goal: a Harley Davidson his wife wouldn't let him buy. This shows that the motivational trigger for top performers can be surprisingly small and personal once financial security is achieved.

Sales leaders wrongly assume compensation is the universal motivator. However, assessment data shows money is the primary driver for only about 55% of salespeople. To create effective incentives, leaders must uncover individual motives, which may include free time, recognition, or charitable giving.

A company’s true values aren't in its mission statement, but in its operational systems. Good intentions are meaningless without supporting structures. What an organization truly values is revealed by its compensation systems, promotion decisions, and which behaviors are publicly celebrated and honored.

Beyond the desire for success, the intense fear of embarrassment and public failure can be an incredibly potent motivator. For high-profile individuals, the social cost of failure is so high that it creates a forcing function to succeed at all costs.

While rewards can remind people of expectations, they are poor at building skills. Research shows a strong negative correlation between using external rewards (e.g., money) and developing intrinsic motivation. The more you motivate externally, the more you may weaken internal drive.

Rewarding successful outcomes incentivizes employees to choose less risky, less innovative projects they know they can complete. To foster true moonshots, Alphabet's X rewards behaviors like humility and curiosity, trusting that these habits are the leading indicators of long-term breakthroughs.