Inner Scorecard Vs Outer Scorecard

Inner Scorecard vs Outer Scorecard
"My father taught me the importance of having an inner scorecard and try in life to
satisfy it. This will help you follow things that you enjoy doing.” - Warren Buffett
"I feel like I’m on my back, and there’s the Sistine Chapel, and I’m painting away. I
like it when people say, ‘Gee, that’s a pretty good-looking painting.’ But it’s my
painting, and when somebody says, ‘Why don’t you use more red instead of blue?’
Good-bye. It’s my painting. And I don’t care what they sell it for. The painting itself
will never be finished. That’s one of the great things about it."
"The big question about how people behave is whether they’ve got an Inner
Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner
Scorecard. I always pose it this way. I say: ‘Look. Would you rather be the world’s
greatest lover, but have everyone think you’re the world’s worst lover? Or would you
rather be the world’s worst lover but have everyone think you’re the world’s
greatest lover?’ Now, that’s an interesting question. “Here’s another one. If the
world couldn’t see your results, would you rather be thought of as the world’s
greatest investor but in reality have the world’s worst record? Or be thought of as
the world’s worst investor when you were actually the best?"
"In teaching your kids, I think the lesson they’re learning at a very, very early age is
what their parents put the emphasis on. If all the emphasis is on what the world’s
going to think about you, forgetting about how you really behave, you’ll wind up
with an Outer Scorecard. Now my dad: He was a hundred percent Inner Scorecard
guy."
“He was really a maverick. But he wasn’t a maverick for the sake of being a
maverick. He just didn’t care what other people thought. My dad taught me how life
should be lived. I’ve never seen anybody quite like him.”
Source: Alice Schroeder, The Snowball: Warren Buffett and the Business of Life
[Kindle Edition]. loc. 639.
How should society be ordered? He told them about the Ovarian Lottery. How do I
find the right spouse? Marry up, he said. (He wasn’t talking about money.) How do I
know what is right? Follow your Inner Scorecard. What should I do about a career?
1
Find something you are passionate about. I only work with people I like. If you go to
work every morning with your stomach churning, you’re in the wrong business.
Source: Alice Schroeder, The Snowball: Warren Buffett and the Business of Life
[Kindle Edition]. loc. 16437.
I was driven in large part by what Warren Buffett calls “the outer scorecard”—that
need for public approval and recognition, which can so easily lead us in the wrong
direction. This is a dangerous weakness for an investor, since the crowd is governed
by irrational fear and greed rather than by calm analysis. I would argue that this
kind of privileged academic environment is largely designed to measure people by
an external scorecard: winning other people’s approval was what really counted. So
during those formative years I was developing a serious flaw that I would later
need to identify and reverse. Value investors have to be able to go their own way.
The entire pursuit of value investing requires you to see where the crowd is wrong
so that you can profit from their misperceptions. This requires a shift toward
measuring yourself by an “inner scorecard.” To become a good investor, I would
need to come to an acceptance of myself as an outsider. The real goal, perhaps, is
not acceptance by others, but acceptance of oneself.
Source: Guy Spier, The Education of a Value Investor: My Transformative Quest for
Wealth, Wisdom, and Enlightenment [Kindle Edition]. loc. 377.
But it was only later that I felt the full force of this advice. In the months that
followed, I began to realize just how much of my life I had spent measuring myself
by an outer scorecard. I had always been so eager for people to like and respect me
—to win the plaudits of my professors at Oxford and Harvard, to be seen as a
successful investment banker and deal maker at D. H. Blair, to be admired as a top-
notch fund manager. This neediness had inevitably led me astray. What I really
needed was to measure myself by an inner scorecard. For a start, this would have
enabled me to run for my life the moment I realized how toxic it was at D. H. Blair.
It’s hard to overstate the importance of Buffett’s insight. After all, how many of the
self-serving excesses and moral compromises that caused the financial crisis of
2008–2009 would have been avoided if mortgage brokers, bankers, and others had
lived by an inner scorecard? As Warren helped me to understand, people too often
justify their improper or misguided actions by reassuring themselves that everyone
else is doing it too.
2
One of Buffett’s defining characteristics is that he so clearly lives by his own inner
scorecard. It isn’t just that he does what’s right, but that he does what’s right for
him. As I saw during our lunch, there’s nothing fake or forced about him. He sees no
reason to compromise his standards or violate his beliefs. Indeed, he has told
Berkshire’s shareholders that there are things he could do that would make the
company bigger and more profitable, but he’s not prepared to do them. For
example, he resists laying people off or selling holdings that he could easily replace
with more profitable businesses. Likewise, some investors have complained that
Berkshire would be much more profitable if he’d moved its tax domicile to Bermuda
as many other insurers have done. But Buffett doesn’t want to base his company in
Bermuda even though it would be legal and would have saved tens of billions in
taxes.
Buffett taught me that what’s on your inner scorecard is more important than your
outer scorecard. A lot of people are concerned with what the world will think about
this or that instead of what they themselves think about it. If you are comfortable
with your inner scorecard, you are going to have a pretty gratifying life. The people
who strive too much for the outer scorecard sometimes find that it’s a little hollow
when they get through. My father died forty-six years ago. I have a large portrait of
him on my office wall, and I still wonder how he would feel about anything I do.
Source: Gillian Zoe Segal, Getting There: A Book of Mentors [Kindle Edition]. loc.
167.

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