Author: David Wright

All from *Thinking Fast and Slow*, these are on loss aversion, perhaps one of the most powerful forces in the universe:

If Tiger Woods had managed to putt as well for birdies as he did for par, his average tournament score would have improved by by one stroke and his earnings by almost $1m per season.

This made me think of the fiscal cliff debate:

Negotiations over a shrinking pie are especially difficult because they require an allocation of losses. People tend to be much more easygoing when they bargain over an expanding pie.

This made me think of entitlement reform generally, which includes things like subsidies for farmers or any other entrenched interest group:

As initially conceived, plans for reform almost always produce many winners and some losers while achieving an overall improvement. If the affected parties have any political influence, however, potential losers will be more active and determined than political winners, the outcome will be biased in their favor and inevitably more expensive and less effective than initially planned.

More quotes and thoughts to follow in this, perhaps. It’s a truly amazing book. I pair it with *Guns, Germs and Steel* and say that anyone who wants to consider him/herself educated should read and think about both. Carefully.

I can’t really think of any others on that list for me.

Booze.

I didn’t realize Microsoft patented the Holodeck. Neat.

More here.

 

I spent five hours with Bill Russell last week and thought of Kobe Bryant twice and only twice. One time, we were discussing a revelation from Russell’s extraordinary biography, Second Wind, that Russell scouted the Celtics after joining them in 1956. Why would you scout your own teammates? What does that even mean? Russell wanted to play to their strengths and cover their weaknesses, which you can’t do without figuring out exactly what those strengths and weaknesses were. So he studied them. He studied them during practices, shooting drills, scrimmages, even those rare moments when Red Auerbach rested him during games. He built a mental filing cabinet that stored everything they could and couldn’t do, then determined how to boost them accordingly. It was HIS job to make THEM better. That’s what he believed.

That’s from this excellent article by Bill Simmons (this post is one of many I wanted to write on it). Here’s some more:

…But if you think of Russell as a genius — which he was — it might make more sense. Here’s an example: A few years ago, Russell’s wife² searched his name on eBay and found someone selling a DVD of one of Russell’s college games. She bought the DVD and surprised him with it. They started watching the game: San Francisco (Russell’s team) and Oregon State.³ Bill Russell could rattle off every play before it happened. Not a few of the plays. Not half of the plays. Every play. For a random college game that happened in 1955.

“I can’t do that anymore,” Russell said last week. “I’m older now. If you showed me an old game now, I couldn’t remember every play, just most of them.”

I think there are two interpretations of Russell’s genius, which I agree is genius. First, you could imagine him as having a photographic memory, which is what I think Simmons is getting at and Russell is kinda going along with.

For another interpretation, let’s go back to Daniel Kahneman’s Thinking Fast and Slow.

Your brain is composed of two modes of thought: System One and System Two. System Two is the conscious part, the part that does most of what we think of as “thinking” like math and poetry and deliberate learning.

System One is the unconscious part. This is what is at work when a chess master predicts a match outcome with a single glance or when a nurse evaluates a patient’s condition by walking through a room. Years and years and thousands of hours of using System Two on these problems creates a vast catalog of experience. This experience is mostly unseen; you don’t remember it all consciously, but your System One can access it at extraordinary speeds, compare the situation in front of you to it and give your gut a… feeling.

That’s what I think Russell was actually doing when watching that video. Think of the first quote: he scouted his own teammates. He knew their game intimately. He probably wasn’t so much consciously remembering each play as evaluating each play. Knowing what he knew of the players and himself he could predict how the plays *should* play out and typically did. There would be times when something unexpected happened and those memories probably stuck out more prominently, but mostly it was just immersing himself in the System One routine again.

So I’d say, in this case, his genius is the 99% kind.

“Geodon?” I say.

Bryan Googles it. “It’s for symptoms of schizophrenia,” he reads, “so it’s an anti-psychotic agent, I guess.”

“Did you get it from somebody with schizophrenia?” I ask.

“No, I got it from a doctor,” Bryan says. And this is when Bryan tells me the other way he acquires many of his drugs. He sometimes visits psychiatrists, tells them about the art project, and asks them for “samples of some pain pill or sedative I’ve never tried. I say, ‘Can you write me a prescription for just one so I can do my drawing?’ And I take my book with me and show them my art project. And they always give me some crazy, crazy anti-psychotic pill instead.”

“They never give you what you ask for?”

“Never,. Always something way worse.”

“Even though they know you aren’t psychotic,” I say, confused.

“They think I am,” he says.

“And are you?” I say.

“I don’t think I am,” he says.

That’s artist Bryan Saunders. Here’s more. Here are fifty of his  self-portraits, which he paints every other day on different drugs.

3. I am struck by the way genius seems to come in small clusters. Read Eric Kandel about Vienna or George Dyson about the Institute for Advanced Study in the 1930s and 1940s. In the latter case, it seems as though much of the genius originally was concentrated in a part of the Jewish community in Budapest. So, my hypothesis is that having one high school with 5 really bright students produces more geniuses than five high schools with one bright student each. Together, the bright students are more competitive and also learn from one another. The same would be true for tennis players or artists–people with talent will be pushed to higher levels by being around other people with talent. According to this hypothesis, the decline of Jewish genius might come from the dispersion of the population of bright Jewish students, instead of a high concentration at particular high schools in Vienna, Budapest, or New York.

That’s Arnold Kling.

Want to be a genius? Find the smartest people around and try to beat them.

Here’s Robin Hanson on consulting (I blogged a bit of it here).

The upshot is that strategy consultants exist to help break up resistance to changes in strategy. Here’s an amusing caricature:

Fellow consultants and associates … [said] fifty percent of the job is nodding your head at whatever’s being said, thirty percent of it is just sort of looking good, and the other twenty percent is raising an objection but then if you meet resistance, then dropping it.

It’s easy for people to read things like this and think “oh, well if THAT’s all they’re doing, it’s clearly valueless work”

We are clearly programmed to politic in the shadows. The idea that a boss would be willing to direct large swaths of company resources to a consulting firm to bolster his political case for a certain course of action is ridiculous.

Yet I’m increasingly convinced that that’s what is going on. It happens in my business, too.

In fact, I think that the presence of consultants might actually be an incredibly macro-beneficial thing. Think about this quote from Daniel Kahneman’s latest book, which I’m still working through:

Because adherence to standard operating procedures is difficult to second-guess, decision makers who expect to have their decisions scrutinized with hindsight are driven to bureaucratic solutions -and to an extreme reluctance to take risks. As malpractice litigation became more common, physicians changed their procedures in multiple ways: ordered more tests, referred more cases to specialists, applied conventional treatments even when they were unlikely to help. These actions protected the physicians more than they benefited the patients, creating the potential for conflicts of interest. Increased accountability is a mixed blessing. (page 204 in hardcover version)

Now remember that real strategy is incredibly hard and so dependent on execution to make strategic planning nearly irrelevant. Giving executives excuses to take risks should improve overall performance.

The irony for the poor consultants is that they need to walk a very careful line. Being able to grant legitimacy to a view is an incredibly valuable ‘product’ but one that requires a reputation for not being a mercenary.

People need to believe the consultant is above such crass political maneuvering. The sponsoring executive him/herself probably self-deludes, thinking that his/her ideas are winning simply on the power of their own merits.

Such confidence is another hallmark of risk-taking. Which is good for the economy.

Better question: under what circumstances would you live in this apartment? More here.

There are periods in my life when I would have. Particularly when I was single, living alone and in a big city. You either have a home you want to spend time in or you don’t. If you’re happy to live your life ‘out’, you might as well spend as little money as possible on your place to sleep and store valuables. Living ‘out’ is expensive.

I’m working through Daniel Kahneman‘s latest book and I wondered: how might this apply to interior decorating? Who wouldn’t.

Consider two important concepts he discusses: priming* and cognitive strain. Priming is where you are influenced subconsciously by cues in your environment (looking at money makes you feel more individualistic, for example) and cognitive strain is simply when you have to think hard about things. We don’t like doing it.

So let’s use them to design a workplace. Most important is probably easing cognitive strain: keep the design simple and functional, almost invisible. Apple comes to mind when I think of low-cognitive strain design. No annoyances, no ugliness, nothing to distract you from your tasks. And remember that distractions can come from hideous art, to be sure, but also from beauty, from famous paintings or physically large things. Dial down the vanity displays.

Now think about priming. What thoughts or feelings does the design impress upon the mind?

In most businesses teamwork is probably the most important cultural value, as I believe it is in mine. Since starting this post I’ve tried to think about what kind of design additions might encourage teamwork. Steve Jobs designed the Pixar studio to encourage collaboration by forcing everyone to go to the same bathroom. That’s probably a good functional example.

I’m thinking maybe elements that evoke sport or martial themes are a good idea. Now, putting a giant print of the Iwo Jima flag raisers in your front hallway is perhaps going too far. You don’t want to be mocked.

To me priming is about subtlety; remember at best you’ll get a marginal effect, but aggregate it across a company and you can get impressive results. Another important point: don’t hide what you’re doing. Priming smacks of manipulation but it doesn’t need to be covert. According to Kahneman we can resist it only with deliberate effort and strong culture requires conscious buy-in anyway.

So prime carefully: maybe something as simple as images of people standing together. Or symbols of shared experience. Emphasize coordination.

How about the view from the boardroom? Think of what impressive views signal: opulence, wealth, status.

If you want your employees to feel rich and your visitors (clients?) to be in awe, it’s probably a good idea. Such conceit isn’t really my cup of tea, so I’d probably consider it a culture-sapping distraction. Others go for the shabby look to emphasize scrappy cheapness. Also, to me, a strain.

Now, there’s also an interesting tradeoff in pursuing cognitive ease: it makes you less analytical. From Kahneman:

[There is a] growing evidence that good mood, intuition, creativity [and] gullbility form a cluster. At the other pole, sadness, vigilance, suspicion, an analytic approach, and increased effort also go together… Cognitive ease is both a cause of an a consequence of a pleasant feeling.

In my business, brokering complex financial deals between insurance companies, we must balance a sales culture with analytical rigor. Kahneman suggests that environmental stimulus cannot boost these two mental faculties at once. Sales is a creative activity, analysis is not.

Why have just one place to do both then? Here I imagine an ‘analytics room’. Distraction-free and austere, cold surroundings. A bit uncomfortable. Perfect for a critical eye.

Being in this room is not the norm, even for analysts; your home is in the collaborative, creative zone. The reason is that pure analysis is probably never going to be any company’s competitive advantage. To paraphrase a business prof of mine: MBAs teach you a thousand reasons to say “no”, learn instead how to say “yes”. In opportunity lies success.

The next most important value after teamwork for us is having a strong sales culture. As I said above, this is creative work: advocating for a client, identifying new opportunities and relentlessly pursuing them. What design elements might help here?

The state of mind I most associate with successful sales is enthusiasm and excitement: a feeling that anything can be done. Perhaps symbols of extraordinary achievement? I’m not sure.

Of course, nothing can replace the hard part of building a strong culture: team member selection, training and tireless policing from leaders. Most of all, time.

But Kahneman teaches us that oft overlooked details can influence our minds in surprising ways. We should be mindful of this.

*Now, priming is a bit controversial. See this article and this earlier post. I think that the general point Kahneman is trying to make is a valid one, at least as I’m applying it.