Among the slices of my life I’m grateful for are the bits and pieces of wisdom KJR’s subscribers share with me that enrich my understanding of How Things Work.
This week, a tip o’the hat to Nelson Pardee for pointing me to a nice article by a gentleman named Morgan Housel titled “Common Causes of Very Bad Decisions.”
It’s so nice that this week I’m just going to share some snippets to whet your appetite, paraphrased into KJR-speak because I have to add some value somehow, after all:
- Virtue is, for most people, negotiable. With a sizeable enough incentive we’re all capable of behavior we wouldn’t want headlined in the local newspaper. And for most of us, it’s the disincentive of being caught out that keeps us from succumbing, not our native integrity.
- Mistakes are multiplicative, not additive. Imagine, that is, we’re manage to create a badness metric. Next imagine you have three colleagues who, on the badness scale, measure 2, 3, and 5. Their combined impact on overall organizational badness isn’t 10 (2+3+5). It’s 30 (2 x 3 x 5).
- Probability is hard but accurate. Binary is easy but wrong. When our local meteorologist predicts a 70% chance of rain and rain doesn’t happen, we don’t review the last 100 rain forecasts to see if the meteorologist’s 70% chance of rain turned into actual rain in 70% of the forecasts. We gripe about the meteorologist being wrong.
- Your opponents aren’t always playing to outscore you. Many are playing a different game than you are altogether. If you can’t figure out what game they’re playing you’ll never figure out why they do what they do, let alone what you should do about it.
- The world is a jigsaw puzzle. It consists of a few million pieces. The information available to us and the knowledge we have about it constitute no more than a few hundred of those pieces. The moral of this story: No matter how much we think we know, we’re always mostly ignorant.
- Success is more dangerous than failure. We can learn from failure. When we succeed we’re more likely to take credit for brilliance we don’t have than to understand that in a random world, winning the lottery isn’t a meritocratic outcome. This makes us vulnerable to overconfidence.
- Learning from the successes of others is almost as fraught as learning from our own. Most people who succeed, most of the time, owe a lot of their success to dumb, random luck too. Sorting out what they did that actually factored into their success from everything else they did that had nothing at all to do with it is an unending challenge.
Bob’s last word: In KJR I’ve written a lot about the importance of creating a “culture of honest inquiry.” One aspect of this culture is insisting on evidence and logic and not just “trusting your gut.”
But just as importance is for each of us to recognize where our personal logic is vulnerable to sources of illogic, including but not limited to those so admirably summarized by Mr. Housel.
You might consider making a list and keeping it handy for those times you’re called on to make consequential decisions.
Bob’s sales pitch: This being the holiday season and all, what could make a better gift for those you’d like to enlighten than a book by yours truly? No, no, no, don’t answer that question. It’s rhetorical, not an actual inquiry!