Gonzo math

As Aristotle pointed out, one should not seek more precision in a subject than it allows. In many contexts, gonzo math turns out to be more accurate than the purer forms of analysis. “Pure” analysis in most business situations tends to be conservative rather than creative. It implicitly favors optimizing the existing business rather than building a new one. It is biased toward shrinking the business, for the simple reason that figuring out how to cut costs is easier than thinking up new ways to generate revenue. It produces an irrational kind of rationality—the kind that underestimates the impact of everything that can’t be measured easily, like the cost of job cuts on a company’s public image and internal morale. In pretending to analyze the future with the same fanatical precision with which it parses the past, it makes the classic mistake of assuming that the future will be a dotted-line projection of the most desirable recent trends.

The Management Myth: Debunking Modern Business Philosophy

Matthew Stewart

Think Biologically: Messy Management for a Complex World

A very good synthesis of complex adaptive systems theory applied to business. Couldn’t have said it better myself.

Therefore, instead of focusing on developing specific techniques or actions, managers should master the principles of biological thinking:

Pragmatism, Rather Than Intellectualism. In an old business joke, a strategist says of a new idea, “It might work in practice, but does it work in theory?” The reality is that managers also tend to want narratives and explanations. It is tempting to reject ideas that one cannot explain. Nevertheless, the lack of an obvious explanation does not imply that something does not work (or vice versa). Managers must acknowledge that things often work before we can explain why.

Resilience, Rather Than Efficiency. It’s hard to argue against efficiency. What few managers recognize, though, is that it often trades off against resilience. Like excessive dieting, trimming too much fat can in fact be harmful to companies. The difficulty is that the benefits of efficiency are often immediate and visible, while its risks are latent and invisible. To balance the calculus, companies must make resilience an explicit priority.

Experimentation, Rather Than Deduction. Paul Graham once claimed that “the best startups almost have to start as side projects.” That’s because when it comes to innovating, no one knows what will work. Great ideas, in particular, are often outliers that experts may have good reasons for rejecting. Biological management therefore demands getting your hands dirty and tinkering more often than it demands analyzing and theorizing.

Indirect, Rather Than Direct, Approaches. In her influential analysis of system leverage points, Donella Meadows pointed out that the most powerful leverage points in complex systems are all indirect, whereas the obvious leverage points like subsidies, taxes, and standards tend to be relatively ineffective. It’s an idea that most business executives intuitively understand but hesitate to put into practice. Acting on structure, goals, mindset, and other contextual drivers may seem unacceptably “soft,” but these levers are often more effective than direct levers in the long run.

Holism, Rather Than Reductionism. On the surface, reduction is a natural step in the problem-solving process. It makes problems more tractable and allows for division of labor. It works in engineerable systems, in which subcomponents interact minimally or linearly. But reduction often fails in complex systems because the crux of their behavior lies in the relationship between parts rather than in the parts themselves. The whole is not the sum of its parts.

Plurality, Rather Than Universality. Heterogeneity is the basic ingredient through which adaptation and therefore renewal and growth become possible. Innovation in cities scales superlinearly, not because their inhabitants are efficient and coordinated, but because their plural, competing viewpoints provide for constant growth and rejuvenation.7 Likewise, companies can achieve vitality not through dogma or universal solutions but by nurturing plurality.

Source: Think Biologically: Messy Management for a Complex World

Mark Ritson: Only crap marketers mistake stereotypes for segments – Marketing Week

For strategic reasons as much as politically correct ones, if you cannot empirically show any meaningful differences between your target segment and the other segments – or if it is populated by completely different people who want entirely different things – your segment is not a segment. It’s a joke and so are your skills as a marketer.

Source: Mark Ritson: Only crap marketers mistake stereotypes for segments – Marketing Week

The age of distributed truth — Remains of the Day

An important insight….

It’s also worth noting that she did what every employee training course I’ve ever taken says you should do, which is to report such incidents to HR. I’ve met many a kind HR person in my career, but let’s be honest about what bad advice this is for employees. It’s not just that Uber’s HR department let Fowler down; in every company I’ve ever been at, HR reports into the CEO, and their job is to protect the company. I hope my readers will provide me with examples of HR protecting employee’s interests in such cases, but from what I’ve seen and read, the moment you report an incident to HR they start building a dossier on you and a case to defend the company in court. Their work will be in that courtroom with you, but it will be on the desk of the company’s attorneys, not yours. As many an employment lawyer has told me, before you talk to HR, you should talk to one of them. Until we have some independent, ombudsman-like HR group looking out for employees in the tech world, that would be my advice, too.

Source: The age of distributed truth — Remains of the Day

San Francisco Review of Books: Book Review: ‘The Design of Business: Why Design Thinking is the Next Competitive Advantage’ by Roger Martin

+  Reliability is what is prized by legacy organizations that seeks to replicate the past and improve means of achieving the same goals.

+  Validity strives to achieve a future objective that cannot be proven on the basis of the past precisely because it is so pioneering in nature.

+    McKinsey and other similar consulting firms continue to focus on reliability and repetition of formulas from the past to the EXCLUSION of validity, exploration, and innovation.  [I am much more critical of all the so-called consulting firms, they tend to throw ignorant MBA billing hours at a problem better understood by the janitor on site.]

+  Three forces converge to marginalize the future: 1) demand for prior proof of sources and/or method; 2) aversion to bias i.e. not open-minded; and 3) constraints on time, demanding results in too short a timeframe.  In short, organizations are poor at SENSING, not OPEN-MINDED, and therefore not ADAPTIVE.

Source: San Francisco Review of Books: Book Review: ‘The Design of Business: Why Design Thinking is the Next Competitive Advantage’ by Roger Martin

Pocket: Charlie Munger on Avoiding Computers

Think first. You can ‘logic’ your way to most answers without having to do research through simple good thinking.

And they asked, “Why are you doing this?” He said, “I’m so located in life that I’m like a gold miner in 1848 who could just walk along the banks of the river and pick up enormous nuggets of gold with organized common sense. And as long as I can do this, I’m not going to use scarce resources in placer mining.”

Well, that’s the way I go at life. I think if you get the big points with organized common sense, it’s amazing the placer mining you never have to do…But is there still enormous gain to be made with organized common sense that doesn’t require a computer? I think the answer is “yes.”

Are there dangers in getting too caught up in the minutiae of using a computer so that you miss the organized common sense? There are huge dangers. There’ll always be huge dangers. People calculate too much and think too little.

Source: Pocket: Charlie Munger on Avoiding Computers