I found the ideas in this book really resonated with my experience in a number of industries.
Syed's thesis is that we live in a society that usually pI found the ideas in this book really resonated with my experience in a number of industries.
Syed's thesis is that we live in a society that usually plays the blame game when things go wrong. He contrasts this with the ideas used by the aviation industry where mistakes and errors are seen as problems with the system, and not individuals. Because he draws from this industry it uses the thinking behind the black box from aeroplanes as the central metaphor.
If something goes catastrophically wrong it's not the pilot that's to blame but instead the system as a whole that allowed the mistake to happen. This systems approach is why there are so few aviation accidents.
In the early parts of the book he contrasts aviation errors with medical errors. Doctors are trained not to admit to failure and be "experts". So instead of learning from failure there's a culture of "accepting the inevitable" and not trying to stop things happening again. Indeed there's a really silly idea that doctors' training makes them infallible.
Syed gives an account of one awful medical accident where a young mother ended up with brain damage because her throat closed up under anasthetic and the doctors spent so long trying to insert a breathing tube they didn't do a tracheotomy in time. It turns out that under stress people lose track of time, and can end up going past hard limits (like how long someone can survive when they can't breathe) with bad consequences. In this case the poor woman's husband was an airline pilot and he didn't accept the "one of those things" arguments.
Eventually after a fight the husband managed to get to the truth of what had happened. Instead of being bitter he shared what he had found in medical journals, made sure that the simple things you can do to make sure your intense focus hasn't made you blind was wider known. For example, you can make sure that all people involved can call for certain things, hierachies need to be questioned. Two people work on a problem, but one of them stays out of the decision making loop and the cognitive stress so they can see what's happening and call time.
This information has saved a lot of lives. The woman's husband has been written to by many surgeons all over the world. There are examples of how this telescoping time phenomenon caused crashes of aircraft, but that industry changed the way it did crisis management to make the problem far less likely to occur.
It sounds simple, doesn’t it? Learning from failure has the status of a cliché. But it turns out that, for reasons both prosaic and profound, a failure to learn from mistakes has been one of the single greatest obstacles to human progress. Healthcare is just one strand in a long, rich story of evasion. Confronting this could not only transform healthcare, but business, politics and much else besides. A progressive attitude to failure turns out to be a cornerstone of success for any institution.
Next he looks at experts. If there is no feedback loop after they qualify as experts then they do not improve. Without being able to measure your success you are stuck, probably making the same mistakes over and over again.
If we wish to improve the judgement of aspiring experts then, we shouldn’t just focus on conventional issues like motivation and commitment. In many cases, the only way to drive improvement is to find a way of ‘turning the lights on’. Without access to the ‘error signal’, one could spend years in training or in a profession without improving at all
And of course failure is necessary, as long as systems are in place to learn from it:
beneath the surface of success – outside our view, often outside our awareness – is a mountain of necessary failure
This goes much further than the old saw about learning from failure. Syed's argument is that you must be systematic about it and not blame individuals for systematic failures. But also it is important that individuals take responsibility for what happens and own up when things go wrong. Without this there can be no learning.
Another extremely interesting thread later in the book is when he picks up on marginal gains. This is a way to find improvements and is used by teams like the British Cycling team who were so successful at the Rio olympics. In short: everything matters every detail that can hold back success or performance is important and when you address them all they compound together to create an unstoppable chain of improvements. Small gains, marginal gains become the root of great success.
Marginal gains is not about making small changes and hoping they fly. Rather, it is about breaking down a big problem into small parts in order to rigorously establish what works and what doesn’t.
They use the first test not to improve the strategy, but to create richer feedback. Only when they have a deeper understanding of all the relevant data do they start to iterate.
see weaknesses with a different set of eyes. Every error, every flaw, every failure, however small, is a marginal gain in disguise.
I heartily recommend this book, it's easy to read and the stories make the examples stay in your head. I hadn't heard of the marginal gains technique but will be using it myself....more
I hadn't come across the Rolling Stone journalist Matt Taibbi before I picked up this book. He's their political editor and in the opening pages descrI hadn't come across the Rolling Stone journalist Matt Taibbi before I picked up this book. He's their political editor and in the opening pages describes how he realised he needed to understand the causes of the financial crises that have been rolling like a wrecking ball through the economies of the world for years.
He doesn't have a background in finance so of course had to first understand what the banks and insurance companies had been doing. It turns out that the string of crises since 2008 are not the seemingly random events that we all thought. The causes are stupidity, fraud, and outright theft combined with an overweening sense of entitlement that makes the players whine to governments and get the rules (designed to protect the markets from manipulation and fraud) changed, generally the regulators say yes because saying no to them would be a career limiting move.
He also takes a little time out to look into the origins of the Tea Party, but that isn't the main thrust of the book. The Tea Party's rabid anti-intervention incoherence makes them a good front for whipping opposition to moves that might hold up the rapacious consumption of the middle america's pensions and theft of their property. They are never whipped up against the banks, because the ideologues in control have a vested interest in keeping the spotlight away from their doings whether because they are bankers, or because they rely on campaign contributions from the banks. Yes, it is that blatant, and no-one apart from Taibbi seems to be reporting on it.
He first turns his attention to the execrable Alan Greenspan, a shallow self-seeking publicity hound whose tenure as head of the Federal Reserve saw most of the regulatory controls quietly dismantled and huge billion dollar bail outs given to his friends. This includes the very sensible rules about investment banks not being allowed to merge with retail and insurance, because the investment banks can set up financial bets that bet against the retail market and then force them to become true. It's also what made these greedy morons "too big to fail".
Not a single prediction by Greenspan has ever proved to be true, and pre-Fed he did things like suggest to Regan he hike up social security payments massively to fund a shortfall while saying that the money could be put away and then used later - Regan and successor presidents just spent the money. In the UK the unlamented Gordon Brown did something similar - disproportionally hitting poorer people because the wealthier ones get paid by dividends or shares that aren't subject to welfare taxes.
The important thing to realise about the Alan Greenspan era is that despite all the numbers and the inside-baseball jargon about loans and forecasts, his is not a story about economics. The Greenspan era instead is a crime story. Like drug dealers and gambling and Ponzi schemes, bubbles of the sort he oversaw are rigged games with preordained losers and inherently corrupting psychological consequences. You play, you get beat, in more ways than one.
Greenspan staked the scam, printing trillions upon trillions of dollars to goad Americans into playing a series of games they were doomed from the start to lose to the dealer. In the end the printed wealth all disappeared and only the debts remained. ... a pure free market for the suckers, golden parachutes for the Atlases.
The emphasis is mine. Atlases is a reference to Greenspan being a disciple of the self-cult dominatrix Ayn Rand who wrote an unreadable book called Atlas Shrugged, much loved by selfish incoherent bastards everywhere.
Next he looks at the Great American Mortgage Scam. Players like Goldman Sachs (GS) cooked up a scheme where lots of cheap credit funded a housing boom. At street level people were hustling the credit and selling products that were in essence frauds, cooking buyers' credit ratings so that they could get properties and only pay a fraction of the true interest rate and then resell, pocketing the difference. There were three kinds of mortgages AAA - very little risk of default, B - marginal risk and C - high risk.
The lenders would then package this up into something they could resell, the C stuff got sold to hedge funds who have an appetite for risk, and the interest paid on the tranche was higher. The AAA stuff sold to organisations that are AAA rated themselves as low risk paying relatively low interest. They couldn't send the B stuff because there wasn't enough security or margin in them. The risk looked low even for the C stuff because the credit scores weren't too bad. But the scores were all lies because of the housing boom and the fraud from the borrowers and the agents pocketing the fees for arranging it.
So they repackaged the B stuff into 3 tranches again - fraud, however you dress it up, and the underlying credit scores were all unreliable lies because of buyers spinning the housing boom to try and make a quick profit. This is what happened in the UK too.
In the mean time, GS and others were short selling. i.e. betting the value of these tranches would fall. They had no interest in policing the fraud but were about to make billions from it. Once the tranches failed GS and the other pack rats pocketed the bailout money, moved their accounting forward one month to hide a big loss, "orphaning" the bad month, and paid themselves big bonuses. This isn't fraud, of course not.
There's also a detailed description of the AIG failure - two idiots in different parts of AIG working against each other in such a way as to allow GS to strangle another few billion out of the Fed while AIG went down the toilet - all the time the idiots being paid millions per month to screw things up even worse. No regulation, probable massive fraud, no consequences except to the tax payer. This time GS used AIG's holdings in its subsidiaries to force the money, if they'd called for what they were owed AIG would have had to raid people's savings and insurance policies and the political consequences would have been dire as each state stepped in to stop it happening and the ordinary folk would have been left with pennies on the dollar.
GS also had a special place in the negotiations not given to other debtors which has never been explained. They were also the ones who insisted on getting their money - are you starting to notice a pattern here?
Next, in Blowout we look at the bubbles created in the futures markets. Remember how the price of oil and foodstuffs rocketed a few years ago? We were told by our witless media that it was down to China's growth and us driving expensive cars but then the price went down again. Not true, there was plenty of oil and the price hike had nothing to do with supply. There is a market in futures, betting on the price of key commodities. The people who create and consume them use the market to lock in prices so that they can have some stability. There are speculators who are allowed to buy things in the markets so that there is some lubrication, say no-one wants to buy corn on a particular day then a speculator can buy the option and allow a corn producer to fix a price for their corn. There's nothing wrong with this unless a speculator were to buy a significant proportion of something and therefore be able to demand whatever price they wanted for a commodity from the people who consume it. This is one of the things that precipitated the Wall Street crash, the Federal Reserve also shares a lot of the blame, but that's for another day. Regulations were put in place to prevent this, speculators can make money and take positions in the market but they cannot hold everyone to ransom.
So, GS buys itself a commodities broker called J Aron. One of the Goldman people cuts a private deal with the regulator and gets a letter saying that they can be quietly reclassified as a physical hedger, as in a producer or consumer. Oh shit. The fox is in the hen house, it can even buy the hens and keep other foxes from having access to them. Other brokers are also given the same privileges without anyone knowing. Goldman et. al. create financial products based on the commodities market that cause an inrush of money - prices go boom, consumers pay more, prices fall again for a while. Ordinary people all over the world have their pockets picked invisibly by the artificial jump in prices - poor countries starve and in richer ones people lose everything because they work for businesses that suddenly can't make money with these high fuel prices. The snakes in suits have another bonanza because they can ignore rules specifically set up to stop them doing this. Dead poor people don't count, neither do the bankrupt, whether they be Tea Party supporters or not - it's poor black people's fault for being so feckless and using up the social security funds, it must be.
The cycle is create a bubble, lend people money to get into that bubble, bubble bursts, get bailed out and leave the suckers with the debt. Go looking for the next bubble. The first couple of cycles they conned everyone into parting with their savings, but now they're broke. Bubbles create short-term rapid gains that people buy into but the only winners are the people who set up the game when it bursts and goes back to its real price. This has happened all over the world with property - it caused the crash in Ireland and Greece, a Ponzi scheme in property.
Of course, eventually, you can't milk a dead cow. The ongoing crashtopia has meant that there is less money around because it's all been sucked out of our pockets by the booms and busts. Also less revenue from taxes because less people have been left with jobs. So we have the final wheeze - persuade cash-strapped portions of the state to sell access to revenues from toll roads or parking meters or sewage or anything you can think of for a price now so they can balance their budgets. Of course, a fair price where they get say, 80%, of the revenues they would have enjoyed over, say, the next ten years and the bankers' fees and profit come out of the future revenues is what's this is sold for? No, of course not, this is rape - they get about 15% with no price caps and some funds to help the politicians run for reelection for the next couple of terms. This is a great deal for the people using those services and the organisations that run them, at least according to the people who were caught taking bribes to implement them.
Taibbi also covers the unholy rip off that is Obamacare, the disgusting cartel that runs US health insurance who have people run from hospitals that won't play their games with IV drips in their arms is now legally entitled to force people to give them money. These companies are explicitly exempt from anti-trust laws by virtue of a temporary measure that was finagled into a permanent one in Congress. Congress is terrified that the reelection money train will be derailed if these companies are called to account for their actions so nothing happens and even the mildest reforms are blocked. If Obamacare had only reformed this, and not bothered even trying to create a health care system it could have saved billions of dollars and brought a huge number of people affordable health care - but that was never going to happen. Fully one third of the cost to the hospitals is administering claims - this is insane and in the UK some parties want to introduce this after they've destroyed the NHS.
He also describes how the lenders for junk mortgages have managed to set up kangaroo courts in some areas that steal peoples houses from them, even people who are making payments get ripped by oceans of false documents that don't even match up. If you can prove the documents are false then the judge gives the lender more time to cook up some more. You couldn't make this up. In another bit of fraud lenders tell people they can have a payment holiday but don't record it in the documents associated with the loan, instant default, kangaroo court - you're gone baby.
This is about half of the book summarised. I recommend it to anyone who wants a readable explanation of how we've all been conned by the banks and what really goes on. If you live in America it's a must read. I've yet to find a companion volume for the UK and Europe and might have to write it myself....more
Easterly is well known economist, who used to be one of the people he characterises as a "Development Economist" in the book. His central thesis is thEasterly is well known economist, who used to be one of the people he characterises as a "Development Economist" in the book. His central thesis is that experts think that the world's poor don't worry about their rights; they're far more worried about their poverty and must be "helped" by the experts' expertise to get out of poverty. Only then do their rights matter.
Easterly demonstrates with masterful strokes how, in fact, respecting rights is the cornerstone of sustainable growth. You won't put effort into something if the government can arbitrarily turn up with a truck full of soldiers and take it away from you. If a king can just confiscate what you make you won't make much, or trade with other people, because what's the point?
Once the individual's rights are respected, only then, can growth happen.
He goes right back to Adam Smith's invisible hand from the wealth of nations and gives a far more nuanced reading of Smith than the current dogma about markets would lead you to believe is the case. For example, Smith would have been appalled by the monopolists cartels that run much of our economy. The invisible hand is, instead, people working in a self-interested way with the limited knowledge at their disposal, with each other, to create an economy that works for them. There is no expert saying how it should work in an abstract sense. There is no way an "expert" can possibly have all of the knowledge needed to create an economy, or have a deep understanding of people's individual needs. It's simply too big a problem. The knowledge needed is in no single head, and creates a different structure with a different history depending on what the individuals knew or discovered when they collaborated with each other. Of course, there can't be any miracles caused by some anointed leader either.
His other target is what he calls the "blank slate" approach. Experts and the dictators that appoint them start from the assumption that whatever poor country they are about to blight is a blank slate, with no history, no already operating, particular, invisible hand that gets things done. So they proceed to impose a way of doing things on people instead of letting them find it out for themselves, and also trample on the rights of those people in the process "for their own good".
He also discusses at length the works of Friedrich Hayek and Gunnar Myrdal. Hayek has been somewhat hijacked by later thinkers such as Milton Friedman but in The Road to Serfdom he outlines why the old state-socialist vision of experts telling us how to live our lives is deeply flawed, if not fascistic, and he also defended the right of the individual to not have their lives decided for them by the state. In contrast Myrdal's vision of removing children from their families and having them brought up by more "efficient" state-controlled organisations is frankly terrifying. Myrdal's vision for what we now call the third world suffered from the benevolent expert illusion. He wrote a huge treatise Asian Drama An Inquiry into the Poverty of Nations without once mentioning anything to do with the history and culture of the place or the needs of the people there, but instead talking of them like they are children. Myrdal's work invented the so-called science of development economics that Easterly's book is a polemic with.
Easterly makes the point that local custom and democratic tradition meant that Myrdal's vision in his native Sweden made his ideas about reorganising the family not start. People wouldn't let this happen because democracy and basic rights mean such harebrained ideas can't take root. However, in the non-democratic, less developed world they can, due to the lack of individual rights and the dominance of dictators. Of course, the custom and tradition is the product of many generations of trial and error, it won't be perfect, but the best people have come up with so far. It will almost definitely be better than something just made up in the mind of a Myrdal, because it has been tested by the people living with it.
There is a detailed discussion debunking the myth of dictators promoting growth, and what is a mountain of evidence pointing the other way. Also, evidence of growth is called into question. In the long run you will get periods of apparently high growth for purely statistical reasons followed by low or average, but our human propensity for seeing patterns will credit it to an individual or government because it makes a better story, even when the dates don't overlap. A far better measure is to look at the growth on average for a region and see if it matches that of neighbouring countries, then see if there is a significant difference that might be caused by the dictator. This explains the miracle of Singapore far better than any story about Lee Kuan Yew being responsible for it.
One of the most striking examples Easterly covers is that of Korea. People living in an area where the land was awful for growing food, and where "experts" may have spent a lot of time and energy getting the crop yield from terrible to bad instead gained skills servicing motor cars, they swapped these skills with the people who had land that could grow food. This became the motor for the massive technology companies in Korea, but if the experts had arrived they all would still be subsistence farmers growing slightly more food than they might have done otherwise on marginal land.
One of the most telling arguments about the abuse of statistics comes when the Gates foundation are taken to task for claiming they reduced infant mortality in Ethiopia. In essence the figures are made up from guesses looking at what might have happened and have no rigour. The Ethiopian government are also rights abusers on a grand scale, and use British aid to drive people of their land and pay for their political prisons, as well as hold people to ransom (vote for us or starve) over political reform. The book opens with the story of some farmers in the USA being forced off their land and moved to model villages so a British company can grow wood there. Of course, this could not happen in a democratic country like the USA, but it did happen in Ethiopia and Easterly uses this to make the point that individual rights against the government are paramount if you want economic progress. They are not a nice to have, at some undefined point in the future. I am personally very angered that my government's much lauded ethical foreign policy was a smokescreen for this. Of course the government has changed since then, but I am sure the same ignorant, condescending, rights ignoring view holds.
I have used some quite emotional language writing this review, but in fact Easterly is scrupulous in making sure the evidence speaks for itself and does not make any polemical points the way I have here for brevity's sake. He also goes into some depth looking at an area in New York that is now one of the most desirable places to live that was left alone by the zealous bureaucrats by a process of accident and prevention by protest, and how it was transformed because it was left alone while the invisible hand found a better use for it, this is fascinating and also calls into question the current zeal for tearing everything down and evicting people from perfectly good houses because of some grand plan.
To sum up, this is a well written, engaging book. It recasts some writers who have been unjustly hijacked by some of the more extreme political views of the last half century and lets their ideas breathe. The central thesis, that people find excellent solutions themselves when not interfered with or stolen from by the state, is valid. It also calls into question the grip the monopolists have on our economy, to create a metaphor of my own, the invisible hand has become a strangler's and Adam Smith would have had no truck with it....more
I think this is a great book in terms of the ideas it promotes, but for me somewhat flawed.
It's billed as a companion to Domain-Driven Design: TacklinI think this is a great book in terms of the ideas it promotes, but for me somewhat flawed.
It's billed as a companion to Domain-Driven Design: Tackling Complexity in the Heart of Software and as such is less abstract and works through some case studies to get to the meat of what that the original DDD book only hinted at and actually went round and round a lot.
For me it harks back to a lot of things I have recently read and done, in particular the design process for good (for some definition of the word) object-oriented software, as Practical Object-Oriented Design in Ruby: An Agile Primer covers really well. Sandi talks about OO being all about the messages, and you end up with well put together clusters of objects if you start from there.
DDD comes at the problem from a different direction, instead starting out at a higher level of abstraction in the problem domain, rather than creating objects and seeing how they work together. It has some tools for uncovering what the business wants. It starts by looking for a ubiquitous language and making sure that the development and testing silos are speaking the same language as the business.
Of course, it's more complicated than this. Vernon gives the example of a book publisher. The people commissioning a book need different language to describe setting up their relationship with an author and paying them, the people creating the book and illustrating it again have different needs, and distributing and stocking the final physical product is different again. So, if you were trying to create some kind of master book object that met all of these needs you may well end up with conflicting terms, and indeed needs expressed by those terms.
To get round this you break your problem space into bounded contexts, and these become functional areas which each have the own ubiquitous language. This gets around the weird mashing together of functionality that quite often makes large systems a complete pain to maintain. Each area manages its own needs and translates, as and when required, if it needs to talk to another. I believe that a pretty reasonable SOA architecture will fall out of this in the end.
I think I've understood this process after a hundred pages or so, but I don't want to read any more of the book. I had the same problem with the original DDD book as well. The core concepts are pure gold, but the presentation is extremely repetitive, wordy and really hard to read for useful content. Both books needed more pictures and a catalogue of the concepts, organised rather like Martin Fowler's Patterns of Enterprise Application Architecture - with about 100 pages of well-written and illustrated chat with the remainder of the book taken up with a list of the patterns in detail once you know how to use them. In fact, both books need a damn good edit.
The other thing that I find really annoying is things like bounded context, once introduced, are always capitalised Bounded Context. Maybe it's just me, but the constant capitalisation of a concept really breaks the text up and interrupts the flow. The original DDD book does this as well. This capitalising thing is a disease caught from an old-fashioned style of writing, common to people who read the King James Bible, which was written at a time when you would capitalise nouns. Myself, I use italics when I introduce a concept and then either abbreviate it to, say, BC, or just use it as normal. This capitalisation reads like the old pompous religious tracts handed out by slightly demented people going door to door when I was a kid, and I didn't like it then either.
So I would like a list of all of the Ideas Expressed With Capitalisation and how to use them, and about half the amount of text without all the waffle. I gave up because I got the concepts and the rest of the signal to noise was too low.
The cartoons of the cowboys make no sense to me either, and there was a weirdly old-fashioned feel to the one offering your stakeholder a cup of coffee to talk to them. You could probably put each chapter into about three paragraphs and not lose a lot of information.
So, I gave the book four stars because the ideas are incredibly useful, but be prepared to struggle with keeping awake between the useful nuggets.
You first have to get to grips with his literary, raconteur (although he would prefer flâneur) style. It's not a textbook and in fact the heavy number based, more academic, arguments are in other documents you can get from his website. Some readers find the style hard to get to grips with, but I like it.
He also makes words up, like Antifragile itself, sometimes for effect and sometimes because he doesn't feel there is a word that works. I like this playing with words, it amuses me, I play with words a lot myself.
The core idea in Antifragile comes from the ones he explores in the other books. In essence we live in a world that isn't dominated by the comforting shape of the normal distribution. There are events that are rare but will happen and they completely drown out the rest of the things you come into contact with the other 99% of the time. This is why the Black-Scholes equation is bunk, you can't take a derivative of a catastrophic disconnect so the risk it gives is useless, without perfect knowledge of the future. It does work when things are stable, for example I've seen it used in estimating risks in queues in development processes, but as soon as you are open to catastrophic black swan events the figures it gives are meaningless, in fact dangerous.
If you have antifragility then you can take advantage of these sharp disconnects to make you richer, stronger or happier. He uses as examples where systems become stronger when challenged. Of course these are used mostly metaphorically to show that it does happen out there in the real world.
The bit that had me laughing out loud was his description of the "Soviet-Harvard illusion" where people assume that things that happen together have some connection in reality. He gives the example of a Harvard professor going and lecturing birds on how to fly because they wouldn't be able to without the series of lectures and growing his or her own sense of importance because of it. This is his beef with academic theorists, none of their ideas have weight in the real world, and if you look at how we actually do things and what the real risks are when you take black swan events into account.
I also liked the Barbell concept, put most of your risk into very conservative places, and a small amount in very high risk (as in the risk is shape is a barbell, yes?). If the high risk pays off all is good, but you've not lost much if it doesn't pan out. On the other hand, most of us go for "medium" risk, which is in fact not medium at all because of the propensity for the economy to have black swan events. This is in fact the riskiest long-term strategy and we've all bought into it because it's been mis sold and feels safest when times are calm. It isn't because long term times are not calm and never will be.
Similarly, take things like climate change, or fracking. The onus isn't on the people who worry about it to prove there is a problem. Put simply if you start doing something novel or unusual you must prove it doesn't change things for the worse - the onus is on the new to prove its safety. We already understand the old works fine. Again, this is about unknown black swans waiting for you.
So, if you want to meet Fat Tony and a host of interesting characters who live in this place, read the books. But remember - they aren't text books, but a literary exploration of some interesting ideas and you have to be prepared to walk a while with Taleb while he tells you his stories....more
I think this is an important book, and I also think its message might be difficult for some people to reconcile their world view with. Ormerod sets hiI think this is an important book, and I also think its message might be difficult for some people to reconcile their world view with. Ormerod sets his stall out to show that economists have presumed that the economy (and lots of other systems we think of all day every day) actually is a steady state, that markets exist as a relationship between buyers and sellers, with supply and demand following perfect curves that come from perfect knowledge.
Of course, as he points out, this is nonsense. Markets don't exist in a steady state, there are too many factors that cause change. Ormerod cites work done that shows even if the steady state were to occur any kind of shock to it could take as long as a hundred years before it would stabilise again.
The classical view that comes all the way from Adam Smith assumes perfect knowledge, actors in the system need to know what every other actor is doing. This doesn't happen, the textbook view that makes assumptions around marginal costs is bogus, a lot of the time businesses don't know what they are, a lot of the time they don't know what their competitors are doing, and as you can't see into the future, even if they did it probably wouldn't help because you still don't know what your customers may want that you don't do. Most businesses of any size or complexity tend to work using rules of thumb, and the MBA spreadsheets don't help because they assume perfect information. Also, your customers might just not like what you have to offer this season.
He looks at work done on evolution. In particular work done by Raup shows that there is a power series relationship between the frequency of extinction events and their size. Other people have discovered that you can draw almost exactly the same curve if you look at business failures. This has some interesting consequences - if you play with these models and look at an arbitrary measure of 'fitness' in the Darwinian sense then a degree of cooperation is actually good for the long term viability of the system as a whole. Ultra competition forces prices down and isn't good in the long run - neither is cost cutting.
The problem of perfect information is also addressed by looking at simple games, such as the Prisoner's dilemma, played over many iterations and looking at what strategies win over the long term. As well as an arbitrary game involving where on a line you might place your ice cream stand to get the most customers. As soon as you have more than two players, and more than one time of entry into an existing market it becomes almost impossible to do more than work out what the graph of possible solutions to the problem is and understand the shape of it. If you are one of the players it's hard to work out what to do.
Interestingly we have two extinction models - one is external shocks (the asteroid of dyno extinction fame), another is that a niche closes because of some other factor in the competition and a species dies out. Species are competing and cooperating (predators stop prey eating all of the available food and destroying the environment which means both species survive), so there could be a cascade from what looks like a relatively small cause. In fact, both happen, there is no either/or. But modelling this, predicting the future, becomes impossible. All you can do is look at the shape and work out how to cope with what may happen.
Ormerod concludes by giving an overview of the work of Schumpter and Hayek, that is often ignored.
The visions of the world articulated by orthodox economists and by Hayek are fundamentally different. Conventional theory describes a highly structured mechanical system. Both the economy and society are in essence gigantic machines, whose behaviour can be controlled and predicted. Hayek's view is much more rooted in biology. Individual behaviour is not fixed, like a screw or cog in a machine is, but evolves in response to the behaviour of others. Control and prediction of the system as a whole is simply not possible.
Ormerod quotes several examples of systems coming up with robust solutions to problems (even the origins of the mighty US dollar) that weren't obvious until they were left alone to find solutions themselves. A good example of this is the hub and spoke architecture of US domestic airlines that appeared after deregulation. It serves customer needs but no-one could have foreseen it at the time.
The central argument is that central planning doesn't work and solutions that are workable and human come from creating environments where the actors can work together on solutions that benefit them. Essentially.
... it is innovation, evolution and competition which are the hallmarks of a successful system ... Schumpter coined the phrase 'gales of creative destruction'. He argued that innovation led to such gales that the caused old ideas, technologies, skills and equipment to become obsolete. The question ... was not 'how capitalism administers existing structures ... [but] how it creates and destroys them'. Creative destruction, he believed, caused continuous progress and improved standards of living for everyone.
This has serious and interesting consequences for policy makers - the models show that forcing too much competition between actors hurts the overall fitness of the system, and also protection does too. So most of the time they must resist the urge to exhort and fiddle - this comes right back to the work that Deming did all those years ago that no-one remembers and everyone should read. Four days with Doctor Deming
But if they resist the temptation to exhort and fiddle without enough information, if they don't listen to lobbyists and make sure decisions are made locally by the people who know what's needed. If they do all these things, we don't need that many them and they don't need to do much to keep things steady.
I've just started reading Antifragile, which addresses the other side of this equation, given that the world is very unpredictable isn't it better to create institutions and systems that aren't brittle from so much command and control mania and even benefit from small shocks and changes. I will return to this subject again in my next review. I think that I have accidentally stumbled on two books that complement each other. Ormerod's work gives a mathematical, scientific background that looks across many disciplines to say some very similar things.
So, read this book, it will surprise you and leave you thinking about how we should do things so that failure is part of what happens but isn't a catastrophe....more
I have enjoyed the Game of Thrones series right from the beginning, but this book was very disappointing. The writing was very laboured in places, witI have enjoyed the Game of Thrones series right from the beginning, but this book was very disappointing. The writing was very laboured in places, with characters repeating themselves, and there weren't enough dragons in it for me. It also seemed to take far too long for anything interesting to happen, and when something happened it took a long time to actually effect anything.
The title is a reference to the various bits of royalty that have connections with the original Dragon Throne, but the dragons that Dany is bringing up don't do much for 90% of the book.
I was also really interested in what was going to happen to Arya, but the answer was - "not much".
And we finally meet the three eyed raven but again what happens? "not much".
The book could have been 25% shorter and not lost anything, it needed an edit. Rather like the Harry Potter "Order of the Phoenix" it felt like it had been rushed and then left.
The cliff hanger ending was really laboured, and I'm not sure I can be bothered reading book 6. I also thought it was possibly the last book in the series and was irritated that a good number of plot lines are still dangling.
Not sure I care enough to read the last book, assuming there aren't books 7 and 8 after it....more
This book is an easy read but very thought provoking.
One of the most interesting bits was where he examines the difference between the average Cystic This book is an easy read but very thought provoking.
One of the most interesting bits was where he examines the difference between the average Cystic Fibrosis centres and the best ones. All human activity has a bell curve attached to it, but CF treatment is very well understood and systematic. So why does one centre have startlingly better results than another?
In essence the better centre didn't compromise, they didn't think that (for example) 80% lung function was good enough, the patients under their care were expected to have 100% or better.
It's the difference between 99.99% and 99.5% - we'd all be happy with 99.5, but excellence is in the remaining fraction of a percent, because when you add this up over several years this tiny difference means a lot. The sums are simple 99.5 over 5 years will give 97%, 99.99 will still be 99.99 or thereabouts. If you take this up over a patient's life of 30 or 50 years the difference would be even more apparent.
I've hit this in other walks of life, for example project management, where you maybe have a 0.9 chance of finishing on time every iteration. This means that the chances of still being on track are as low as 0.6 after 5 iterations - it's just mathematics. When building software having a fire break every so often to deal down the technical debt and reset the projects is perfectly doable, but if you're looking for excellence in medical care or some other industry that could kill people then you have to become fanatical about getting higher scores
There are plenty of other excellent articles in the book, the fight to eradicate polio and the crazy situation faced by doctors in India are really great articles, and I learned a lot about how we could really help the people in poor countries. I admire Gawande's honesty about his own shortcomings, this gives the writing a validity that it would otherwise lack. And the nutty unjust system that is the law based compensation for medical errors, that wrecks the chances of the poor to get help and helps no-one but the lawyers....more
Seriously, if you want to know why your children's school seems to not be teaching them to think, if you want to know why you hate your job, read thisSeriously, if you want to know why your children's school seems to not be teaching them to think, if you want to know why you hate your job, read this book.
Our entire education system is built around creating good factory workers, who have no initiative and do what they're told. You may sit in a call centre or push numbers into a computer all day - but it's still a factory, think about it. Guess what - the factories are all gone or on their way, and cost-cutting means that you can't compete with folk from other countries. The race to the cheapest is one you can't win. The race to the most useful, caring, innovative - well, you're competing with the cheapest, they're going to lose.
Enter the linchpin - someone who adds value, who cares about doing a good job, who *thinks* about how to get things done more quickly and to a higher standard, a game changer. Your boss will employ a competent drone if no-one else is available, but would prefer a linchpin. Someone who is difficult to replace. If you don't want to be easy to replace then read this book and follow Seth's advice.
The latter half of the book gives a whistle-stop tour of the human brain and goes into some detail about how the "lizard brain" tends to sabotage the thinking brain and choose short term comfort over long term success. It needs to be tricked to get out of the way and allow you to succeed. Godin talks about how the lizard brain made him stop writing the book several times, because it was hard work. The paradox is the lizard brain likes comfort, but is scared of success.
Read this book if you want to escape the whole post-industrial "my job went to India" fear and find your way to a future where you enjoy what you do.
Had this book on tape and listened to it many times back in the early noughties. I was writing a blog post about "The Agile Heart" (http://goo.gl/aBCaHad this book on tape and listened to it many times back in the early noughties. I was writing a blog post about "The Agile Heart" (http://goo.gl/aBCae) and quoted from it, so I got a second-hand copy from Amazon to verify the quote, my tape player having gone the way of all flesh a while ago. Still need to change the quote, but there you go.
Thing is, even now, nearly 15 years after it was first published, it's a gem. The style is designed to look like his presentations, with a slide-like set of images setting up a proposition and then some discussion about the ideas. I've also been reading Linchpin: Are You Indispensable? and they cover a lot of similar ground. Peters' take is more based on subverting the traditional workplace, "brand you", "making everything a project", "making where you work into a company in its own right". Godin talks about the kinds of behaviour and attitude you need to make what Peters talks about become a reality. The two books complement each other. I think Linchpin is an essential read for anyone who cares about where we are today, but Peters' book gives some historical context.
The subtitle you can't shrink your way to greatness is a polemic with the late 90's obsession with the bottom line: how big corporations were doing a slash and burn on their workforce and their working conditions to drive profit up. But if you race to the bottom you end up competing with people who are much poorer than you are and will do the same low-value work for less in a different country. You lose, the whole enterprise loses, and that's it. This is also the theme of Linchpin. Two recessions later we are still learning the same lessons, funny that. Those lessons being that creativity and what Peters terms "emotional labour" (as in giving it some heart and caring about it) will keep you fed, but charging to the bottom won't.
Both authors say that if you're stuck somewhere you can't do "emotional labour" or become a Linchpin - move on. Good advice....more
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