One of the more unfortunate things about people is the intersection of responding to incentives and recognition primarily, thinking short-term in time, and not reasoning through events that don't happen.
When an engineer or surveyor goes on and on about improving earthquake or hurricane measures, they're generally perceived as a nag, burden, and hassle -- until you get a bad hurricane or earthquake that costs lives, causes immense human misery, and does millions to billions of dollars in possibly preventable damage.
In business, you wind up with lots of these too. There's dozens of little things that only have a 1% chance of occurring, but the majority of people will perceive you as a hassle if you try to bring them up.
For instance, a friend of mine owns a large bilingual IT firm in a highly developed, non-English country.
At the advice of one of his mentors, he moved his salespeople's commission structure from the old system that was based just on revenues, to one that had "diversification" as a criteria. This was because his firm was doing most of their business with just a few very large clients, and they had immense leverage over his company. And if one of them should switch providers, they'd have gotten hit with a serious crunch, and potentially would have had to lay some of their excellent team that had taken many years to build.
Of course, predictably, everyone except his wife (who works with him and supports him wholeheartedly) hated the change and wanted to rebel against it. He eventually, through sheer of force of will and determination, pushed it through and then re-improved morale.
But in this case, there was a never a "happily ever after" ending where people realized the wisdom of what he'd done. His business is now much less likely to hit a cashflow crunch, and they have more negotiating leverage and less desperation when dealing with big clients.
Will it ever be noticed? Probably not. Only in a nightmare scenario of losing two of their top clients in a short period of time, which has a low likelihood of happening and hopefully never will. He de-risked and shaved off a couple percentage points of risk that his business gets hammered, but no one notices that and no one cares, except in the math of the Armageddon-type events that you hope never occur anyways.
There's tons of other examples, from getting your legal documents tight, to getting structures set up correctly, doing tax-planning in advance (which might not be fatal if you fail to do it, but will very likely be your largest single cost if you're making significant profits, and could have been much lower with some pre-planning a year or two earlier)...
...and you see this everywhere, on a personal level with people who don't floss, don't stretch, and so on. The downsides to not doing these activities are far off, there's no recognition or immediate payoff, and so they rarely happen.
The solution? Well, it's difficult. Some education of key people you're involved with into thinking about these low-odds high-damage risks can be good. Building a set of partners, collaborators, key executives, a board, whatever, that appreciates and thinks this thing through periodically is probably the best way, but people that think in this way are rarer than not.
And y'know, to add insult to injury, you've also got to do all those day to day imminent pressing things like growing revenues, dealing with operations and fulfillment and customer service, and all the other high-recognition obviously valuable tasks.
Yet... making those computer backups, actually testing your backups, having just a little bit of emergency plans if you're operating in an unstable country, diversifying your client base, diversifying your currency of payment if your primary payment currency is unstable, having a lawyer look over your contracts, getting your tax-planning and legal structures correct, taking the time to get a decent relationship with a decent bank, doing just a little bit of planning in case a key employee, contractor, partner, client, or supplier leaves your company or goes under...
...you don't win awards for that sort of thing, and it isn't sexy. But devoting just a bit of time to it is key if you're going to build something big. Those small-chance high-damage risks can be absorbed by a gigantic conglomerate, but it could spell the end of a fledgling successful company. A couple hours a month thinking them through, and some resources devoted to cleaning them is a wise play.
Have you read Taleb's "Black Swan"? He's a jerk, but he's also brilliant. This is the core message of the book: Black Swans are phenomena that are highly nonlinear, and hence cannot be predicted via extrapolation. In those cases you should not behave as you normally would in cases of statistically predictable risk * consequence, because that behavior assumes the math is pretty stable and as risk approaches zero and consequence approaches infinity, it's not stable. (That's not really the right metaphor - he's talking about situations not just where the risk is very tiny, but where it is impossible to say clearly what the risk is because it is an event that does not occur often enough to have a measurable risk, or one to which you can meaningfully fit a function curve.)
So instead, your beahvior in these cases should simply be to position yourself so that you are out of the blast radius of negative Black Swans, and within the blast radius of positive Black Swans, and that's really it.
He said people complained that the book didn't tell them "what to do", and he said "Don't smoke. Don't eat sugar. Etc." And they'd say "No I want to know what to do!"
Since he's a jerk I imagine he enjoyed the whole thing a lot.
I find that those low-level solidification fixes improve self-image. Getting my digital shit (backups, encryption, etc) in order has made me feel like more of a person who has hit shit together in general, for instance. Our self-image is buffed by what we repeatedly do.
Interesting read on self-image: http://lesswrong.com/lw/g0e/narrative_selfimage_and_selfcommunication/
I am also reading Maxwell Maltz (Psycho-Cybernetics) on the same topic, but no comments there yet.
My friend Joshua Spodek was kind enough to write about his experiences building out public art exhibitions. One of the lessons he has is counterintuitive - that it can be a faster path to success to get large art projects off the ground than it is to work your way slowly through the art world. Here's Josh -
Art can be an insular field and breaking in is a common challenge, so I'd like to share it with a community that values success and victory. I hope there are insights others can use and share too.
My background is in science and entrepreneurship, but I've developed a passion for making art. I'm not content with just creating it -- like any artist I want exposure and recognition (sales aren't bad either).
The challenge is that New York's art world is notoriously xenophobic and tends to promote from within. My credentials -- a PhD in astrophysics and a company running for over a decade -- mean little to them. Even making great art only gives a foot in the door.
I have a huge challenge that my work doesn't photograph at all and video doesn't capture it that well. When galleries take an interest in my work, a version this conversation happens:
One of the biggest mistakes I see young people making is spending their money capriciously and not saving. If your bank account or investment portfolios aren't growing, or you are not expecting them to grow something is awfully wrong. S&P 500 has been shown to go up around 10% every year in the long run. There are treasury bonds and other investment vehicles as well which can ensure that your money is at the very least keeping up with inflation.
When I started earning some money last year I ended up investing or saving up 4/5 of it, and kept spending my money frugally and only splurged once or twice. Being frugal, saving up, and thinking about the future is crucial, especially at a young age because you have so much time for compound intrest to take hold
One of the clearest ways to picture this was an example given in the book the slightest edge, whereby two young post-graduates at the age of 24 agree decide that they want to retire millionaires and will invest 2,000 a year into an 12% account every year until they can make it a reality.5 years later they meet each other and ask how its been going. One of them has followed the investing religiously, while the other hasn't. The one who hasn't asks the other how close he is to his investment goal and the the other friend says "I'm done". It turns out that with just 6 years of investing, the compounding interest will be sufficient enough to get him to 1 million at retirement. The other friend decides he has to get to it, but when he does the math, he realizes he has to invest 2,000 a year for the next 33 years!
This story underscores two things. One the cost of waiting, how waiting to long to do something keeps you from taking advantage on the magic of compounding interest. and second how important investing and not overspending is.
The biggest reason by far not to overspend though, is so you can increase your freedom. I'm not saying money always equals freedoms, but having a good amount of money in the bank significantly opens your options and lowers your anxiety levels. Living paycheck by paycheck, or not having a clear long term financial goal can lead to distress and insecurity.