Worse than a crap shoot

I have become more convinced that success depends less on good initial decisions and more on the ability and willingness to kill off bad ones. You just cannot predict with much precision. It doesn’t mean that you don’t plan, but it does mean that you plan to eliminate many of your endeavors and to modify all of them based on evolving conditions and new information.

This posture makes most of us uncomfortable. We like to believe there is more certainty in this uncertain world. We like to believe that experts, sufficiently intelligent and disinterested, could make big plans that would work. All of the big dystopias of the 20th Century were based on this error, as well as most of the little ones.

The fact is that uncertainty cannot ever be banished. The reason the free market works better than the alternatives is not that it can plan better but because it can through up lots of plans and trim off those that don't work. Our world cannot be perfected.

This does not mean that we are helplessly adrift in a sea of uncertainty. We can create robust systems that will function and survive in a wide variety of possible scenarios and will prosper in thrive among the probable ones. We never really have a choice between two alternatives. We have a multiverse of choices, all of which change in fundamental ways based on our choices. It is a process not a plan, or maybe the plan is the process.

The beginning of wisdom is recognition that you cannot understand all the variables in any of the decisions you must make and the next step is to know that you have to make decisions anyway. It is not a failure to cut a bad decision and even a good decision will eventually become unworkable. This is the way of all life.

I recently cut a program that I had advocated last year. It was a great star ... last year. This year it is a dog and had to die. In my discussions, some colleagues argued that it had been so successful and we had invested so much that maybe we should keep it. No. You have to cut unproductive projects to make room for new ones.

When my father wanted to express uncertainty, he would use the term "it's a crap shoot," referring of course to the game of playing dice. I only wish it was that easy. Dice are very certain. There are only thirty-six possible combinations and the probabilities of each are well known. You are six times more likely to roll as seven as you are to roll snake eyes (two ones) or box cars (two sixes). Risk is predictable. If you can find someone dumb enough to keep on betting that he will roll box cars before a seven, you will take all his money sooner or later, probably sooner. Unfortunately the world is not that certain so we have to have lots of options.

Posted by Christine & John at March 27, 2013 10:24 PM
Comments
Comment #363485

3 thoughts:

1. The definition of stupid, is doing the same thing over and expecting a different result.

2. Programs are never cut; the on going big lie from the left is that the right wants to cut programs. Base line budgeting prevents any cuts; only the percent of increase is cut.

3. Pro 1:7, “The fear of the LORD is the beginning of knowledge: but fools despise wisdom and instruction.”

Posted by: DSP2195 at March 29, 2013 6:47 AM
Comment #363494

While I write my novel, I’ve come up with multiple plans for different parts of the story. I’ve changed significant parts of the story from what they were, and added much I didn’t intend to at the first.

But I feel that the management of what I’m doing has been much easier, and my work faster for that planning. The point of planning is not to get everything right, though you should try not to leave things to chance. No, point of planning is make yourself aware of more than just things on the top of your head you might want to react to, and to make real decisions before the fact.

You can always make a real decision after you’ve made your plan, or acknowledge the decisions, however uncertain, that you really wanted to make. But it helps to be in that place where you’re not having to think of a thousand things at once, but instead can focus on a few, and see how things develop.

There are predictable things in our world, to be sure. Not everything is uncertainty. However, one of the key issues is knowing things, and not only that, knowing you need to find something out, in order to understand your situation.

Posted by: Stephen Daugherty at March 29, 2013 1:15 PM
Comment #363500

Stephen

I am not advocating lack of planning, but rather a different, more process based method. It is more evolutionary than intelligent design.

Perhaps I don’t express it well, because I have been developing this over years of working. Some of it is based on my reading about systems and my increasing belief in my own ignorance but also my ability to adapt.

During most of my career, I have been very “lucky”. Situations improve when I am around and lots of difficult problems turn out to be not so bad. I have reached a high level of success with this luck. People like to work with me and I am in some demand from people asking advice. My answer, that you have to be lucky does not satisfy.

So I have been thinking about method and have identified some that I habitually use and that I notice others who make things look easy also use. Some are simple and obvious, although not always easy, such as making sure you get lots of opinions.

But the determining factor in my success, IMO, is the ability to see changing patterns and adapt solution. This, I think, is the key to luck.

Lots of things are predictable or have predictable odds associated with them. This is risk. Uncertainty is when we really cannot come up with good odds.

The thing that is interesting is how fast people make themselves believe unpredictable events were indeed predicted. People fool themselves about their prescience.

Back in 1990, I read a book called “Decision Traps.” This book talked about how we fool ourselves. It was one of the best short books I ever read. One habit I took from the book was to write my predictions of important events. After the event has happened but BEFORE looking at my prediction, I write what I think I predicted. It is amazing how my version of my prediction is better than the real one. I am not trying to lie to myself, but human nature is such that we overestimate our own wisdom as well as our own contribution.

Anyway, I notice in the successful people I know the ability to adapt. Some of them later claim that things went according to their plans. But I have never in my life seen or heard about a plan about complex human interactions that worked w/o significant alternations. Conditions change and so must our plans.

It is very stupid to put all your efforts behind any single plan or method. We can never know which one will develop.

Posted by: C&J at March 29, 2013 2:31 PM
Comment #363501

Stephen

One more thing - when leading people or projects, you often need to project more confidence than you feel. Confidence expressed by the leader can make a okay plan work. The trick is to change course when you have to and not seem to be betraying earlier confidence.

Consistency is a very good thing, but it should be consistency in values and process, not consistency in particulars of the plan.

Posted by: C&J at March 29, 2013 2:35 PM
Comment #363511

You’re right about confidence and changing course. It’s what made our military so successful when allowed to be.

Posted by: Royal Flush at March 29, 2013 6:32 PM
Comment #363538

Your post quickly reminds me of goal setting. A very successful entrepreneur wrote an article not too long ago about how he never sets goals more than 6 months out. There are too many variables and while these goals looks great on paper the reality is the ever changing set of circumstances in our lives renders these long term goals (almost) meaningless.

Posted by: BZA at March 30, 2013 3:59 PM
Comment #363573

Just a bit of contrarian thought on this issue. While the ability to adapt to changing circumstances is important, it is also equally important not to abandon important goals in the face of short term setbacks or less than ideal initial outcomes. Sometimes, simply slogging through a difficult period and keeping the troops focused on the ultimate goal is the best course.

Posted by: Rich at March 31, 2013 10:27 AM
Comment #363576

Rich

I think it is important to maintain long term goals and values. It is the precise planning I think is silly. We may keep our eyes on the prize, but the exact nature of the prize may change and the tactic we use to get it certainly will.

Posted by: C&J at March 31, 2013 10:58 AM
Comment #363578

C&J,

I agree with your basic point. However, it has always struck me as to how often managers have no plan, no vision for the future, no real goals. This is especially true in large bureaucracies which tend to promote the status quo. I guess what I am saying is that I would like some long term goals, vision and at least some planning before I worry about the adequacy of that planning or execution.

Posted by: Rich at March 31, 2013 11:37 AM
Comment #363581

Rich

without vision the people perish. But vision is hard and often punished in large bureaucracies.

In large bureaucracies, planning and training are often used to replace vision. This is one of the biggest problems with government administration.

This is the paradox. Vision is “soft”. Bureaucracies demand and even brag about having a “culture of measurement.” But many times they choose to measure things that are easy to find or demonstrate rather than the real issues.

Posted by: C&J at March 31, 2013 2:24 PM
Comment #363639

Plans are made to be changed- that’s how I could sum up my feeling. I feel it’s easier and more productive to improvise when you’re not forcing yourself to confront the whole damn problem that way, when you’ve got the scaffolding and you’re applying the improvisation mainly to the detail work.

That way, it’s more humanly manageable to adjust.

That’s one of the reasons I favor a stronger regulatory sphere. I think it’s absurd to expect every American to become an expert in every discipline, so they don’t get taken advantage of. Nobody’s got the time or the ability to look out for themselves on every issue.

Government in the modern age is about keeping society well-structured enough that people don’t have to make improbably versatile experts out of themselves for the situation to work. I mean, if that’s what we’re counting on, on everybody to become an expert in mortgages, or an expert in car safety, or an expert in climate science, in order to avoid policy disasters, then we’re screwed.

We need to respect the consequences of having a society where the division of labor has become so profound in its variety. We need to respect the fact that in practical terms, few are going to have the time or the inclination, much less the natural ability, to juggle all those disciplines. We can’t all be Buckaroo Banzai, Bruce Wayne, or whatever fictional polymath you can think of. Some of us just got to stick to learning how to do, and keeping up with doing what we know how to do best.

Just go to your local library and look around. Look at all the professions you might have taken a whack at, and didn’t. All those things you never learned, or learned, but never kept sharp through practice. There is a world of things even smart guys like you and I never learn, much less become competent in. We choose to pursue other matters with our time. We sacrifice the opportunity to learn all things, to have the time, the money, and the inclination to learn what we choose to learn.

We can’t be sufficiently knowledgeable to be able to defend ourselves against other people not doing their jobs right. There has to be a division of labor, so to speak, concentrated on making sure that commerce in this country is fair, even if people aren’t always conscientiously up to snuff on the matter at hand.

Of course, the question is how to do this elegantly, with a minimum of interference with healthy, productive activity.

One last point: I would argue this metaphorical point: we may not always be able to predict the weather, but we can often anticipate the climate that makes such weather more likely.

The lower the percentage we ask of those investing on the margin, for example, the more likely we are to see greater and more irresponsible speculation. Why? Because it makes things easier for them.

The dark nature of the derivatives market, and the way those assets are accounted for makes it easier for the banks to hide losses, making it easier for them to overextend themselves.

So on and so forth. Not everything is precisely predictable, but there are certain events that definely become more likely when we relax certain rules, or put certain policies in place.

And really, when you factor human creativity in, the picture on things becomes more complex, so one needs to think in term of an environment in which behavior takes place in, rather than simply just a direct reaction, with back and forth interactions.

Posted by: Stephen Daugherty at April 2, 2013 2:47 PM
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