Critics and Gurus- Underdogs, Misfits and The Science of Battling Cognitive Bias

There is a marked difference in quality between the book reviews you read in The Wall Street Journal and its online magazine Speakeasy. While the former consistently produces critical review of books the latter is just like any other blog out there that suspends any kind of thinking in reviews. Speakeasy’s latest review is on Gladwell’s new book, “David and Goliath” with a far reaching subtitle of, “Underdogs, Misfits and The Art of Battling Giants”

You can bet I have not read this book nor will I read this (unless of course for a price). But I am here to tell you this book is most likely rife with cognitive biases and you should do everything to avoid it.  Who am I kidding? No one reads books. They just read blog posts about books and retweet some memorable quotes tweeted by someone who read the review.

Most likely you are going to  believe Goliath’s days are numbered and underdogs are already winning.  You know why? Because

Malcolm Gladwell, with his unparalleled ability to grasp connections others miss, uncovers the hidden rules that shape the balance between the weak and the mighty, the powerful and the dispossessed.

I am willing to wager that most also see themselves as underdogs and see lessons from Gladwell’s unparalleled ability to grasp connections. And see the hidden rules are all they need to win their war against their Goliaths.

Unfortunately if underdogs are in a battle against big dog they likely are not going to win. That is just going by the base rate and not because I personally know these underdogs. There are no rules, hidden or overt. There are no connections. There are no lessons to win against Goliaths.

For starters just by the sheer number of battles that go on there are bound to be a few where the Davids win due to sheer luck.  Anyone motivated and looking for connections or hidden rules in these victories will find something in these.

Second, after the Guru makes up his mind about rules to look for he will find them in these carefully chosen examples, rules that explain how David won.

Third the Guru can only look at those Davids that lived to tell the story. That is the survivorship bias. What about so many other battles that are not recorded and available for the Guru to apply his unparalleled ability to grasp connections?

Just because some underdogs can win their battles against Goliaths does not mean any underdog will win. But that will be lost among the many loyal followers.

Finally a point by point response to questions the book supposedly answers

When is a traumatic childhood a good thing?

Seriously? I hope you do not start traumatizing your child. Say you round up 100 people and mistreat them everyday. Day after day half of them die, finally leaving one person. Would you really take a lesson from the last man standing?

 

When does a disability leave someone better off?

At best this is downward counterfactual thinking and at worst this is plain cruel. What makes the Guru think that person would not have achieved even greater things if not for the disability?

Why are the childhoods of people at the top of one profession after another marked by deprivation and struggle?

Are you kidding me? Let us grab a random sample of said people and rate their childhoods. How different is that number from general population?

Good for the Guru, the editor decided to call it  “The Art”. Anything and everything can be swept under that title and those underdog critics who ask for Data are simply ignored. For these Goliaths, the data seeking Davids are not even worth fighting against.

 

 

Startups and Cognitive Biases

If you are not irrational enough it is highly likely you won’t start a venture.

See also Mind of Analyst.

Fail fast because successful companies failed before they succeeded

There are several versions of this statement, one way or another they glorify failures and in the name of exhorting startup founders these inspirational statements lead one to believe

  1. After a few failures success is inevitable
  2. You must fail first to succeed
  3. Fail fast so you can succeed
  4. Failures signal impending success
  5. “Failure can be a true blessing in that it educates you and prepares you for success” (from here)
  6. “Remember that most successful entrepreneurs fail good and hard before they finally make it” (same source)

All these assertions are happy to point out popular examples. The problem is the assertions are derived from the very examples they are using as evidence.

First let us make something very clear. Success and Failure are the only two possible outcomes for any venture you undertake. But the fact that there are just two outcomes does not mean they are equally probable. It is not the case of tossing a fair coin and calculating the odds of heads or tails.The chances of success and failure can be and are very different. If you take the base rate (looking at the success rate of thousands of ventures and small businesses) the success rate is 3 to 5%.

Second  even if we assume that Success and Failure are equally likely, a series of failures does not mean inevitable success. Take the coin example. The probability of getting 10 Tails in a row is same as the probability of getting 9 Tails in a row followed by a Head.

Lastly the fact that those who succeeded had failed in the past is irrelevant. Those who make such an argument pick only the success stories that are popular, recent and available to them. When you only look at those who succeeded and are still in business you are leaving all those who did finally succeed and gave up or still trying without success. Even in these cited success stories success is mostly random rather than a result of their failures. The fact that those who succeeded had “failed hard” does not mean when you fail you will succeed.

Granted they learned from their mistakes but you do not have to learn from your own mistakes.  You do not have to fail to learn. Failure is not the true blessing. Insane success with hundreds of billions of valuation even when your venture has no real product or clear value add is true blessing.

Those who advise you to fail are not being intellectually honest. Their advices are no different from those advising a gambler to bet on a slot machine that had been coming up empty for the past few hours.

 

Using Metrics Over Myths in Hiring

For the first time in my life I filled out the March Madness bracket. I never followed NCAA Basketball nor do I plan on following now. I did it only because of the simple idea from The Wall Street Journal to do Blindfold Brackets.

In WSJ’s Blindfold Bracket they stripped down names of the teams and substituted them with made up names. For each game they present the two teams with their made up names but their real statistics. Based only on the metrics and stripped of any affiliation or bias to actual teams you need to pick the winner.

I do not know all the teams that are playing this year.  Bias would not have been an issue for me but without the metrics presented I would have been clueless. So I filled out my first bracket. I used the following simple rule and applied it consistently for all the match-ups I was presented.

  1. I treated all the metrics as linear  interval scale from 1 to 5.
  2. I ignored the metric on Hot streak. It didn’t matter (teams will regress to the mean)
  3. Offense and Defense are my first criteria. Both got equal weight with an exception.  When a team with better offense faced a team with better defense I picked the defensive time unless Offense is 2 points better than opposing team’s defense.
  4. If both Offense and Defense are equally balanced I picked based on experience.
  5. I mostly ignored 3-point shooting because I did not bother to check prevalence of 3-point shooting in NCAA.

You can see my bracket here. On the first big day, the WSJ standings say I picked 16 of the first 20 games correctly. Let us see if I will regress to the mean.

The point is how relevant this simple example is to how we hire a candidate, choose our gurus or fund a venture. In his book, “Thinking, Fast and Slow“, Nobel laureate and Behavioral Economist, Daniel Kahneman writes how easily we succumb to irrelevant attributes in hiring people.

We rely on looks (the candidate looks the part), how she talks, etc. We invent subjective metrics like, “hustle”. We focus on most recent success or failure and ignore the history.  We hire based on interviewing skills over wherewithal to get the job done. We let the first impression and answer to the first question bias the rest of the interview process. Once we form an opinion we keep digging for selective evidence to support our case.

Kahneman recommends a metrics driven approach to hiring.

  1. Come with a set of metrics you are going to evaluate all candidates on. You will apply the same metrics and same scale to all.
  2. Treat the different metrics as additive. If you want use weighted scale but use it consistently.
  3. Make an upfront commitment that you will hire only the candidate with highest total score regardless of the intangibles and your gut feel.
  4. Design a list of questions and ways you will measure the candidates on these metrics. Score each candidate on these metrics.
  5. If you insist on image and look, define its own metric but make sure it does not contribute  more than 10% of the total.

This may not work all the time but is likely to work most of the time and you have a reproducible process compared to the one based on your gut, driven by irrelevant factors and subject to your cognitive biases.

Are you prepared to hire based on falsifiable but repeatable metrics over axiomatic myths?

And by the way, it appears my choice for NCAA championship is Kansas. Same as the most common choice of others playing Blindfold Bracket.

When an idea stands alone, separated from its originator

I recently heard a NPR piece about the discovery of a copy of da vinci’s  Mona Lisa painting. Martin Bailey from The Art Newspaper had this to say in that piece

BAILEY: Well, I think maybe too much mystique has built up about this picture, the “Mona Lisa.” I mean, it is after all the world’s most famous painting. But people don’t look at it fresh. They look at it almost as an icon. And if you go to the Louvre, people aren’t actually really looking at the painting. They just want to sort of be in the same room with it. And for me, the beauty of the copy is that it actually makes us look at the painting as a painting, and I hope it will have that effect on other people too.

What Bailey says for world’s most famous painting and our reaction to it applies to famous ideas by famous gurus and our reactions to those.  We don’t seem to look at the ideas as just an idea when it is uttered by someone popular or with status.   As Galbraith wrote, anyone with position is assumed to be gifted with deep insights.

We may not grasp the idea nor we may analyze whether or not it is applicable to our case. But we just want to be part of the “conversation”. We tweet, retweet and write about it just to be in the same room as the Guru and his idea.

What if we are able to separate the idea from the one who said it?

What if I copied the idea of a Guru, word for word, intonation for intonation and stated it as mine? Will the mere act of copying make it stand alone?

Will we see the idea for what it is with all its biases?

 

Ideas that are convenient, popular, and acceptable have become sacrosanct

There is incessant and increasing attack on our intellect. We are fed simple ideas based on convenient samples and bombarded with regurgitation of weak ideas extended by other popular gurus.

As Galbraith wrote first in introducing The Conventional Wisdom by John Kenneth Galbraith, ideas that are convenient, popular and acceptable have become unquestioned truths. Times may change, new fads replace old fads – but our acceptance of what is convenient, familiar and popular as sacrosanct remains the same.

We now have instant communication, huge follower-ship, everywhere connectivity. Yet these remain the channels for spreading the same type of unquestioned ideas that suffer from cognitive biases and analytical errors.

Here are some nuggets from Galbraith’s essay, see how relevant these remain to what we see in social media:

  1. On attacking ideas: Anyone who attacks such [weak, incorrect] ideas must seem to be trifle self-confident and even aggressive. The man who makes his entry by leaning against an infirm door gets an unjustified reputation for violence. Something is to be attributed to be poor state of the door.
  2. Acceptable==Truth: Audiences of all kinds most applaud what is merely acceptable. In Social Comment, the test of audience approval, far more than the test of truth, comes to influence comment. (The more an idea gets blogged about, Retweeted …)
  3. Tribe Think:  Ideas come to be organized around what the community as a whole or particular audiences find acceptable. (Voting in Quora)
  4. Self-Esteem: We also find highly acceptable what contributes most to self esteem. The individual knows he is not alone in his thoughts – that he has not been left behind and alone.
  5. Power of Titles and Positions: Before assuming office, he ordinarily commands no attention. But on taking up his position, he is immediately assumed to be gifted with deep insights. Think of how we treat the ideas of those have the title “author, speaker” in their Bio. What would otherwise have been labeled as commonplace advice suddenly gets anointed as “inspiring advice” or “deep insight”.

It is time to call out that the Gurus have no robes!

Other articles:

  1. Evidence Based Management
  2. Informed Decision Making
  3. Fallacies of Cure-all Prescriptions