- Title: Skin in the Game – Hidden Asymmetries in Daily Life
- Author: Nassim N. Taleb
- Publication Date: 2018
- Recommendation Score: 5 / 5
Nassim Taleb is a non-conventional thinker. He is a mathematician and cares a lot about rigor and logic. He is a philosopher and cares about the consequences of theory on people’s life. This is reflected in his writings when theory (science) and practice (real life) are intertwined.
“Skin in the Game” is the 5th book in Nassim Taleb’s Incerto series. It deals with asymmetries in daily life (decision-making, risk management, politics, religion, etc.). This post summarizes some of the ideas of the book.
Ethics and Competence
In the introduction, the author focuses on the idea that one cannot disentangle ethics and competence when dealing with human beings. What does it mean that you trust a professional? Do you trust their knowledge and skills? Or their ethics and moral values? Or both?
Some people have skin in the game, such as citizens, merchants, businessmen, entrepreneurs, artisans, etc. Others have no skin in the game such as bureaucrats, administrators, policy wonks, consultants, etc.
No-skin-in-the-game people keep the upside and transfer the downside to others. Skin-in-the-game people, on the other hand, take their own risk and keep their own downside.
Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.
The golden rule vs the silver rule
The golden rule is: Treat others the way you would like them to treat you. The author argues that the following silver rule is more robust: Do not treat others the way you would not like them to treat you.
The Hammurabi code of laws and “skin in the game”
Continue reading “Skin in the Game – Nassim Taleb”
Salient events are easier to remember, so we give them more importance in our decisions. Psychologists call this simple fact “the Availability heuristic”, which is a cognitive bias.
Remember that cognitive biases are mental shortcuts that help us survive in a dangerous world, but they fool us in a complicated one. When you see a lion in the Serengeti, you need to run without thinking. But when you decide to buy a car, it would be better to avoid running to buy the one you see frequently in the ads and think thoroughly before making the decision.
Examples of the Availability Heuristic
Salient memories from one’s experience will impact its future decision, when searching for a job, a neighborhood, a partner, a vacation destination, etc. We focus on that specific event and forget about the rest. We make a poor decision, and we often regret it.
Plane crashes are so rare that everyone knows about them when they happen. Yet they seem to horrify people much more than car accidents, which cause many more victims… Sharks, Tsunamis, Terrorist attacks, etc. These are a salient cause of death, but they have, by far, the least number of victims compared to car accidents or medical errors.
The media are an enormous « availability bias » machine. Journalists and reporters are both victims and contributors to this social phenomenon. A journalist that reports “a plane departing from Berlin had landed safely in CDG airport this afternoon” will most probably lose his job. Continue reading “Outsmart the Availability Heuristic”
Checklists are a simple, powerful, yet often ignored, business tool. They provide a reliable and quick shortcut that improves our performance in the task at hand with less mental effort. Whether flying a plane, operating a surgery, troubleshooting a system, or making big decisions, checklists are always useful.
This post gives the reasons why checklists are paramount in some situations and emphasizes their importance in the process of decision-making.
What is a Checklist?
A checklist is a pre-defined standard operating procedure to follow when performing a specific task. It is a proven business tool that improves performance and minimizes human errors and mental effort.
How to build Checklists?
Both knowledge and experience contribute to checklist definition, in a closed feedback-loop fashion, where the checklist definition contributes to the knowledge and experience too.
Checklists are useful for frequent routines, which reduces the cognitive effort needed to perform them. Nevertheless, we can use them in any other task, profession or industry.
Why do we need Checklists?
Simply put, we need to use checklists to perform some tasks because we cannot be sure we have considered all the details of the task at hand. Our brains have blind spots. Sometimes, we overlook even the most basic fact of the problem, which may lead in some circumstances to catastrophic results. In a hospital, for example, a nurse may treat the wrong patient if the name is not verified. Worse, a surgeon may operate the wrong patient! Yes, it happened and may happen again even for the highest skilled nurse and surgeon.
Here are some reasons why we are often unable to consider all the facets of the problem at hand:
- We simply forget: as human beings, we are prone to forgetting. This is why we often write things down in the form of to-do lists and checklists.
- Complexity: as human knowledge and technology grow in complexity, so does our professional tasks (finance, software design, hardware design, etc.). The memory alone does not help.
- Limited attention: pay attention to something, and you’re almost sure you are missing something else. It is a scientific fact that our conscious mind can handle only one object at a time, and leaves rest for the unconscious autopilot. That is why we may forget the pizza in the oven if we engage in an interesting discussion. This is also the principal cause of car accidents, medical errors, etc.
- Expertise: an increasing number of professions require super-specialized experts. A domain expert is prone to both complexity and overconfidence and may overlook basic facts.
- Cognitive biases: our cognitive biases, such as the confirmation bias, the planning fallacy, the availability heuristic, etc. are the major cause of errors.
Continue reading “Checklists: where the Disciplined Outperforms the Genius.”
Projects go over-budget and over-schedule; small ones, like renovating your kitchen, and huge ones, like constructing the Sydney Opera House. One main reason is our overconfident optimistic approach to planning. Behavioral psychologists call this the “Planning Fallacy“.
This post defines the concept of planning fallacy, gives examples of its consequences on some global projects, and provides some tips to mitigate it.
The Planning Fallacy
The planning fallacy is when we underestimate the time and resources needed to complete a project. We are often optimistic about our performance and the outcome of the project, so we take our desires for real plans.
The planning fallacy is a cognitive bias that fools our decision-making ability into considering the best-case scenario. It has a somewhat positive side, which is risk-taking. This cognitive bias allows us to take both small risks, such as opening a small business, and huge risks such as starting a war.
Catastrophic Project Plans
The following chart presents some major projects around the globe that went catastrophically over-budget. Notice the trend; the bigger the project, the higher the overbudget.
Mitigate the Planning Fallacy
Among the methods to mitigate the planning fallacy, we present the major three: Continue reading “Outsmart The Planning Fallacy”
- Title: Deep Work – Rules for Focused Success in a Distracted World
- Author: Cal Newport, PhD
- Publication Date: 2016
- Recommendation Score: 4 / 5
The population of “knowledge workers” is increasing with the shift towards an information economy. These workers, such as researchers, journalists, engineers, computer programmers, designers, etc. need “deep work” to be productive and creative. However, they often find themselves in a working environment where they are prone to distractions and frequent interruptions. They are losing calm offices to get open spaces, they spend their time in multitasking, jumping between meetings, chats, and emails, they are expected to remain available for instant messaging platforms, and sometimes they are forced onto social media.
Cal Newport addresses these topics in his book “Deep Work – Rules for Focused Success in a Distracted World”. He coined the term “Deep Work” to define the professional activities performed in a state of distraction-free concentration, and that stretches one’s capabilities to their limits.
Deep Work is Valuable, Rare and Meaningful
The author argues that:
- Deep work is valuable for learning, productivity, and creativity.
- Deep work is rare since we live in a world where we are distracted permanently.
- Deep work is meaningful and brings calm and satisfaction to our lives.
The book investigates several ways to incorporate deep work into our working habits, illustrated with real-life stories. Continue reading “Deep Work – Cal Newport”
Becoming a manager is a stressful, yet rewarding, experience. Beginners in management often fail in their first role. This is mainly because of their misconceptions about what it means to be the boss. In this post, you will find the main misconceptions about management, reality, and tips for successful leadership. The main misconceptions of the new managers are:
- I can rely on the same skills that led me to the management role.
- Being a manager means I am more independent.
- Formal authority is a source of power.
- Results delivery requires controlling people.
- I must build relationships with individual subordinates.
- I will make sure that the operation will keep running smoothly.
1 – Be a leader. Don’t be a star.
- Myth: I can rely on the same skills that led me to my new role.
- Reality: The required skills to be a successful manager are completely different. You learn them mostly by experience. You need to put your emotional intelligence at work.
- Tip: Prepare yourself for the management role before you take it. If you already are a manager, it is never too late. Learn and practice.
2 – Stay humble, you can’t do whatever you want
- Myth: Now I can implement my brilliant plans. I can change everything.
- Reality: You are tied with a complex chain of interactions. You discover that someone who works for you could get you fired.
- Tip: Build your network inside the organization. Learn how to negotiate and influence. Understand the interdependencies and stay humble.
3 – Don’t rely on your formal authority. You must earn it.
- Myth: My position is a source of power.
- Reality: You can’t be more wrong. It will surprise you that people will not give you respect and trust you for your formal authority, you need to earn it.
- Tip: Demonstrate competence (listen more than talk), character (your willingness to do the right thing) and influence in the organization.
The more talented the subordinate, the less likely he/she is to follow orders.
4 – Don’t seek compliance. Seek commitment.
- Myth: I must get compliance from my subordinates. I am in charge; I control.
- Reality: More often than not, direct reports will not respond when you tell them to do something.
- Tip: Build commitment by empowering individuals to achieve team goals. Don’t use orders.
Continue reading “6 Tips for New Managers”