Critical Thinking

Jeff Bezos on Day 1 vs Day 2

by Limbic on January 16, 2019

I love this letter from Jeff Bezos and wanted to quote it at length. The full letter is at Recode.

 2016 Letter to Shareholders

April 12, 2017

“Jeff, what does Day 2 look like?”

That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?

Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.

True Customer Obsession

There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.

Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.

Resist Proxies

As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle, and very Day 2.

A common example is process as proxy. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second.

…Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design.

Embrace External Trends

The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.

These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace. We’re in the middle of an obvious one right now: machine learning and artificial intelligence.

High-Velocity Decision Making

Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations. The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business – plus a high-velocity decision making environment is more fun too. We don’t know all the answers, but here are some thoughts.

First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong?

Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.

Third, use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes.

This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time.

…Fourth, recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision.

“You’ve worn me down” is an awful decision-making process. It’s slow and de-energizing. Go for quick escalation instead – it’s better.

So, have you settled only for decision quality, or are you mindful of decision velocity too? Are the world’s trends tailwinds for you? Are you falling prey to proxies, or do they serve you? And most important of all, are you delighting customers? We can have the scope and capabilities of a large company and the spirit and heart of a small one. But we have to choose it.

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William Dershowitz on Multitasking

by Limbic on August 11, 2018

“Multitasking, in short, is not only not thinking, it impairs your ability to think. Thinking means concentrating on one thing long enough to develop an idea about it. Not learning other people’s ideas, or memorizing a body of information, however much those may sometimes be useful. Developing your own ideas. In short, thinking for yourself. You simply cannot do that in bursts of 20 seconds at a time, constantly interrupted by Facebook messages or Twitter tweets, or fiddling with your iPod, or watching something on YouTube.

I find for myself that my first thought is never my best thought. My first thought is always someone else’s; it’s always what I’ve already heard about the subject, always the conventional wisdom. It’s only by concentrating, sticking to the question, being patient, letting all the parts of my mind come into play, that I arrive at an original idea. By giving my brain a chance to make associations, draw connections, take me by surprise. And often even that idea doesn’t turn out to be very good. I need time to think about it, too, to make mistakes and recognize them, to make false starts and correct them, to outlast my impulses, to defeat my desire to declare the job done and move on to the next thing”

https://theamericanscholar.org/solitude-and-leadership/

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Effective Theory

by Limbic on June 25, 2017

I was reminded of this concept of Effective Theory in an article on Economics by Arnold King.  Heren it is explained by Harvard physicist Lisa Randall:

Effective theory is a valuable concept when we ask how scientific theories advance, and what we mean when we say something is right or wrong. Newton’s laws work extremely well. They are sufficient to devise the path by which we can send a satellite to the far reaches of the Solar System and to construct a bridge that won’t collapse. Yet we know quantum mechanics and relativity are the deeper underlying theories. Newton’s laws are approximations that work at relatively low speeds and for large macroscopic objects. What’s more is that an effective theory tells us precisely its limitations — the conditions and values of parameters for which the theory breaks down. The laws of the effective theory succeed until we reach its limitations when these assumptions are no longer true or our measurements or requirements become increasingly precise.

Kind writes:

Whereas the term “science” often is used to connote absolute truth in an almost religious sense, effective theory is provisional. When we are certain that in a particular context a theory will work, then and only then is the theory effective.

Effective theory consists of verifiable knowledge. To be verifiable, a finding must be arrived at by methods that are generally viewed as robust. Any researcher who tries to replicate a finding using appropriate methods should be able to confirm it. The strongest confirmation of the effectiveness of a theory comes from prediction and control. Lisa Randall’s example of sending a spacecraft to the far reaches of the solar system illustrates such confirmation.

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LARPing

by Limbic on June 25, 2017

“For employees (campaign staff), there is an opportunity for live-action roleplaying (LARPing) disruption instead of actually taking the existential risks of disrupting. LARPing disruption is fun..Don’t mistake LARPing disruption for the real thing.Venkatesh Rao on “Software Adoption Bullshit” via Ribbonfarm newsletter

“The High Modernists claimed to be about figuring out the most efficient and high-tech way of doing things, but most of them knew little relevant math or science and were basically just LARPing being rational by placing things in evenly-spaced rectangular grids.” Review of “Seeing Like A State” by Scott Alexander

I first internalized the meaning of this phrase when I saw it in the Ribbonfarm newsletter above.

LARPing suddenly crystallized and gave a name to a phenomenon I have witnessed my whole life: people playing roles as though they were in a solipsistic theater, rather than living their roles.

LARPing is common amongst the wealthy, where dilettantism is endemic. I know of entire companies that exist merely to provide a realistic LARPing set for someone to play CEO / Founder, with sometimes hundreds of employees cast as actors in their personal drama.

It reminds me of the old vituperative “poseur“, but LARPing is more collaborative. You need a cast to play along. It is group or collective posing.

 

 

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Mental Model: Inversion

by Limbic on April 15, 2017

One of the best mental models I know: Inversion.

From Warren Buffet and Charlie Munger to star Quarterback Tom Brady, the secret to success is to simply avoid stupidity.

In the Brady case, here is an example I read in the Farnam Street newsletter. A quote from his coach Bill Belichick:

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Skills for the 21st Century

by Limbic on April 15, 2017

From 2011, but good. The four drivers of change:

  1. Longevity, in terms of the age of the workforce and customers – Retiring Later
  2. Smart machines, to augment and extend human abilities – Workplace Automation
  3. A computational world, as computer networks connect – Internet of Everything
  4. New media, that pervade every aspect of life – Online Privacy
  5. Superstructed organizations, that scale below or beyond what was previously possible – AirBNB
  6. A globally connected world, with a multitude of local cultures and competition from all directions- Geek NationFrom http://jarche.com/2014/07/four-basic-skills-for-2020/

Matched by the 10 core skills:

  1. Sense making –  Ability to determine the deeper meaning or significance of what is being expressed
  2. Social intelligence –  Ability to connect to others in a deep and direct way, to sense and stimulate reactions and desired interactions
  3. Novel and adaptive thinking –  Proficiency at thinking and coming up with solutions and responses beyond that which is rote or rule-based
  4. Cross cultural competency –  Ability to operate in different cultural settings
  5. Computational thinking–  Ability to translate vast amounts of data into abstract concepts and to understand data based reasoning
  6. New Media Literacy – Ability to critically assess and develop content that uses new media forms, and to leverage these media for persuasive communication
  7. Transdisciplinary –  Literacy in and ability to understand concepts across multiple disciplines
  8. Design Mindset –  Ability to represent and develop tasks and work processes for desired outcomes
  9. Cognitive load management –  Ability to discriminate and filter information for importance, and to understand how to maximize cognitive functions
  10. Virtual collaboration – Ability to work productively, drive engagement, and demonstrate presence as a member of a virtual teamFrom http://www.top10onlinecolleges.org/work-skills-2020/

All started with the Institute for the Future document.

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A wonderful letter on censorship from Charles Bukowski that I found on the Farnam Street Blog. Bukowski had one of his books removed from a library and this was his response to the person warning him about it. The emphases are mine. It was written in 1985:

The thing that I fear discriminating against is humor and truth.

Censorship is the tool of those who have the need to hide actualities from themselves and from others. Their fear is only their inability to face what is real, and I can’t vent any anger against them. I only feel this appalling sadness. Somewhere, in their upbringing, they were shielded against the total facts of our existence. They were only taught to look one way when many ways exist.

I am not dismayed that one of my books has been hunted down and dislodged from the shelves of a local library. In a sense, I am honored that I have written something that has awakened these from their non-ponderous depths. But I am hurt, yes, when somebody else’s book is censored, for that book, usually is a great book and there are few of those, and throughout the ages that type of book has often generated into a classic, and what was once thought shocking and immoral is now required reading at many of our universities.

I am not saying that my book is one of those, but I am saying thatin our time, at this moment when any moment may be the last for many of us, it’s damned galling and impossibly sad that we still have among us the small, bitter people, the witch-hunters and the declaimers against reality. Yet, these too belong with us, they are part of the whole, and if I haven’t written about them, I should, maybe have here, and that’s enough.

may we all get better together,”

Absolutely wonderful.

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Trend is Not Destiny

by Limbic on March 26, 2016

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Stop and just go read the superb Farnam Street Blog on “The Central Mistake of Historicism: Karl Popper on Why Trend is Not Destiny“.

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Michael Mauboussin

by Limbic on March 26, 2016

Just heard an interview with Michael Mauboussin on The Knowledge Project podcast (a Farnum Street blog production) and he was super interesting.

A few quotes form the podcast. These are paraphrased:

  • “An expert is someone who has a predictive model that works.”
  • “When it comes to decision making, Daniel Kahneman advises us to use the statistical baseline first (system 2) then Overlay your intuition (system 1), not the other way around or you have confirmation bias.”
  • Evaluate your decision making – track your results. The objective is to make quality decisions over time (like Munger and value investing which is more about avoiding loss than making huge gains).
  • Lessons from Colonel Blotto – if you are dominant player you want to keep It as simple as possible – fewest possible battlefields.    Also for weaker then dilute the power Of the powerful opponent.  Create more complexity, more battlefields.
  • Advice for Parents: Instill Growth Mindset (praise for effort not characteristics) , consider opposite viewpoints and learn how to bet ( decision tracking). Teach kids that even though they win a bet, if it was an irrational/reckless bet, they will lose in the long run. Offer them recommendations, not orders. If you are right, they will learn to respect your recommendations.

He recommended these books:

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How to compose a successful critical commentary

by Limbic on December 25, 2015

“In disputes upon moral or scientific points, let your aim be to come at truth, not to conquer your opponent. So you never shall be at a loss in losing the argument, and gaining a new discovery.” –  Arthur Martine,  1866 guide to the art of conversation

In this everyone-is-a-critic culture, Daniel Dennet asks, “Just how charitable are you supposed to be when criticizing the views of an opponent?”

He offers what he calls “the best antidote [for the] tendency to caricature one’s opponent”: a list of rules formulated decades ago by the legendary social psychologist and game theorist Anatol Rapoport, best-known for originating the famous tit-for-tat strategy of game theory. Dennett synthesizes the steps:

  1. You should attempt to re-express your target’s position so clearly, vividly, and fairly that your target says, “Thanks, I wish I’d thought of putting it that way.

  2. You should list any points of agreement (especially if they are not matters of general or widespread agreement).

  3. You should mention anything you have learned from your target.

  4. Only then are you permitted to say so much as a word of rebuttal or criticism.

From the incomparable Brain Pickings

See also the superb:  A Code of Conduct for Effective Rational Discussion

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