Mentalmodels
We highlight a very interesting article called “How Aha! Really Happens”. In it, the author argues that the notion of the brain’s two hemispheres being extremely specialized – “left” being rational/ analytical, “right” creative/ intuitive – has been proven inadequate since 1998, which means that companies focusing on “right-side brainstorming” exercises to foster innovation are not doing themselves many favors. The main point is this: “(…) our most-accepted approach to problem solving is grounded in an incorrect premise about the source of creativity in the brain.” The implications are very interesting.
We’ve discussed “risk management” the TSA way, but you can’t beat nukes. What can risk management in nuclear plants contribute to the design of systems and policies to monitor and manage risk in global finance? The Financial Times ran an article over the weekend about it, and it’s a thought-provoking and fun read. As we’ve highlighted in the TSA post, “we’ll never eliminate risk” but we can always learn more about ways to mitigate it.
In our Q4 2010 report, out later today, we will publish the second part of the “Sand Castles, Concrete Walls” text we began publishing in the Q3’10 report. Today we’re publishing part 1 on Buysiders.com. In Part 1 we revisit the idea of an “economic moat”, using as a backdrop the Maginot Line – France’s ingenious fortification system which, bypassed by the German army at the beginning of the Second World War, became a synonym for a “white elephant”. More important than reflecting on subjects that interest us as investors is to make use of the Maginot metaphor to rethink the sense of security that guides our actions as shareholders or executives, especially in times of calm.
Another reader suggestion! We’ve written skeptically about “checklist approaches” – in corporate governance, for instance. That said, there are situations for which checklists just work – in aviation and project management for decades – and our reader suggested a classic article about how the proven power of checklists in some fields can be transported over to many other fields. We remain skeptical about such widespread application of checklists, but the book has other provocative insights.
Our hopes for mankind were renewed when we received a great suggestion by a reader today. Better yet, this reader has sent great stuff before and this is no exception. Keep those suggestions coming! We have the full BBC documentary with global health professor Hans Rosling inside. There’s also more on Hans Rosling and data visualization, including tips on how to build your own presentation with this data.
A video by Taleb, who’s getting more and more irritated with QE2. Another video, this one an interview with GMO’s Jeremy Grantham, also strongly argued. And (finally!) a reasonably-toned open letter to Ben Bernanke in the Wall Street Journal, signed by plenty of investment mavericks. Reactions are getting more and more personal, but then again the economic policies are unprecedented. Now also includes Warren Buffett’s open letter to “Uncle Sam”.
Quick post about a NYT story on the inherent difficulties in economics – with obvious applications in investments. Also pretty useful as a teaser for our Castles of Sand introductory text in the Q3 2010 report.
As reflected in Buysiders posts since we started it, we’ve been increasingly interested in and puzzled by networks. There has been a number of talks, books and studies on how to take advantage of social networks – and certainly not just those of the online world. But many behaviors are non-linear, counter-intuitive and therefore extremely hard (perhaps impossible) to model, which has the potential consequence of generating tons of opportunities.
Our Q3 report is almost ready to go, and in it we will publish the first part of a text called “Castles of Sand, Walls of Concrete” – we’ve been working with this text’s theme for a while. We were positively surprised by James Surowiecki in the New Yorker magazine (cover date October 18th 2010) with an article called “The Next Level” that has a lot to do with what we wrote.
A great story called “Just Manic Enough: Seeking Perfect Entrepreneurs” highlights the sort of “good obsession” that seems to be a part of success. In the milder form, we call it “hunger” in an earlier Buysiders.com post – an incessant and relentless drive to be/ become exceptional or, in this case, to create exceptional things. That said, this story relates behavior that borders on the troublesome, and part of the story regards VCs’ efforts to try to separate between “good” and “bad” manic behavior. But as a teaser and to paraphrase the old saying: could we be calling the insane “eccentric” just because they’ve gotten rich?
