The Devils Advocate

Real risk is what remains unknown after everything known has been considered.

The world respects the intelligence agencies of Israel. Their country is surrounded by people who hate them (India comes a close second in neighborhood hostility) but Israel has prospered with help of its intelligence agencies and their bold actions.

Things were very different years ago. In 1973 Israel was attacked simultaneously by its neighbors and was taken by surprise. In spite of having a lot of actionable intelligence that the attack would happen the decision makers did not take any action. Israel did win the war and then went on to find out why all the intelligence was ignored. The culprit was Group Think. All the people in the decision making group, in spite of acknowledging the intelligence reports, chose to ignore them only to be surprised later. This led to the principal of the Tenth Man or Devils Advocate. The logic is that if 9 people of the group agree on something, the tenth man has to compulsorily take an opposite view and point to loopholes so that all angles can be discussed and a better decision can be taken.

What Am I Missing Here?

Is a good question to keep asking to keep us alert, even paranoid. Being aware of the fact that there is always the unknowable and unforeseen that will disrupt the best plans will help us create better plans with higher margins of safety. History teaches us that trying to be efficient in everything is futile. Margin of safety is a cost until it becomes a life saver. That is why plan B and Plan C are as important as Plan A, which will work most of the time but some times back up will need to be called.

Why is dissent so difficult? Dissenters get labelled and ousted. Conformity kept us in tribes and safe in groups. Being contrarian is painful most of the time. The label of Devils Advocate itself has negativity attached to it.

If everyone agrees with us on something, we need to find dissenters and then listen to them or become one ourselves. It is very difficult to acknowledge a counter view and even more difficult to act on it. It is best to keep an open mind and listen to potential problem areas one may have overlooked, so that the plan can become better.

It Is equally important to come to a decision and once done, the group should whole heartedly back it. Dissenting and agreeing should not become political tools to win points or settle scores. Ideally, the devils advocate should try to see all the follies and the overlooked aspects and then get aligned to the final decision of the group. The idea is to make the final decision stronger and not sabotage it. Real sabotage is in seeing the folly and not pointing it out.

Find time to relax

Don’t underestimate the value of doing nothing – Winnie the pooh

It is important to work hard but it is equally important to rest, relax and recover from hard work so that we are ready for it the next day. All of us want to be productive, efficient and do more in less time. Nothing wrong in that. However we need to understand that even machines have a scheduled downtime and we need the same.

It was easier pre Covid to plan for downtime. When WFH started it looked like a lot of downtime. Now we have got into a zone where there is a lot of work and a loss of sense of weekdays and weekends. Earlier one could “switch off” as there was office and home. Now homes have become offices so the boundary has blurred. With many establishments still closed, activities like dining out and movie watching which were downtime earlier are now out of bounds. Vacations are out too. Being holed up at home has also increased screen time in a big way. Hence downtime has become even more important.    

Downtime is more relevant for a break for the mind rather than the body. The body rejuvenates itself in sleep. It’s the mind that needs some time off. A full-throttle lifestyle can chisel away at productivity, creativity, and happiness, says Stew Friedman, Ph.D., the director of the Wharton Work/Life Integration Project at the University of Pennsylvania and the author of Leading the Life You Want. "The mind needs rest," he says. "Research shows that after you take a mental time-out, you are better at creative thinking and coming up with solutions and new ideas, and you feel more content."                

Some ideas to get it done –

Non demanding tasks like gardening, doing dishes (WFH special) allows your mind to relax

Yoga, walk in the park, jog, swim or any other mild physical activity

Anything that you like to do – read, going to the movies, playing a musical instrument or with your kids and pets, sketching, painting  

There should be only one rule for the downtime – ignore your phone. Checking social media does not count as downtime!!

It’s ironical – the busier we are, the more downtime we need. As the rested fields give the best crops, the rested mind brings more productivity. Do more by doing slightly less.

Sources –

https://www.shape.com/lifestyle/mind-and-body/why-its-important-schedule-more-downtime-your-brain

https://claritychi.com/the-importance-of-downtime/

When Nature Inspires

We have a symbiotic relationship with nature. Not only does it provide for us but also inspires us. People find answers when they are in the lap of nature. Creative people swear by it. Apart from the indirect inspiration by being in nature, there are many examples where we have taken direct inspiration from animals around us. After all, nature has been solving problems for millions of years and only the best ideas thrive in the natural world. Let us look at some of them.

Woodpeckers inspired better black boxes that survive mechanical shocks that come with airplane crashes

Kingfisher inspired scientists in Japan when they were struggling to deal with the sonic boom (which leads to noise pollution) caused by the high speed of the bullet train

Mosquitoes are inspiring us to make pain free (almost) injections

Camouflage techniques

Termite colonies on efficient heat distribution and ventilation in dense populations

The fins of humpback whales helped us design efficient turbines and pumps

Velcro was inspired by tiny hooks on the burrs surface that latch on to any surface

Bird safe glass that was inspired from the spider’s web

Fireflies inspired brighter LED bulbs

The ability of mussels to attach themselves on wet surfaces inspired a better adhesive

Humming Birds are inspiring better helicopter technology

Butterfly wings are inspiring anti counterfeit technology which is better than holograms

Camel toes are inspiring better tyres for use in sand and on Mars  

The shark skin and its ability to stay clean inspired better ships

The most popular story has been how birds have always fascinated us and inspired us to take flight.

There is a very good podcast from BBC – 30 animals that made us smarter with many more amazing examples like these.

It is said that if you want a better answer, you need to ask a better question. We should also add that we need to look around us, not only for inspiration but for the solutions to our problems as well.

Sources –

https://www.bbc.co.uk/sounds/play/p0731jmf

https://www.popularmechanics.com/science/animals/g28912650/animal-inspired-technologies/

The Gospel Of Wealth

 This is the amazing story of Andrew Carnegie (1835 – 1919), one of the four “robber barons” of the USA and the richest man in the world at that time. His autobiography was written over a century ago but makes for a fascinating read even today as the basic principles on which he built his business are even more relevant now.

He lived the classic American dream – a poor immigrant who went on to become an industrialist with passion, hard work and risk taking. His empire was in steel, railroads and construction. By education he only went to school for a couple of years but he rode the waves of modern technologies of his times – telegraph, mining (coal and oil), construction (railroads and bridges) and iron and steel.

Its fascinating to read about Carnegie’s journey. Most of his ventures were partnerships with like minded people who were forward looking, experimental in their approach and were specialists in their fields. They were the first ones to back the modern Bessemer furnaces from England (which only a century ago was the Industrial capital of the world). They had modern book keeping in their factories that allowed them to keep a track of the cost of goods being produced on an (almost) real time basis. Till then most of the steel industry did not know the status of their P&L till the books got tallies at the end of the year. They had a system where workers were rewarded for suggestions in process improvement and some of them rose to the level of partners and plant managers. Most importantly, they developed a process of determining the level of ferrous content in the ore using chemistry and began paying mine owners accordingly. As things were, some mines who had a very high iron content did not produce good results if treated normally and hence found no takers. Carnegie steel works was able to modify their process in such a way that they could use this better ore and pay a lesser price for it as no other mill would buy the ore (thinking it was inferior) and produce the best steel in the world at the lowest cost. The sellers were thankful to them for being the only buyers of their ore and the Carnegie mills enjoyed this arbitrage for a long time. They were backward integrated by owing the coal mines, railroads and ships from transportation of their goods.

Most importantly was his fixation for a solid balance sheet and staying away from projects where the margin of safety was low. The economic and stock market cycles were vicious a century ago (central banks were yet to discover their true power) and the reason Carnegie always had funding available was his fixation on the solidity of their balance sheet. There is a mention in a couple of places in their following the “spirit of the law” and not just “letter of the law” and avoid “cuteness” so that the business had a rock solid reputation. Because of his reputation he also underwrote a number of public issues of stocks and bonds as capital was getting raised to establish large industries.

The best part – The Gospel Of Wealth. He exited the business at the age of 65 (to a JP Morgan controlled entity, another “robber baron”) and focussed the rest of his life in giving away all his wealth. Libraries (2800 approx) and public places were the favourite subjects of their attention along with universities (Carnegie Mellon). Many trusts were also established – the one to support teachers post retirement was close to his heart. What stood out for me was the “heroes fund” that he set up with an objective of helping the families of people who lose their lives in a heroic act that they could have chosen to be a bystander in. Marvellous isin’t it?

He travelled the world and had a great equation with his workers, although he is also infamous for one of the big strikes that took place in one of their plants. He had a big social circle and also was an advisor to politicians on matters of foreign affairs. The book also details the role that parents can play in shaping their children and how his life was shaped by the people around him.

If you are looking for some inspiration you will definitely find it in the life of Andrew Carnegie beautifully captured in his autobiography and Gospel of Wealth. He was the original “Man Of Steel”  (sorry Superman).

Circle Of Competence

Let us keep our minds open, by all means, as long as that means keeping our sense of perspective and seeking an understanding of the forces which mould the world. But don’t keep your minds so open that your brains fall out! There are still things in this world which are true and things which are false; acts which are right and acts which are wrong, even if there are statesmen who hide their designs under the cloak of high-sounding phrases.

Walter Kotschnig

When facts change I change my mind. What do you do sir?

John Maynard Keynes

Let’s start with the most successful investor of our times - Warren Buffett. He is a legendary value investor, an icon and role model for his wisdom, philanthropy and simple lifestyle. He owns Berkshire Hathway which is the holding company for all his investments. Since 2002 the S&P 500 has outperformed Berkshire stock by 2% annualised, in spite of him being very active in the 2008 financial crisis and in spite of 20% of his portfolio being Apple which was bought only 4 years ago (stock is more than 3X in last 4 years). One thing explains the underperformance to a large extent – the absence of technology stocks in the portfolio. Warren became legendary by avoiding tech stocks leading to the dot com crash of 2000 He has continued to avoid technology as the tech giants became more and more ingrained into our daily lives over the last twenty years. There is a link in the sources below for a brilliant article on the subject.

Buffett is public about technology being a hole in his “circle of competence” What makes this even more striking is that Bill Gates is one of Buffetts close buddies. Let us see some successful examples of managements expanding their circle of competence -    

TCS for TATA

UltraTech for Birla

HDFC group successfully seeding and then building several large businesses

WIPRO would still be in the vanaspati business if it had not transformed itself into a software powerhouse

Ajay Piramal from Textiles to Pharma to Financial Services

Reliance from petrochemicals to telecom

Berkershire itself was originally a textile company

Google from search to android to maps to autonomous vehicles to AI

Edelweiss from Investment Bank to Broking to NBFC to ARC to Wealth and Asset Management

To be fair, there are numerous examples of disastrous diversifications and conglomerates becoming too big and unwieldly to manage, but that does not take anything away from the fact that one of the best ways to successfully manage atrophy is to continuously expand your circle of competence.  

We start with some basic ideas and a limited world view. With time if the view does not expand enough to challenge the prevailing conventional wisdom, we have done disservice to ourselves. How can one expand the circle of competence – organically through lifelong learning or inorganically by hiring and empowering competent people. The distinction between the “hype around the shiny new thing” and a new mega trend is indeed difficult to make.     

It is certain that the world will be very different in the next 10, 20, 50, 100 years. The longer the time period the greater the change. However in day to day the world seems the same with minor changes year on year. That is why it becomes important to keep the core principles intact and be flexible about most things. The core principles should not become the excuse not to change. The other certainty is that only those who are able to constantly able to expand their circle of competence will thrive.

Source -

https://marker.medium.com/has-warren-buffett-lost-his-touch-5d1b48f6a5cf

Consistently Mediocre or One Time Brilliant

Grab all the opportunities, especially the ones that were missed the first time around. Not everyone gets a second chance.

Bollywood quiz – remember Uttam Singh? He was the music director of the musical Dil To Pagal Hai. Ismail Darbar? He was the music director of Hum Dil De Chuke Sanam. These movies had one of the most melodious songs of those times and topped the charts in the year of their release 1997 and 1999 respectively. But the music directors are now (almost) forgotten. Not because of some lobby or conspiracy theory but because they faded away having done their best work in those movies. Perhaps full credit should go to their respective directors who could inspire and extract the best work from their team members.

I am sure all of us can think of many sportsmen, actors, businessmen, authors, creative people and others who had great “promise” but could not deliver to that promise. Only a few people have in them that allows them to keep pushing the boundaries and get better and better with time, while most find it very difficult to recreate their own best work? All the devotion of a lifetime distilled into one work which is so sublime that it can never be touched again. Or the blessings of the craft that were yours to command that get taken away from you? Perhaps the skill was a finite resource that got extinguished in the pursuit of perfection, instead of the infinite reservoir that we all desire it to be.

Those who are consistent become great. Those who keep getting better with time become immortal. But is it better to be consistently mediocre than flash in the pan brilliant? I would pick brilliant every time. Only with the benefit of hindsight do we have the ability to see which was our best work. Till then its best to keep trying to be better every day, even if slightly better than yesterday. It all adds up into what we understand better as compounding.

Mediocre or brilliant is not a function of your circumstances and benchmarks. If you were a very good wicketkeeper when Dhoni was around, you did not stand a chance to be in the Indian team, unless MSD was injured. So you waited to shine in the IPL or other formats. Here the context of brilliant is functioning at the best of your abilities and then continuously expanding the limits. Similarly mediocre is not about feeling small if compared to a very high benchmark but working well within your abilities without trying to expand the limits.

Our work in this world is the memorial that we build, for us to look back with satisfaction (and hopefully pride) and for others to admire. It can indeed be wonderful with dedication and sincere effort!!

Paying It Forward

No act of kindness, no matter how small, is ever wasted.

The Silicon Valley has been the hub of entrepreneurial activity and at the forefront of innovations that have taken the world by storm over the past 25 years. While there are many factors (talent, capital, technology, head start) that have contributed to the mega success of the valley, I kept coming across “paying it forward” in the interviews of the super successful valley people. Let’s see what it means and how it has played a large role in shaping up the culture of the valley.

The Oxford English Dictionary defines it as to respond to a person's kindness to oneself by being kind to someone else. To pay it forward means that instead of paying someone back for a good deed, you do a good deed for someone else. There is also a book and movie by the same name.

The most famous story is of Intel CEO Robert Noyce agreeing to meet and coach a wannabe entrepreneur Steve Jobs in 1975. “Bob Noyce took me under his wing, I was young, in my twenties. He was in his early fifties. He tried to give me the lay of the land, give me a perspective that I could only partially understand,” Jobs said, “You can’t really understand what is going on now unless you understand what came before” As Mark Zuckerberg was struggling in his early days as an entrepreneur he turned to Steve Jobs for advise and Steve obliged. Paying it forward.

Fairchild Semiconductor was possibly the first success story of the valley, what is unique was that their employees would not hesitate to show up at their competition to help when called to solve a technical difficulty. What is entrepreneurship if not the burning desire to help others, including your competition. This may be what makes silicon valley tick. The valley works on network. No one can build a solid network without paying it forward, without the willingness to help others.    

             

Another way to think about it can be Gratitude. It inspires kindness connection, strengthening social ties and making one happy.

We also see similar examples in the Marwari and Jain communities where the senior and successful help the young entrepreneurs of the community get started with capital and good advise. May the tribe of people who keep paying it forward keep growing!!