First Explore. Then Exploit.

Albert einstein in the early 1900s. Aretha Franklin in the 1960s. Steve Jobs in the 2000s. There are certain spans of time when scientists, artists, and inventors have phenomenal periods of productivity.

This is also true of most people—at least on a smaller scale. Aren’t there periods when you feel like you’re effortlessly flourishing at work, while other times you feel incompetent and uninspired? You might recognize these periods of concentrated success among your friends, peers, and competitors too.
The Northwestern University economist Dashun Wang calls these special bursts of creativity “hot streaks”—a term usually reserved for sports. “Ninety percent of people have a hot streak in their career,” Wang told me. “Most people have just one. Some people have two. It’d be nice to have more.”

In the past few years, Wang has peeled back the mystery of why these special creativity clusters happen and how individuals and companies can multiply and extend them. Three years ago, he co-wrote a paper with researchers at Northwestern, the University of Miami, Penn State, and Central European University, in Budapest, that used large data sets to trace the career outputs of more than 20,000 artists, film directors, and scientists. The researchers found that almost all of them had clusters of highly successful work, as determined by higher-than-average art-auction prices, IMDb film ratings, or scientific-journal citations. “Bursts of high-impact works [are] remarkably universal across diverse domains,” he and his co-authors wrote. Just about everybody has a period in their life when they produce at their best, even if, unlike Aretha, they aren’t pumping out some of the greatest work of the 20th century.

So where do hot streaks come from? And how can each of us plan for one, or two—or 100? Wang spent several years trying to answer that question. His search uncovered mostly dead ends. “The more we tried and the more failed attempts we had, the idea of hot streaks seemed very random,” he said.
 
The conventional wisdom is that hot streaks happen in our middle age. One famous analysis of scientists and inventors found that their ability to produce Nobel Prize–winning insights and landmark technological contributions peaks between the ages of 35 and 40. Another analysis of “age-genius curves” for jazz musicians found that musical productivity rises steadily until about the age of 40 and then declines sharply.

Wang’s analysis—which used a broader measure of productivity for a much larger group of people—didn’t find anything special about the productivity of middle-aged people. Instead, hot streaks were equally likely to happen among young, mid-career, and late-career artists and scientists. Other theories fell flat too. Maybe, he thought, getting hot is a numbers game, and hot streaks happen when you produce the most work. Or maybe extremely successful work periods are all about focusing on one specific type of art or scientific discipline—as the 10,000-hours-of-practice rule popularized in Malcolm Gladwell’s book Outliers suggests. Or maybe hot streaks are more about who else we’re working with, and we’re most successful when we cozy up to superstars in our domain. But no explanation fit the data set.

Until this year. This summer, Wang and his co-authors published their first grand theory of the origin of hot streaks. It’s a complicated idea that comes down to three words: Explore, then exploit.

In 1991, the Stanford Graduate School of Business professor James G. March published an influential paper, “Exploration and Exploitation in Organizational Learning,” which broke down work into two big categories: exploring new ideas and exploiting old certainties. Say you’re a car manufacturer. Every year, you must decide between investing in future innovations, such as self-driving software, and finding ways to squeeze new revenue out of existing technologies and materials. Too much fanciful R&D spending, and this year’s profit plummets. Too much emphasis on tweaking existing product lines, and you get squashed by some fresh upstart in a decade.
 
Individuals face the same choice. Every week, I can write about pretty much whatever I want. I love exploring new ideas and emerging industries. But if I write an article about a totally new subject, it’s possible that I’ll do a bad job, or that nobody will want to read about it. Meanwhile, whenever I write articles about the future of work, a lot of people read them. Should I allow my curiosity to wander into new fields that might be dead ends for my career, or should I double down on becoming a full-time work futurist? It’s the same tension: explore or exploit?
 
In Wang’s most recent analysis, he found that artists and scientists tend to experiment with diverse styles or topics before their hot streak begins. This period of exploration is followed by a period of creatively productive focus. “Our data shows that people ought to explore a bunch of things at work, deliberate about the best fit for their skills, and then exploit what they’ve learned,” Wang said. This precise sequence—exploration, followed by exploitation—was the single best predictor of the onset of a hot streak.

Wang pointed to Jackson Pollock, the artist known for splashing and dribbling paint on a canvas. When Pollock started painting, in the early 1930s, he experimented with a variety of styles, including abstract art and surrealism reminiscent of Marc Chagall’s work. Suddenly, in the mid-’40s, he honed a mystically messy “drip style,” in which he painted almost exclusively for about four years. In 1949, Life magazine made him a household name and asked if he was “the greatest living painter in the United States.” The next year, at the height of his fame, Pollock abruptly abandoned his drip method—and started experimenting again, until his death.

At least for artists, film directors, and scientists, neither exploration nor exploitation does much good on its own. “When exploitation occurs by itself,” Wang and his co-authors wrote, “the chance that such episodes coincide with a hot streak is significantly lower than expected, not higher, across all three domains.” Only when periods of trial and error are followed right away by periods of deliberate focus does the probability of a hot streak increase significantly.

The research suggests something fundamentally hopeful: that periods of failure can be periods of growth, but only if we understand when to shift our work from exploration to exploitation. If you look around you at this very moment, you will see people in your field who seem wayward and unfocused, and you might assume they’ll always be that way. You will also see people in your field who seem extremely focused and highly successful, and you might make the same assumption. But Wang’s paper asks us to consider the possibility that many of today’s wanderers are also tomorrow’s superstars, just a few months or years away from their own personal hot streak. Periods of exploration can be like winter farming; nothing is visibly growing, but a subterranean process is at work and will in time yield a bounty.

Several years ago, the journalist David Epstein wrote the book Range: Why Generalists Triumph in a Specialized World, which argued that early specialization was a poor strategy for succeeding in a world of complex problems that defy easy answers. Instead, Epstein said, people are better off exploring a variety of fields and approaches and braiding their knowledge to produce new solutions. Wang’s research seems to back up that claim. The central paradox of the explore-exploit sequence is that hot streaks are examples of specialization, but specialization itself doesn’t lead to hot streaks. Today’s best exploiters were yesterday’s best explorers.

Source –
https://www.theatlantic.com/ideas/archive/2021/11/hot-streaks-in-your-career-dont-happen-by-accident/620514/

Internal Vs External Benchmarks

There are two ways to measure how you’re doing: Against yourself and against others. Internal vs. external benchmarks.

There’s a time and a place for both, but I’ve come to appreciate how much happier you can be if you appreciate when internal benchmarks should get the spotlight.

If Jeff Bezos started a new company that got to $100 million in revenue and sold for a billion dollars, it would mean … nothing to him, both financially and on his list of accomplishments.

But if I did it, it would be … unbelievable. Everything would change.

So accomplishments have a cost basis. What you gain or lose is always relative to where you began. And since we all begin at different spots, there’s a range in how people feel when experiencing the same thing.

In his book on the final days of World War II, Stephen Ambrose writes about a wounded American soldier who’s carried back to the medic tent. He knows he’s going home – his war is over. “Clean sheets boys!” he yells back to his comrades still fighting. “Clean sheets, can you believe it! Clean sheets!” Living in foxholes for weeks caused soldiers to daydream about normal life, and few things tickled their imaginations like the dignity of clean sheets. Not money or status or respect or glory. Just the absolute pleasure of clean sheets. It’s an extreme example of when the outside world ceases to exist and everything becomes relative to an internal benchmark.

A lighter version of this happens in business and finance, which are home to so many staggeringly successful people whose lives are broadcast over a staggeringly loud social media system.

If you measure your career solely relative to them – the external benchmark – you’re on the never ending path of feeling inadequate, incompetent, and poor. Nothing you do will ever feel that great because someone is always smarter than you, more popular than you, better looking than you, getting richer faster than you, and making sure you know about it.

It’s not until you focus on internal benchmarks and see how far you’ve come, relative to where you began – the gap between today and your own cost basis – that you have a good view of where you stand and what you’ve accomplished. Even if it’s the career equivalent of clean sheets.

External benchmarks can be great because so much innovation comes from the urge to chase whoever’s in front of you. They’re also just necessary to survive a competitive environment.

But great things backfire when taken to an extreme, and external benchmarks are no different:

External benchmarks are deceiving because accomplishments are advertised while the ugly, hard, and painful parts of life are often hidden from view. Almost everything looks better from the outside. When you’re keenly aware of your own struggles but blind to others’, it’s easy to assume you’re missing some skill or secret that others have. Few things are as awful as chasing something you eventually realize you never actually wanted.

People play different games, some of which might not be related to your own goals. Investors range from nineteen-year-olds learning how to day trade to endowments with century-long time horizons and everything in between. But so often there is just one external benchmark: How you have performed in the last 365 days relative to the S&P 500. Can we not imagine a world where different people have different goals stemming from the different games they play?

Another version: Working 100-hour weeks and squeezing every penny out of your career potential is the ultimate goal for some people, but a nightmare for others whose priority is, say, quality time with their kids. “To each their own” only works when benchmarks are internalized.

The key to a lot of investing success is to be motivated by opportunity while immune to FOMO. The difference is subtle, but mostly comes down to FOMO being a byproduct of anchoring on the external benchmark of how rich other people are getting.

It’s hard to know how much of some external benchmarks owe their performance luck, which you cannot replicate no matter how smart you are or how hard you try. This is especially true when you’re anchoring to a specific person or company’s success.

The most important point may be this: Internal benchmarks are only possible when you have some degree of independence.

The only way to consistently do what you want, when you want, with whom you want, for as long as you want, is to detach from other peoples’ benchmarks and judge everything simply by whether you’re happy and fulfilled, which varies person to person.

I recently had dinner with a financial advisor who has a client that gets angry when hearing about portfolio returns or benchmarks. None of that matters to the client; All he cares about is whether he has enough money to keep traveling with his wife. That’s his sole benchmark.

“Everyone else can stress out about outperforming each other,” he says. “I just like Europe.”

Maybe he’s got it all figured out.

Source –

Internal vs. External Benchmarks · Collaborative Fund

Learnings from the fall of FC Barcelona

How the best soccer team in the world lost its luster

FC Barcelona produced the greatest homegrown talent of any club but failed to keep the production line rolling. Business leaders can heed its warnings.

If you had to date the peak of FC Barcelona’s reign in global soccer, it might be November 25, 2012. That night, Barça, which plays in the Spanish topflight La Liga, won 4–0 at little Levante. When Martín Montoya replaced the injured Brazilian Dani Alves after 14 minutes, all 11 of Barcelona’s players on the field had come through the club’s youth academy, La Masia. Even Barça’s coach that day, Tito Vilanova, was a Masia alumnus. Arguably, this homegrown 11 were the best on Earth. Soccer clubs pride themselves on having strong youth training programs, but this team was something special. Most of the players had won the World Cup with Spain in 2010. Another, the little Argentinian Lionel Messi, was widely recognized as the world’s best footballer. Barcelona at the time was all-dominant: in the decade from 2006 to 2015, it would win the European Champions League, the biggest prize in club soccer, four times.

 

How the mighty fall. For years now, Barça has regularly been thumped by better teams in European competition. This August, after running up debts of about US$1.5 billion, Barça was forced to let Messi join Paris Saint-Germain. The Catalan team couldn’t afford to offer him a new contract even after he had agreed to halve his pay. With the club in decline while I was researching my recent book, The Barcelona Complex, I sometimes felt as if I were writing about Rome in 400 AD with the barbarians already inside the gates or perhaps a chronicle of the humbling of GE, a once mighty industry giant whose management relied on past strategies for success with disappointing results. Barcelona’s fall from grace offers lessons for companies that lead or aspire to lead their sectors. The club fell into the trap set for every company that’s number one: it got lazy while its rivals copied its best ideas and built on them. It failed to create a sustainable succession plan for its aging players, and it was profligate with its finances. Barcelona failed to understand that greatness is always a moving target, not just on the pitch.

 

How the best soccer team in the world lost its luster? Talent unmanaged More than almost any other industry, professional sports revolve around the war for talent. The difficulty teams face in finding the people is something that most companies are starting to experience in the current tight jobs market. The cheapest way to find talent is to source it in-house, as Barcelona did brilliantly in the Messi era. But then the club fell victim to its own success. Once the team was packed with world-beating players, there was little scope for new talents to make their own developmental journey. When the playmaker Thiago Alcântara emerged from La Masia around 2010, he found his path to the first team blocked by the world’s best midfield in Xavi, Andrés Iniesta, and Sergio Busquets. Thiago ended up leaving for Bayern Munich. In 2020, he starred in Bayern’s 8–2 demolition of his old club. The Brazilian Neymar did find a place in the great Barcelona side, but he too eventually saw his development blocked. Neymar aspired to something greater than playing as Messi’s right hand, running onto the Argentinian’s passes. He wanted to be Messi: the fulcrum of every attack, winner of Ballon d’Or awards for European Footballer of the Year. In 2017, he left to become the main man at Paris Saint-Germain. Messi considered him modern Barcelona’s most significant loss. (Ironically, the pair are back together again at PSG this season.) More fundamentally, Barça fell into the trap that catches industry leaders across all sectors: complacency.

 

When an organization is number one, the temptation is to stop thinking. Why innovate when you are already the best? Paco Seirul·lo, a physical trainer who over the decades has turned into the guardian of Barça’s culture—he is known as El Druida (“the druid”)—told me that the club had never bothered to study the great Masia generation to understand how it had emerged. Meanwhile, every rival club was studying Barcelona. They followed the lead of the long-running advertising slogan of rental car firm Avis, which was number two in the market: “We try harder.” The German Hans-Dieter Flick was just one of countless European coaches who visited La Masia to discover its secrets. In 2020, Flick coached the Bayern Munich team that crushed Barça. During Barcelona’s glory years, as one La Masia coach admitted to me, he and his colleagues never made study visits abroad to see what other clubs were doing. They traveled only to explain their success to admiring foreign colleagues at conferences.

 

Over time, every big soccer club’s youth academy in Europe became La Masia: a university whose curriculum was devised by the legendary Dutch soccer player Johan Cruyff when he took over as manager at Barça in 1988 and explained that winning at soccer meant mastering the rapid passing game. For years, the on-field geometry of Barcelona’s interplay left opponents bewitched. But once everyone else has become La Masia, the original Masia loses its lead. “Football is evolution,” summed up Pep Guardiola, coach of Barcelona in its peak era, from 2008 to 2012. Especially in Europe, where the best teams play one another constantly, the sport improves almost by the month. After a team lost to Barcelona, it would go home and work out what it was doing wrong. Everyone kept getting better—except Barcelona. The one-time innovators were overtaken, in a process that the economist Joseph Schumpeter labeled “creative destruction”: new entrepreneurs come along with new ideas, and the pioneering systems of yesteryear are junked. If you play the soccer of 2012 in 2021, you will lose.

 

Messy money

When you’re number one, you also tend to get careless with your spending. While the money pours in, you stop counting every penny. In 2018, Barça became the first club in any sport ever to gross more than $1 billion in annual revenues. And so when Jorge Messi, Lionel’s father and agent, kept threatening that his son would leave unless he got another pay rise, the club kept giving in. From 2017 through 2021, Messi earned a total of more than €555 million ($674 million), according to highlights from his 30-page contract published in Spanish newspaper El Mundo, and not denied by player or club. Bayern Munich’s chairman Karl-Heinz Rummenigge said he had “had to laugh” when he saw the contract: “I can only compliment him on managing to negotiate such an astronomical salary.”

 

A senior Barça official told me Messi’s salary had tripled between 2014 and 2020. He added, “Messi is not the problem. The problem is the contagion of the rest of the team.” Whenever Messi got a raise, his teammates demanded one as well. By 2019, average first-team pay at Barça was $12.2 million a year, the highest for any sports club on Earth, according to the Global Sports Salaries Survey by Sportingintelligence.com. (Rival soccer clubs Real Madrid and Juventus were second and third in the rankings, with NBA basketball teams completing the top ten.)

 

In any talent industry, the talent has substantial power vis-à-vis the employer. But at Barça, the talent was so successful, experienced, and well-paid that its power became close to absolute. Quique Setién, head coach for seven unhappy months in 2020, said he was always aware that Messi could get him fired at any moment. By then, the survivors of the great Masia generation were effectively running the team and quite simply not working hard enough. Almost every day at Barcelona was take-your-children-to-work day. Kids would kick a ball in the changing room with their dads before a game. And whereas other Spanish teams would fly to road games the day before the game, to acclimatize, Barça usually flew on match day itself. The Barça players preferred it: they liked being at home longer.

 

As the dominant players aged, Barça’s training sessions slowed down. That was a shock for the Frenchman Antoine Griezmann, who had come from Atlético Madrid in 2019. There, he recalled, “Every training session was at the intensity level of a match.” Barça paid €120 million ($142 million) for Griezmann. In August 2021, it lent him to Atlético for free, his talent wasted for two years in what had become a dysfunctional team. Barcelona is now in freefall, and yet this is also a strangely creative moment at the club. The people on the inside understand that having lost their greatest talent, it’s time to start rethinking. Some of the spirit of innovation that once made this the world’s leading club may now be returning.

 

Source –

https://www.strategy-business.com/article/How-the-best-soccer-team-in-the-world-lost-its-luster

Gaining Experience or Expertise?

In some circles, Ben Hogan is credited with “inventing practice.” Hogan was one of the greatest golfers of the 20th century, an accomplishment he achieved through tireless repetition. He simply loved to practice. Hogan said, “I couldn't wait to get up in the morning so I could hit balls. I'd be at the practice tee at the crack of dawn, hit balls for a few hours, then take a break and get right back to it.” For Hogan, every practice session had a purpose. He reportedly spent years breaking down each phase of the golf swing and testing new methods for each segment. The result was near perfection. He developed one of the most finely-tuned golf swings in the history of the game.

Deliberate practice refers to a special type of practice that is purposeful and systematic. While regular practice might include mindless repetitions, deliberate practice requires focused attention and is conducted with the specific goal of improving performance. When Ben Hogan carefully reconstructed each step of his golf swing, he was engaging in deliberate practice. He wasn't just taking cuts. He was finely tuning his technique.

While regular practice might include mindless repetitions, deliberate practice requires focused attention and is conducted with the specific goal of improving performance. The greatest challenge of deliberate practice is to remain focused. In the beginning, showing up and putting in your reps is the most important thing. But after a while we begin to carelessly overlook small errors and miss daily opportunities for improvement.

 

This is because the natural tendency of the human brain is to transform repeated behaviors into automatic habits. For example, when you first learned to tie your shoes you had to think carefully about each step of the process. Today, after many repetitions, your brain can perform this sequence automatically. The more we repeat a task the more mindless it becomes. Mindless activity is the enemy of deliberate practice. The danger of practicing the same thing again and again is that progress becomes assumed. Too often, we assume we are getting better simply because we are gaining experience. In reality, we are merely reinforcing our current habits—not improving them. Claiming that improvement requires attention and effort sounds logical enough. But what does deliberate practice actually look like in the real world?

 

Deliberate practice always follows the same pattern: break the overall process down into parts, identify your weaknesses, test new strategies for each section, and then integrate your learning into the overall process.

Here are some more examples.

 

Cooking: Jiro Ono, the subject of the documentary Jiro Dreams of Sushi, is a chef and owner of an award-winning sushi restaurant in Tokyo. Jiro has dedicated his life to perfecting the art of making sushi and he expects the same of his apprentices. Each apprentice must master one tiny part of the sushi-making process at a time—how to wring a towel, how to use a knife, how to cut the fish, and so on. One apprentice trained under Jiro for ten years before being allowed to cook the eggs. Each step of the process is taught with the utmost care.

Martial arts: Josh Waitzkin, author of The Art of Learning, is a martial artist who holds several US national medals and a 2004 world championship. In the finals of one competition, he noticed a weakness: When an opponent illegally head-butted him in the nose, Waitzkin flew into a rage. His emotion caused him to lose control and forget his strategy. Afterward, he specifically sought out training partners who would fight dirty so he could practice remaining calm and principled in the face of chaos. “They were giving me a valuable opportunity to expand my threshold for turbulence,” Waitzkin wrote. “Dirty players were my best teachers.”

Chess: Magnus Carlsen is a chess grandmaster and one of the highest-rated players in history. One distinguishing feature of great chess players is their ability to recognize “chunks,” which are specific arrangements of pieces on the board. Some experts estimate that grandmasters can identify around 300,000 different chunks. Interestingly, Carlsen learned the game by playing computer chess, which allowed him to play multiple games at once. Not only did this strategy allow him to learn chunks much faster than someone playing in-person games, but also gave him a chance to make more mistakes and correct his weaknesses at an accelerated pace.

Music: Many great musicians recommend repeating the most challenging sections of a song until you master them. Virtuoso violinist Nathan Milstein says, “Practice as much as you feel you can accomplish with concentration. Once when I became concerned because others around me practiced all day long, I asked [my professor] how many hours I should practice, and he said, ‘It really doesn’t matter how long. If you practice with your fingers, no amount is enough. If you practice with your head, two hours is plenty.’”

Basketball: Consider the following example from Aubrey Daniels, “Player A shoots 200 practice shots, Player B shoots 50. The Player B retrieves his own shots, dribbles leisurely and takes several breaks to talk to friends. Player A has a colleague who retrieves the ball after each attempt. The colleague keeps a record of shots made. If the shot is missed the colleague records whether the miss was short, long, left or right and the shooter reviews the results after every 10 minutes of practice. To characterize their hour of practice as equal would hardly be accurate. Assuming this is typical of their practice routine and they are equally skilled at the start, which would you predict would be the better shooter after only 100 hours of practice?”

 

Perhaps the greatest difference between deliberate practice and simple repetition is this: feedback. Anyone who has mastered the art of deliberate practice—whether they are an athlete like Ben Hogan or a writer like Ben Franklin—has developed methods for receiving continual feedback on their performance.

 

There are many ways to receive feedback. Let's discuss two. The first effective feedback system is measurement. The things we measure are the things we improve. This holds true for the number of pages we read, the number of pushups we do and any other task that is important to us. It is only through measurement that we have any proof of whether we are getting better or worse.

The second effective feedback system is coaching. One consistent finding across disciplines is that coaches are often essential for sustaining deliberate practice. In many cases, it is nearly impossible to both perform a task and measure your progress at the same time. Good coaches can track your progress, find small ways to improve, and hold you accountable to delivering your best effort each day.

 

The Promise of Deliberate Practice

Humans have a remarkable capacity to improve their performance in nearly any area of life if they train in the correct way. This is easier said than done. Deliberate practice is not a comfortable activity. It requires sustained effort and concentration. The people who master the art of deliberate practice are committed to being lifelong learners—always exploring and experimenting and refining.

 

Deliberate practice is not a magic pill, but if you can manage to maintain your focus and commitment, then the promise of deliberate practice is quite alluring: to get the most out of what you've got.

Source -

The Beginner's Guide to Deliberate Practice - James Clear

 

Real Wealth

We have a unique relationship with money. We want to have enough to be comfortable, but very few want to stop at that. We Indians want enough for our future generations too. Intergenerational wealth is common, with the inherent risk of the diminishing hunger of the future generations if they get too comfortable. Wealth is always relative. We feel wealthy not because of a certain number of net worth, but because we seem to be at par with whom we consider to be our peer set. While it is difficult to arrive at absolute net worth numbers (other than for those on the Forbes list), we try to make our judgement and place ourselves on a scale relative to others. Most of us also aspire to keep growing our wealth without paying attention to it – a task almost impossible and a subject for another day.

What is real wealth? Is it the ability to buy what one wants without thinking twice or bothering about the price? Even Kuber would find it difficult to sustain a lifestyle like that. If the whims are too frequent and the tags too high, one would find the coffers empty at some point, having spent itself on things that at best, can give one a temporary high. Real wealth can be the ability to buy things that are not for sale.

 

Is real wealth living a prosperous life? To have people take care of all your needs and to be able to take care of people who are dependent on you? At the base level, yes, and we try to reach higher from there.

 

Real wealth can also be the ability of able to maintain your current level of lifestyle while giving up the primary source of income which drives the lifestyle. For professionals it may mean giving up their current profession and focusing on their passion (if the two are different) without compromising on their current lifestyle.

 

What about non material things? Is good health real wealth? “Health is wealth” is definitely true, as anyone with serious ailments will tell you. Wealth and health are not a trade off and should not be mutually exclusive. Our character and reputation are also equally important.

 

Real wealth is also the unconditional love of near and dear ones. Having people to really care for you. It is the outcome of a life lived to its fullest and helping others realize their true potential and achieve their dreams. Material wealth along with a life of resentment and ungratefulness does not sound like a great life.

 

Real wealth is the total control on your time. “Time is money” is totally true. Time is scarcer than money hence becomes more valuable, in comparison. The ability to decide how to spend one’s time, in my view, is the litmus test of wealth. This can come only after one has achieved all what we have covered till now, and some more. Even the wealthiest are sometimes the slaves of their calendars. Time is finite, money is not. Every day all of us all over the world start with the equal amount of time available to all of us. Very few have the privilege of using their time as per their absolute discretion, and that, to me, is real wealth.   

 

In your view, what is real wealth?

The Big Risk In Too Little Risk

What do we think of when we think of risk? For most of us the initial thoughts may go to losses, downsides or doing things outside our comfort zone. Only few will think of the potential upsides of risk. But we should, as all risks have two possibilities – upside and downside. Payoffs and losses. This is where “calculated risk” comes into play. We hear this all the time from our sports commentators. The players or the team captain/coaches taking these calculated risks. What it means is that the risk- reward ratio is such that warrants taking an action that is different than normal times. The important thing to note here is that calculated risk does not mean it will turn out in our favor. As no outcomes are 100% guaranteed, if they are, where is the risk? Where is the risk if its popular and everyone is doing it? All decisions, even good ones, have some probability of things not going as per plan and going against us. Calculated risk means that we have thought through the possibilities, are aware of the consequences and we are now confident of making our move. If the situation is such that without a risky action, it cannot be redeemed, then it is not a calculated risk as our hand is forced and the risk should have been taken earlier.

We may think of risk as something that only businessmen/CEO/Politicians/Sportspeople take – anyone with high stakes, that is. Completely wrong. All decisions involve some payoff and hence some risk. All of us make decisions hence take risks. In fact, I believe, we do not take enough risks, as we become fixated with what can go wrong. Most everyday decisions don’t involve a life/death situation (unless you are a surgeon or at the border) are also easily reversible. Only a few big decisions need to be deliberated upon with adequate importance being given to the potential payoffs.

 

We Indians generally don’t like risk. Maybe risk has not paid off for us for too long. Most mothers (mine included) encourage kids to be risk averse. I believe it’s a sub-optimal way choose our professions. Or our lives. Our investments. Risk free is also upside potential free. Nothing ventured, nothing gained. We all can do with some dynamism and some discomfort to get to our desired optimal levels. Like exercise – we can be comfortable on the couch or get out for a workout and enjoy the upside of that discomfort. The other end of this spectrum is people who take too much risk – we all know some of those. This is equally bad and again, a review of the decision making process is highly recommended. Risk builds up slowly but unravels quickly. Panics, Manias, collapse, run on an institution are all outcomes of risk coming off rapidly in the economy. Destruction follows these events, followed by rebuilding and a new life.

 

Turns out, risk is like all good things in life. We need to have some of it to keep pushing ourselves. Too much is fatal. So take some risks. Approach that stranger that seems interesting. Evaluate that job opening. Back that venture. Follow your dream. Do bigger things. Push yourself. No pain no gain is totally true. Pushing the boundaries is totally cool. If there is no risk, things are not at their optimal yet. There are some segments in our lives that should be totally risk free – the choice of our major relationships, some of our investments, the choice of where you live etc. All other areas should be open to an audit of the risk in them. Any good decision can have a bad outcome and bad decisions can have good outcomes. The idea is not to turn speculative or a risk addict or an adrenaline junkie but to be able to review the payoffs and act when the same turns favorable.

 

This choice is ours to make - between a guaranteed mediocre outcome or some chance of a great one. The biggest risk is taking no risk at all and certainty of a sub-optimal outcome. There is no judgement if one chooses one over the other, as long as we are aware of the choices and are making them consciously. It’s a very personal choice as unique as our fingerprints. But these should keep changing over a lifetime, if they don’t, we are not thinking enough about them. We need to be conscious of the cycles too. Risk takers are sometimes felicitated and sometimes ridiculed, depending on where in the cycle one takes risk. Betting the house is definitely not a good risk, the quest is about doing things optimally to get a better outcome. To avoid regret of not taking that decision. So go back to your drawing board, put up your decision making matrix and see if it can do with a little bit of risk. When to take the risk and where are equally important. We can’t change the past but starting today, we can change the future, one decision at a time. The best promise we can make to ourself is to not repeat past mistakes. And the best favor we can do to ourself is to keep that promise. Fortune favors the brave and the well prepared. More power to you!!

The Last Dance

A documentary recommendation this time – check the same out on Netflix. This is a documentary on the life of Michael Jordan focussing on his playing years. The documentary beautifully captures his absolute dominance of the game and goes back and forth in time, taking the viewers through the trials and tribulations of athletes that are at the highest levels of their games. 

Although I am not a basketball fan, this is an extraordinary piece that I would put on the must watch list. Michael was a talented athlete and was destined for greatness, however the level that he reached and then made his home, is without parallel. There were basketball demi gods before Michael appeared on the scene – Magic Johnson was already playing at that time. Not only he shattered all records but kept on pushing the boundaries, each season. For the nerds, scroll to the end for his career stats.

Basketball being a team game, elements of power play and team dynamics get introduced in the narrative. Michael knew he was good and kept pushing his team members and the coaches. Initially he was hated in the team for the pressure he put on everyone to rise up to his standards and the practice sessions that were as intense as real games. However his team members started loving him as they began to realise what Michael was doing by being the bad boy – pushing them to greatness and pushing himself every day too. As he says at one point in the documentary – I never expected any team member to do something that I was not doing myself. Some episodes are focussed on his team mates and keep coming back to Michael’s relationship with them and the respect they developed for one another. 

For me, the pivotal moment in their march to greatness is Michael’s realisation that he needs to trust his team members more than what he did. As a star player, he was always marked and through his sheer genius, he would continue scoring. However as they started getting into eliminations and the competition kept getting tougher, scoring kept getting difficult. Since Michael was guarded by more than one opposition player, his team members were free. The journey of how the coach hand holds Michael through this journey and the satisfaction when he starts trusting his team members to take the important shots, is wonderful to watch. 

The human side of Michael is on display too. The injuries and setbacks that are a part of an athlete’s life. His special relationship with his dad and the loss he feels when he passes away, his nature of betting too much and the trouble of taking a stand as a very successful African American athlete on issues related to the community, all get highlighted. 

The best part was the sheer hunger of Michael. Gets highlighted in each episode. He is the absolute alpha. How he goes after his opponents. How he bounces back from bad games. How he goes after players that are being touted as the “next Michael” How he pushes his team members every day. How he transforms his entire team physically as they keep getting beaten by a very tough team that plays rough (Detroit Pistons). He wants his team to be the baddest, and he does, to beat their opponents at their own game. There is the additional element of intrigue with their team management’s decisions and politics in the hiring and firing of coaches. The season beautifully navigates through the playing years of Michael and how in each season they face different teams with different strategies but come out on top. Totally worth 10 hours of your time, I would say. 

I did not want this to be a spoiler and have tried to put my key takeaways here, but this is not all. I would encourage all of you to see this documentary, like a beautiful book, we will come out with our own takeaways. Why is it called the last dance? What happens when Magic Johnson and Michael Jordan face off? How does his relationship evolve with other members of his team, players in the other teams and his support staff? Why did he retire from basketball to go to play baseball and come back again to basketball? A career spanning decades is covered in 10 hours and it is an absolute fascinating watch. Enjoy. 

Stats – 

Michael played 15 seasons in the NBA winning 6 championships. Jordan's individual accolades and accomplishments include six NBA Finals Most Valuable Player (MVP) Awards, ten scoring titles (both all-time records), five MVP Awards, ten All-NBA First Team designations, nine All-Defensive First Team honors (joint record), fourteen NBA All-Star Game selections, three All-Star Game MVP Awards, three steals titles, and the 1988 NBA Defensive Player of the Year Award. He holds the NBA records for career regular season scoring average (30.12 points per game) and career playoff scoring average (33.45 points per game).