With the Grain

I'm back, baby. Well, maybe. If you've been here a while, you know I start and stop a lot. I also have periodic identity crises. I can't reliably make any promises about where my writing may go, but I am going to commit to posting every day again, because I tend to be an all-or-nothing sort of guy. I'm not sure what's next, but that's part of the fun. Right? Before you go, please take a minute to filling out a quick poll. I'm trying to figure out what matters to you, dear reader. Loading... If the embed isn't displaying correctly, please click here. Before you go, for real this time, please consider signing up for my email list. I don't currently send out any actual emails, so I figure only dedicated fans will sign up, and that's what I'm looking for. I also have to admit I am not terribly comfortable describing anyone as a fan, but that just makes me okay with zero responses. What I'd like to do, eventually, is form a community of likeminded folks, but in the meantime, please send me an email if you want help, advice, coaching, whatever. Someday (maybe inside of 18 months), when I'm legally allowed to market myself, I want to try consulting as a potential gig. Until then, you can have my help for free. Incidentally, these email exchanges will be with the real me, not the potatowire me, so there's that too. Welcome back. I hope we both stay here a while. With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.

A lot of introspection has brought me to what I think will be the third iteration of this blog. The rest of the answer is in the audio, which is really the point. With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.

There is something romantic about the notion of intuition. Who doesn't love the idea of a respected art critic getting a fleeting view of a work of art and knowing immediately that it is a fake? How about a chess grand master walking past a game in the park boldly pronouncing, “white mate in three.” This leads us a nagging feeling that we can become masters of intuition, if only we work hard enough, making any decision a trivial task. The trouble is, most of life renders intuition unreliable. As Chip and Dan Heath explain in their book Decisive: What is sometimes lost in the work celebrating intuition is a sense of the relatively limited domain where it can help us make good decisions. A research consensus is now emerging about situations where intuition reliably generates reasonable answers. Robin Hogarth, one of the researchers who have done the most to clarify situations where intuition does and doesn't work, describes learning environments along a continuum from kind to wicked. When we acquire our intuitions in a kind environment, our gut instincts are likely to be good, but intuitions acquired in wicked environments are likely to be bad. Feedback in kind environments is clear, immediate, and unbiased by the act of prediction. Forecasting the weather for tomorrow is a kind environment. Feedback is rapid (next day) and clear (it snows or it doesn't). And the act of making a prediction doesn't bias the outcome—the rain and snow don't care about the forecaster.1 In contrast, the learning environment in an emergency room is wicked because of the lack of long-term feedback. Most ER docs and nurses get good short-term feedback (I either help the patient stop bleeding or I don't) but bad long-term feedback, since they don't see what happens to a patient once he or she leaves the emergency room (e.g., did something we did to stop the bleeding cause greater complications down the road?). The learning environment for new-product launches is wicked on all three dimensions. Feedback is unclear (perhaps Pets.com was a bad idea or perhaps it was just ahead of its time), it is delayed (often for months or years), and it is biased by the very act of prediction (classifying a launch as high priority or low has self-fulfilling ramifications for, say, its ad budget or the quality of the personnel on the launch team). Because of the environments they operate in, we will be better off trusting the intuitions of the weatherman than the entrepreneur or brand manager launching a new product. We should trust the ER doc to find an effective short-term solution to a health crisis but not to recommend good long-term actions for a chronic condition…2 Somewhat depressingly, the situations where we should most trust our instincts don't characterize many of the most important decisions that we make in life—which college to go to, whom to marry, which product to launch, which employee to promote. Professor Rick Larrick of Duke University has a compact summary of the kinds of environments that have been reliably found to develop good intuition: He calls them “video game worlds”—they are environments that provide quick, unambiguous, unalterable feedback. Video games, however, allow you to die and come back to life multiple times as you learn. For the kinds of decisions that [are covered] in this book, life doesn't typically allow many do-overs.3 Unless our feedback will be clear, immediate, and unbiased by the act of prediction, we cannot train our intuition. Unless we can test this feedback many times, we cannot trust our intuition. In every other case, intuition is just another unreliable input to the decision making process. Heath, Chip, and Dan Heath. Decisive: How to Make Better Choices in Life and Work. New York, NY: Crown Business Publ., Random House, 2014. Kindle link. ↩︎ Heath, Kindle link. ↩︎ Heath, Kindle link. ↩︎ With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.

Throughout The Black Swan, Nassim Nicholas Taleb bemoans the prevalence of Gaussian functions, perhaps known best graphed as characteristic bell curves. Much of the natural world sorts itself into a bell curve (see also the 80/20 “rule,”) but if we expect everything to fall within a Gaussian framework, we will be continually surprised by real life. Consider my previous discussion of casino risk management. The games are all statistically reliable and predictable, but the biggest risk to its business come from non-gaming threats. The desire to fit nature into a probabilistic straight-jacket has infected the Nobel Prize in Economics, much to Taleb's chagrin: …True, the prize has gone to some valuable thinkers, such as the empirical psychologist Daniel Kahneman and the thinking economist Friedrich Hayek. But the committee has gotten into the habit of handing out Nobel Prizes to those who “bring rigor” to the process with pseudoscience and phony mathematics. After the stock market crash, they rewarded two theoreticians, Harry Markowitz and William Sharpe, who built beautifully Platonic models on a Gaussian base, contributing to what is called Modern Portfolio Theory. Simply, if you remove their Gaussian assumptions and treat prices as scalable, you are left with hot air. The Nobel Committee could have tested the Sharpe and Markowitz models—they work like quack remedies sold on the Internet—but nobody in Stockholm seems to have thought of it. Nor did the committee come to us practitioners to ask us our opinions; instead it relied on an academic vetting process that, in some disciplines, can be corrupt all the way to the marrow. After that award I made a prediction: “In a world in which these two get the Nobel, anything can happen. Anyone can become president.”1 I think maybe he was on to something… Taleb, Nassim Nicholas. The Black Swan: Second Edition: The Impact of the Highly Improbable (Incerto). New York: Random House, 2012. Kindle link. ↩︎ With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.

I find Nassim Nicholas Taleb captivating. He possesses the amazing ability to reveal and clarify what should already be obvious, but isn't. I also love the way he writes and how radical he is in his honesty. This also polarizes. In his book The Black Swan, Taleb analyzes the concepts of uncertainty and probability in light of the truly unpredictable. Casinos illustrate this well, and he describes the situation from the perspective of one such establishment: The casino's risk management, aside from setting its gambling policies, was geared toward reducing the losses resulting from cheaters. One does not need heavy training in probability theory to understand that the casino was sufficiently diversified across the different tables to not have to worry about taking a hit from an extremely lucky gambler… All they had to do was control the “whales,” the high rollers flown in at the casino's expense from Manila or Hong Kong; whales can swing several million dollars in a gambling bout. Absent cheating, the performance of most individual gamblers would be the equivalent of a drop in the bucket, making the aggregate very stable.1 I promised not to discuss any of the details of the casino's sophisticated surveillance system; all I am allowed to say is that I felt transported into a James Bond movie—I wondered if the casino was an imitation of the movies or if it was the other way around. Yet, in spite of such sophistication, their risks had nothing to do with what can be anticipated knowing that the business is a casino. For it turned out that the four largest losses incurred or narrowly avoided by the casino fell completely outside their sophisticated models.2 First, they lost around $100 million when an irreplaceable performer in their main show was maimed by a tiger (the show, Siegfried and Roy, had been a major Las Vegas attraction). The tiger had been reared by the performer and even slept in his bedroom; until then, nobody suspected that the powerful animal would turn against its master. In scenario analyses, the casino had even conceived of the animal jumping into the crowd, but nobody came near to the idea of insuring against what happened.3 Second, a disgruntled contractor was hurt during the construction of a hotel annex. He was so offended by the settlement offered him that he made an attempt to dynamite the casino. His plan was to put explosives around the pillars in the basement. The attempt was, of course, thwarted…but I shivered at the thought of possibly sitting above a pile of dynamite.4 Third, casinos must file a special form with the Internal Revenue Service documenting a gambler's profit if it exceeds a given amount. The employee who was supposed to mail the forms hid them, instead, for completely unexplainable reasons, in boxes under his desk. This went on for years without anyone noticing that something was wrong. The employee's refraining from sending the documents was truly impossible to predict. Tax violations (and negligence) being serious offences, the casino faced the near loss of a gambling license or the onerous financial costs of a suspension. Clearly they ended up paying a monstrous fine (an undisclosed amount), which was the luckiest way out of the problem.5 Fourth, there was a spate of other dangerous scenes, such as the kidnapping of the casino owner's daughter, which caused him, in order to secure cash for the ransom, to violate gambling laws by dipping into the casino coffers.6 Conclusion: A back-of-the-envelope calculation shows that the dollar value of these Black Swans, the off-model hits and potential hits I've just outlined, swamp the on-model risks by a factor of close to 1,000 to 1. The casino spent hundreds of millions of dollars on gambling theory and high-tech surveillance while the bulk of their risks came from outside their models.7 All this, and yet the rest of the world still learns about uncertainty and probability from gambling examples.[Emphasis mine]8 Every probability textbook uses gambling examples to illustrate its principles, but these examples presuppose the strict following of rules. In the real world, human beings cheat and screw up. It's foolish to forget this fact when exercising personal judgment. Taleb, Nassim Nicholas. The Black Swan: Second Edition: The Impact of the Highly Improbable (Incerto). New York: Random House, 2012. Kindle link. ↩︎ Taleb, Kindle link. ↩︎ Taleb, Kindle link. ↩︎ Taleb, Kindle link. ↩︎ Taleb, Kindle link. ↩︎ Taleb, Kindle link. ↩︎ Taleb, Kindle link. ↩︎ Taleb, Kindle link. ↩︎ With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.

Occasionally, I get the idea that I am a hard worker. For times such as these, I keep stored up in my heart this passage from Robert Caro's The Path to Power: Every week, every week all year long—every week without fail—there was washday. The wash was done outside. A huge vat of boiling water would be suspended over a larger, roaring fire and near it three large “Number Three” zinc washtubs and a dishpan would be placed on a bench. The clothes would be scrubbed in the first of the zinc tubs, scrubbed on a washboard by a woman bending over the tub. The soap, since she couldn't afford store-bought soap, was soap she had made from lye, soap that was not very effective, and the water was hard. Getting farm dirt out of clothes required hard scrubbing. Then the farm wife would wring out each piece of clothing to remove from it as much as possible of the dirty water, and put it in the big vat of boiling water. Since the scrubbing would not have removed all of the dirt, she would try to get the rest out by “punching” the clothes in the vat—standing over the boiling water and using a wooden paddle or, more often, a broomstick, to stir the clothes and swish them through the water and press them against the bottom or sides, moving the broom handle up and down and around as hard as she could for ten or fifteen minutes in a human imitation of the agitator of an automatic—electric—washing machine.1 The next step was to transfer the clothes from the boiling water to the second of the three zinc washtubs: the “rinse tub.” The clothes were lifted out of the big vat on the end of the broomstick, and held up on the end of the stick for a few minutes while the dirty water dripped out. When the clothes were in the rinse tub, the woman bent over the tub and rinsed them, by swishing each individual item through the water. Then she wrung out the clothes, to get as much of the dirty water out as possible, and placed the clothes in the third tub, which contained bluing, and swished them around in it—this time to get the bluing all through the garment and make it white—and then repeated the same movements in the dishpan, which was filled with starch. At this point, one load of wash would be done. A week's wash took at least four loads: one of sheets, one of shirts and other white clothing, one of colored clothes and one of dish towels. But for the typical, large, Hill Country farm family, two loads of each of these categories would be required, so the procedure would have to be repeated eight times.2 For each load, moreover, the water in each of the three washtubs would have to be changed. A washtub held about eight gallons. Since the water had to be warm, the woman would fill each tub half with boiling water from the big pot and half with cold water. She did the filling with a bucket which held three or four gallons—twenty-five or thirty pounds. For the first load or two of wash, the water would have been provided by her husband or her sons. But after this water had been used up, part of washday was walking—over and over—that long walk to the spring or well, hauling up the water, hand over laborious hand, and carrying those heavy buckets back. Another part of washday was also a physical effort: the “punching” of the clothes in the big vat. “You had to do it as hard as you could—swish those clothes around and around and around. They never seemed to get clean. And those clothes were heavy in the water, and it was hot outside, and you'd be standing over that boiling water and that big fire—you felt like you were being roasted alive.” Lifting the clothes out of the vat was an effort, too. A dripping mass of soggy clothes was heavy, and it felt heavier when it had to be lifted out of that vat and held up for minutes at a time so that the dirty water could drip out, and then swung over to the rinsing tub. Soon, if her children weren't around to hear her, a woman would be grunting with the effort. Even the wringing was, after a few hours, an effort. “I mean, wringing clothes might not seem hard,” Mrs. Harris says. “But you have to wring every piece so many times—you wring it after you take it out of the scrub tub, and you wring it after you take it out of the rinse tub, and after you take it out of the bluing. Your arms got tired.” And her hands—from scrubbing with lye soap and wringing—were raw and swollen. Of course, there was also the bending—hours of bending—over the rub boards. “By the time you got done washing, your back was broke,” Ava Cox says. “I'll tell you—of the things of my life that I will never forget, I will never forget how much my back hurt on washdays.” Hauling the water, scrubbing, punching, rinsing: a Hill Country farm wife did this for hours on end—while a city wife did it by pressing the button on her electric washing machine.3 Lest I think we now live in the time of intellectual pursuits not subject to measures of physical toil, I force myself to remember that Caro wrote this passage after moving to Texas's Hill Country,4 because he sensed the local folks were unwilling to open-up to outsiders. He has committed his life to his art. I do not know hard work. Caro, Robert A. The Path to Power: The Years of Lyndon Johnson I. New York, NY: Alfred A. Knopf, 1982. Kindle link. ↩︎ Caro, Kindle link. ↩︎ Caro, Kindle link. ↩︎ See here for more information. ↩︎ With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.

Human beings are masters of overconfidence. Even when we're wary of a rose-colored outlook, we find it tough to reliably determine whether a particular course of action is wise or not. This effect is not eliminated by combining fallible people together into groups, either. Daniel Kahneman describes this dynamic in his book Thinking, Fast and Slow. Can overconfident optimism be overcome by training? I am not optimistic. There have been numerous attempts to train people to state confidence intervals that reflect the imprecision of their judgments, with only a few reports of modest success. An often cited example is that geologists at Royal Dutch Shell became less overconfident in their assessments of possible drilling sites after training with multiple past cases for which the outcome was known. In other situations, overconfidence was mitigated (but not eliminated) when judges were encouraged to consider competing hypotheses. However, overconfidence is a direct consequence of features of System 1 that can be tamed—but not vanquished. The main obstacle is that subjective confidence is determined by the coherence of the story one has constructed, not by the quality and amount of the information that supports it.1 Recall that System 1 thinking is the fast variety, which can also be thought of as intuitive or less effortful thinking. In order to explore this issue more fully, in 2009, Kahneman collaborated with Gary Klein, a research psychologist known for his work on experts' decision making processes in real-world scenarios. Kahneman makes room for his alternative perspective on intuition. Organizations may be better able to tame optimism and individuals than individuals are. The best idea for doing so was contributed by Gary Klein, my “adversarial collaborator” who generally defends intuitive decision making against claims of bias and is typically hostile to algorithms. He labels his proposal the premortem . The procedure is simple: when the organization has almost come to an important decision but has not formally committed itself, Klein proposes gathering for a brief session a group of individuals who are knowledgeable about the decision. The premise of the session is a short speech: “Imagine that we are a year into the future. We implemented the plan as it now exists. The outcome was a disaster. Please take 5 to 10 minutes to write a brief history of that disaster.”2 This mental frame, applied by team leadership, is designed to circumvent the natural loyalty people have to their teams. Kahneman continues, As a team converges on a decision—and especially when the leader tips her hand—public doubts about the wisdom of the planned move are gradually suppressed and eventually come to be treated as evidence of flawed loyalty to the team and its leaders. The suppression of doubt contributes to overconfidence in a group where only supporters of the decision have a voice. The main virtue of the premortem is that it legitimizes doubts. Furthermore, it encourages even supporters of the decision to search for possible threats that they had not considered earlier. The premortem is not a panacea and does not provide complete protection against nasty surprises, but it goes some way toward reducing the damage of plans that are subject to the biases of WYSIATI3 and uncritical optimism.4 I think learning to consciously change our mental frames is vital to improving our judgment and decision making. When it comes time to begin your next big project, whether solo or on a team, take time to picture what failure would look like. It might help you find success instead. Kahneman, Daniel. Thinking, Fast and Slow. New York, NY: Farrar, Straus and Giroux, 2013. Kindle link. ↩︎ Kahneman, Kindle link. ↩︎ “What You See is All There is,” is one of the ways people jump to conclusions. We act as if we have a complete picture, even if this is far from true. What you see is all there is. For more information, see Chapter 7 of Thinking, Fast and Slow. ↩︎ Kahneman, Kindle link. ↩︎ With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.

Yesterday, Erik and I released the first episode of our new podcast Seasons of Obsession. He introduced it far better than I can, but I think of the show as a combination rough draft and director's-cut version of our writing. As the name suggests, we will also sometimes veer off in pursuit of short-lived obsessions. Today on this site, I am launching a new feature: podcast companion posts. Since I know how hard it is to read everything I want to on a daily basis, I'm hoping an audio version might allow more folks to follow along as I try to get better. Functionally, this will be simple: each Tuesday and Thursday I will publish new posts in audio and text form. You can read or listen online right here or subscribe to the feed in iTunes or your favorite podcatcher. Without audiobooks, I could only cover a small fraction of what I want to read, and I hope the audio option here will mean some of you will listen to With the Grain when you can't read it. One way or the other, I hope you stick around, and please let me know what you think. With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.