recentpopularlog in

jerryking : compounded   25

The Zen of Weight Lifting
Nov. 22, 2019 | The New York Times | By Brad Stulberg.

There’s an old Eastern adage: “Before enlightenment, chop wood, carry water. After enlightenment, chop wood, carry water.” It’s great training advice too.......A favorite movements at the gym is called a farmer’s carry. You hold a heavy weight in each hand and attempt to walk with a solid, upright posture for between 30 and 60 seconds...... the farmer’s carries work your grip, core, arms, legs and even cardiovascular system — an utterly elegant full-body exercise. .......The physical and mental health benefits of weight lifting are well documented. Weight training can help us to maintain muscle mass and strength as we age, as well as better mobility and metabolic and cardiovascular health. It may help ease or prevent depression and anxiety, and promote mental sharpness.......lifting weights becomes a transformative practice to be undertaken primarily for its own sake, the byproduct of which is a nourishing effect on the soul.....Weight lifting offers participants a chance to pursue clear and measurable goals with outcomes that can be traced directly back to oneself.....In the weight room, however, it’s just you and the bar. You either make the lift or you don’t. If you make it, great. If not, you train more, and try again. Some days it goes well, other days it doesn’t. But over time, it becomes clear that what you get out of yourself is proportionate to the effort you put in. It’s as simple and as hard as that. A kind of straightforwardness and self-reliance that gives rise to an immense satisfaction, a satiating feeling that makes it easier to fall asleep at night because you know you did something real, something concrete, in the world. This doesn’t mean that progress happens fast or is always linear. Consistency and patience are key. If you try to rush the process or force heroic efforts, you invariably wind up getting hurt. Weight lifting, like so much in life, demands showing up day in and day out, taking small and incremental steps that, compounded over time, lead to big gains.
Whether you like it or not, there will be plateaus, which in my experience tend to occur right before a breakthrough. Weight lifting teaches you to embrace them, or at the very least accept them.....For most, the plateau is a form of purgatory. But to advance beyond the low-hanging fruit in any meaningful discipline — from weight lifting, to writing, to meditation, to marriage — you must get comfortable spending time there. Weight lifting shoves this reality in your face since progress, or in this case, lack thereof, is so objective.......
you don’t keep showing up and pounding the stone.

But here’s a paradox: Pound too hard or too often, and you’ll run into problems. The only way to make a muscle stronger is to stress it and then let it recover. In other words, you’ve got to balance stress and rest. Exercise scientists call this “progressive overload.” Too much stress, not enough rest, and the result is illness, injury or burnout. Too much rest, not enough stress, and the result is complacency or stagnation. It’s only when yin and yang are in harmony that you grow — another lesson that applies to a lot more than lifting weights.

It is true that from the outside, weight lifting can seem dull or boring — same movements, same barbells, same people at the same gym. 
Weight lifting fulfills three basic needs:
Autonomy: The ability to exert oneself independently and have control over one’s actions.
Mastery: A clear and ongoing path of progress that can be traced back to one’s efforts.
Belonging: Being part of a community, lineage or tradition that is working toward similar goals.
 
The Zen of weight lifting — the joy, fulfillment, hard-earned calluses and growth — lives in the process, in the journey. 
cardiovascular  compounded  consistency  core_stability  efforts  exercise  fitness  functional_strength  incrementalism  metabolism  movement-based  objective_reality  paradoxes  patience  plateauing  small_wins  soul-enriching  strength_training 
november 2019 by jerryking
Opinion | How to Level the College Playing Field
April 7, 2018 | The New York Times | By Harold O. Levy with Peg Tyre. Mr. Levy is a former chancellor of the New York City public schools. He wrote this article with the education journalist Peg Tyre.

Despite the best efforts of many, the gap between the numbers of rich and poor college graduates continues to grow.

It’s true that access programs take some academically talented children from poor and working-poor families to selective colleges, but that pipeline remains frustratingly narrow. And some colleges and universities have adopted aggressive policies to create economic diversity on campus. But others are lagging. Too many academically talented children who come from families where household income hovers at the American median of $59,000 or below are shut out of college or shunted away from selective universities.....The wealthy spend tens of thousands each year on private school tuition or property taxes to ensure that their children attend schools that provide a rich, deep college preparatory curriculum. On top of that, many of them spend thousands more on application coaches, test-prep tutors and essay editors. ......
(1) Let’s start with alumni. It is common to harbor fond feelings toward your alma mater. But to be a responsible, forward-looking member of your college’s extended community, look a little deeper. Make it your business to figure out exactly who your college serves. What is the economic breakdown of the current student body? Some colleges trumpet data about underrepresented minorities and first-generation students. But many don’t. And either way, there are follow-up questions to ask. How has that mix changed over the past 10 years? What policies are in place to increase those numbers?
(2) Legacy admission must end.
(3) shorten the college tour.
(4) cities and states should help students who come from the middle and working classes with programs that provide intensive advising, money for textbooks and even MetroCards
(5) Refine the first two years of some four-year liberal arts education into an accredited associate degree.
(6) Stop acting like everyone already has the road map to college plotted. The college application system has become costly and baroque. Make it possible for high schools to hire, train and deploy enough guidance counselors.
(7) stop giving to your alma mater. Donors to top universities are getting hefty tax deductions to support a system that can seem calculated to ensure that the rich get richer. If you feel you must give, try earmarking your donation for financial aid for low-income, community college students who have applied to transfer to your alma mater.
Colleges_&_Universities  accessibility  legacies  roadmaps  admissions  op-ed  unfair_advantages  social_mobility  meritocratic  alumni  hereditary  nepotism  education  self-perpetuation  super_ZIPs  opportunity_gaps  college-educated  upper-income  compounded  low-income  elitism  selectivity  follow-up_questions 
april 2018 by jerryking
Start Spreading the News: Digital Fuels Superstar Cities - CIO Journal. WSJ
Dec 29, 2017 | WSJ | By Irving Wladawsky-Berger.

Superstar companies are primarily driven by economies of scale, generally achieved through platforms and network effects. Whenever a product, service or process is captured in software and digitized, it becomes digital capital and the economics of abundance take over. The more products or services a platform offers, the more users it will attract, helping it then attract more offerings from ecosystem partners, which in turn brings in more users.....The result is that a small number of companies become category kings dominating the rest of their competitors in their particular market – the Facebooks, Googles, Twitters, Ubers and AirBnbs. Category kings generally take over 70 percent of the total market value in their category, leaving everyone else to split the remaining 30 percent.

“Cities have been caught up in this winner-take-all phenomenon, too,” noted Mr. Florida. “Just as the economy confers disproportionate rewards to superstar talent, superstar cities… similarly tower above the rest. They generate the greatest levels of innovation, control and attract the largest shares of global capital and investment.”

Network dynamics apply to cities just as they do for companies and talent. “They have unique kinds of economies that are based around the most innovative and highest value-added industries, particularly finance, media, entertainment and tech; businesses in superstar cities are formed and scaled up more quickly. All of this attracts still more industries and more talent. It’s a powerful, ongoing feedback loop that compounds the advantages of these cities over time.”

But, such a concentration of talent, wealth and economic activity in fewer and fewer places has led to what a recent Economist issue called the changing economies of geography, the rising inequalities between a relatively small number of superstar cities and the many towns and regions that have been left behind by technology and globalization.
Irving_Wladawsky-Berger  cities  winner-take-all  platforms  superstars  network_effects  disproportionality  geographic_concentration  geographic_inequality  feedback_loops  compounded  increasing_returns_to_scale  digitalization 
january 2018 by jerryking
Tornado-Ravaged Hospital Took Storm-Smart Approach During Rebuild - Risk & Compliance Journal.
Aug 30, 2017 | WSJ | By Ben DiPietro.

...................“Preparation for what these events can be–and belief they can actually happen–is important so you make sure you are preparing for them,” ....trying to undertake whatever is your organizational mission in the midst of a tornado or other devastating event is much harder, given the high emotions and stress that manifests itself at such moments.

“Understand the possibilities and pre-planning will make that go a lot better,”

===============================
As Hurricane Harvey has shown, extreme weather events can devastate a region’s infrastructure. Hospital operator Mercy had its own experience of this in 2011 when a tornado ripped through Joplin, Mo., killing 161 people and destroying its hospital.

Hospital operator Mercy took the lessons it learned from that tornado experience and incorporated them into the design of the new hospital–and also changed the way it plans and prepares for disasters. The new facility reflects a careful risk assessment, as Mercy took into account not only the physical risk of tornadoes but the risks to power supplies and medical supplies.

“We always prepare, always have drills for emergencies, but you never quite can prepare for losing an entire campus,” ....“Now we are preparing for that…it definitely changed the way we look at emergency management.”

** Protecting What Matters Most **
Mercy took the lessons it learned from that devastating weather event and applied them when it was time to build its latest hospital, which was constructed in a way to better withstand tornadoes while providing more secure systems infrastructure and adding backup systems to ensure operations continued unimpeded, ......Even the way medical supplies were stored was changed; instead of storing supplies in the basement, where they were inaccessible in the immediate aftermath of the tornado, they now are kept on each floor so staff don’t need to go hunting around for things they need during an emergency.....“The first priority is to save lives, the second is to minimize damage to the facility,”

** Focus on the Worst **
many companies worry about low-severity, high-frequency events–those things that happen a lot. They instead need to focus more on high-severity events that can cause a company to impair its resilience. “....identify and work on a worst-case scenario and make sure it is understood and the company is financially prepared for it,”

work with its key vendors and suppliers to know what each will do in the face of a disaster or unexpected disruption. “...large companies [should] know their key vendors prior to any major incidents,” ...“Vendors become partners at that time and you need to know people will do what you need them to do.”

A company needs to assess what is most important to its operations, map who their vendors are in those areas and engage them in various loss scenarios .... It should review its insurance policy language against possible weather events, identify any gaps and either revise policies to fill those holes or to at least make sure executives understand what the risks are of leaving those gaps unattended.
==================================
See also :
What to Do Before Disaster Strikes - WSJ.com ☑
September 27, 2005 | WSJ | By GEORGE ANDERS.
start by cataloging what could go wrong. GM, for example, has created "vulnerability maps" that identify more than 100 hazards, ranging from wind damage to embezzlement. Such maps make it easier for managers to focus on areas of greatest risk or gravest peril.
low_probability  disasters  Hurricane_Harvey  extreme_weather_events  hospitals  tornadoes  design  rebuilding  preparation  emergencies  lessons_learned  worst-case  natural_calamities  anticipating  insurance  vulnerabilities  large_companies  redundancies  business-continuity  thinking_tragically  high-risk  risk-management  isolation  compounded  network_risk  black_swan  beforemath  frequency_and_severity  resilience  improbables  George_Anders  hazards  disaster_preparedness  what_really_matters 
september 2017 by jerryking
Can we ever knock down the walls of the wealthy ghetto?
Jul. 15, 2017 | The Globe and Mail | DOUG SAUNDERS.

Fifty-two years ago, sociologist John Porter demonstrated, in his bestseller The Vertical Mosaic, that Canada's economy, its politics and its culture were controlled by a cloistered elite from the same schools and neighbourhoods, and only 3 per cent of Canadians had any access to this circle. Social mobility has improved dramatically thanks to half a century of immigration, growth and better social policies. But the top ranks remain closed and self-protective.

There are two factors in particular that make Canada's cycle of privilege a closed loop that excludes outsiders.

The first is Canada's lack of an inheritance tax. Estates (including houses) are taxed as income upon their owner's death, then can be passed on to children – removing incentives to put that wealth to better and more productive use. As a result, the higher rungs on the ladder are less open to people who have developed creative, profitable companies and ideas, and more so to people who have simply had the right parents.

The second is Canada's lax policy on private schools. The 6 per cent of Canadians who attend fee-charging schools are overwhelmingly there because their families are wealthy (studies show that their advantages are entirely found in their connections, not in their academic performance).
Canada  Canadians  high_net_worth  privilege  Doug_Saunders  cumulative  social_mobility  social_classes  private_schools  inheritance_tax  elitism  compounded  inequality  geographic_sorting  college-educated  super_ZIPs  self-perpetuation  upper-income 
july 2017 by jerryking
Marginal gains matter but gamechangers transform
25 March/26 March 2017 | FT | by Tim Harford.

In the hunt for productivity, the revolutionary long shot is worth the cost and risk.

.............................As Olympic athletes have shown, marginal improvements accumulated over time can deliver world-beating performance,” said Andrew Haldane in a speech on Monday, which is quite true. Mr Haldane, the Bank of England’s chief economist
........The marginal gains philosophy tries to turn innovation into a predictable process: tweak your activities, gather data, embrace what works and repeat.......As Mr Haldane says, marginal improvements can add up.

But can they add up to productivity gains for the economy as a whole? The question matters. There is no economic topic more important than productivity, which in the long run determines whether living standards surge or stagnate.
........
The idea that developed economies can A/B test their way back to brisk productivity growth is a seductive one.

An alternative view is that what’s really lacking is a different kind of innovation: the long shot. Unlike marginal gains, long shots usually fail, but can pay off spectacularly enough to overlook 100 failures.
.....
These two types of innovation complement each other. Long shot innovations open up new territories; marginal improvements colonise them. The 1870s saw revolutionary breakthroughs in electricity generation and distribution but the dynamo didn’t make much impact on productivity until the 1920s. To take advantage of electric motors, manufacturers needed to rework production lines, redesign factories and retrain workers. Without these marginal improvements the technological breakthrough was of little use.
....Yet two questions remain. One is why so many businesses lag far behind the frontier. .......The culprit may be a lack of competition: vigorous competition tends to raise management quality by spurring improvements and by punishing incompetents with bankruptcy. ....
But the second question is why productivity growth has been so disappointing. A/B testing has never been easier or more fashionable, after all. The obvious answer is that the long shots matter, too.
.....In a data-driven world, it’s easy to fall back on a strategy of looking for marginal gains alone, avoiding the risky, unquantifiable research (jk: leaps of faith). Over time, the marginal gains will surely materialise. I’m not so sure that the long shots will take care of themselves.
adaptability  breakthroughs  compounded  economics  game_changers  incrementalism  innovation  leaps_of_faith  marginal_improvements  moonshots  nudge  organizational_change  organizational_improvements  organizational_structure  power_generation  production_lines  productivity  productivity_payoffs  slight_edge  taxonomy  thinking_big  Tim_Harford 
march 2017 by jerryking
Why It’s Not Enough Just to Be Disruptive - The New York Times
By JEREMY G. PHILIPS AUG. 10, 2016

Short-term success may be driven by exceptional execution; long-term value creation requires building a defensible model.

Any microeconomics textbook will tell you there are limited sources of competitive advantage. The most valuable companies combine several reinforcing strands, like scale and customer loyalty.....

While it is hard to stay ahead solely through superior execution over an extended period, it is sometimes enough in the short term to draw a deep-pocketed buyer where there are strong, immediate synergies. Creating enormous value over the long term requires turning a tactical edge into some form of durable advantage....Superior tactical execution can still create real value, particularly where it provides ammunition for a bigger war (like Walmart’s battle with Amazon). And in the long term, value is created not by disruption, but by weaving together advantages (as both Amazon and Walmart have done in different ways) that together create a barrier that is hard to storm.
disruption  value_creation  Gillette  competitive_advantage  execution  books  slight_edge  Amazon  Wal-Mart  microeconomics  short-term  long-term  barriers_to_entry  compounded  kaleidoscopic  unfair_advantages  endurance  synergies  M&A  mergers_&_acquisitions 
august 2016 by jerryking
America’s elite: An hereditary meritocracy
Jan 24th 2015 | The Economist | Anonymous.

America has always had rich and powerful families, from the floor of the Senate to the boardrooms of the steel industry. But it has also held more fervently than any other country the belief that all comers can penetrate that elite as long as they have talent, perseverance and gumption....But now, the american elite is self-perpetuating by dint of school ties, wealth....Today’s elite is a long way from the rotten lot of West Egg. Compared to those of days past it is by and large more talented, better schooled, harder working (and more fabulously remunerated) and more diligent in its parental duties. It is not a place where one easily gets by on birth or connections alone. At the same time it is widely seen as increasingly hard to get into.

Some self-perpetuation by elites is unavoidable; the children of America’s top dogs benefit from nepotism just as those in all other societies do. But something else is now afoot. More than ever before, America’s elite is producing children who not only get ahead, but deserve to do so: they meet the standards of meritocracy better than their peers, and are thus worthy of the status they inherit....wealthy parents pass their advantage(s) on to their children....
Colleges_&_Universities  elitism  hereditary  Matthew_effect  nepotism  education  values  parenting  public_education  legacies  admissions  alumni  endowments  SAT  social_mobility  self-perpetuation  super_ZIPs  opportunity_gaps  college-educated  upper-income  compounded  meritocratic  cultural_transmission 
january 2015 by jerryking
The Most Important Question You Can Ask
APRIL 25, 2014 | NYT | By TONY SCHWARTZ.

The answer to “In the service of what?” is to add more value to the commons than we take out, and not to discount any good that we can do.

“We must not, in trying to think about how we can make a big difference,” said the children’s rights advocate Marian Wright Edelman, “ignore the small daily differences we can make, which, over time, add up to big differences that we cannot foresee.”

Personal accomplishments make us feel good. Adding value to other people’s lives makes us feel good about ourselves. But there is a difference. The good feelings we get from serving others are deeper and last longer. Think for a moment about what you want your children to remember about you after you’re gone. Do more of that.
work_life_balance  Tony_Schwartz  serving_others  hedge_funds  questions  slight_edge  legacies  values  life_skills  compounded  personal_accomplishments  foundational  cumulative 
april 2014 by jerryking
Do we really want elite youth to get more elite? | mathbabe
December 16, 2013 Cathy O'Neil,

Finally, let me just take one last swipe at this idea from the perspective of “it’s meritocratic therefore it’s ok”. It’s just plain untrue that test-taking actually exposes talent. It’s well established that you can get better at these tests through practice, and that richer kids practice more. So the idea that we’re going to establish a level playing field and find minority kids to elevate this way is rubbish. If we do end up focusing more on the high end of test-takers, it will be completely dominated by the usual suspects.

In other words, this is a plan to make elite youth even more elite. And I don’t know about you, but my feeling is that’s not going to help our country overall.
education  PISA  elitism  meritocratic  Cathy_O’Neil  compounded  self-perpetuation  Matthew_effect  opportunity_gaps  privilege  high-end  cumulative  unfair_advantages 
december 2013 by jerryking
The need for an analytical approach to life
November 3, 2013 | FT.com | By Rebecca Knight.

Risk analysis is not about predicting events; it’s about understanding the probability of possible scenarios, according to Elisabeth Paté-Cornell, professor at the Stanford School of Engineering.
In her latest research, she argues that expressions such as “black swan” and “perfect storm”, which have become journalistic shorthand when describing catastrophes, are just excuses for poor planning. Managers, should “think like engineers” and take a systematic approach to risk analysis. They should figure out how a system works and then identify the probable ways in which it could fail.
So does a black swan event exist?
The only one that I can think of is the Aids epidemic. In the case of a true black swan, you cannot anticipate it.
And what about ‘perfect storms’?
A combination of rare events is often referred to as a perfect storm. I think people underestimate the probability of them because they wrongly assume that the elements of a perfect storm are independent. If something happened in the past – even though it may not have happened at the same time as something else – it is likely to happen again in the future.
Why should managers take an engineering approach to analysing the probability of perfect storms?
Engineering risk analysts think in terms of systems – their functional components and their dependencies. If you’re in charge of risk management for your business, you need to see the interdependencies of any of the risks you’re managing: how the markets that you operate in are interrelated, for example.
You also need imagination. Several bad things can happen at once. Some of these are human errors and once you make a mistake, others are more likely to happen. This is because of the sequence of human error. When something bad happens or you make a mistake, you get distracted which means you’re more likely to make another mistake, which could lead to another bad event. When you make an error, stop and think. Anticipate and protect yourself.
How can you compute the likelihood of human error?
There are lots of ways to use systems analysis to calculate the probability of human error. Human errors are often rooted in the way an organisation is managed: either people are not skilled enough to do their jobs well; they do not have enough information; or they have the wrong incentives. If you’re paid for maximum production you’re going to take risks.
So in the case of a financial company I’d say monitor your traders, and maybe especially those that make a lot of money. There are a lot of ways you can make a lot of money: skill, luck, or through imprudent choices that sooner or later are going to catch up with you.
So you can do risk analysis even without reliable statistics?
We generally do a system-based risk analysis because we do not have reliable statistics. The goal is to look ahead and use the information we have to assess the chances that things might go wrong.
The upshot is that business schools ought to do a better job of teaching MBAs about probability.
+++++++++++++++++++++++++++++++++
“Numbers make intangibles tangible,” said Jonah Lehrer, a journalist and
author of “How We Decide,” (Houghton Mifflin Harcourt, 2009). “They
give the illusion of control. [Add "sense of control" to tags]
engineering  sense_of_control  black_swan  warning_signs  9/11  HIV  Aids  business_schools  MBAs  attitudes  interconnections  interdependence  mindsets  Stanford  imagination  systems_thinking  anticipating  probabilities  pretense_of_knowledge  risk-management  thinking_tragically  complexity  catastrophes  shorthand  incentives  quantified_self  multiple_stressors  compounded  human_errors  risks  risk-analysis  synchronicity  cumulative  self-protection  systematic_approaches 
november 2013 by jerryking
Who's Your Daddy?
July 20, 2013 | NYT |By MILES CORAK

Better job opportunities for the children of the top 1 percent deepen our cynicism about how people get ahead....Hard work and perseverance will always be ingredients for success, but higher inequality has sharply tilted the landscape and made having successful parents, if not essential, certainly a central part of the recipe....THE Danish and Canadian top 1 percent certainly have their share of privilege: the Gus Wenners of the world, talented or not, are not rare. A recent study published by the Russell Sage Foundation showed that about 30 percent of young Danes and 40 percent of Canadians had worked with a firm that at some point also employed their fathers. This is more likely the higher the father’s place on the income ladder, rising distinctly and sharply for top earners. In Denmark more than half of sons born to the top 1 percent of fathers had worked for an employer for whom the father also worked, and in Canada the proportion is even higher at nearly 7 of every 10.

This is on a par with the United States, where, according to a 2006 study, up to half of jobs are found through families, friends or acquaintances, with higher wages being paid to those who found jobs through “prior generation male relatives” who actually knew the potential employer or served as a reference.
nepotism  movingonup  income_distribution  self-perpetuation  winner-take-all  inequality  privilege  myths  opportunities  The_One_Percent  income_inequality  hard_work  compounded  upper-income 
july 2013 by jerryking
The Problem With Too Many Millionaires - NYTimes.com
June 20, 2013 | REUTERS | By CHRYSTIA FREELAND.

The rich are getting richer....the very, very rich are doing best of all. The ranks of the ultrarich, whom the report defines as people with investable assets of at least $30 million, surged 11 percent, an even greater rate than the mere millionaires....“We are increasingly becoming a ‘winner-take-all’ economy, a phenomenon that the music industry has long experienced,”...The lucky and the talented — and it is often hard to tell the difference — have been doing better and better, while the vast majority has struggled to keep up.”... the problem is that the rise of the ultrarich isn’t occurring in isolation--it takes place in lock step with a darker phenomenon — the hollowing out of the global middle class. What is worrying is that: (a) labor productivity — which used to be the secret sauce for making everyone better off — has a diminished impact on wages.
(b) declining social mobility. The 1 percent is very good at passing on its privilege, and those born at the bottom are finding it harder to climb up.

That is the great paradox of today’s winner-take-all economy. At its best, it is driven by adopted dropouts like Steve Jobs or struggling single mothers like J.K. Rowling, who come up with something amazing and manage to prosper — and to enrich us all. But the winner-take-all economy will make such breakthroughs for anyone who didn’t make the wise choice of being born into the 1 percent harder and harder in the future, which is why we urgently need to come up with ways to soften its impact.
breakthroughs  Chrystia_Freeland  compounded  elitism  high_net_worth  hollowing_out  income_inequality  Matthew_effect  middle_class  paradoxes  productivity  self-perpetuation  social_mobility  special_sauce  The_One_Percent  virtuous_cycles  winner-take-all 
june 2013 by jerryking
Learning to Love Volatility: Nassim Nicholas Taleb on the Antifragile
November 16, 2012 | WSJ | Nassim Nicholas Taleb

In a world that constantly throws big, unexpected events our way, we must learn to benefit from disorder, writes Nassim Nicholas Taleb.

Some made the mistake of thinking that I hoped to see us develop better methods for predicting black swans. Others asked if we should just give up and throw our hands in the air: If we could not measure the risks of potential blowups, what were we to do? The answer is simple: We should try to create institutions that won't fall apart when we encounter black swans—or that might even gain from these unexpected events....To deal with black swans, we instead need things that gain from volatility, variability, stress and disorder. My (admittedly inelegant) term for this crucial quality is "antifragile." The only existing expression remotely close to the concept of antifragility is what we derivatives traders call "long gamma," to describe financial packages that benefit from market volatility. Crucially, both fragility and antifragility are measurable.

As a practical matter, emphasizing antifragility means that our private and public sectors should be able to thrive and improve in the face of disorder. By grasping the mechanisms of antifragility, we can make better decisions without the illusion of being able to predict the next big thing. We can navigate situations in which the unknown predominates and our understanding is limited.

Herewith are five policy rules that can help us to establish antifragility as a principle of our socioeconomic life.

Rule 1:Think of the economy as being more like a cat than a washing machine.

We are victims of the post-Enlightenment view that the world functions like a sophisticated machine, to be understood like a textbook engineering problem and run by wonks. In other words, like a home appliance, not like the human body. If this were so, our institutions would have no self-healing properties and would need someone to run and micromanage them, to protect their safety, because they cannot survive on their own.

By contrast, natural or organic systems are antifragile: They need some dose of disorder in order to develop. Deprive your bones of stress and they become brittle. This denial of the antifragility of living or complex systems is the costliest mistake that we have made in modern times.

Rule 2:Favor businesses that benefit from their own mistakes,not those whose mistakes percolate into the system.

Some businesses and political systems respond to stress better than others. The airline industry is set up in such a way as to make travel safer after every plane crash.

Rule 3:Small is beautiful, but it is also efficient.

Experts in business and government are always talking about economies of scale. They say that increasing the size of projects and institutions brings costs savings. But the "efficient," when too large, isn't so efficient. Size produces visible benefits but also hidden risks; it increases exposure to the probability of large losses.
Rule 4:Trial and error beats academic knowledge.
Rule 5:Decision makers must have skin in the game.

In the business world, the solution is simple: Bonuses that go to managers whose firms subsequently fail should be clawed back, and there should be additional financial penalties for those who hide risks under the rug. This has an excellent precedent in the practices of the ancients. The Romans forced engineers to sleep under a bridge once it was completed (jk: personal risk and skin in the game).
Nassim_Taleb  resilience  black_swan  volatility  turmoil  brittle  antifragility  personal_risk  trial_&_error  unknowns  size  unexpected  economies_of_scale  risks  hidden  compounded  disorder  latent  financial_penalties  Romans  skin_in_the_game  deprivations  penalties  stressful  variability 
november 2012 by jerryking
Business continuity: Making it through the storm
Nov 10th 2012 | The Economist |Anonymous.

Hurricane Sandy was another test of how well businesses can keep going when disaster strikes...GOLDMAN SACHS’S latest shrewd investment was in sandbags and back-up electricity generators. As Hurricane Sandy approached New York, the bags were stacked around its headquarters. It was one of the few offices in downtown Manhattan to remain dry and well-illuminated as “Frankenstorm” battered the city.

Meanwhile, a block farther down West Street, the headquarters of Verizon were awash with salty flood water, soaking cables delivering phone and internet services to millions of customers. The firm was able to reroute much of the traffic through other parts of its network, but local service was disrupted....Sandy is the latest catastrophic event to test the readiness of the world’s leading firms to cope with disaster. Most firms have improved “business continuity” preparations over the years. The Y2K scare at the turn of the century moved IT risk high up the list of worries. The attacks of September 11th 2001 warned firms of the danger of putting all their computers (and staff) in the same place (jk: concentration risk; SPOF)....“Firms are increasingly reliant on networks, but often fail to understand the risks that networks bring,” says Don Tapscott, a management guru. Global supply chains, just-in-time and shifting to the “cloud” tend to bind once unrelated activities ever closer together, making them more prone to failing at the same time. The current fad for moving data to the “cloud” may appear to reduce risk because there is so much spare capacity in the web. Yet some firms offering cloud services have more concentrated operations than (jk: concentration risk).

Firms are starting to recognise their vulnerability to cyber-attack, but few have much idea what they would do if it happened. Mr Tapscott thinks boards should have a committee explicitly focused on understanding IT and network risks and ensuring they are properly managed....Dutch Leonard, a risk expert at Harvard Business School, says that the best-prepared firms use a combination of planning for specific events and planning to cope with specific consequences, such as a loss of a building or supplier, regardless of the cause. He also recommends copying an approach used by the armed forces: using a group of insiders to figure out how the firm could be brought down [ jk: white hats]....Firms should make lobbying government to invest heavily in upgrading that infrastructure a core part of their risk-management strategy, argues Irwin Redlener of the National Centre for Disaster Preparedness at Columbia University.

Goldman Sachs has long been a leader in disaster planning because it understands that the situations in which it might not be able to function are exactly the sort of events when very large changes in the value of its investments could occur, says Mr Leonard. Yet too many firms underinvest in planning for disaster because they don’t think it will pay, at least within the short-term timeline by which many now operate, reckons Yossi Sheffi of MIT.
beforemath  boards_&_directors_&_governance  business-continuity  catastrophes  compounded  concentration_risk  crisis  cyberattacks  cyber_security  disasters  disaster_preparedness  Don_Tapscott  Goldman_Sachs  Hurricane_Sandy  isolation  natural_calamities  networks  network_risk  New_York_City  optimism_bias  preparation  readiness  red_teams  resilience  risks  risk-management  short-term  SPOF  step_change  supply_chains  surprises  underinvestments  valuations  vulnerabilities  white_hats 
november 2012 by jerryking
A conversation that translates
June 7, 2012 | The Financial Times pg. 14 | Philip Delves Broughton.
(Pass on to Abdoulaye DIOP)
For global companies, creating an approach to risk that resonates across cultures can be a challenge, writes Philip Delves Broughton

Risk is a risky word. Already prone to misinterpretation among people who share a language and a culture, the difficulties multiply dangerously when it moves across borders.

What a Wall Street trader might define as moderately risky may seem downright insane to a Japanese retail broker; what an oil pipeline engineer in Brazil might characterise as gung-ho may appear overcautious to his revenue-chasing chief executive in London....The greatest pitfalls in managing risk across borders, he says, emerge from assuming too much. When dealing with fellow English speakers, it is easy to imagine that a shared language means shared assumptions - that the English, Americans and Australians think the same thing because they are using the same words.... Tips for managing risk across borders

Context is more important than language. Understand what matters most in the markets where you are doing business. Is it the law, logic or maintaining relationships?

Every word comes with its own "metadata" in different cultures. Be as specific as you can and never assume you have been properly understood without checking for potential misunderstandings.
cultural_assumptions  risks  risk-management  Communicating_&_Connecting  globalization  organizational_culture  transactions  national_identity  Philip_Delves_Broughton  translations  assumptions  misinterpretations  contextual  metadata  specificity  crossborder  cross-cultural  misunderstandings  interpretation  conversations  risk-assessment  words  compounded  risk-perception  multiplicative 
september 2012 by jerryking
Graduates, Take Heed - WSJ.com
June 11, 2004 | WSJ | By DANIEL AKST.

if you are dreaming of making the world a better place...just go out and make the most money you can. Then, if you still want to do more, give it away....Economics, remember, is not a zero-sum game. Capital is the lifeblood of the economy, fueling the productivity gains that in turn fuel expanding affluence and social progress. As if none of this were sufficient, Alex's earnings required him to pay enough income taxes over the years for the government to employ a small army of social workers. He never shirked these obligations through dubious tax-shelter schemes, either. And don't forget the foundation!

The conclusion is unavoidable: If you have a good education, you shouldn't just consider getting rich. Creating and amassing wealth is an outright moral obligation. Do so and you can take comfort not just in financing public services but in knowing that you are giving people what they need or want, generating jobs and underwriting the affluence that makes art, justice, environmental protection and other social goods possible.

Of course, making yourself a pile of money is good for you too. You'll live in a better neighborhood, drive a safer car, get to be more selective in choosing a spouse and enjoy a longer, healthier life. Your kids will get a better education, which in turn will mean more of the same for them, too -- and will better equip them to improve the world still more.
commencement  advice  Wall_Street  capitalism  new_graduates  personal_enrichment  career_paths  finance  wealth_creation  philanthropy  tithing  geographic_sorting  compounded  self-perpetuation  super_ZIPs  zero-sum_games 
august 2012 by jerryking
Two Classes in America, Divided by ‘I Do’ - NYTimes.com
July 14, 2012 | NYT | By JASON DePARLE.

The economic storms of recent years have raised concerns about growing inequality and questions about a core national faith, that even Americans of humble backgrounds have a good chance of getting ahead. Most of the discussion has focused on labor market forces like falling blue-collar wages and lavish Wall Street pay.

But striking changes in family structure have also broadened income gaps and posed new barriers to upward mobility. College-educated Americans like the Faulkners are increasingly likely to marry one another, compounding their growing advantages in pay. Less-educated women like Ms. Schairer, who left college without finishing her degree, are growing less likely to marry at all, raising children on pinched paychecks that come in ones, not twos.

Estimates vary widely, but scholars have said that changes in marriage patterns — as opposed to changes in individual earnings — may account for as much as 40 percent of the growth in certain measures of inequality.
marriage  parenting  family  family_breakdown  income  income_distribution  Matthew_effect  social_classes  college-educated  social_mobility  self-perpetuation  compounded  blue-collar  inequality 
july 2012 by jerryking
To risk or not to risk? Where (and when) should be the question
Sep 3, 2007 |The Globe and Mail pg. B.6 | Daniel F. Muzyka, Glen Donaldson

First, risk can sometimes be asymmetric: bad news being more "bad" than good news is "good". For example, while a business project that goes particularly well might deliver slightly ahead of expectations, a bad project that goes off the rails may far exceed its time and budget...Second, risk is often interconnected: the knee-bone is connected to the shin-bone is connected to the foot-bone.
...Third, risks can be multiplicative, with a series of small risks combining to produce large outcomes....The good news is that advancements in risk management can help produce insight and can deal with some of the risks. One can consider four steps to managing risk: identification, measurement, mitigation, and monitoring.
ProQuest  Daniel_Muzyka  risk-management  insights  large_payoffs  measurements  compounded  interconnections  risk-mitigation  multiplicative  risks  network_risk  asymmetrical  cumulative  risk-assessment  bad_news 
october 2011 by jerryking
Crovitz: Tsunamis of Information - WSJ.com
MAR. 21, 2011 |WSJ| L. GORDON CROVITZ. Hayek spoke of the
'pretense of knowledge,' and why disasters are worse than expected. In
this information-saturated era, we expect no surprises. Yet we are
constantly surprised. We have huge amounts of data, so we assume that
risks can be calculated & avoided. But we also have exceedingly
complex systems. Just as weather is too hard to predict more than a few
days out because of how many variables interact, it's hard to predict
other complex systems. Consider credit instruments during the financial
crisis, the global warming debate, or global epidemics. Thus an
earthquake & tsunami, even in technologically advanced Japan, can
kill tens of thousands, wipe out entire villages, & re-open
questions about nuclear power....some physical systems turn out to be so
complex that they resemble unpredictable social sciences more than the
certainties of simpler physical science....We need to learn how to live
with both new technologies & new uncertainties.
disasters  complexity  Friedrich_Hayek  L._Gordon_Crovtiz  natural_calamities  information_overload  data  uncertainty  surprises  overconfidence  pretense_of_knowledge  earthquakes  tsunamis  social_sciences  certainty  psychology  unpredictability  compounded  risk-assessment  physical_systems  CDOs 
march 2011 by jerryking
The Many Trials of 'Spider-Man' - Speakeasy - WSJ
March 11, 2011 WSJ By Peter Schneider
Looking back, he realizes that it was not one big mistake of judgment.
Instead, it was 10 little decisions that seemed inconsequential along
the way but, in retrospect, turned out to have led him into a precarious
and nearly fatal situation. At some point, the cumulative impact of all
those wrong decisions makes it impossible to regain your bearings.
theatre  post-mortems  failure  decision_making  producers  playwrights  cumulative  compounded 
march 2011 by jerryking
Seth's Blog: Information about information
Posted by Seth Godin on July 15, 2010.

information about information. That's what Facebook and Google and Bloomberg do for a living. They create a meta-layer, a world of information about the information itself.

And why is this so valuable? Because it compounds. A tiny head start in access to this information gives you a huge advantage in the stock market. Or in marketing. Or in fundraising.

Many people and organizations are contributing to this mass of data, but few are taking advantage of the opportunity to collate it and present it to people who desperately need it. Think about how much needs to be sorted, compared, updated and presented to people who want to choose or learn or trade on it.

The race to deliver this essential scalable asset isn't over, it's just beginning.
information_flows  Information_Rules  Seth_Godin  data_driven  competingonanalytics  overlay_networks  sorting  metadata  slight_edge  compounded  inequality_of_information  multiplicative  cumulative 
july 2010 by jerryking
Op-Ed Columnist - Drilling for Certainty - NYTimes.com
May 27, 2010 | NYT | By DAVID BROOKS. "...the real issue has
to do with risk assessment. It has to do with the bloody crossroads where complex technical systems meet human psychology...we’ve come to depend on an ever-expanding array of intricate hi-tech systems. These h/w & s/w sys. are the guts of financial markets, energy exploration, space exploration, air travel, defense programs and modern production plants. These sys. which allow us to live as well as we do, are too complex for any single person to understand. (1) people can't
imagine how small failings can compound into catastrophic disasters. (2) people acclimate to risk (3) overconfidence in backup sys. and safety devices. (4) people match complicated technical sys. with complicated governing structures. (5) people tend to spread good news and hide bad news.(6) people in the same field suffer groupthink...Overlooks incentives that distort choices.
David_Brooks  oil_spills  complexity  risk-assessment  cognitive_skills  biases  Malcolm_Gladwell  certainty  overconfidence  psychology  incentives  catastrophes  groupthink  compounded  financial_markets  energy_exploration  space_exploration  air_travel  multiplicative  risk-perception  optimism_bias  risk-acclimatization  Richard_Feynman  cumulative  bad_news 
may 2010 by jerryking
Take Smart Risks
09.21.09 | Wired Magazine | by By William Gurstelle. "Done
artfully and wisely, living dangerously engages our intellect, advances
society, and even makes us happier. It is possible to work consciously
toward joining the "golden Third": Just get in there and start pitching.
As with knife-throwing, unicycle-riding, and whip-handling, one gets
better mainly by practice. Make your choices smart ones. It's not
difficult to discriminate between a good, soul-enriching risk and one
that's just plain nuts."

A comment:

That study of risk takers vs. non risk takers is probably
biased. The random sample of people interviewed most likely didn't
include people that were dead or in prison as a result of the risks they
took.

And it is very true, but sometimes risks are compounding and other times
they are isolated. It's important to distinguish when something that
appears to be isolated is really starting to compound.
category_errors  risk-taking  risks  self-actualization  isolation  compounded  discernment  risk-assessment  dangers  psychology  soul-enriching  practice  dedication  multiplicative  survivor_bias  cumulative 
october 2009 by jerryking
Financial daisy chains can cause markets to seize up
08/09/07 G&M by Avner Mandelman

the problem here is that at a certain point, the sum total of the legal-derivative demands in the chain, can surpass the physical/financial ability of the underlying institutions' balance sheets. And when the financial temperature rises everywhere because of some event, the system can seize up.

Are we at that point? I don't know, nor does anyone. Even Warren Buffett said that he doesn't. But, I can hear CFAs hollering: "What's wrong with transferring risk from those unwilling to assume it, to those who do? That's insurance, isn't it?" Yes and no.

The problem is that when too much risk is transferred to the system as a whole in a daisy chain, this can make the system unstable, as several studies showed after October, 1987, when portfolio insurance and dynamic hedging made the stock-clearing system temporarily unstable and the market crashed.
Avner_Mandelman  risks  derivatives  daisy_chains  instability  compounded  market_crash 
march 2009 by jerryking

Copy this bookmark:





to read