Two Criteria for Believability

Back in 2017, I read Principles by Ray Dalio. It has since become one of my favorite professional books of all time and one I’d certainly recommend to anyone.

Dalio ran Bridgewater Associates, the world’s largest hedge fund, for many years and created a unique culture that he describes in the book. A key concept of Principles is the idea of believability and making decisions within a group.

The problem with a democracy is that it assumes that everyone’s views are equally valuable.

Ray Dalio

(I took “Democracy” in the above quote to mean “consensus-driven decisions,” not “democracy” as a political construct.)

This idea resurfaced in my mind after listening to a recent podcast from Pat Sherwood where he discusses this idea in-depth.

Bridgewater has built a culture Dalio calls an idea meritocracy. Everyone is free to have an opinion in any decision, and the overwhelming majority of conversations and meetings are made public within the company through recordings. This isn’t inherently unique as many companies are moving towards a more transparent model. The unique part is how Bridgewater comes to a decision.

They practice believability-weighted decisions where everyone’s opinion is not counted equally. Individuals with unique expertise, a track record of success, and/or a special investment of time, energy, or resources in a given area are weighted higher than others.

I’ll share a large chunk from the book that summarizes this approach well:

In typical organizations, most decisions are made either autocratically, by a top down leader, or democractically, where everyone shares their opinions and those opinions that have the most support are implemented. Both systems produce inferior decision-making.

That’s because the best decisions are made by an idea meritocracy with believability-weighted decision making in which the most capable people work through their disagreements with other capable people who have thought independently about what is true and what to do about it. It is far better to weigh the opinions of more capable decision makers more heavily than those of less capable decision makers.

…How do you determine who is capable at what? The most believable opinions are those of people who:

1. Have repeatedly and successfully accomplished the thing in question.

2. Have demonstrated they can logically explain their cause and effect relationships behind their conclusions.

Principles, page 370

I find myself coming back to those two criteria quite often when I’m weighing in on a conversation. It’s easy to weigh in and express ideas, but it’s often not clear that those ideas are backed up by experience and logic.

In his podcast, Sherwood mentioned a CrossFit article titled “Conjecture, Hypothesis, Theory, Law: The Basis of Rational Argument.” This goes hand in hand with the concept of believability.

I’d highly encourage everyone to read Principles if you’re interested in running a high-performing team or just making better personal decisions. For a teaser, you can listen to Pat’s podcast or the Recode Decode interview with Dalio. Also, read the interesting story about how Principles came into being as an actual book.

The Failure of Kodak: Why New Ideas Feel Risky

Way back in the 1970s, an engineer named Steven Sasson at Kodak invented the first digital camera. Sasson’s invention was ahead of its time by a few years so one would assume that this innovation would put Kodak at the forefront of the digital revolution.

If you have read one of the many articles on the topic though, you’ll know this isn’t the case. Despite being ahead of the curve, Kodak eventually fell far behind (filing for bankruptcy in 2012). The term “Kodak moment” now connotes missed opportunities instead of magic moments to be captured on film.

As Scott Anthony points out in his article on Harvard Business Review “Kodak’s Downfall Wasn’t About Technology,” the fall of Kodak has less to do with the actual digital camera technology and more about the culture of the company surrounding innovation and new ideas.

When Sasson originally brought his prototype to management, Kodak made a large chunk of their profits from selling film for their cameras. As one might expect, this new film-less invention didn’t get a warm welcome from leaders at the company. As Sasson recounts: 1

My prototype was big as a toaster, but the technical people loved it. But it was filmless photography, so management’s reaction was, ‘that’s cute — but don’t tell anyone about it.’

The first digital camera created by Sasson at Kodak

New ideas can be both incredibly exciting and intensely stressful. On one hand, new ideas are necessary to disrupt an industry and create a unique product/service. On the other hand, they represent a change in the status quo. By definition, a new idea is a departure from what you’re comfortable with and what you may have had success with in the past.

Let’s take a deeper dive into why new ideas are so difficult to adopt pulling from Adam Grant, author of Originals, and others.

Continue reading “The Failure of Kodak: Why New Ideas Feel Risky”

Drucker on an Effective Decision Process

Peter Drucker's The Effective Executive

I’m currently finishing up The Effective Executive by Peter Drucker. Those of you aware of my love for goal setting, decisions, and productivity won’t be surprised, but I’m thoroughly enjoying the read. Sure the text is a bit outdated, but the underlying principles are still sound and applicable. Drucker’s words have already inspired one post on managing time. This time around, I want to talk about the process he details for making an effective decision.

Drucker lays out five characteristics of an effective decision making process starting with deciding what problems warrant attention and ending with evaluation metrics.

Continue reading “Drucker on an Effective Decision Process”

Does that matter?

A screenshot of the header to Fried's blog post "Does that matter?"

Jason Fried, founder and CEO of Basecamp, published a great piece on Signal vs. Noise that I just stumbled upon thanks to Twitter.

Being able to see what matters, to know what’s worth doing is an instinct you can hone, a skill you can build. I’d consider it a top requirement for anyone tasked with making key decisions.

I would expand that to say it’s a top requirement for anyone. Making key decisions about what to work on is something we all face.

I’ve had the same conversation a few times now with new Happiness Engineers that start at Automattic. When they first join the company, they’re obviously excited and ready to make a big impact. They dive right in to every project they find helping out here and helping out there.

For a short time, the juggling act works, and everything is sustainable. Over time, the foundation starts to crumble, and they become overwhelmed, forced to take things off their plate to maintain some sense of sanity.

I know this feeling all too well because it happened to me.

Continue reading “Does that matter?”

Mastermind: How to Think Like Sherlock Holmes

Title: Mastermind: How to Think Like Sherlock Holmes
Author: Maria Konnikova
Published: December 31, 2013

I picked up Maria’s book after reading nearly every column she’s written for the New Yorker. She does a tremendous job of applying scientific discoveries to practical, real-world use cases. I’ve quoted her articles several times in some of my published pieces including my article on reading retention.

Her book, Mastermind, was yet another shining example of how Maria can combine science and real-world application to help you improve your thinking in some way. Drawing upon stories from the famous detective Sherlock Holmes, Maria provides detailed instructions on how to improve your thinking. She touches on how to become a better observer and how to draw upon past experiences and elements in your “brain attic” (a collection of experiences and facts similar to Mozart’s bag of memories) to form better conclusions. The end goal is to ultimately make better decisions and avoid mental biases like the Availability Heuristic and the Confirmation Bias.

One aspect of the book that I found interesting was Maria’s instructions on how to separate yourself from your work. In a world of constant connectivity, being able to take a step back and involve yourself in something else has a direct correlation with your happiness and how well you’re able to solve problems. According to Maria, the best activities have the following attributes:

It needs to be unrelated to what you are trying to accomplish (if you are solving a crime, you shouldn’t switch to solving another crime; if you are deciding on an important purchase, you shouldn’t go shopping for something else; and so on).

It needs to be something that doesn’t take too much effort on your part (if you’re trying to learn a new skill, for instance, your brain will be so preoccupied that it won’t be able to free up the resources needed to root through your attic; Holmes’s violin playing—unless you are, like him, a virtuoso, you need not apply that particular route).

It needs to be something that engages you on some level (if Holmes hated pipe smoking, he would hardly benefit from a three-pipe problem; likewise, if he found pipe smoking boring, his mind might be too dulled to do any real thinking, on whatever level—or might find itself unable to detach, in the manner that so afflicts Watson)

If you’re interested in the science of thinking and how your brain formulates opinions and decisions, I’d highly recommend giving Mastermind a look.

Read more quotes

How to Make Better Decisions Based on Science

This post was originally written for the Crew blog.

2+2=

Unless you’re a cyborg, you couldn’t help but think of the number “4″ when you saw the above expression. In the same way, the partial phrase “bread and” leaves you with the word “butter” on the tip of your tongue. That’s no accident.

Our brains make thousands of decisions every day. Many of them (like whether you want cream and sugar in your coffee) seem to be automatic. Others (like where you want to go for dinner) can be a bit more taxing and require mental effort.

Research has identified two seemingly separate “systems” of the brain responsible for decision-making. In order to make better decisions, we need to understand what each of these systems is responsible for and how we can shift from one to the other.

Continue reading “How to Make Better Decisions Based on Science”

Using Constraints to Make Better Decisions (Like Walking Away From $2 Million)

Could you walk away from $2 million? How hard of a decision do you think that would be?

If you’re Biz Stone, co-founder of Twitter, the decision is apparently easy. “Of course!” you might say. Stone now has more than a few million in the bank thanks to his role in the social sharing company. However, Stone turned down millions of dollars when he was still poor before Twitter even came into existence.

It was October of 2005, and Stone was working at Google1. He joined the team two years prior to work on Blogger, a blogging software built by Ev Williams.

Stone would need to put in two more years before his stock options fully vested. At that time, Google was skyrocketing in popularity meaning Stone’s options were worth about $2 million.

Yet, on that day in 2005, Stone was quitting his job ready to walk away with nothing in order to join Ev on his new venture, a company called Odeo, which would later become Twitter.

To Stone, the decision was actually quite simple. He had joined Google with one goal in mind: work with Ev Williams. Since Ev had left to pursue other projects, it was time for Stone to move on as well. As Stone put it to his wife, “We didn’t move out to California so I could work at Google. We moved out here so I could work with Ev.”

To make a hard decision, Stone asked a simple question: Is staying at Google accomplishing what I set out to do in California. The answer was obviously “No.”

Stone’s simple question is a type of constraint that helped to guide his decision making.

We typically think of constraints as a negative thing. In the land of plentiful options, constraints represent a step in the wrong direction. But, when used consistently and correctly, constraints can actually help simplify many aspects of your life from what to have for dinner to whether or not you want to walk away from $2 million.

Continue reading “Using Constraints to Make Better Decisions (Like Walking Away From $2 Million)”