Daniel's blog

Prof. Nassim Taleb gave a talk last week at the LSE on his new book – Antifragile. It is essentially about how to live a volatile world as defined by him in his earlier book – The Black Swan. I read most of The Black Swan and went to the talk so here is my take on it.

Our inability to forecast

Let me start by telling you a story Prof. Taleb presents in The Black Swan. Imagine you are a turkey. Every day a man comes to feed you and over time, you really get to like him. He gives you food and looks after you and therefore you conclude he must be a nice guy. One day however, he kills you and eats you for his thanksgiving dinner. How come you were so fatally wrong?

It is because you, same as most other ordinary people as well as experts, based your judgement on retrospective analysis. Things always appear to be orderly and seemingly logical when looked at retrospectively – we start suffering from an illusion of understanding. This is because we base our thinking only on what we know which are only things that happened in the past and equally importantly, things that somebody was able to/took the effort to note down. The problem comes with trying to predict what has not happened yet.

Prof. Taleb concludes that it is virtually impossible to do so and that if we attempt it, we can experience phenomena of Black Swans. People thought for centuries that swans can only be white as all swans around them had been until somebody found black ones on a remote island. A modern day equivalent would be for example the 2008 global financial crisis which nobody was expecting and therefore did not prepare for it and which had severe consequences. So if we cannot predict the future, what should decision makers do?

What does not kill you makes you stronger

This is where his book on antifragility comes in. We can image the world as consisting of two basic systems – fragile and antifragile ones. A glass is an example of a fragile system. If exposed to volatility, it cannot become any better, it will remain being a glass, and if exposed to significant volatility or stress it will break.

Our body on the other hand, is an antifragile system. If exposed to stress up to a certain point such as in a gym or by application of a live vaccine, it becomes stronger and therefore more able to cope with such situation in the future.

We should therefore attempt to build systems which can benefit from volatility. Such systems can gain strengths from fragility of its components as is the case e.g. with the aviation industry. Whenever a plane crashes, others learn from the mistakes and prevent them from happening again. Such systems also often rely on trial and (small) error for learning rather than on predictions. Stelios, the founder of Easyjet, who spoke at the LSE couple days later said that he does not believe in research – he claims to learn by trial and error as well. See my next article for some more relevant ideas by Stelios.

Prof. Taleb also thinks that some volatility in our world is necessary, just as our body needs to stretch every now and then and cannot lay in a bed all the time. He extends this to policy makers and argues that it is a mistake to smooth things beyond the necessary. Perhaps Europe’s labour and welfare systems can take a lesson here.

So what is the takeaway this time? I guess it would be something along the lines of:
Do not spend too many resources on trying to exactly anticipate the future and rather invest them in building systems robust enough to withstand volatility, to learn from it and capable of utilising those leanings.

PS: A joke I heard some time ago relevant to antifragility came to my mind. How did Goldman Sachs react to the global Occupy movement? By setting up a new fund investing in companies making protective clothing, tear gas and rubber bullets

Let me ask you a question at the beginning (do not scroll down to the picture yet). What is the best way of preventing students from eating in a library?

I would imagine there is a range of possible approaches. A simple polite notice saying ‘Please do not eat in the library’ might be one of them. If that one fails, one might add a statement that a £30 fine will be levied on anyone breaching the rule. They can also ban offending students from entering the library for a period of time or kick them out of the school all together. Or they can do a night-club style security check upon entering the library, confiscating any food found in bags.

While some of these are ineffective (such as the first one), others are too strict or too expensive to implement given the relatively low risk/increase in costs resulting from this undesirable behaviour to the LSE community.

So how about creating an environment in which the students would police themselves? Firstly, one needs to come up with a reason why would anyone bother telling somebody next to them to stop eating here. Things like increase in cleaning costs/increased noise levels/making books dirty are not on their own strong enough to spring people into action. We need something that resonates deep into all of us. Well, even if it only gets half of us going, it would be enough. What are girls really afraid of? Mice!! There you go!

Let’s tell the girls that food dramatically increases the number of MICE in the library and nudge them towards not only not eating food themselves while there but also towards telling all their male friends to bloody stop eating here as there are going to be lots of mice otherwise.

Somebody is yet to carry out a study if the poster worked or not but it is a great example of using behavioural science to influences people’s daily actions in a cost effective way.

The only thing on my mind now is, if it will not backfire and boys will not start leaving lots of food around the library in order to support the mice and therefore keep girls out of the space so that consequently they can easily find a free table to study…

With smart phones being virtually ubiquitous nowadays, an escape from the reality of right now is often only a swipe away. You surely have some friends who are constantly checking their email, facebook and twitter accounts on their phones or using WhatsApp, blackberry messenger and many other applications while being out with their peers. I believe these habits have a negative effect on how much we enjoy the presence.

I got a new iphone recently after having my old one pick pocketed while travelling in Mongolia several months ago. It has reminded me that we do not need to be in connection with everybody else all the time and that it is much better to devote 100% of our attention to whatever we are doing at the moment. I do not use facebook on my iphone and check emails only when absolutely necessary. Instead of seeking an escape or a distraction from here and now, I focus fully on the person I am talking to at the moment, the food I am eating or the class I am sitting in. It makes me enjoy those moments much more (and by consequence the people I am with have a better time as well), learn more from them and be happier in general.

Coincidentally, I saw a TED talk on the topic just yesterday, where Matt Killingsworth presented his research into tracking happiness concluding that ‘people are often happiest when they are lost in the moment… and that the more our mind wanders, the less happy we can be.’ You can watch it here.

We can extend this concept even further. I for example always used to read if I was eating alone. I have stopped doing that couple months back and just enjoy the food now and let my mind process all information it has been getting whole day and relax a bit instead. If at all possible, I also do not like checking my watch when I am out with somebody as that again only takes me out of the moment and gets my mind spinning in different directions.

So ask yourself a simple question. Am I genuinely present in my moments? When I am talking to my friends, working, watching a movie etc.? If the answer is sometimes no, I would encourage you to try devoting all your attention to whatever you are doing at a moment. You should see you will have a lot better time!

Professor Ralph Keeney, world’s leading authority on behavioural sciences from the Duke University, gave a lecture at LSE some time ago, offering couple interesting views on the topic.

In addition to his summary slide bellow, his other main thoughts were following:

There are reactive decisions, which come to us and we are forced to make them, and there are proactive decisions which we generate and therefore we can exert more influence over them.

According to Prof. Keeney’s research, 56% of deaths in the US in 2000 were consequences of people’s personal decisions such as to drink and drive or to smoke cigarettes and get terminal lung cancer. He estimates the figure to be 20% and 5% in 1950 and 1900 respectively.

When making decisions, we are often guided by our objectives. It is therefore important to be aware of what our objectives are and to formulate them well. There are means objectives which’s accomplishment takes us to fundamental objectives.  In business, getting a product to market first, gaining competitive edge or increasing sales are all means objectives to the fundamental one of increasing profits. In personal life, being healthy or rich are means objectives to fundamental ones such as living meaningful or enjoyable life.

Couple days ago I wrote a blog post on how much can we do in a day. The main point was that if we schedule lot of things, it will force us to cut off our unproductive activities and focus only on the relevant ones (I suggest you read it first if you have not read it yet). If you get into this habit, you are probably going to have more genuinely free time than you had before despite the fact you are getting more things done. This blog post is about what to do with all that free time and on what you can do with your time in general.

We were asked to write down how we would like to spend our time while at LSE at our introduction lecture couple weeks ago.  I am now applying for consultancies so I used a framework I learned a long time ago from a great speaker and friend of mine called Houston Spencer, himself an ex-McKinsey consultant. It identifies four main areas you should devote your time to. These are:

1. Relationships – family, friends, girlfriend/boyfriend
2. Professional – work related activities
3. Body – sports, taking care of your health, appearance
4. Mind – reading, meditation, listening to relaxation music etc.

 
This is how Houston put it down:

Draw these on an x/y axis and then think what activities you want to do each of these areas. While your priorities might change depending on the stage of life you are in, you should take care to have at least something in every domain.

And here is a brief sketch I did in the lecture:

I would encourage you to be a lot more specific and spend some time doing this exercise. You might get some great insights. Here is how to do it:

1. Think how fulfilled you are in each area now.

2. What percentage of your time are you investing into each area now?

3. What percentage of your time do you want to be investing into each area in the future?

Closing thoughts

Did you see any correlation between your satisfaction with each area and your investment?
What are your goals for each area for now, in one year, five years from now?
What would you like your time investment mix to look like in the future? Is it realistic given the goals you set for yourself?

Now that I am back at uni, I have to balance my time between lectures, studying, applying for jobs, setting up my own business, working out, going out, and many other things. This has led me to a question of how much can I actually do in one day. I am sure you have asked yourself that question many times before as well. I have recently read a book by C. Northcote Parkinson, The Parkinson’s Law, which might offer us an answer.

One of the most famous Parkinson’s laws postulates that work expands to fill the time available for its completion. I think this is very true. Just imagine you are sitting in your room and have to for example write a short report for a class/your boss and you have three hours to do so. You would probably spend the first half an hour on facebook, the next half an hour deciding what to write about, ten minutes checking your email, hour and half writing the report with some more facebook in between and use the remaining time for formatting it and watching videos on youtube.

Now suppose you have only an hour to write the report because you are also planning to go to a gym for an hour and to catch up with a friend over a coffee afterwards to discuss your new business idea. I bet you would finish the report to a comparable if not better standard in that one hour of focused work and manage to do two more important things in those same three hours.

So what is the moral? Do not be afraid to schedule lot of activities in your day because it will only make you more effective in whatever you are doing. If I am under a pressure of a packed day and tight deadlines, I cut off most of my unproductive time such as facebook, focus on work at hand more intensively and therefore complete it a lot faster and to a higher standard, do many other things and at the end of the day, still end up with more free time than I had before.

The next blog post will be on what you can actually do with all that new free time.

As a follow up to my previous article on entrepreneurship, here is one more great advice I keep hearing a lot lately, last time from Sunny Midha, a successful entrepreneur, a tech venture capitalist and LSE graduate. And the advice is – get on the phone!

If you want something, you need to ask for it. If you have the courage and determination to call up a big guy and ask him for help, odds are you will be able to make use of that help as well.

Equally importantly, get on the phone to your potential customers to test if the idea you are thinking about would be of an interest to them. Have they bought anything like this before? Why yes, why not?

Last but not least, it’s a great way to get a job as well. One management consulting head hunter and a friend of mine, gave a talk earlier this week on getting into the industry. One of his top advices was to read related press and if a partner from an organization you want to work for has an article there or is quoted, get on the phone to his company and say you want to talk to XY about his recent article in Z. His/her assistant will probably put you through and the partner will be delighted you read the article and found it interesting enough to enquire more. Towards the end of the call, say you are considering your next career steps and got really interested in this segment of the industry. ‘Can you help me please?’ pause… While she will not probably offer you a job outright, people rarely give you a straight no as well. She might recommend you to their HR or to a friend from another consultancy in the sector which is hiring right now.

I have started my MSc Decision Sciences degree at the London School of Economics this week and one of the great things about LSE is that it attracts a wide range of remarkable speakers who come and give public lectures on the campus. I have missed out on Kofi Annan but managed to attend Gurbaksh Chahal’s lecture. He dropped out of high school at the age of 16 and by the time he was 25 he built and sold two companies worth over $340 million dollars in total. Being now slightly over thirty, he’s now building a third one, already valued at over $500 million. Here are some of his ideas on entrepreneurship I particularly liked.

Entrepreneurship is like a roller coaster,
it has its ups and downs
but it is your choice
to scream or enjoy the ride.

The idea is 1%, execution is 99%
I really like this one. Many people have great ideas, but they never get down to realising them. Some people guard their idea, afraid somebody would steal it. I think that sharing your ideas with others can open you many unknown doors and provide you with valuable feedback and help with execution.

Culture is everything
Gurbaksh argued that the first 15 to 20 people you hire will define DNA of the whole organization which will in turn determine if the company will remain a small one or will grow successfully. One bad hire not dealt with quickly can destroy the company – so he recommended us that if we make a hiring mistake, it is OK to fire the person the first week or even the first day.

Grow a thick skin, a very thick skin
People will intentionally or unintentionally question your ability to succeed. You need to get over it and not get put down by it. Ignore it; create your own reality (this was coming up a lot also in Steve Job’s biography I was writing about some time back – he called it distorted reality – you persuade people around you that impossible is possible until it becomes reality). He encouraged us to overcome any fear or insecurities we might have and just get on with things, keep trying and learning from what we do.

We are confronted every day with tips, advices, rules and expectations in all aspects of our lives. We often understand them only superficially, yet we treat them as some kind of eternal truth and guide our behaviours accordingly. But how relevant are they in nowadays world and what were they really aiming to achieve when they were first formulated? I came across two such rules recently which made me think about the topic further.

Pre-marriage sex

Having travelled and lived in Asia, I came to accept the concept of no sex before marriage as something ingrained in parts of the society and as one of those timeless cultural habits you do not question. My friend of Chinese origin pointed to me last week however, the absurdity of trying to fit a centuries old rule to these times. Historically, people lived 30 to 40 years on average. They got married as soon as they could have babies or even earlier, in order to survive and manage to bring up new generations before they die. This corresponds to age of 12 – 15 for girls. Put simply, they did not have much time to get naughty. Also, women were dependent on man for survival and stood no chances of being able to bring up kids on their own. A lot has changed since.

Many people get married nowadays at the age when our ancestors used to die yet people are still expected to have no pre-marriage sex. That is ten to fifteen years of waiting people did not have to endure before coupled with widespread availability of contraceptive methods and economic opportunities for woman to be single mothers should they want to do so. How relevant is the rule nowadays when times are so different?

Drinking red wine at room temperature

Couple days later, I was having some red wine with my grandfather. I know that we chill white wine and drink the red one at a room temperature. I was therefore surprised that he put it in a fridge in between pouring it into our glasses. What I learned is that the idea of ‘room temperature’ comes from medieval times when there was one fireplace in a huge room and consequently the temperature there was about 14°C. A lot less than the 20°C we have in our homes these days and what we now understand as room temperature. It tasted great.

So next time somebody tells you a moral, take it with a pinch of salt. Chances are, circumstances under which it was first formulated have changed a lot making in either irrelevant or deceiving if taken on its face value.

I finished my last placement with AIESEC on Friday August 31st which was the last thing as did as an active member of the organization. Now, I am an alumnus. I have spent amazing five years in the organization and have had countless life changing experiences I will remember until the end of my life.

I was a chair at an AIESEC conference in Moscow the very next day . I saw how much more the delegates have ahead of them and I felt little jealous that my experience is over. On the other hand I felt proud of myself that I have grabbed every opportunity available to me over the five years and made the most out of that time. I was feeling satisfied and at peace with myself, excited about the future.

During the closing plenary, I encouraged the delegates to fully embrace the next couple years ahead of them. I wished them to be proactive in creating powerful experiences for themselves and to have as many great memories as I have to look back on 20 years later.

One of my favourite quotes is from Mark Twain:

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”

And how about you, are the experiences you are living now so powerful that you will you remember them 20 years later?