CDOQ

In philosophy, argument reconstruction is defined as restating an argument as a logical sequence of premises supporting a conclusion. For example:  Argument: We have a decision to make today. Our competitor has launched a new product, we need to either launch a better product or lower the price of the current product.  Argument reconstruction:  1. Competitor has launched a new product.  2. There are only two possible responses to this event: launching a new product or lowering the price of the existing product.  3. Therefore, we must do one of these two things. Argument Reconstruction The argument reconstruction of the example makes it clear that you don't have to make any decision today and in addition to validating the premises, more options need to be explored.  Reconstructing arguments clarify thinking and help you see the flaws in assumptions.  Adapted from The Economist Education 

Desire clouds judgment.

I spent most of the 2020 at home and I thought that it would result in a lot more reading than usual (~12 books a year).  I was wrong but not entirely, I read 14 books last year:)  2020 Books  Following are some random and interesting excerpts:  1. The Worldly Philosophers   There is a "preanalytic" process that precedes our logical scenarios, a process which we cannot escape, and which is inescapably colored with our innermost values and preferences. "Analytic work", writes Schumpeter, '...embodies in the picture of things as we see them, and whenever there is any possible motive for wishing to see them in a given rather than another light, the way in which we see things we can hardly be distinguished from the way in which we wish to see them.  2. Technology Strategy Patterns  When the good leader's work is done, his aims fulfilled, the people will all say, "We did this ourselves." - Lao Tzu  Definition of [technology] archite...

The underlying assumption in data-based decision making is that the future will be the continuation of the past. The big companies have all the data in the world and somehow meaningful innovation comes out of startups which are based on the founders' believes, intuition, or curiosity. All data is about the past including the data about the future, which is more of an opinion than fact. Does that mean we ignore data? No. Understand the data about the data. Where does it come from? When and how it was collected? Is it showing causation? Do we understand the interconnectedness of all variables? etc. And then, use data as one of the inputs in decision making.  Was controlled fire invented based on data? :) 

Data represents the past. 

Greg Mankiw has a good idea about how the government can distribute money to the people who lost wages because of the coronavirus pandemic. Since speed is of the essence, the government can not take the time to target the right people.  Basically, give money to all adults in the US until people can get back to jobs (i.e. a few months). Next year, when people file for taxes, people who needed the money, decided based on income differential in 2020 and 2019, can keep it and people who did not need the money have to return it.  Source: Wikipedia See the details here . 

I tend to read 10-12 books a year.  Last year, I completed reading eleven books and at the end of the year I realized that I do not remember much of what I had read. Following is an attempt to remember at least one thing from each book I read i.e. a random sentence or paragraph I underlined while reading the book:  1. The success equation - Michael J. Mauboussin  A common mistake is to use a process for making a decision that is appropriate for activities that are nearly all skill and then apply to activity that is mostly luck. 2. Design is storytelling - Ellen Lupton  Emotion is temporal. Waves of feeling drags us out of the present and into the past and future. Novelist F. Scott Fitzgerald wrote that trying to live in the present moment is a losing struggle. People, he said, are ceaselessly drawn to "the orgiastic future that year by year recedes before us." Mindfulness is a state of focused attention that requires people to resi...

A good decision does not have prejudice, opinion, or belief.  - Krishnamurti 

Context is not a well understood concept in context of decision-making:-) By context, I mean a set of conditions (mostly interconnected) under which something works or occurs.  We go to school (higher education) and learn theory which tells you how the world should work and not necessarily how it actually works. Subjects are taught in universal terms and not in relative (or context-specific) terms. How many classes have you seen on mastering context? So, how do you learn context? Mainly, by experience and thinking. However, most people are mentally lazy and they don't think about why something worked. One of my heroes, George Bernard Shaw , famously said, " Few people think more than two or three times a year . I have made an international reputation for myself by thinking once or twice a week."  We tend to think that success was because of our actions and failure was because of others' actions. We like simple rules of thumb which don't require us t...

I just finished reading a fantastic book- Seeking Wisdom: From Darwin to Munger  by Peter Bevelin. The book offers a systematic approach to becoming a better thinker and a better decision maker. It synthesizes thinking of two of my heroes- Charlie Munger  and Charles Darwin.   The book gives you fundamentals from various disciplines- biology, physics, chemistry, mathematics, and psychology and then shows you how they are applied to reality. The core idea of the book is to understand that there 28 common misjudgments  people make, why we make them, and if we just learn to avoid them, we will be much better decision makers and will live better lives. And, it also outlines guidelines to better thinking.  One of the guidelines of better thinking is better attitudes. I think that changing attitudes can do wonders for people. Following are the attitudes for better living adapted from the book:  1. Life is long if we know how to use it....

Charlie Munger, one of my heroes, says that smart people are are often wrong because they don't use checklists for decision making. Here is Munger's checklist for problem solving: 1. Decide the "no-brainer" questions first 2. Apply Numerical fluency 3. Invert (think the problem in reverse) 4. Apply elementary multidisciplinary wisdom, never relying entirely upon others 5. Watch for combination of factors- the Lollapalooza effect Munger defines Lollapalooza as the critical mass obtained via a combination of concentration, curiosity, perseverance, and self-criticism, applied through a prism of multidisciplinary mental models.

Emotion is a much more powerful force than Rationality in decision making. Hence, the study of economics solely based on the behavior of "rational man" is flawed. Also, when making decisions one should think about how the decision will make people "feel" even if the decision is a perfectly rational one.

I have been observing for a few years that most human beings are always looking to confirm what they already believe in. It is a vicious circle that rarely breaks. Our beliefs and ideas are a result of our conditioning and the environment we are exposed to and we tend to ignore data (information) against our beliefs and give higher weight to the data that confirms our beliefs i.e. Confirming Data. In this article, I will make a case that majority of the times, the human mind looks for Confirming Data and this quest never stops. Let's start with childhood. Most children grow up with love from their parents. And, children do things that reassure them that their parent(s) love them. In case, the child believes that only one parent loves him and the other does not, the child then looks to reconfirm that belief by taking action for which he knows the expected reaction from both parents. The child sees reaction of one parent as love and the reaction of the other as not-love. Hence, the c...

In most big hierarchical organizations, the decisions are made to satisfy one or more of the three Cs of the decision makers. The three Cs are: Credit: Who will get the credit for the decision and its outcome? Compensation: How will the decision affect my compensation? Control: Will I gain more control or lose control with the decision? When aligning various decision makers to collaborate, it may be helpful to address the 3Cs. Thanks to my friend, Tom Carter, for sharing this valuable lesson.

Charlie Munger is one of my heroes. After attending the last Berkshire Hathaway shareholder meeting, I read a book on Charlie Munger- Poor Charlie's Almanack . It is a fantastic book. I could not put it down until I finished it. In the last chapter, Charlie summarizes 25 human psychology-based tendencies while generally useful, often mislead. In this post, I will summarize the tendencies for you to become better decision makers and to help others around you. 1. Reward and Punishment Superresponse Tendency People, in general, underestimate the power of incentives. Ben Franklin said, "If you would persuade, appeal to interest and not to reason." Also, prompt rewards work much better than delayed rewards in changing and maintaining behavior. Incentives are superpowers. One of the most important consequences of incentive superpower is " incentive-caused bias." A man has acculturated nature making him a pretty decent fellow and yet, driven both consciously ...

People spend their life in "the grind" or "rat race" and wake up one day and think where did the last 40 years go. One of the most fundamental principles of logistics is that you can not improve what you can not measure. I think this applies to life as well. So, I try to measure my progress every day by answering the following questions in my journal: 1. What did I do today to bring to closer to achieving my yearly objectives? 2. What did I do well today? 3. What could I have done better today? 4. What did I do for others today? 5. What was diamond of the day i.e. what did I enjoy the most today? 6. What did I learn today? 7. What couldn't I answer today? It is amazing what ten minutes a day of reflection does to your outlook on everything. Try it! People who taught me the value of measurement and reflection are Dieter Klein (former boss), Walter Zinn (former professor), and Tom Carter (former customer).

I recently changed my "title" on LinkedIn from "Accelerator of Technology Adoptions" to "Effective Executive 2.0". Now, what does Effective Executive 2.0 mean? The principles on which the executives 1.0 operate are: Command and Control Centralize-make as many decisions on your own as possible Surround yourself with yes-men so that you always hear confirming data for your thoughts and ideas Resist change ("this is how we do things here") Linear approach to problem solving Limited industry-specific knowledge The principles on which executives 2.0 operate are: Enable and leave "them" alone i.e. create an environment for the employees to self-organize (learning organization) Decentralize-make as less decisions as possible and let the people make decisions at the local level. Focus on policy-making. Surround yourself with diverse people who feel safe to share their thoughts Embrace change (Recognize what worked in the past may not work in th...

We make decisions every day. Some big, some small. I noticed that most people do not have a framework that they apply to decision making. Most of the decisions are made on "gut-felling" and without required analysis. I attended an executive program on decision making at Harvard and as optional reading material, I read "Smart Choices" http://search.barnesandnoble.com/booksearch/isbnInquiry.asp?z=y&EAN=9780767908863&itm=2 It outlines a very simple approach which can be applied to all decisions-business, personal, financial, etc. The recommended model is called PrOACT-URL . It is: Pr=Problem: Identify the problem correctly. E.g. when you buy a car, usually the problem is commute and not the car. O=Objectives: What are trying to achieve by solving the problem? You can have multiple objectives with one problem. A=Alternatives: What alternatives do you have and what alternatives can you create? C=Consequences: how well the Alternatives meet your Objectives?...