Stephens Business Playlist 22Nov21

An ongoing series where I share a “Business Playlist” of articles that made me think in the hope that you find them valuable also.

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Who is believable?

https://commoncog.com/blog/believability/

https://commoncog.com/blog/writing-doesnt-make-you-a-genius/

I enjoy reading Cedric Chin’s book summaries and thoughtful critiques. In the articles above he references the “believability formula” that Ray Dalio espouses in his book “Principles”, a book that I recommend all business leaders read. You may not agree with everything Dalio says (and nor should you fully agree with any author), but his principles certainly do make me think.    

One of the principles is the “believability formula” Dalio developed while running his highly successful hedge fund firm, Bridgewater.

According to Dalio, for a person to be believable, they need to have:

  1. a record of at least 3 relevant successes, and 
  2. credible explanations of their approach when probed 

Beware of experts

From Cedric, “For example, a venture capitalist giving you operational advice for your company. Is the venture capitalist high believability? This depends: if they have never successfully built a company, you might want to discount this advice. Conversely, if the same venture capitalist is telling you about the broader startup investment market, he has higher believability due to his work and you should listen carefully.”

Even if someone passes the 2-part believability formula, they can still fall victim to their own biases.

For example, Dalio shared a personal story of when he was diagnosed with cancer. The first specialist he consulted recommended a certain treatment option. Not satisfied, he consulted with 2 other experts who recommended very different treatment options.

3 equally qualified medical experts with high believability, but 3 very different treatment recommendations. What to do? 

Dalio recommends that you never rely on 1 information source. He even went so far as to get the doctors on a conference call and made them debate each other while he questioned them. Dalio then opted for the 3rd treatment option and fortunately, seems to be clear of the condition.  

He recommends that you do your own research first to get a strong base knowledge, but stay “radically open-minded”. Get opinions from a variety of “believable people” and probe them hard with questions and have them explain the reasons for their opinions. Doing this will significantly raise your probability of making the right decision when you “triangulate” the various viewpoints.

Beware of business books.

Persuasive writers (yes, Dalio included) attempt to convince you that their way is the right way, and if you are new to a subject, it is easy for a reader to be misled. Just because someone has written a book, it does not make them automatically believable (and yes, having written a book myself, the irony of this statement is not lost on me). 

Don’t rely on 1 book. Read several books on a subject before “triangulating” and coming to your own conclusions. Test your conclusions to see how they play out in the real world, keep what works, and discard the rest. 

My personal experience? The more books I read, the more jaded I become. Much of what I took as gospel at the beginning of my reading journey got downgraded into utter B.S. as I became more educated and discerning.  

Beware of compelling narratives. Authors frequently cite business case studies of well-known firms to bolster their arguments, but mostly these fall victim to Survivorship Bias

Beware of opinions masquerading as facts. Is it really true? What is the proof? 

Beware of low-quality evidence. Authors cite research studies to “prove a point”, but does the paper really prove what the author claims? Most people don’t have the time nor the skills to check the quality of research papers, and even more distressingly, the Replication Crisis indicates that many findings in fields like psychology, sociology, medicine, and economics don’t hold up when other researchers try to replicate them. 

For example, a 2015 attempt to reproduce 100 psychology studies was able to replicate only 39 of them. An effort in 2018 to reproduce prominent studies found that 14 of the 28 replicated, and an attempt to replicate studies from top journals Nature and Science found that only 13 of 21 could be reproduced.

I groan every time I read a current book or article where an author references a discredited study to support their thesis, where this information was available before the author published the piece. Instant believability #FAIL. (e.g. Power posing will make you act bolder, Self-control is a limited resource, The Stanford prison experiment, Milgram’s electric shock obedience experiment, The marshmallow test for delayed gratification, The priming effect – and that’s just a small sample of debunked studies).  

Beware of polished speakers. 

From Cedric, “Speakers have access to a vast array of persuasive rhetorical devices not available to writers. It seems bizarre that merely speaking well can make a stupid idea convincing, but listening carefully to the contents of the average TED talk will make this very clear – very few TED speakers are worth really listening to.”

And, “As a degenerate test case, try applying the ‘listening carefully’ rule to Simon Sinek’s much lauded TED talk ‘Start With Why’. It’s bullshit, and Sinek isn’t believable.”

From Forbes: “Before he became a professional guru, Sinek worked in advertising. His tenure at Ogilvy & Mather and Euro RSCG taught him well. While some might say the actual content of his ideas is flimsy at best, the strategies he uses to sell them in the form of books, talks, and consulting engagements are remarkably effective.”

My take? Let’s see: spouting pseudoscientific nonsense about the brain that does not stand up to serious scrutiny, lots of generalizations citing vague sources, stating opinions as if they were facts, retro-fitting his frameworks to already successful companies …. I could go on.

I call it B.S. bordering on charlatanism. I don’t find Sinek to be believable at all, but I can’t argue with the man’s popularity. “Caveat emptor” is all I will say – a Latin phrase that can be roughly translated to “let the buyer beware”.

Back to the heavyweight division.

I mentioned Balaji Srinivasan in a previous business playlist, and continue to be amazed at his ability to coherently riff on a wide variety of subjects. He’s a rare individual who truly fits the description of a polymath. 

Balaji appeared as a guest on the Tim Ferriss podcast this month and spoke non-stop for almost 5 hours on subjects as varied as business, history, geopolitics, cryptocurrency, civil war, media, wokeness, new forms of city governance, and much more. 

Like me, the host Tim Ferriss was scrambling just to hang on for the intellectual ride. I’m listening to the interview for the 3rd time and still feel like I am just scratching the surface. Again, you may not agree with everything he says, but Balaji certainly makes me think!

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“Right now we sort of think of companies, currencies, cities, countries, communities as being different things, but they’re all going to become the same thing.” – Balaji Srinivasan

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Until next time…
Stephen

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