Comments on: I am Never Wrong – Just Ahead of My Time http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/ Basab Pradhan's weblog about business and life in a 'flat world'. 6 AM Pacific is the best time for a global conference call. Sat, 11 Oct 2008 11:41:31 +0000 http://wordpress.org/?v=2.5 By: Sandip http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8378 Sandip Fri, 26 Oct 2007 11:55:59 +0000 http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8378 Hi Basab, It's really a nice compilation of human mentality,I totally agree with the view that the more no of people know the decision the more stubborn we become in deviating from that even if it results in disaster , but coincidentally sometimes the external environment make sure that your stubborness makes sense( like the stock markets in India are proving everyone right). I have been reading your posts since inception but in today's post last but one paragraph made a lot of sense to me. Hi Basab,

It’s really a nice compilation of human mentality,I totally agree with the view that the more no of people know the decision the more stubborn we become in deviating from that even if it results in disaster , but coincidentally sometimes the external environment make sure that your stubborness makes sense( like the stock markets in India are proving everyone right).

I have been reading your posts since inception but in today’s post last but one paragraph made a lot of sense to me.

]]> By: Anil http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8339 Anil Wed, 24 Oct 2007 16:36:54 +0000 http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8339 I wouldn't put it stubbornness alone. Each person secures a livelihood on the basis of their self-worth, sustaining it on the same self-worth and the value they believe it brings to the table where the folks who sit at the table are those paying for it. To back track would mean a drop in self-worth, and hence the value it brings to the table, and the risk it entails. More than stubbornness, it is survival that makes one clutch at the straw even if it means drinking the sea through it. :) By all means bet the farm . . . but only if the cows inside belong to you :) I wouldn’t put it stubbornness alone. Each person secures a livelihood on the basis of their self-worth, sustaining it on the same self-worth and the value they believe it brings to the table where the folks who sit at the table are those paying for it.

To back track would mean a drop in self-worth, and hence the value it brings to the table, and the risk it entails.

More than stubbornness, it is survival that makes one clutch at the straw even if it means drinking the sea through it. :)

By all means bet the farm . . . but only if the cows inside belong to you :)

]]> By: Vishwa Vedula http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8208 Vishwa Vedula Wed, 17 Oct 2007 20:51:53 +0000 http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8208 Given that topic of current discussion is Investing Decisions and rationale behind the same wanted to recommend another excellent book which has hit the shelves recently. "Your Money & Your Brain" by Jason Zweig offers a fascinating insight into new discipline Neuroeconomics (Psychology +Neuroscience+Economics &Investment). I found it an excellent read. Given that topic of current discussion is Investing Decisions and rationale behind the same wanted to recommend another excellent book which has hit the shelves recently.

“Your Money & Your Brain” by Jason Zweig offers a fascinating insight into new discipline Neuroeconomics (Psychology +Neuroscience+Economics &Investment).

I found it an excellent read.

]]> By: Krishna http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8172 Krishna Tue, 16 Oct 2007 02:27:48 +0000 http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8172 On the investment allegory, sometimes fund managers admit their call going wrong by reasoning that “it’s just a temporary blip, an outlier (quants often say this while licking a wound) or a 1 in 500 probability that happened” – which may or may not be it. But for the CEOs and Politicians, they have fixed tenures and hence timing matters. They would rather do it when the impact is minimal, on them personally. CEOs risk their severance pay and erosion in value of their huge unexercised/unvested stock options if they open up and capitulate before the end of their term. They will rather wait until their options are vested, exercised and liquidated and then open up when the others discover it so that the damage has minimal impact on them. Ken Lay of Enron and his coterie did exactly that, selling their stock even as they exhorted their employees and other shareholders to stay put. Politicians, if they are closer to the end of their term, may not risk getting toppled at the hustings if they intend to run for the next immediate term with that stigma on. They would rather let it be found out later, lie low for a while and re-emerge after it loses steam, relevance and recall by another, more topical gaffe. On the investment allegory, sometimes fund managers admit their call going wrong by reasoning that “it’s just a temporary blip, an outlier (quants often say this while licking a wound) or a 1 in 500 probability that happened” – which may or may not be it.

But for the CEOs and Politicians, they have fixed tenures and hence timing matters. They would rather do it when the impact is minimal, on them personally. CEOs risk their severance pay and erosion in value of their huge unexercised/unvested stock options if they open up and capitulate before the end of their term. They will rather wait until their options are vested, exercised and liquidated and then open up when the others discover it so that the damage has minimal impact on them. Ken Lay of Enron and his coterie did exactly that, selling their stock even as they exhorted their employees and other shareholders to stay put.

Politicians, if they are closer to the end of their term, may not risk getting toppled at the hustings if they intend to run for the next immediate term with that stigma on. They would rather let it be found out later, lie low for a while and re-emerge after it loses steam, relevance and recall by another, more topical gaffe.

]]> By: Basab http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8170 Basab Tue, 16 Oct 2007 01:09:51 +0000 http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8170 Shashi, your point is well made, which is why setting CEO compensation is so tough. You don't know if you are rewarding randomly ocurring positive outcomes or true performance. But I do believe that a fairly large part of a CEO's job and its outcomes are non-random in nature, which is the point Arun is making. Expanding margins because of a weak dollar may not be something the CEO can take credit for. But assembling a top class team and keeping them motivated and performance oriented for instance are non-random and non-trivial as well. Shashi, your point is well made, which is why setting CEO compensation is so tough. You don’t know if you are rewarding randomly ocurring positive outcomes or true performance. But I do believe that a fairly large part of a CEO’s job and its outcomes are non-random in nature, which is the point Arun is making. Expanding margins because of a weak dollar may not be something the CEO can take credit for. But assembling a top class team and keeping them motivated and performance oriented for instance are non-random and non-trivial as well.

]]> By: R. Arun Kumar http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8167 R. Arun Kumar Mon, 15 Oct 2007 20:03:07 +0000 http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8167 Something i read a few months ago that maybe relevant here...and this applies to both personal and professional situations: Decisions (at least the kinds we are talking about here) are not really right or wrong; it is what one does after taking that decision that goes a long way in making it right or wrong. So, assume i take a decision on starting a new business or entering a new market, and that is based on imperfect information (nothing new here) - i need to then work to make that decision become 'right' for me, through dedication, perseverance, funding etc. And if it doesn't, and there could be several reasons why, external and/or internal, i need to have the maturity to admit it and move on. Seems like a great book...will pick it up soon. Something i read a few months ago that maybe relevant here…and this applies to both personal and professional situations: Decisions (at least the kinds we are talking about here) are not really right or wrong; it is what one does after taking that decision that goes a long way in making it right or wrong.

So, assume i take a decision on starting a new business or entering a new market, and that is based on imperfect information (nothing new here) - i need to then work to make that decision become ‘right’ for me, through dedication, perseverance, funding etc. And if it doesn’t, and there could be several reasons why, external and/or internal, i need to have the maturity to admit it and move on.

Seems like a great book…will pick it up soon.

]]> By: Shashi http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8147 Shashi Mon, 15 Oct 2007 04:12:20 +0000 http://6ampacific.com/2007/10/15/i-am-never-wrong-%e2%80%93-just-ahead-of-my-time/#comment-8147 Basab, At the end of the book he argues, and proves, that the job of topmost execs (ouch, that's you!) involves highest amount of randomness. They make may be less than dozen mega decisions ion their career (likes of Compaq acquisition by HP, etc.) It is extremely difficult to judge their performance when available data points are so few. Compared to that job of say a chef is far less random as performance is measurable. Chef may get it right once, but to get it right a thousand times requires skill and not luck. So, execs don't admit mistake(s) as the chances of them getting another opportunity (to commit the same mistake) are extremely low. This book has been such a wonderful read. I've already started The Black Swan. Basab,

At the end of the book he argues, and proves, that the job of topmost execs (ouch, that’s you!) involves highest amount of randomness. They make may be less than dozen mega decisions ion their career (likes of Compaq acquisition by HP, etc.) It is extremely difficult to judge their performance when available data points are so few. Compared to that job of say a chef is far less random as performance is measurable. Chef may get it right once, but to get it right a thousand times requires skill and not luck.

So, execs don’t admit mistake(s) as the chances of them getting another opportunity (to commit the same mistake) are extremely low.

This book has been such a wonderful read. I’ve already started The Black Swan.

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