Don’t Drive a Car Looking Only at the Rearview Mirror
Or, you don’t have an opinion, your ‘theory’ has an opinion
👋 Hey there! My name is Abhishek. Welcome to a new edition of The Sunday Wisdom! This is the best way to learn new things with the least amount of effort.
It’s a collection of weekly explorations and inquiries into many curiosities, such as business, human nature, society, and life’s big questions. My primary goal is to give you some new perspective to think about things.
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This week I had a bit of fever, for two days — probably because of some (supposedly) bad eggs that I ate. Nothing serious though. I didn’t even go to a doctor. I took a lot of rest, didn’t do anything — literally nothing — and recovered on my own.
This is probably the first time in my recent memory where I did absolutely nothing for two days. I remained on the couch like a potato with some fuzzy thoughts. I had a bit of a headache so I couldn’t really do any sort of structured thinking, but I did become slightly more conscious of my surroundings just by doing nothing.
I usually have a very tiny focus area. I have a knack for ignoring everything other than what really matters to me. I often forget to have food when I’m working until I’m too hungry. If there’s a fire in the living room when I go to get food from the kitchen (through the living room) there’s a good chance I wouldn’t notice it. I might be exaggerating, but you get the point.
It does help me find a state of flow pretty easily, but I noticed that I’ve started to stumble on new observations by chance far more less than I used to. In other words, I’ve become very less observant of my surroundings.
So these two days, sitting on that couch, wrapped under a blanket, sipping hot beverage, I noticed the greenness of the plants in my home, the texture of the dining table, the colour of the sky during twilight (which I absolutely hate), the different sounds of birds in the morning, noon, evening, night, and also the noise the kids make when they play in the evening.
It was fun. Refreshing. Peaceful, even. I should try this more, of course without falling sick.
Enough talk! On to this week’s essay! It’s about 1,500 words.
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Q: Are there any downsides in learning on the job?
In 1997, Clayton Christensen (revered HBS professor, best-selling author, and one of the founders the Jobs to Be Done methodology) got a call from Andy Grove, then the chairman of Intel.
Grove had heard of one of Christensen’s early academic papers about disruptive innovation, and asked him to come to Santa Clara to explain his research and tell him and his top team what it implied for Intel.
A young professor, Christensen excitedly flew to Silicon Valley and showed up at the appointed time, only to have Andy say, “Look, stuff has happened. We have only ten minutes for you. Tell us what your research means for Intel, so we can get on with things.”
Christensen responded, “Andy, I can’t, because I know very little about Intel. The only thing I can do is to explain the theory first; then we can look at the company through the lens that the theory offers.”
Grove relented.
Christensen then showed a diagram of the theory of disruption. He explained that disruption happens when a competitor enters a market with a low-priced product or service that most established industry players view as inferior. But the new competitor uses technology and its business model to continually improve its offering until it is good enough to satisfy what customers need. Ten minutes into that explanation, Andy interrupted impatiently: “Look, I’ve got your model. Just tell us what it means for Intel.”
Christensen said, “Andy, I still can’t. I need to describe how this process worked its way through a very different industry, so you can visualise how it works.”
He told the story of the steel-mill industry, in which Nucor and other steel mini-mills disrupted the integrated steel-mill giants. The mini-mills began by attacking at the lowest end of the market — steel reinforcing bar, or rebar — and then step by step moved up toward the high end, to make sheet steel — eventually driving all but one of the traditional steel mills into bankruptcy.
When he finished the mini-mill story, Andy said, “I get it. What it means for Intel is …” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the lower-priced Celeron processor.
My first computer had an Intel Celeron D processor — so this story is kind of personal to me. But the biggest takeaway from this story is something else — the power of theories — which we are going to discuss in this essay.
Today, let’s talk about the power of a theory. More precisely, how it can be used to make decisions even when you don’t have a lot of information about everything.
While experiences and information can be good teachers, there are times where we simply cannot afford to learn on the job. You don’t want to have to go through multiple marriages to learn how to be a good spouse. Or wait until your last child has grown to master parenthood.
This is why a theory can be so valuable: it can explain what will happen, even before you experience it.
Consider, for example, the history of mankind’s attempts to fly. Early researchers observed strong correlations between being able to fly and having feathers and wings. Stories of men attempting to fly by strapping on wings date back hundreds of years. They were replicating what they believed allowed birds to soar: wings and feathers.
But when humans attempted to follow what they believed were “best practices” of the most successful fliers by strapping on wings, then jumping off cathedrals and flapping hard… they fell to their deaths.
So much for learning on the job.
The mistake was that although feathers and wings were correlated with flying, the would-be aviators did not understand the fundamental causal mechanism — what actually causes something to happen — that enabled certain creatures to fly. In other words, they had no working theory of flight.
The real breakthrough in human flight didn’t come from crafting better wings or using more feathers. It was brought about by Dutch-Swiss mathematician Daniel Bernoulli and his book Hydrodynamica, a study of fluid mechanics.
In 1738, he outlined what was to become known as Bernoulli’s principle, a theory that, when applied to flight, explained the concept of lift. We had gone from correlation (wings and feathers) to causality (lift). Modern flight can be traced directly back to the development and adoption of this theory.
If Christensen had tried to tell Grove what he should think about the microprocessor business, he would have tore apart whatever argument was given. Grove had forgotten more than Christensen will ever know about his business.
But instead of telling him what to think, Christensen taught him how to think. This made Grove reach a bold decision, on his own.
“When people ask me something, I now rarely answer directly. Instead, I run the question through a theory in my own mind, so I know what the theory says is likely to be the result of one course of action, compared to another. I’ll then explain how it applies to their question. To be sure they understand it, I’ll describe to them how the process in the model worked its way through an industry or situation different from their own, to help them visualise how it works. People, typically, then say, ‘Okay, I get it.’ They’ll then answer their question with more insight than I could possibly have,” writes Christensen.
A good theory doesn’t change its mind. It doesn’t apply only to some companies or people, and not to others. It is a general statement of what causes what, and why.
About a year after meeting with Andy Grove, Christensen received a call from William Cohen, then-secretary of defence in the Clinton administration. “Could you come to Washington and talk to me and my staff about your research?” he asked. This was a once-in-a-lifetime opportunity for Christensen.
When he walked into the secretary’s conference room, the Joint Chiefs of Staff were in the front row, followed by the secretaries of the Army, Navy, and Air Force, and then each of the secretaries’ under-, deputy, and assistant secretaries. Christensen didn’t expect this. This was the first time Secretary Cohen had convened all of his direct reports in one room. This was serious!
Christensen used the exact same slides he had used with Andy Grove. As soon as he had explained how the mini-mills had undermined the traditional steel industry by starting with rebar at the bottom, General Hugh Shelton, then the chairman of the Joint Chiefs of Staff, stopped Christensen. “You have no idea why we are interested in this, do you?” he queried.
When Christensen said no, General Shelton gestured to the mini-mill chart. “You see the sheet steel products at the top of the market?” he asked. “That was the Soviets, and they’re not the enemy anymore.” Then he pointed to the bottom of the market — rebar — and said, “The rebar of our world is local policing actions and terrorism.”
Just as the mini-mills had attacked the massive integrated mills at the bottom of the market and then moved up, he worried aloud, “Everything about the way we do our jobs is focused on the high end of the problem — what the USSR used to be.”
Once Christensen understood why he was there, they were able to discuss what the result of fighting terrorism from within the existing departments would be, versus setting up a completely new organisation.
On the surface, competition in the computer chip market and the proliferation of global terrorism could not seem like more different problems to tackle. But they are fundamentally the same problem, just in different contexts.
A good theory can help us categorise, explain, and, most important, predict.
People think that the best way to predict the future is by collecting as much data as possible before making a decision. But this is like driving a car looking only at the rearview mirror — because data is only available about the past.
The appeal of easy answers — of strapping on wings and feathers — is incredibly alluring. Whether these answers come from writers who are hawking guaranteed steps for making millions, or the four things you have to do to be happy in marriage, we want to believe they will work.
But so much of what’s become popular thinking isn’t grounded in anything more than a series of anecdotes. Solving the challenges in your life requires a deep understanding of what causes what to happen.
It requires the power of a good theory to base your decisions upon.
Timeless Insight
When we have to choose which job offer to accept, who to hire, or which city to live in, the consequence seem high, and hence regret looms large. Whenever we are presented with a set of options — all of them good — we can easily torture ourselves with the consequences of making the wrong choices.
Regret is the comparison between what would have been the best course of action in hindsight versus what course of action we actually took. It’s the difference between the payoff that could have been obtained by pulling the best strategy, and the payoff actually obtained by following a particular strategy.
It is virtually impossible to live a life without regret, yes, but the next best thing is indeed achievable: living a life with minimal regret. This can save us from a lot of mental pain.
What I’m Reading
When economists insist that they too are scientists because they use mathematics, they are no different from astrologists protesting that they are just as scientific as astronomers because they also use computers and complicated charts.
― Yanis Varoufakis, Talking to My Daughter
Tiny Thought
For company, you prefer those who find you interesting over those who you find interesting.
Before You Go…
Thanks so much for reading! Send me ideas, questions, reading recs. You can write to abhishek@coffeeandjunk.com, reply to this email, or use the comments.
Until next Sunday,
Abhishek 👋