Cotton Wool Focus

Tacit Knowledge is understanding we have that we are unable to write down or verbalise. Embodied knowledge. Relational knowledge. It is information that is only available to those who do the work themselves. It can’t be communicated to managers. Being good at something isn’t the same thing as knowing why you are good at something. Often, we end up attributing the “merit” to anything that is easy to count. Even if we acknowledge that there is so much noise that the numbers need to be treated carefully (this excuse is normally used when the numbers are bad). As organisations get bigger, you can get a separation between the clients and where management think the value is added. The intention is good. Cotton wool focus. In reality, a direct relationship with the client is the value added. Every layer is a distraction. Every layer loses focus. Otherwise client facing staff simply become a shield for bad performance.

Staying Rooted

If we were all farmers, delegation would be easier. The person giving the task, and the person accepting the task would understand each other clearly. Developed over the thousands of years since we learned to tame the land, our words would probably mean the same thing. The tasks would be well understood, even if seasons and the weather had the final say. We are not all farmers. Our words don’t mean the same thing. We often end up having to delegate tasks in areas we do not understand, so we can focus on our own slice (which we understand better than others, maybe). Due Diligence is the process of taking reasonable steps of oversight. Kicking the tires to check for defects or poor quality. Trust but verify. It’s worth collecting good questions. Knowing what to ask. What to look for. My preference is for as little abstraction as possible. I want to know what the Jam is. The product. How it is made. Who makes it. The process. Too many layers, and I’ll pass. We may not be farmers, but staying rooted still matters.

Not Farmers

Hot Capital

I am an Anti-Apartheid Activist. I grew up in the regime that gave Separateness legal form. That makes defending and encouraging the four freedoms of movement (Capital, Goods, Services and Labour) close to my heart. But Spidey, with freedom comes responsibility too. A criticism of “Hot Capital” is that money just flows in and out without commitment. Real wealth creation takes time, so if you are making “investment decisions” based on less than a 5-10 year period, you aren’t investing, you are speculating or trading. The “Investment Behaviour Penalty” is the difference between what investment funds return, and the return achieved by underlying investors. Usually investors chase returns, switching between funds and in and out of cash as if they can guess short term market movements. Imagine if a real business owner did that? A stock is a slice of ownership in an underlying business. It isn’t an abstract idea. Imagine if every time something went wrong, an owner sold the business? Real creativity comes from the ability to endure through challenges, and respond with the resources available. It’s not a game. You don’t play the market. You commit to something and you build.

Responsibility

Holy Cow

Milk doesn’t come from the shops. It comes from Cows. Most of the products we now end up using are assembled from bits that come from all over the world. The words we use have danced off the tongues of hundreds of thousands of people as they criss-cross the globe. Sharing flavours. Bending structure. Breaking rules. What you see isn’t all there is. The problem with bowing down at the alter of the obvious, the conspicuous, and the evident, is it cuts us off from the stuff you can’t count. Quantitative Finance likes to boil decisions down to two numbers. Return and Risk. The problem is, you don’t actually get paid for taking risk. In the long run, you get paid for adding value. Value is a deeply complicated, often abstract, internal, personal, and relational story. It is important to regularly remind yourself where your milk comes from. To look for, and retain awareness of, the source.

A calf and a Sadhu