Get the Game

Stilling anxiety and making decisions we are comfortable with can revolve around building agreements. Managing expectations through commitments to each other that are understood. An ability to build driven by confidence in intended consequences, and capacity to absorb and adjust to unintended consequences. A calm and inspired sense of general direction. 

If you feel like you “get the game” so you can apply yourself and get rewarded, and have a transparent understanding of the cost of breaking agreements. A world where there is consensual agreement making. Yes means yes, and no means no. 

People feel like they are honest with each other and themselves about what their needs are. Where people find other people who willingly and enthusiastically want to be part of each other’s lives. Where no one is forced to act against their will. 

The challenge is tolerance. We don’t live in isolation. Independent decision-making is very attractive. In your world, what do you think you should do? That results in multiple, very detached realities, that sit separately from the shared world and aren’t a part of it. That has consequences. 

A difference between an investor who makes independent decisions and an operational decision-maker, is operations have momentum and they have mojo (the morale of people). Changing an investment decision affects no one. Changing an operational decision has consequences, and you can never get momentum and start compounding if you are constantly changing your mind.

Do you get the game?

Decision-Makers

Joint decision-making is complicated. We make mistakes when we make our own decisions. They are our mistakes. They reveal information about our habits, values, character, drivers, desires, fears, knowledge, ignorance, and personalities, but they are also wrapped up in noise. 

We are complex and inconsistent. If someone else is going to make decisions for us, the further they are away, the less they will see the consequences and responses to the decisions they make for us. Central Decision-Making scales both impact and mistakes. 

If you look at the typical democratic political process, the issues are incredibly complicated when it gets to elections. How many people read and engage with the manifestos of the politicians, and grapple with what they are promising? How accurately does the manifesto reflect their intentions? Their ability to deliver? 

If you wrote your own manifesto, how closely would that reveal your real behaviours... or would it (more likely) reflect a promotional version of what you (in your head) want? 

Information gets lost as you add distance between decision-makers and consequences. Ideally, in local markets, small decisions can be made that reflect the stuff we can’t even put into words. There is relationship building. There is understanding. There is the ability to adapt. 

As soon as markets scale with central decision-makers, they become abstract. People become categories. Voters become power bases. Actions have consequences. It is important that decision-makers feel those consequences.

What we do, matters

Hating Hierarchy

One of the ways that money is made is scaling up by doing the same tasks repeatedly. What that can result in is this is mono-culture. Which is dangerous. David Attenborough's witness statement shows aerial pictures of oil palm plantations where it looks green, but there is no life in it. It is just one decision laid out. That is dangerous. When you come to free will, there are levels of consciousness. Not everyone wants to be making decisions all the time. It feels good to nail a process so well that you are flowing. Complex decision-making is often far from flowing. Some people are more than happy just to do what they are told. That is okay. I have a friend who loves being micromanaged. It means he can be super productive because he knows what to do. And if he doesn't know what to do, someone will tell him. He just gets on with it. I hate being micromanaged. I hate someone telling me what to do. I don't like hierarchy at all. I have always had a chip on my shoulder about hierarchy. To the point where it has resulted in me being arrogant/childish. 

Central Decision Making

Decisions have Consequences

“The Man in the High Castle” looks at what how the world would have been like if the Second World War turned out differently. If Germany and Japan had conquered America and the rest of Europe. Even that kind of scenario (where we have a clear historical story of good winning out over evil), there were still moments of joy that happened in that alternate universe, that wouldn't have happened otherwise.  

Part of autonomy and consent is that decisions have consequences. Choices and events open up, and close down, histories and futures. Making peace with this idea that we have different options is a challenge. With an intricate web of ripple effects. What we do matters. To us and to others. 

I do not believe in pure equality. That is not autonomy. It would strip the world of its complexity, ambiguity, and randomness. If everyone had exactly the same experience, we would be controlled. It feels like that would be fair. But it would restrict us.

Intricate Web of Decision Making

Compounding and Noise Reduction

Wealth creation is path-dependent. Rewards escalate and attract resources. Most decisions are made independently of each other. This is both a feature and a flaw. Ignorance allows focus. We have limited capacity and sloppy memories. We cannot scale up our way of thinking to 7.8 Billion people, nor should we. We die, and new ways of seeing grow in the soil of our deep soaked biases. Central decision making is a strong candidate for the cause of the world’s biggest mistakes. Empowered decision making allows multiple perspectives to chip away at our challenges from different angles. We need to learn and apply every day. Asking better questions. Making better choices. Compounding our good decisions, but making different mistakes that cancel each other out. Unpacking the past. Building the future. Creating the capital and containers required to see our skills and knowledge. To see and hold space for each other, and for different paths.

Don't Compound Noise

Decision Makers

Ideally, we would have a very transparent relationship with asking and offering. Money is made by solving problems for decision makers with money. The challenge is making sure everyone is a decision maker. That is a foundation stone for the idea of Universal Basic Income. Information gets lost in central decision making. The more layers there are between where the knowledge lies, and where the power lies, the poorer the decision will be. Central decision makers also rely on concealing information. The true nature of problems. The resources allocated to those problems. This makes it harder for people to develop the skills and knowledge necessary to find solutions. It is hard to ask. It is hard to offer. It is hard to know with clarity what you need to do to help, even if you want to. Part of this is due to trust and communication skills. Being prepared to clumsily iterate through the questions and answers needed to nail what needs doing. Trusting that being open will not bring down the barriers to entry that maintain the illusion of your superiority. Trusting that other people will make different decisions, while respecting yours.

Nailing the Problem

Holding the Knife

Price is not value. Salary is not worth. The best way to see this is to speak to someone who has moved from a big company to a small company. Especially if that small company is a start-up. The layer of story-telling that gets added onto a business to do salary negotiations is simply that. A story. The magic of markets are they let us quantify things that cannot be quantified. If you have someone who wants something (because they think it is worth more than the price) and someone who has that thing to offer (because they can supply it at sufficiently less than the price). Price is just an agreement. In most businesses price determines the size of the pie. Then story gets added and sliced by the person with the knife. If the company has a stable cash flow that allows the illusion of sticky wages (annual increases in only one direction), then people can live in the false security of salaries that reward seniority and perceived merit. Key performance indicators are a tool for those who hold the knife. They are not a market price.

Messy Decisions

One huge advantage of being an Investment Analyst is yogic sage level detachment. You pass judgement on the value of a business, but active investors are still not activist investors. They stand apart. Management, customers, suppliers, competitors etc. need not even be aware of the investor’s existence. I remember one young (at the time) analyst moaning about what he was supposed to do with the next five years. The time it would take to get a sense if 50-60% of his decisions were “correct”. Like a dentist can fix a tooth in a couple of minutes, or take hours just for the sake of it, the main “job” of active investors isn’t the investment, it is the business of raising capital to invest. One huge disadvantage of being an Investment Analyst, is thinking you can make the same detached decisions in the real world. The real world has momentum and morale. Decisions do impact other people. Changing track has a real cost. There is no such thing as an independent decision. We must engage in the messy interplay of coordinating with other real people who see differently, want differently, and do differently.

Muddied Decisions

In Power or Empower

If you want a problem to be solved quickly, all the decision makers need to be in one room with no distractions, and intimately involved in doing the work. If you want a problem not to be solved, make those doing the work write memos and get other people around a boardroom to make the decisions based on what is on that paper. There is deep irony in the loss of meaning around the word Capitalism. Adam Smith’s “invisible hand” is effectively a tearing down of the memo factory. Let decisions be made locally by those who they affect. Not in isolated bubbles with oceans between realities. Virginia Postrel vividly describes Tacit Knowledge (the stuff we know but cannot communicate) in the book which completely changed my mind about the desirability of benevolent dictators and central planning (“The Future and its Enemies”). The world is too complicated, ambiguous, and random to concentrate power. The way you build endurance, resilience, and creativity is by creating more decision makers. That means building buffers and engines of capital for everyone. It means letting other people make different decisions to you.

Waves of What If

“Win-Win” was the biggest insight Adam Smith offered the world. With central decision makers trapped in Nation State gun boat diplomacy, and global pissing contests between birth-based containers competitively colonising the world… he suggested a different course. His bold idea was that people were best placed to make their own decisions, and that when two people agreed on an exchange with full transparency… both won. Agreement building. Trade. Generous problem solving. The problem with Zero-Sum thinking is you are wishing ill on your competitors. Things you don’t do become haunting waves of what if. Letting go of and wishing well alternative histories, paths, choices, and options allows you to focus simply on the problems you are working on. Not on the way you will be judged. It allows you to genuinely celebrate other people’s success, rather than seeing it as confirmation of your inadequacy.

Alternative Histories

Biggest Slice

Once you let go of the illusion that price is value, anxiety disappears from selling the pie. If people want pie, and you can get it made at the price offered… it happens. The problem remains in slicing the money after selling the pie. We still live under the illusion that you can attribute everything. That you can say who added the value. That you can say who deserves the biggest slice. We still claim that people are paid based on their value add. They aren’t. It is a combination of politics and power that splits the pie. Containers and Capital. People with barriers. People with capacity. In the absence of markets that simply respond (without barriers) to supply and demand. You can’t count everything that counts. As soon as it isn’t a market and there are barriers… it isn’t a meritocracy. It’s a story.

Man Behind the Curtain

When our institutions (Nations, Companies, Identities) fail us, we need to take the power away from the man behind the curtain. Small a anarchy inverts hierarchy. It recognises the danger in central decision making. The danger of lost information and distorted incentives that comes with the intentional creation of barriers to entry around wealth and information. Small a anarchy is not about creating chaos or lack of rule of law. Quite the opposite. When you empower individual decision and agreement making, you recognise and support the power of the multiple relationships that make up society. Imagine a world full of capitalists, in the sense that everyone had a buffer of cash and an engine of capital that allowed their No and Yes to be meaningful. Autonomy. Consent. This doesn’t mean people can do whatever they want. It means we are empowered to build agreements. It means a spontaneous order that has the resilience and endurance to deal with whatever comes our way. Learning. Unlearning. Contributing.

Market Knowledge

Tacit Knowledge is the idea that there is stuff we know that we can’t explain. Virginia Postrel explores this powerful concept in “The Future and its Enemies”. That was the book that changed my mind about the pipe dream of a benevolent dictator, or even the desirability of central decision making. The stuff we really know is embodied. This means that decisions are best made by the people they affect. Not you. Not me. Not some undiscovered saviour. Real Adam Smith Capitalism is in the market-places where everyone has a voice. Small businesses. Small customers. Where price makes no pretence at being value. It is just an agreement between a buyer and a seller. Just a word that makes both participants happy. Capitalism is not Corporatism. Capitalism is the idea that you can build resources and reinvest them. That money/capital can be paid and our labour can be set free. Community Wealth (Capital) can empower people from the bottom up. Amplifying voices through an exchange is a much clearer indication of what people need, than a powerful representative (hopefully) making (good) decisions on their behalf.

Markets need Bottom Up Power

Spot the Chairman

Corporates aren’t democracies. They have shareholders who employ (or are) managers, who set the goals and manage the performance of their teams. Corporates also aren’t free markets. Once you are hired, central decisions get made up the chain and strategies set. The most obvious exhibit to demonstrate this is salaries. If there was an internal market for skills and knowledge, then whoever needed something done would have to bid for their team. Instead, in most companies I know of, the bosses would be irate if a Spreadsheet of everyone’s pay got leaked. Like Chairman Mao managing the iron supply in a 5-year plan, the central powers need to trust the train of information about who is doing what. Layers of grades and metrics can be added to maintain the illusion of price (salary) and value bearing a relation. The beauty of free markets is the lack of pretence. Price isn’t value. It is a way of matching supply and demand. It is very noisy, but if both parties are happy, value is created. In Corporates, this falls apart because (1) the employee is full time, and (2) we don’t talk about pay. In some ways that is good. Imagine your pay moved like the markets? To cope with that you can’t live hand-to-mouth. To cope with noise (transparency and truth), you need to create space to breathe.

Can you handle the truth?