Saturday, October 25, 2008

Success Master Skills: Adding "Productive Entropy"

This is my fifth post on Entropy in Human Achievement The others are :

Part 1
Part 2
Part 3
Part 4

I have suggested in earlier posts that achievement is related to the reduction of entropy, or disorder, in our lives, so that our energies can be focused and re-focused on the important “leverage points” that can potentially bring about the best outcome in our lives.

But there are also times and situations when we need to “shake things up” a bit. We need to add entropy, not remove it. We need to widen the view. We need to search for gold in different lands.

In today’s world, where new business models and new business concepts can spring up overnight, where technology can change in an instant, we can only find new entrepreneurial niches by casting the widest possible net, so that, later, we can reduce entropy, and mine the “gold”. Here are a few ways to add Productive Entropy.

Study a wide range of topics, especially early in life.
Some people call this ”priming the pump”. You never know where a good solution will come from. Innovation expert Phil McKinney subscribes to huge numbers of magazines. Thomas Schweich , in his book Staying Power : 30 Secrets Invincible Executives Use for Getting to the Top - and Staying There, recounts the careers of many successful people who kept their options open early in their careers, which, he says, allowed them to gain a wide variety of connections and experience.

One great example is Warren Buffett, now a multi-billionaire specializing in what he terms a small “circle of competence”. While his current entropy content is reduced, allowing him to focus on his unsurpassed investment style, it was not always so. In her remarkable book The Snowball: Warren Buffett and the Business of Life, author Alice Schroeder uncovers the fact that Buffett was involved in innumerable business activities before turning to stock investments: he owned a tenant farm, owned a gas station, sold used golf balls, and managed newspaper circulation, all the while devouring mountains of business information at a breakneck pace and with incredible focus on detail. Furthermore, although somewhat socially awkward in his youth, Schroeder’s biography makes it clear that he made friends wherever he went, often with people a generation or more older than him. Again, adding variety, and “disorder” (entropy) into his life.

The point is, he first had the drive and opportunity to “add productive entropy” by taking in both practical and theoretical knowledge, for at least a full decade in his early life prior to settling on stocks and investments as a career.

Acquire and Use Multiple Mental Models
This is a “blind man and the elephant” idea, very much understood and taught by Warren Buffett’s longtime associate (and fellow billionaire) Charlie Munger. Munger excels at viewing human events through a multitude of conceptual lenses: mathematics, probabilistic, psychological, biological, evolutionary, and others. Another method Munger uses is “inversion”: viewing a problem in reverse, to get a different perspective. Again, this adds “Productive Entropy”, i.e. disruption, or “creative destruction", into the problem-solving arena.

Read, Read, Read
Alice Schroeder (again in “the Snowball”) quotes a description of the young Charlie Munger as “a book with legs”. This refers to his lifelong addiction to reading. If there is one characteristic that seems to be the most highly correlated with success of all that I have studied (except, perhaps, for the concept of entropy reduction itself), it is the “productive entropy” of reading. The “entropy” of reading adds new facts, new procedures, and, with any luck, new overarching principles by which you can better understand and effect the events in your life. Then, again, after the exposure to the “entropy” of the new material, you remove the entropy by fitting the best ideas into your own goals and plans.

Music and Art
Music , Visual Art, Theatre, Poetry often deliberately disrupt in order to then re-order reality. The poems of John Donne, with their startling metaphors “short-circuit” the brain, allowing it to view an object on a wholly different light. I have listened to Bach’s “Well-Tempered Clavier” all of my adult life, and often feel hat there is an “order behind the order” of the brilliant counterpoint. Multiple channels of information creating a new information stream (if God talked, would it be in multi-part music?). My point is, the jaw-dropping experience of great art makes us “normal” people have to use different “mental muscles” to convert the data into a stream we can comprehend and appreciate, very much like the task of slowly removing the “entropy” surrounding a task. Even scientific research seems to indicate that music , specially, can add to IQ and productivity.

Go Where the Action Is
The brightest minds in business know to go where the business is. Wherever the best and the brightest in a particular field congregate, that is the "casino" where a “roll of the dice” has the greatest probability of landing on “7”. There is maximum “entropy, in the sense of a lot of ideas brewing and bubbling in busy, populous area. Silicon Valley is a good example of “productive entropy”. A million projects, a billion ideas, a million people, disorder waiting to become order.

Go to conferences and seminars, watch webinars
You add “disorder” by coming into contact with unknown people, companies, and concepts. This effect is multiplied exponentially by the increasing number of conferences that archive their videos. From the Singularity Summit to Stanford University, to the Cato Institute, new ideas by brilliant minds pour onto the web every day. If we take the time to sample these new inputs, our own brains will re-integrate the information, removing entropy, and fashioning new tools for productive pursuits.

Browse forums in (and out of) your field
Scroll through the forums in your area of business. As a trader, I have found innumerable trading ideas online, as well as new friends, books to study, and other unexpected gems.

Lists, Brainstorming, Idea-Generation, ”Capture Mechanisms”
The mind can continuously improve its idea-generating capacity with practice. Productive Entropy in this case is the free-flowing generation of ideas: Hurson’s “Divergent Thinking” (Think Better: An Innovator's Guide to Productive Thinking). Many successful businessmen, artists, writers, keep an “idea capture” device (voice recorder, notebook, etc) with them at all times. The external world (people, signs, events) and the internal world (internal dialogue, dreams, flashes of inspiration) are often sending us solutions, new directions, new inputs, in an ”entropic” fashion. We need to ‘love” the “disorder” of recording any remotely relevant input, for later entropy-removal, (i.e. the transformation into “useful” inputs to a process). Currently, anything useful that comes in to my field of view usually ends up in my personal wiki: websites, ongoing transactions, GTD categories, article links, etc. That way I can find it later, tag it, link it, etc.

I feel it is urgent to take in new ideas (“Productive Entropy”). Others don’t. I run into people constantly who drown out new directions, alternatives, solutions, etc in the din of their own (internal or external) monologue. “Not Invented Here” is alive and well. But , without new inputs (“Productive Entropy”), we are simply a self-justificatory entity: we have the “order” of living in a changeless mental landscape, comfortable, predictable, but frozen and inflexible.

We, as human beings, are privileged to be the only known creatures on Earth who can consciously and rationally adapt to the changes we ourselves make in the Universe. These changes will, whether we like it or not, inject entropy into our lives: our jobs, relationships, procedures, and relevance/irrelevance of our state of knowledge. We need to get out ahead of that tidal wave as much as possible by welcoming the entropy, and incorporating it into our goals, plans and achievements

Tuesday, October 21, 2008

Success Book Reviews: 3 Quick Takes

I took the audio versions of Fox's book and Pickens' book along on a recent car trip across country. Fox's book was a truly outstanding and exhaustive treatment of client service, promotion, and self-management techniques, clearly written by a master. I found the sheer volume of ideas to be indicative of an incredible generosity. Fox is clearly a master and an insider, and this book is the next best thing to a world-class course in "How to Make The Sale Happen", with a minor in "How Not to Look Like An Idiot In Business".

Pickens' life end exploits are hugely entertaining. In one sense, his life reflects a habit of thinking big, learned at an early age,which, by its very nature, produced knock-on effects throughout his career. That lesson alone was worth the price of the book.

I have just begin to read Buffet's book, and I'm loving it. There are fascinating parallels with Alan Greenspan in some facets of Buffett's early development, notably facility and interest in data and statistics, while Buffett's Omaha-based practical streak added a penchant for making money and salesmanship, which led in a different direction. I plan on further comments at a later date.

Success Master Skills: Can Entropy be Good?

In the previous posts about entropy in human achievement (here, here, here), I have portrayed entropy as a villain: as the seeping disorder that destabilizes our plans, and often our lives. I’ve urged that we become aware of the sources of entropy in our lives and that we take measures to control the process. The less “noise” we allow into our lives, the more we can focus on what really matters to us. We not only free up time, but we allow the brain the time it needs to slowly iterate through our subject matter, producing more and better outputs the longer we fixate on a particular task.

So, are there any areas where entropy is good in our lives? Any ways in which we should be (gasp!) adding entropy? Is there such a thing as “Productive Entropy?”

Of course. Perhaps my favorite book of the year, Tim Hurson’s Think Better: An Innovator's Guide to Productive Thinking describes the methods of “convergent/divergent” thinking. In the ”divergent” phase, we add entropy: we open our minds to all sorts of solutions, alternatives, fantasies, questions, etc in search for the proper frameworks of problems and solutions. Then, Hurson leads us to the “convergent thinking” zone, in which we carefully sift and sort through the ideas we have discovered, in a sense, removing entropy to find the “gold” in the ideas.

There are times when entropy (disruption, variety, surprise, distraction, shocks of one kind or another) is crucial to the unfolding of our existence. There is the well-known story about the discovery of Penicillin, accidentally, because a culture of bacteria had mysteriously died in the presence of certain mold. There was also the hugely disruptive “failure” of the Michelson-Morley experiment which failed to detect an “ether wind”, thus leading to Einstein’s Theory of Relativity, and a revolution in physics.

In terms of bettering our own lives, adding entropy allows a re-ordering of knowledge, of experience, of implications and possibilities, often leading to positive outcomes. For instance,whenever a client’s ”normal” supplier is unavailable, a new supplier might be able to step in. A blind date might lead to romance and marriage, A Paradigm Shift (for instance, from electro-mechanical relays to transistors) can open whole Universes of opportunity. Author Clayton Christensen goes so far as to describe an “innovator’s dilemma” because of the continual encroachment of new methods and technologies moves up the value chain, disrupting business models as it goes. One of the first books I reviewed on this site, Carr's How to Attract Good Luck
is, in essence, a manual for selectively adding “productive entropy” into one’s life. As Carr describes it, the concept of luck could be deconstructed to mean “chance meeting the prepared mind combined with a positive, adventurous outlook and a willingness to be flexible”.

In an upcoming post, I’ll describe some methods to add “productive entropy” .

Sunday, October 19, 2008

Success Master Skills: 50 Ways to Reduce Entropy in Daily Life

This post is technically Part 3 in my series on Entropy in Human Achievement. Part 1 is here Part 2 is here. Entropy is the disorder that seeps into our lives on a daily basis. With each lost credit card, misplaced phone number, wrong turn, late arrival, we rob ourselves of the satisfaction of getting what we truly want. Our energy and forward motion is blunted or blocked entirely. As we set up procedures in advance, we clear the way for more personal satisfaction, because we spend more time doing what we actually want to be doing. We don't waste energy "finding our way back" to our daily tasks and purposes. Here are just a few of the things we can do to prevent entropy from entering our lives. I will comment on some of these items in subsequent posts.

  1. Develop routines for as many life areas as possible (eating, exercising, saving, recreation, cell phone charging etc)
  2. Make lists
  3. Prioritize tasks
  4. Work from a list each day
  5. Set benchmarks for diet, exercise, finance, etc
  6. Quantify activities and plans. Measure results quantitatively
  7. Log the hitting of the benchmarks
  8. Work on big projects first, and longest
  9. Use checklists for multi-step tasks you do frequently
  10. Use checklists for multi-step tasks you do infrequently
  11. Send incoming calls to voicemail
  12. Give new processes time to work. Change processes with deliberation.
  13. Processes that work are rare. Eliminate or change successful processes very carefully if at all
  14. Increase resources allocated to successful processes
  15. Exit failing processes quickly, despite emotional attachment
  16. Go to bed at the same time every night
  17. Stay in one relationship
  18. Reward successes of big projects
  19. Stay away from volatile , erratic people
  20. Stay away from lazy people
  21. Stay away from people who use or previously used drugs
  22. Stay away from failing people
  23. Always assume there is a better expert than you on any topic
  24. Obtain outside expertise for all important tasks and goals (consultants, books, courses)
  25. Keep a notebook and/or voice recorder for recording ideas
  26. Read and write affirmations
  27. Write your goals frequently
  28. Stop doing what isn’t working. Review this often
  29. Measure twice and cut once
  30. Measure your weight and keep records
  31. Measure your cholesterol and keep records
  32. Use maps and GPS when driving
  33. Develop some form of personal information management
  34. Take pictures of all belongings for insurance purposes. Store offsite
  35. Back up all data frequently
  36. Use label makers, file cabinets, file folders and databases
  37. If something is a “whim”, identify it as such and don’t do it right now
  38. Keep a journal of what is working in your life and review it
  39. Put cell phone, keys, wallet, glasses, in the same place every night
  40. Use GTD
  41. Value the retention of capital as much as the spending of money
  42. Save at least ½ of any windfall
  43. Go for intrinsic rewards rather than extrinsic rewards
  44. Avoid tying rewards to the approval of others
  45. Keep carry-on bags with you
  46. Do all scheduled automobile maintenance
  47. Practice asset allocation strategies in investments
  48. Never enter a gambling casino. Do not engage in gambling.
  49. Get professional medical opinions on any health issues
  50. Do not smoke

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Thursday, October 16, 2008

Success Master Skills: Entropy in Human Achievment, Part 2

Why Remove entropy from our lives?

I have two friends who are traders. One works day and night, listening to every news story on CNBC, subscribing to 10 websites with different price patterns, options strategies, stock picks, etc. This person often loses sleep keeping up with all the developments worldwide. He is an unending fountain of the latest economic, business, and political opinion on all aspects of the stock market, the state of the US dollar, interest rates, etc. etc. etc.

The other guy is a total bore. All he does is trade a couple of systems. Over and over again, that’s all he does. System says buy? He buys/ System says sell? He sells. He has no knowledge of who is being interviewed on CNBC. He doesn't subscribe to IBD, WSJ or FT. Nothing to say at all on the weighty subjects of currencies, trade, or the Baltic Dry Index.

Oddly, the second guy is doing better than the first guy. Why? Because he has removed vast amounts of entropy from his trading process. The amount of random energy coming into the “system” is small.

On a much more lofty scale, consider Warren Buffett and Charlie Munger, the avuncular billionaires of Berkshire Hathaway. Warren Buffett has made tens of billions of dollars restricting his investments to those he feels best fit into his “circle of competence”. He sees no payoff in pursuing investments that don’t fit into that circle. Classic entropy reduction. On the other hand, consider an example where a successful , high-performance achiever, basketball star Michael Jordan, decided to try his hand at baseball, a deliberate injection of randomness and disorder (entropy) into a successful career. The result was, predictably, a less-than-stellar outcome.

Why are high-performance people generally hard to reach, or even loners? Because they are consciously reducing the entropy in their lives. They reduce the flow of randomness into their lives by reducing access. High achievers have 1,2 ,3 things to do that are vastly more important than the other 90 things other people want them to do. They know the payoff from their highest-value tasks so, the elimination of a $10.00 task in order to succeed at a $1000 task is a no-brainer for them. The higher the value of the payoff from an activity, the more the high-achiever “loses” by concentrating on a lower-value task. This “loss” is also known as “opportunity cost”. This is the most obvious reason for reducing entropy: you reduce opportunity cost.

Consider McDonalds. Here is a classic example of entropy reduction. Could anyone have imagined at the inception of McDonalds that removing entropy from the production of a 10 cent hamburger would create a multi-billion-dollar industry? Staggeringly, that’s what the McDonalds brothers did. They focused their attention very tightly on reducing disorder in the area of food preparation. Not only did they drastically restrict their menu, but they painstakingly injected more and more order (“negentropy”) into the process, specifying activities down to the smallest detail. If that’s what entropy reduction could accomplish for the lowly burger, imagine what it can do for us in our areas of personal achievement?

One final example of the “why” of removing entropy: the concept of division of labor has been the single most colossal force in lifting mankind out of the primordial mud in which we have been trapped for a million years of dark, agonizing existence. From the very moment that the first “farmer” declared himself into existence, the well-being of the entire human race was drastically improved. Every single product we use, every idea we employ, every drama we watch on TV, every pill we take, is unimaginably better than anything we could create on our own, because they were created by reducing entropy: concentrating on “the one thing” instead of “the many things”. As labor divides, subdivides, and subdivides again, entropy continues to be reduced, the value of the work done increases, and mankind lifts itself p by it’s bootstraps.

Don’t believe me? I’ll cook for you sometime and you will beg me to return to my higher-valued tasks.

Here is a summation of the "Why" of reducing entropy:

1. Controlled attention leads to increased knowledge

2. Specified actions lead to more predictable results than unspecified actions

3. A quantity of energy directed into fewer channels leads to better output than the same quantity of energy directed into many channels

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Thursday, October 02, 2008

Success Master Skills: Entropy in Human Achievement, Part 1

“Depend upon it, Sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully”. Dr. Samuel Johnson’s famous quote illustrates the topic of these next few posts: the study of entropy (or the removal of same) in human achievement. Johnson’s hapless criminal was able to improve his concentration so quickly because, unfortunately, most of his entropy was about to be removed. But, in the fortnight leading up to his rendezvous with the gallows, his metaphorical entropy, the degree of disorder in his life, tended to fade away, and , Johnson implies, the criminal’s mind was focused on, presumably, his highest priorities. And that is the key to entropy and human achievement.

Entropy is, strictly speaking, a scientific term which can be roughly translated as “the degree of disorder in a system”. Interestingly for our current metaphorical definition of entropy, high entropy is sometimes described by scientists as a state where there is such a smooth distribution of energy that there is no capacity for what physicists call “useful work”. Now, it’s been many years since high school physics classes for me, so I won’t presume to discuss the strict scientific definition. But think, for a moment about entropy: “A state of disorder that reduces the capacity for useful work “ Or, consider Entropy’s opposite, negentropy. Wikepedia declares: “negentropy is the force that seeks to achieve effective organizational behavior and lead to a steady predictable state” These definitions point us to a very useful conclusion about personal achievement:

Personal Achievement is facilitated and defined by the removal of entropy from our personal systems.

Another way to look at is to look at all those comic book superheroes: Spiderman, Batman, the Fly, the Human Torch, etc. Each one represented a concentration of a particular set of “powers” to the exclusion or diminution of other powers, activities, etc. These lucky (and unlucky) individuals were examples of trading a wide span of activities (perhaps akin to “normal life”) in return for high achievement in a very selected arena. As such, there was a lot they had to give up (a “normal” identity, “normal” relationships, a 9-to-5 schedule, etc). Presumably, these heroes thought it was worth it, at least most of the time.

Another example of reducing entropy, over centuries, would be the concept of “division of labor”. By concentrating on smaller and smaller sub specialties, individuals, companies, and even whole countries have been able to drastically improve their well-being, lifespan, food supply, educational base, etc. In other words, their over the eons, and , especially since the Industrial Revolution, mankind has, through removal of entropy via division of labor, drastically improved its “capacity for useful work”.

In our areas of personal achievement, we can become more effective, as we reduce the entropy in our lives. We have a higher probability of succeeding at any goal, the more we consciously strip away the entropy surrounding that goal. Every time you “burn a bridge”, use a recipe, turn off the phone, measure “good” and “bad” cholesterol, cancel a magazine subscription, fill out a “to do list” or go through the “pros and cons” of a process, you are removing entropy from your life. And that leads to more and more “capacity for useful work”. Useful? Useful to us. Useful to the creation of the lives we want to live, to the creation of the relationships we want to be involved in, the security we want to feel, the peace of mind we yearn for.

More in Part 2

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