Success Tools: Statistics Tsunami

What do baseball, technical analysis, web-based marketing, politics, medicine, and matchmaking have in common? A lot of profitable businesses based on statistics.

The more statistics we gather, the less reality lies to us. The more we know about which strategies win and which strategies don't, the more we can we can focus our business and personal efforts on the truth.

This focus can a apply to a million-person cohort of teenage consumers, or your own sequential blood lipid readings.

There's nothing wrong with a "gut " feeling. It's a start. it's an inspiration. A hypothesis. But to take results to the bank, start generating the numbers.


But, "anything can be proved with statistics", right? Well, consider that statistics are going to "lie" a lot less when your own prosperity, health, retirement, etc. is on the line. Are you going to cook your own data? Do you want to lie to yourself about what products (from your own company) are selling? What your blood pressure is? What you've been consuming for lunch?





This revolution is occurring because of faster, more powerful computers. Also because of the ease of collecting electronic information: almost all data generated today is generated digitally. It starts digital, and stays digital. Stock prices, mouse clicks, sports stats, Amazon purchases, survey results, etc. All of the data is already in the perfect form to be digested by statisticians and theorists. Not only is your laboratiory super-sophisticated, you have, in essence, an unending supply of experimental subjects

Does that mean the market for originality and creativity is dead? Hardly. The world will always need creative ideas, breakthrough concepts. The good news is that it will be a lot easier to verify those hunches, not just in raw numbers, but with the many tests and measures of validity that statisticians have developed over the years. The behavior you see at your own local mall, that funny feeling you get when you eat the wrong food...all of this can now be checked by huge banks of data. If your hunch is right, the value of that hunch is multiplied a millionfold. if wrong? There's always room for more hunches.



And what about the un-obvious? The non-blockbuster? Now, instead of being tossed aside, your Long Tail product may be far more marketable than in previous generations. Statistics is not just for megahits. Perhaps your soap dish appeals to married woodcutters over 40 but only after the Equinox. You can test for that. Perhaps socks with "Z" in the third letter might all go up on the full moon. Pull up the data and backtest it.

Statistics is going to continually reinvent itself as a powerful tool in all of our lives. We will be learning more about our world, ur neighbors, and ourselves, than ever before...and we are going to profit mightily from it.

New on My Reading List

Actually, I am already reading this fascinating book. In a recent post on idea capture I noted that ideas themselves were becoming more and more powerful, but cheaper and cheaper to monetize. The Numerati exemplifies this trend. Businesses are not being built on iron and steel, or even silicon chips and copper wire, but on data itself, or at least transformed beyond recognition by data, modeling, and statistics. We see it in Google's advertising model, and even in it's statistically based translation capabilities; in such disparate fields a Major League Baseball and computerized financial trading, the real "action" is taking place deep inside statistical models.

And our own lives can be affected profoundly by the statistics we keep on ourselves. But that is a story for another post.

Success Tools: Sony ICD-UX80 Digital Voice Recorder

I am loving my new Sony ICDUX80 Digital Voice Recorder. As a devotee of David Allen's Getting Things Done, I have kept small spiral notebooks "surgically attached" to my body for two years, and my daily routines and tasks have been immeasurably clarified , in part, due to jotting down ideas, references, etc. But I produced more notes in five minutes with this device than in a whole work day with the paper notebook. The main reason is that I don't have to appreciably interrupt my routine to stop walking, reach in my pocket, open the notebook, take out the pen, and, finally, scrawl a note to myself. The audio dictation process is actually mores streamlined than writing notes with a pen, and the USB port allows you to plug the device right into your computer and listen to the mp3 files it generates , by clicking on them on the screen.

The device allows a ridiculous 581 hours of recording, has crystal-clear stereo recording quality, and is certainly an evolutionary leap from tape-based voice recorders. I very much look forward to my new surgical attachment.

Success book Reviews: Josh Waitzkin "The Art of Learning

Josh Waitzkin, is, of course, the subject of the Hollywood film Searching for Bobby Fischer, and was an eight-time National Chess Champion in his youth. But I certainly didn’t know he want on to become a World Champion Tai Chi competitor. His book, The Art of Learning: An Inner Journey to Optimal Performance is a rare prize: a portrait of how a high performer views the art of high performance, written by the expert himself. Often, the master of a discipline is not as good at teaching it as performing it, so we are really luck to have both a superb performer and a superb explicator in the same person.

There are dozens of lessons to be learned from this excellent book about personal success and achievement. I’ll just pick a few here.

From the book:
“I have long believed that if a student of virtually any discipline could avoid ever repeating the same mistake twice…he or she would skyrocket to the top of their field."

Waitzkin is articulating a key tenet of performance improvement: accurate recording of unsuccessful (and successful) actions, and a spiral method for improving the ouputs, hopefully permanently, as a result of the review. Jam’s D. Murphy’s great book “Flawless Execution"
mentions a key practice that fighter pilots use: the after-mission debrief. If someone makes the same mistake twice, of course, fighter pilots could die…so it’s crucial to eliminate mistakes.

This general concept is no different when one examines the Toyota Production Method. To make great cars well, the process needs to be examined by each worker, bolt by bolt, on a daily basis.
The reward here is, of course, not just elimination of errors, but the relentless improvement in your mastery of the discipline.

In my own statement of Major Definite Aim I find I am continually adding more and more statements of the methods I use, and those I avoid. This process allows me to slowly “sculpt” my actions, and take tighter and tighter aim at my goal.


Another concept Waitzkin discusses , he names Investment in Loss.

On the way to greatness, performance is going to fluctuate. Be willing to perform sub-optimally in the process of increasing your results at another point. Be willing to look bad. Think of Tiger Woods, persistently re-working his swing. Or, consider Sandy Weill, one-time chairman of Citibank. He was willing to “look bad”, and walk out on American Express , and re-start his career at the bottom in order to shine later on. He was willing to spend in the desert” before coming back from obscurity

Another concept Waitzkin brings up, recovery time, holds true throughout many facets of human achievement, and is not limited to sports. For instance Ben Stein makes the point that you should never be expected to “shrug off” big setbacks to your goals, but, rather, you should take some time to let the emotional wounds heal.

The general rule that performance “regresses to the mean” is also applicable here. No journey toward any goal makes purely linear progress. Emotionally, we wish that every day could be “above average”…something that is patently unattainable. But, Waitzkin and Stein tell us, we don’t have plod through the bad patches like robots. We can ease off, make the difficult times as comfortable as can be, and then come back stronger than ever. If we pick large goals, then the journey is going to be a “marathon”, not a ”sprint”, so we have to pace ourselves.

Watzkin’s Chapter on Making Smaller Circles should be read by everyone who wants to “start at the top and work up”, a phrase I love, penned by Harvey MacKay. Waitzkin built up his Tai Chi skills by very careful attention to individual components, practicing very small , separated Tai Chi movements for hours or weeks, rather than practicing complicated combinations. Similarly, he would think through chess positions with only three pieces on the board, studying the subtle combinations generated by those few pieces, and then gradually incorporate this knowledge into his overall game. Similarly, a student of the virtuoso composer/pianist Sergei Rachmaninoff marveled at how slowly the master practiced the pieces he was working on. This slow practice, was, of course, the key to his phenomenally incisive playing on the concert stage. There is more than muscle memory involved here. Often, the components of a larger methodology are elegant statements in themselves, and pack a lot of subtlety into a small component. In my trading systems, I have found fruitful paths in subtle variations of my existing systems, because, as I got to know them better, I could draw out more potential.

It is instructive to meditate on very simple concepts that, in their subtlety, can lead to amazing ramifications. Of course, one of the most awe-inspiring is the “on/off”, “one/zero” motif of all digital computing. And look what an incredible world it has built. What could seem more simple than 1/0, on/off, yes/no, and yet we may never see the end of variations built on this deepest of symbolic simplicities. “One/Zero” is of course, the key tenet of logic As Aristote says…”A thing cannot be and not be at the same time”... the centerpiece of all rationality, and also at the core of the very machines we use. Truly…small circles an yield great results.

These points are only a few of the many contained in this fascinating book. They mesh well with the points in many of the other books and sources mentioned in this blog. The light of success shines through many prisms.

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