Specialization is the enemy of the "system"!

Today's leadership blogpost is dedicated to Charlie Munger, who passed away a couple of weeks ago (Nov 28, 2023). Munger took a multidisciplinary approach when it came to understanding businesses outside in (for investment purposes). Similarly, my blogposts take a multidisciplinary approach to understanding businesses, as an insider and provide leaders a fundamentally different approach to view the corporation in order to dissolve their problems and deliver effective outcomes.

As someone who went through life (until the ripe old age of 99) continuously practicing a multidisciplinary approach, Munger drove home to me the point that a multidisciplinary approach is required if maturity is to be effective. I'll start with a quote from the Physicist Richard Feynman that hints at the 'why':

“If our small minds, for some convenience, divide this universe, into parts - physics, biology, geology, astronomy, psychology, and so on - remember that nature does not know it!”

But, where do we start! Here is the fundamental organizing ethos as put forward by Munger:

1. You must both rank and use disciplines in order of fundamentalness.
2. You must, like it or not, master to tested fluency and routinely use the truly essential parts of all four constituents of the fundamental four-discipline combination (math, physics, chemistry, and engineering), with particularly intense attention given to disciplines more fundamental than your own.
3. You may never practice either cross-disciplinary absorption without attribution or departure from a principle of economy that forbids explaining in any other way anything readily explainable from more fundamental material in your own or any other discipline.
4. But when the step 3 approach doesn’t produce much new and useful insight, you should hypothesize and test to establishment new principles, ordinarily by using methods similar to those that created successful old principles. But you may not use any new principle inconsistent with an old one unless you can now prove that the old principle is not true.

Here is the best part: You don't have to learn for several years, be a "know it all" or be the "expert" in all fields to improve your effectiveness. Most fields only have a few essential principles that you need to integrate into your thinking process - even incorporating simple insights from just one other field (we will take the field of psychology for today's post and discuss two real-world examples) can significantly improve your effectiveness as a leader. The quickest return on investment is not doing new things with this approach, but avoiding the errors that you are making now, which in itself delivers profound long-term benefits. It is a journey for sure - once we get that idea that 'the map is not the territory', then the best course of action is to continuously work on getting better at making maps. Let's now dive into the real-world story of Captain Cook that Munger had used in one of his talks...

The leadership of Captain Cook

Scurvy was a deadly disease that affected many sailors during long voyages, causing symptoms such as bleeding gums, rotten teeth, etc. Captain James Cook (1728 - 1779) was one of the first explorers who managed to prevent scurvy among his crew by using a combination of methods, but mostly importantly by understanding psychology and fundamental human nature.

Back then, sailors cared about scurvy but didn't know about Vitamin C. Captain Cook, noticed that the Dutch ships had less scurvy than English ships on long voyages. He look for what the Dutch were doing differently and learned that they ate sauerkraut (which, as it turns out, has trace amounts of Vitamin C).

Cook faced the challenge of convincing his crew to eat the sauerkraut, which while was popular among the Dutch sailors was not very appetizing or popular among the English. Also, Cook didn't want to tell them that he was doing it in the hope it would prevent scurvy - because they might mutiny and take over the ship if they thought that he was taking them on a voyage so long that scurvy was likely.

He used a clever psychological trick to make them want it instead: he ordered that the sauerkraut be served only to himself and the officers, and forbade the common sailors from having any. This made the sauerkraut seem like a rare and valuable delicacy and soon the sailors were begging for a share of it. Cook then pretended to relent and allowed them to have some with some restrictions and then eventually allowed it with no restrictions, thus ensuring that they consumed enough of the food.

This is how Captain Cook used human psychology to prevent scurvy among his crew and complete his voyages with minimal casualties. As the saying goes,

"You can't herd the cats, but you can move the milk"

A good leader understands the power of incentives and the psychological forces at play not only internally with employees (as in the story above) but also externally with paying customers. As the saying goes, not everything is behavioral science, but behavioral science is in everything. Here is one more story, but this time involving the psychology of external customers...

The Fall of Nokia

The most underrated bias in mainstream management is quantification. Many counterintuitive 'psychological'?ideas are totally worth testing in complex systems. By sticking solely to "logical", "rational", or "data-driven" or "quantified" ideas and decision making, your corporation may go extinct one day in the future. This real-life story comes from Tricia Wang who recounts the downfall of Nokia (when Apple stepped into the smart phone business) due to its "big-data" driven decision making and quantification bias. Nokia completely missed the early signals on how much the Chinese (one of its largest markets) desired the smart phone - but, by living with them, Tricia observed how low-income people were saving up to 50% of their salaries to buy one. That deep understanding of human nature, even if it was a small sample size, is very important.

Tricia got it - but, Nokia completely missed the insight that even the poorest in China would want a smartphone and that they would do almost anything to get their hands on one. This is what happens when you miss early signals, which'll obviously appear weak when quantified - they suffered a rapid destruction of market share:

It is comparable to how the Titanic missed its sole data point that really mattered. As Tricia Wang cautions us, this 'quantification bias' could very well be at play right right now - in our own governments, non-profits, corporations and other institutions.

Specialization is the enemy of the system

As the saying goes, all companies are now software companies. The promise of software was to improve our productivity and give us more free time. However, the irony is that software/tech. companies are struggling to solve their internal productivity problems and end up working long hours. Improving the productivity of software companies is going to be critical for us when it comes navigating the exploding complexity of the 21st century. Past attempts at this included a "manifesto", the various ways of working, methodologies, frameworks and "best practices". But, as Harrington Emerson put it:

“As to methods there may be a million and then some, but principles are few. The man (sic) who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.”

Unfortunately, most of what many know about leadership are just practices/rituals/methods. Here are the typical top ways of "learning" leadership:

• copying/conforming to the existing practices/methods in the corporations they worked at (performance ratings, compensation, project planning & execution, weekly 1:1s, budgeting, etc. - without seriously questioning their effectiveness by taking a multidisciplinary approach)
• observing other leaders in action
• listening to the advice of their mentors
• attending corporate leadership training programs
• reading books (but, many just convey platitudes or are pseudo-scientific like 'Good to Great')
• gaining insights from personal mistakes

But, a multidisciplinary approach is sorely missing but can be easily gained and put to practice if you have epistemic humility and curiosity. It is vital that people own the full context of the problem they are trying to solve. Hyper-specialization is the invisible enemy that many in technology don't see today. Many fields like cybersecurity have created specialization within specialization that sometimes make it incredibly hard to sustainably solve problems with such existing structures.

For example, as Mario Platt points out, many of us are blind to the negative impact of handoffs:

So much of our pain is self-inflicted on the whole “system” because of “specialization” coupled with the failure to effectively manage interactions with those pockets of specialization. Managers don't have any insights from queuing theory (which my good friend Manish Jain rightly calls 'counterintuitive') and vastly underestimate the power of cross-training.

As Munger elegantly put it,

The great defect of scale, of course... is that as you get big, you get the bureaucracy. And with the bureaucracy comes the territoriality, which is again grounded in human nature. And the incentives are perverse.

But, very few take a simple insight from a field (like psychology) and take it seriously when applying it to their organizational dynamics. We have to be willing to change our mind and stop/change what we are currently doing when better explanations come forward. But, many times we don't! And that in turn impedes progress as we have shut down our means of error correction.

Don't be good at just one thing! Learn from multiple fields and try to synthesize the insights from them in order to enhance your cognition and thereby your worldview. Don't view "???????? ???? ?????? ????????????" as a negative trait. Knowing something about everything is NOT shallow knowledge. The depth comes from connecting the dots. As you are able put together more and more insights, your effectiveness grows. I'll end this section with an quote that is attributed to Robert Heinlein:

“Specialization is for insects.”

Wrapping Up

So, what can leaders do to avoid the pitfalls of specialization? I have no cheat sheets, no "7 steps to improve productivity", no frameworks, no "4x4 matrix", and no prescriptions to offer in general. No "best practice" has universality - context is critical. As Ralph Stacey put it,

“What makes sense is asking ourselves what we are doing and how we are doing it and why, rather than hoping to find the ‘best practice’ by looking at what others seem to be doing.”

My hope is to help you build a pluralistic worldview that incorporates insights from math, physics, chemistry, biology, engineering, complexity, cybernetics (including second order implications), psychology, etc. weaved together with systemic thinking and underpinned by an optimistic philosophy (that includes both epistemology and ontology) that in turn creates a more pluralistic world. I aspire to learn more in the process and get better at making maps.

Until the next post, I'll leave you with one of my favorite quotes from Charlie Munger:

"If A is narrow professional doctrine and B consists of the big, extra-useful concepts from other disciplines, then clearly the professional possessing A plus B will usually be better off than the poor possessor of A alone. How could it be otherwise?"

and a pertinent comic that made me both laugh and think:

Here's to more generalists ??!

[In case you missed my previous post, it talks about why the Navy Seals have long dispensed with the 'strategy vs execution' delusion - because it gets the Seals killed!]