How To Protect Your Career From Powerful Yet Stupid People Starting Today? Learn Now The 7 Ruthless Insights From Nuno Reis, PhD

“People were asking questions, but they were not deep enough” —Nick Leeson

Nick Leeson is best known for collapsing Barings Banks, the British bank where the Queen of England had a savings account worth 40 million pounds.

Nick’s initial decision to hide a loss of $10,000 led to a series of reckless trading decisions that culminated in a $1bn loss.

One can examine this phenomenal bank failure from different angles?—?but the one I chose to focus on here is the level of institutional stupidity.

In particular, for letting Nick perpetuate his rogue trading for almost 3 years without being asked any challenging questions .

“At Barings, they had a lot of idiots, basically in every control room function. They didn’t understand the basics of the business.“—Nick Leeson.

Yes, Nick was ultimately responsible for his decisions and actions.

But at his age of 25 at the time, one should question the senior people’s level of stupidity for allowing the “easy money” Nick was doing.

Baring’s failure is far from an isolated case due to institutional stupidity?—?it still persists in many places, disguised in different shapes and forms.

The point here is that, in the long run, institutional stupidity will harm your career.

No matter how hard you work on your personal growth and career, your effort can be jeopardised by powerful yet stupid people.

Institutional stupidity is one of the biggest singularities that can seriously damage your career if not identified beforehand.

It is rarely a subject debated by career coaches or personal development books.

For that reason, I choose to focus on this topic here.

Welcome to my newsletter!

Credit Bubble, Bitcoin And Stupid People

“The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.” — Bertrand Russell.

I had the pleasure of dealing with stupid people while working in the financial industry for 18 years.

Coming from an academic background, I was an easy target to work on MBS/CDO products when I joined the industry.

As I examined such products, they looked too complicated for Quants to model based on simplistic assumptions without proper critical thinking.

From my cynical intuition, I thought such financial structures were like sand castles supported by weak foundations.

So I asked a “senior” Quant:

“But what happens if some of the underlying names start to default?”

The answer I had was:

“You don’t have to worry about that. Even if one name defaults, there are still 124 left!”

I was amazed by people’s linear thinking and, above all, their confidence in it.

In the following months, I made it my mission to move away from people who clearly had no idea what they were talking about.

As a junior Quant, those so-called experts had the ability to make me think I didn’t get it and that I was stupid.

So with that, I learned my first lesson from working in finance.

Lesson #1: Stupid people are confident enough to make you believe you are the stupid one.

“Never argue with idiots. They will drag you down to their level and beat you with experience.” —Mark Twain.

Stupid people always come up with some reasoning to protect their ego.

Stupid people also have the gift of NOT learning from past mistakes.

Take the example of the Bitcoin Bubble as of Nov 2021.

At that time, it was clear this was a market bubble, yet many stupid people were confident Bitcoin would reach $100,000.

And I’m not referring to the young generation or those from the fintech industry but with no banking experience.

I’m referring to those who had lived through the 2007 Credit Bubble but could not see the 2021 Bitcoin Bubble.

Lesson #2: Do not try to change the mind of stupid people or hope they will learn from past mistakes.

Knowing how stupid people “think”, can you imagine the implications in your career when they occupy places of power within your institution?

The finance industry is full of such examples.

So, it is crucial to understand the nature of stupidity if you want to survive it.

Bonhoeffer’s Theory Of Stupidity

“If we want to know how to get the better of stupidity, we must seek to understand its nature.” —Dietrich Bonhoeffer.

Dietrich Bonhoeffer was a young German pastor concerned about how his fellow citizens were acting violently along the surge of Adolph Hitler to power.

Arrested due to his outspokenness, he wrote a series of letters from prison, concluding that people were acting not from being malicious but from being stupid.

One can easily mistake maliciousness with stupidity, but they are two totally different human traits.

In fact, a stupid person is more dangerous than a malicious person.

“Stupidity is a more dangerous enemy of the good than malice. Against stupidity, we are defenceless. Neither protests nor the use of force accomplishes anything here. Reasons fall on deaf ears.” —Dietrich Bonhoeffer.

A malicious person acts strategically, causing harm to others for their own benefit.

Nevertheless, you can use counter-intelligent manoeuvres to protect yourself.

But no counter-intelligent tactics can protect you from a stupid person!

A stupid person acts randomly, causing harm to themselves and others.

Carlo Cipolla, an economist at Berkeley University, described the same conclusion in his book “The Basic Laws of Human Stupidity”.

“A stupid person is the most dangerous type of person. A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses” —Carlo Cipolla.

And with that, we come to our third lesson.

Lesson #3: Stupid people cause more harm than malicious people.

But if a single stupid person can wreak havoc in your career, what should we expect when they band together to work relentlessly like chickens headless?

Institutional Mental Laziness

“In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule.” —Friedrich Nietzsche.

Why do large and renowned institutions allow stupidity to rule?

A possible answer is that a level of stupidity benefits running a business, at least in the short term.

This is a theory advocated by André Spicer and Mats Alvesson, authors of the book “The Stupidity Paradox: The Power and Pitfalls of Functional Stupidity at Work.”

“Functional stupidity is beneficial to prevent from high management being exposed of their ignorance when it comes to the details of the business — a good PowerPoint with some bullet points is preferable to summarise complex projects than having to go through the details required to fully grasp the matter. Decisions need to be done quickly, and there is little time for brainstorming.” —André Spicer and Mats Alvesson.

There is some logic in that: if you keep asking too many questions, you will paralyse business decisions.

Therefore, the preference is to focus on the means rather than the ends?—?i.e. on the “style over substance”.

Lesson #4: Institutional stupidity is about focusing on style over substance.

As a result, mindless processes are now enforced, and mental laziness is the new norm to ensure people don’t have to think too hard.

That is related to the process of “layering “, as Ben Ashby refers to in his article .

And although non-stupid people may raise their concerns about such a stupidification process, the sad truth is that most adhere to it.

Why?

It becomes very convenient to show high management how busy they are following mindless processes, with a sense of high work ethic and accomplishment.

A convenient way to hide their innate level of business, leadership and technical incompetence.

A process that takes only a few minutes of thinking is most preferable.

And there is a reason for that.

People prefer to be electrocuted than to think hard for more than 5 minutes, as an experiment conducted by the University of Virginia shows.

“We live in a stupidity-intensive time where we’re far more interested in checking our Pokemon or our Candy Crush than actually just sitting and thinking for a second. A recent study was done by some psychologists at the University of Virginia where they took subjects, put them in a room and said, just think for five minutes. In the room was a button they could press to electrocute themselves to stop thinking. Most subjects electrocuted themselves rather than just sit and think for five minutes. One guy electrocuted himself over a hundred times during the five minutes! “—André Spicer and Mats Alvesson.

But there is another and more profound reason why institutions opt for a process of stupidification.

Mental laziness is a powerful tool for dealing with uncertainty.

Dealing With Uncertainty Using Stupidity

The common perception is that the world is increasingly more complex and uncertain.

There is an overwhelming of information together with a decrease in attention span.

Thus stupidification is a convenient process to deal with such increased levels of uncertainty and a need to make decisions faster.

Lesson #5: Stupidity is a convenient tool to handle uncertainty and complexity.

The opposite would be handling the anxiety of stop-and-wait?—?what the authors of the book “The Stupidity Paradox” call the “negative capability”.

“Negativity capability involves ‘the ability to tolerate anxiety and fear, to stay in the place of uncertainty, and so to allow for ‘the emergence of new thoughts or perceptions.” —André Spicer and Mats Alvesson.

Avoiding anxiety when dealing with uncertainty becomes a profound reason for mental laziness.

“Fostering and exercising negative capabilities may be tough. Demands for order, discipline, consensus and optimism often make it hard to ask questions. Critical thinking takes time and effort. It creates uncertainty, and often upsets people.” —André Spicer and Mats Alvesson.

Institutions that place a great value on loyalty put even more emphasis on order and discipline.

When loyalty is dominant, being a team player can be seen as a moral duty.

As a result, people stop thinking for themselves.

And to ensure the resilience of the stupidification process, one last element is needed to complete the puzzle.

The manager.

Global Head Of Crap

“Congratulations on your promotion! You’re now the new Global Head of Crap.”

No one in her serious mind would announce a promotion this way.

Pompous names usually disguise job titles to make people feel good about themselves.

But as we distil the pompous name from the actual job activities, we realise that many managers are doing mundane, repetitive tasks.

A job that people could easily fill with lower skill levels.

Organisations, therefore, create false hierarchies and statuses to make such managers feel better about themselves and boost their identity.

In truth, the difference in hierarchy between a manager and her subordinates is far slimmer than what you think.

The manager’s primary role is no longer on the personal growth of their people but rather on their stupidification.

Lesson #6: The stupid manager is the one who ensures stupidity to take over the institution.

The priority is to ensure people don’t transgress the mindset and culture prescribed by the institution.

“The fact is, many managers try to ensure that smart people don’t use their intellect. Functional stupidity is the inclination to reduce one’s scope of thinking and focus only on the narrow, technical aspects of the job. You do the job correctly, but without reflecting on purpose or the wider context. Rather than thinking about outcomes, they focus on the techniques for getting things done. And the thing to be done is often to create the right impression. “—André Spicer and Mats Alvesson.

And as their need to compete and win increases, their subordinates will soon want to become the new Global Heads of Crap.

It becomes a vicious cycle.

“As financial markets have become more stretched, senior positions are increasingly being filled by those who have either taken the most risk -- whether well considered or not -- or sufficiently politically adept but lacking the skill or entrepreneurial drive to go elsewhere.” —Ben Ashby.

The only way out is to have a well-defined stupidity tolerance threshold and skills or an entrepreneurial drive to run away.

When should you do so?

Stupidity Tolerance Threshold

“When confronted with stupid individuals, often intelligent men make the mistake of indulging in feelings of self-complacency and contemptuousness instead of immediately secreting adequate quantities of adrenalin and building up defences.” —Carlo Cipolla.

As with any singularity, you need to understand where is the point of no return.

When dealing with stupidity, you must have a well-defined Stupidity Tolerance Threshold.

Failure to do so and you will either get trapped in a meaningless job or, worse, become a stupid person.

You may recognise some of the patterns discussed here in your current job.

But you also need to be aware that humans prefer to make themselves comfortable rather than change radically.

We are more attached to the status quo than what we like to believe.

Only when a certain tolerance threshold is broken that we start taking action.

By the time you realise it, it may be too late, and you may get caught in self-punishment emotions.

Lesson #7: How tolerant you are of stupidity will determine your willingness to change jobs or not.

In summary:

• You cannot reason with stupid people
• Stupidity is a powerful tool to handle uncertainty
• Stupid people cause more damage than malicious people
• Institutional stupidification is all about “style over substance”

All you can do with stupidity is:

• recognise when and where it is
• define your stupidity tolerance threshold
• protect your mind against confident yet stupid people
• create a backup plan to evade stupidity before it catches you

“Against stupidity, the very gods themselves contend in vain.” —Friedrich Schiller.

You may be a dedicated person to your personal development and career.

But all such efforts will inevitably die in vain if we deal with stupid people who occupy positions of power over us.

How you deal with this harsh reality will determine the success or failure of your career.

Be suspicious!

Be cautious!

Be cynical!

Stupidity has no cure.

Nuno Reis

I am a High-Performance Coach. I support Finance practitioners to thrive in a world of uncertainty by developing a mindset that will boost their decision-making & performance.

Disclaimer: This newsletter is not financial or investment advice. It intends to be a psychological, philosophical, and systemic approach to elevate the consciousness levels in the finance & tech industries. The writing of this article wants to be gender-neutral.

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