“The frog in the well knows nothing about the mighty ocean” – Japanese proverb
“To understand is to know what to do” – Ludwig Wittgenstein
Smartness and rank incompetence can co-exist in the same person. One does not need to look far for such examples, just look around you and you might be able to notice some
- The extremely disciplined and hardworking employee who is overweight
- The brilliant trader who cuts positions easily but cannot cut out toxic relationships
All these are real life people I have known and interacted with. As a wealth manager, you work with people who are successful in a worldly sense but for some reason they get taken for a ride more often than pure probability can explain. But every once in a while, you run into a customer who understand the basics of various domains well enough to not fall for narratives. These are people who have mental models in place that can be readily tapped into once they recognize the broad contours of the situation. Is it an art or is there a method to the madness that others can learn?
Some of the things these “smarter” people appear to do are
- They put themselves into situations where one needs to learn skills across disciplines, they try out many more things than do the individuals who are good only in silos
- They make their own decisions, better judgement starts with ownership
- They manage to abstract their learning to a higher level so that this learning can be applied across contexts
Point (3) above is the key in my opinion. The following example illustrates this better
Situation – An investor loses money heavily after betting on a pharma stock that tanks post US FDA observations on its manufacturing facilities.
Learning – Be careful when you invest in pharma stocks.
“Smarter” Learning – Evaluate the aspect of regulatory risk of each investment you hold. What other business segments carry regulatory risks other than pharma? Does banking not carry regulatory risk too? How about Telecom where the regulatory authority can tilt fortunes overnight with the stroke of a pen?
The human mind is very context sensitive. Unless one consciously abstracts the context sensitive lesson to a higher level to its core form, one will have a tough time applying this across situations.
Going back to the example of the brilliant trader, what I found most interesting was the fact that this person swore by stop losses in his profession but did not have a stop loss in other aspects of life. He wasted almost three years of his life in a relationship he just could not “stop” himself out of.
The extremely hardworking employee would turn up for work at 8:30 AM everyday irrespective of whether he liked it or not, he would say that turning up is half the job. Pity he could not apply half of that discipline to his exercise regimen, he just would not turn up to do what it took to get back in shape. A very powerful learning that remained limited to a single context because of his inability to abstract it to a higher level.
The objective of learning is not just to get better at one thing, it should be to get better at similar things across situations and disciplines.