What got you here won’t get you there by Marshall Goldsmith.

What got you here won’t get you there by Marshall Goldsmith.

[Wonderful personal development tips to help in anyone’s life]
Most of us in our workplace delude ourselves about our achievements, our status and out contributions. We,

• Overestimate our contribution to a project;

• Take credit, partial or complete, for success that truly belong to others

• Have an elevated opinion of our professional skills and standing among our peers;

• Conveniently ignore the costly failures and time-consuming dead-ends we have created.

• Exaggerate our project’s impact on profitability by discounting real and hidden costs.

Four key beliefs help us to become successful and they are

• Past performance

• their ability to influence their success (rather than just being lucky)

• their optimistic belief that their success will continue in the future

• their sense of control over their own destiny (as opposed to being controlled by external forces)

Each can make it tough for us to change and that is the paradox of success. This makes us superstitious.
20 habits that hold you back from the top

• Winning too much

• Adding too much value

• Passing judgments

• Starting with ‘no’ but’ or ‘however’

• Telling the world how smart we are

• Speaking when angry

• Negativity or ‘let me explain why that won’t work’

• Withholding information

• Failing to give proper recognition

• Claiming credit that we don’t deserve

• Making excuses

• Clinging to the past

• Playing favorites

• Refusing to express regret

• Not listening

• Failing to express gratitude

• Punishing the messenger

• Passing the buck

• An excessive need to be ‘me’.

The higher we go, the more your problems are behavioral.
At the higher levels of organizational life, all the leading players are technically skilled and they are smart. All other things are equal, your people skills (or lacks of them) become more pronounced the higher you go.
How can we change for the better?

The four commitments:

• Let go of the past

• Tell the truth

• Be supportive and helpful - not cynical or negative

• Pick something to improve yourself - so everyone is focused more on ‘improving’ than judging.

The skills that separate the near-great from the great.

• Listen

• Don’t interrupt

• Don’t finish the other’s sentence

• Don’t say ‘I knew that’

• Don’t even agree with the other person

• Don’t use the words, ‘non’ but' & 'however'

• Don’t be distracted. Don’t let your eyes or attention wander elsewhere while the other person is talking

• Maintain your end of the dialogue by asking intelligent questions that a) show you are paying attention, b) more the conversation forward, and c) require the other person to talk (while you listen)

• Eliminate any striving to impress the other person with how smart of funny you are. Your only aim is to the other person feel that he or she is accomplishing that.

Eight step method for changing our interpersonal relationship and making these changes permanent.

• You might not have a disease that behavioral change can cure

• Pick the right thing to change

• Don’t delude yourself about what you really must change

• Don’t hide from the truth you need to hear

• There is no ideal behavior

• If you can measure it, you can achieve it

• Monetize the result, create a solution

• The best time to change is now

http://www.youtube.com/watch?v=xY7UJVYM9n0

Abundance by Peter H. Diamandis & Steven Kotler

Abundance by Peter H. Diamandis & Steven Kotler
The future is better than you think.
(narrates unexplored territories that can meet growing population needs)

Gaius Plinius later volumes, Earth, book XXXV, Pliny tells the story of a goldsmith who brought an unusual dinner plate to the court of Emperor Tiberius in AD 23. The plate was a stunner, made from a new metal, very light, shiny, almost as bright as silver. The goldsmith claimed he’d extracted it from clay using a secret technique. Emperor was also a financial expert who knew the value of his treasure would seriously decline, if people suddenly had access to shiny new metal. Therefore, recounts Pliny:, “instead of giving the goldsmith the reward expected, he ordered him to be beheaded”. The shiny new metal was aluminum and that beheading marked its loss to the world for nearly 2 millennia (it reappeared in Ad 1800).

The amygdala is an almond-shaped silver of the temporal lobe responsible for primal emotions like rage, hate and fear. It’s our early warning system, an organ always on high alert, whose job is to find anything in our environment that could threaten survival. These days we are saturated with information and how do media compete to get our mind share? By vying for the amygdala’s attention. The old newspaper saw “if it bleeds, it leads’ works because the first stop that all incoming information encounters is an organ already primed to look for danger. We’re feeding a fiend. If you check your newspaper, you will find that over 90% of the articles are pessimistic. Quite simply, good news does not catch our attention. Bad news sells because the amygdala is always looking for something to fear.

Even under mundane circumstances, attention is a limited resource. Of course, any fear response only amplifies the effect. In short, once amygdala begins hunting bad news, it’s mostly going to find bad news. First, it is hard to be optimistic because the brain’s filtering architecture is pessimistic by design. Second, good news is drowned out because it’s in the media’s best interest to overemphasize the bad. Third, it’s not just that these survival instincts make us believe that ‘the hole we’re in is too deep to climb out of’ but they also limit our desire to climb out of that hole.

Over the past 150,000 years, Homo sapiens evolved in a world that was ‘local & linear’, but today’s environment is ‘global and exponential’. If you make 30 linear steps, you end up 30 feet away, but if you take 30 exponential steps, you will end up a billion meters away.

Robin Dunbar was interested in the number of active interpersonal relationship that the human brain could process at one time. After examining global and historical trends, he found that people tend to self-organize in groups of 150 and this explains why the US military consider 150 as the optimal size for a functional fighting unit. Gossip, in its earlier forms, contained information that was critical to survival because, in clans of 150, what happened to anyone had a direct impact on everyone. In the nuclear family, very few of us actually maintain 150 relationships. But we still have this primitive pattern imprinted on our brain, so we will those open slots with whomever we have the most daily ‘contact’ - even if that contact comes only from watching that person on television. Our brain does not realize there’s difference between TV personal (virtual) we know about and relatives we know.

In the past, we spend most of the time on travel and other things - non-productive purposes. Now with new technology, we can save more time which we can spend for worthwhile cause. So the best definition of prosperity is simply ‘saved time’. As Ridley feels that the true measure of something’s worth is the hours it takes to acquire it”. ‘In a world of material goods and material exchange, trade is a zero-sum game’ says inventor Dean Kamen. “I’ve got a hunk of gold and you have a watch. If we trade, then I have a watch and you have a hunk of gold. But if you have an idea an dI have an idea, and we exchange them, then we both have two ideas. It’s nonzero”.

Ray Kurzweil in his first book, 1988’s ‘the age of intelligent machines’, he used exponential growth charts to make a handful of predictions about the future. His predictions turned out to be uncannily accurate: foretelling the demise of soviet Union, computer winning chess championship, and www. In his follow-up 1999 book ‘ When computers exceed human intelligence, Kurzweil extended this prophetic blueprint to the years 2009, 2019, 2029 and 2099. Out of 108 predictions made for 2009, 89 have come true outright and another 13 were damn close, giving Kurzweil a soothsaying record unmatched in the history of futurism.

The two most powerful cooperative tools the world have ever seen are transportation revolution and ICT (information and communication technology). Jeffery Sachs counts eight distinct contributions ICT has made to sustainable development - all of them cooperative in nature.

The first of those gains is connectivity. The second contribution is an increased division of labor, as greater connectivity produces greater specialization, which allows all of us to participate in the global supply chain. Third comes, scale, wherein messages go out over vast networks, reaching millions of people in almost no time at all. The fourth is replication: “ICT permits standard process, for example, online training our production specifications to reach distant outlets instantaneously. Fifth is accountability: today’s new platforms permit increased audits, monitoring and evaluation, a development that has led to everything from better democracy to online banking to telemedicine. The sixth is the internet’s ability to bring together buyers & sellers is the enabling factor behind ‘long-tail’ economics. Seventh is the use of social networking to build communities of interest. The eighth spot is education and training as ICT taken the classroom global while simultaneously updating the curriculum to just about every single bit of information one could ever desire.

The three technologies have world-feeding potential. While aquaculture is here today, the GE industry is dominated by three seeds (cotton, corn, and soybean) and has yet to penetrate deep into the food crop market. Golden rice (rice fortified with vitamin A) is about to clear regulatory hurdles and enters the food chain. Cultured meat is probably 10 to 15 years out, and the same appears true for widespread deployment of vertical farms.

Our current education system was forged in the heat of industrial revolution, a fact that not only influenced what subjects were taught but also how there were taught. Schools were organized like factories: the day broken into evenly marked periods, bells signaling the beginning and the end of each period and even teaching was subject to division of labor - like any assembly line, students progressed from room to room to be taught by different teachers specializing in separate disciplines. What we do know is that the industrialized model of education, with its emphasis on the rote memorization of facts, is no longer  necessary.Facts are what Google does best. But creativity, collaboration, critical thinking and problem solving - that is a different story. These skills have been repeatedly stressed by everyone from corporate executive to education experts as the fundamental required by today’s jobs. They have become the new version of the three Rs (reading, writing and arithmetic); the basics of what recently been dubbed ‘twenty-first-century learning’. Educational pundits stressed the ability to ask right questions. “There is something about understanding what the right questions are; and there is something about asking the nonlinear, counterintuitive questions. These are the ones that take you to the next level”.

Studies have shown that games outperform textbooks in helping students learn facts-based subjects such as geography, history, physics and anatomy while also improving visual coordination, cognitive speed, and manual dexterity. World-building games like SimCity and Rollercoaster Tycoon develop planning skills and strategic thinking.

There are four major motivations that drive innovations. The first, and weakest of the bunch, is curiosity: the desire to find out why, to open the black box, to see around the next bend. It fuels much of science, but it’s nothing compared to fear, our next motivator. Extraordinary fear enables extraordinary risk-taking. The desire to create wealth is the next major motivator. The fourth and final motivator is the desire for significance: the need for one’s life to matter, the need to make a difference in the world. One tool that harness all four of these motivations is called the incentive prize. If you need to accelerate change in specific areas, esp. when the goals are clear and measurable, incentive competitions have a biological advantage. Humans are wired to compete and we are wired to hit in the world, no matter where they live or where they are employed, to work on your particular problem.

Almost every time I give a talk, I like to ask people what they fear most about failure. There are three consistent answers: loss of reputation, loss of money and loss of time.

In our abundant future, the dollar goes further. As does yen, peso, euro, and so forth. This happens because of dematerialization and demonetization; because of exponential price-performance curves; because each step up prosperity's ladder saves time; because those extra hours add up to additional gains; because the close ties between categories in our abundance pyramid produce positive feedback loops, bootstrapping potential and the domino effect and for a thousand other reasons.  

Proverbs 29;:8 tells us: “Where there is no vision, the people will perish”. Abundance is both a plan and a perspective. Where is a vision, the people flourish. The impossible becomes the possible and abundance for all becomes imagine what’s next.


Books referred in this book:
Where Good ideas come from: the natural history of innovation by Steven Johnson.
Out of our minds: Learning to be creative by Sir Ken Robinson

No One’s world by Charles A. Kupchan

No One’s world by Charles A. Kupchan
The west, the rising rest, and the coming global turn
(Talks about changing landscape of global power team. What I find it interesting is the depth of historical information provided (many of them are new to me and hence very enlightening)
The west is losing not only its material primacy as new power rise, but also its ideological dominance. The rising rest (BRIC) regularly break with US and Europe on geopolitics, trade, the environment, and other issues, preferring to side with ascending states, whether democratic or not. Interests matter more than values. The liberal democracies of the West have been stumbling. The US is not alone in confronting democracy’s discontents. Many industrialized countries - UK, France, Germany, Italy and Japan among them - have recently been afflicted by divided electorates and enfeebled government.
The emerging landscape is one in which power is diffusing and politics diversifying, not one in which all countries are converging toward the Western way. Between 1500 & 1800, the world’s center of power moved from Asia and the Mediterranean Basin to Europe and by the end of nineteenth century, North America. The West then used its power at the leading edge of history ever since. But the West’s rise was a function of time and place, and history is now moving on. East Asia has been anointed as the candidate most likely to assume the mantle of leadership. It is doubtful, however that any country, region or model will dominate the next world. For the first time in history, an interdependent world will be without a center of gravity or global guardian. A global order, if it emerges, will be an amalgam of diverse political cultures and competing conceptions of domestic and international order. Failure to foresee this global turn and adjust the West’s grand strategy accordingly would be an error of grave consequence.
West’s ascent to global preeminence between 1500 & 1800, shows that the West followed a unique and contingent path that was, paradoxically, a product of its singular political weakness. The main driver of Europe’s rise was socioeconomic ferment. In the midst of the fragmenting political order of medieval Europe, a nascent middle class of merchants, entrepreneurs and intellectuals challenged the power of monarchy, aristocracy and church. This rising bourgeoisie went on to serve as the vanguard of the Protestant Reformation., which fostered religious tolerance and set the stage for the eventual separation of church and state. Combined with the emancipatory ideas of the Reformation, the growing costs of the modern state forced monarchs to share power with their subjects in order to gain access to their resources and skills. The rising middle class also provided the economic and intellectual market capitalism and gave birth to secular nationalism via urbanization, public education, mass conscription and other social developments that were a by-product of industrialization. Nationalism became the twin sister of democratization, providing the connective tissue would hold together societies by consent rather than coercion.
More rigid and hierarchical orders in the ottoman Empire, India, China and Japan stood in the way o f the transformation that fueled the rise of Europe and North America, enabling the West to become the globe’s center of gravity in the nineteenth century. The global spread of the West’s founding ideas marked the first time that a single conception of order took hold in most quarters of the world. And the long and expansive run of this order admittedly provides ample reason for confidence that the Western way is here to stay. The spread of this order has in large part been a product of the West’s material dominance, not the universal appeal of its ideas.
Rising rest is not tracking the development path followed by the West. They have different culture and socioeconomic foundations, which give rise to their own domestic orders and ideological orientations. They have different views about the foundations of political legitimacy, the nature of sovereignty, the rules of international trade, and the relationship between the state and society. The developmental paths followed by the rising rest represent alternatives to the Western way, not temporary detours on the road to global homogeneity.
During the West’s rise, the middle class was the main agent of change. Today, China’s middle class is a defender of status quo, not a force of political change. Today, the international system is interdependent and porous; more centralized states are in many respects better able to cope with globalization than more pluralistic ones. In today’s multifaceted global system, different types of states have their advantages and disadvantages. It is for this reason that the 21st century will host multiple brands of modernity, not political homogeneity along Western lines.
For two reasons, cannot presume that the coming global turn will coincide with the universalization of the Western order. First, is the timing problem. It takes long time to transform non-democratic regimes into democratic ones. Britain became a constitutional monarchy when it began late in the 17th century, but did not mature into a liberal democracy for another 200 years. Germany began life as a unified state in 1871, but it took some eight decades and two world wars for democracy to take root. Second, is democratization does not mean Westernization. Indeed democratization could well produce states decidedly opposed to adhering to the international order erected by the West. In the Middle East, for example, more democracy may well mean more political Islam and the emergence of Arab states which will be less willing to cooperate with the West than their autocratic predecessors.
Rise of West.
For some 100 years - from 5th to 15th- power shifted to the East as Rome lost its pride of place to Constantinople, the center of Byzantine Empire. Two empires accounted for half of global wealth. Although the Holy Roman Empire existed in name from 962 until the early 19th century, imperial rule was fragmented from the start, with authority widely distributed among the king, the pope, local religious leaders, noble families and relatively autonomous fiefdoms. . The power struggle among them opened up political space for new actors (merchants, artisans and other members of middle class who founded independent towns in order to play their trades and accumulate wealth beyond the reach of manorial and ecclaesitical authority.
Three developments during the early phases of the Holy Roman Empire (962-1806) set the stage for Europe’s rise. First, the collapse of the Carolingian Empire in 888 cleared the way for the onset of feudalism and the more fragmented political landscape that accompanied the spread of autonomous manors. Second, competition between the emperor and pope and divisions within the church itself weakened both imperial and ecclesiastical authority. Third, the growth of trade led to the rise of a nascent bourgeoisie that established new towns and capitalized on the diminished strength of state and church to expand its own influence.
After the collapse of the Carolingians, cavalry effectively became knights as they putdown territorial roots and fashioned lord-vassal relationship with local nobility. Land which had been the exclusive provenance of the monarch, passed into the hands of the nobility; possession became ownership and ownership became hereditary. Knights offered protection to the now-landed nobility, in return receiving rights to a fief and the agricultural revenue it produced. Power struggle between emperor and pope further contributed to the political fragmentation of Europe. Strife within the church itself also contributed to the erosion of ecclesiastical authority. In 1054, the Christian world broke into its Roman Catholic and Greek Orthodox variants (In the 4th century, Roman Empire was divided into administrative halves; Western empire was governed from Rome and Easter empire from Constantinople. Soon thereafter, the papacy in Rome and patriarchate in Constantinople began to jostle over doctrinal questions and status).
Towns became centers of not only wealth, but also learning, printing and innovation. The accumulation of wealth enabled some urban dwellers to focus on intellectual pursuits rather than manual labor. Innovation was driven in larger part by practical demands of commerce. In the country side, time was marked by nature - seasons, festivals, light and dark - and trade was based on personal relationships. Over the time, the expansion of literacy and learning led to progress not only on matters of business. Towns opened up unprecedented opportunities for scholarship, contributing to the humanist movement and advancing study of the arts, literature, law and medicine.
The protestant movement and its clash with Catholicism had three irreversible effects of fundamental importance. First, the Reformations set the stage for the intellectual advances of the Enlightenments by exposing religion and ultimately politics to theological, moral and rationalist inquiry. Second, Protestants proved to be a new source of common cause - Protestants communities formed strategic alliances within and across territorial boundaries to enhance their ability to challenge status-quo. Third, decades of religious war produced both religious tolerance and political pluralism: tolerance was born out of conflict.
The spread of the protestant reformation generally tracked the socioeconomic divide between town and countryside. The north and west of Europe - Germany, Netherland, Scandinavia and England- which were the most commercialized and urbanized regions, embraced Protestantism in one of it various form. The south and east - Eastern Europe, Italy, France & Spain- which had, with the exception of Italy, more agrarian economies and rural populations, tended to remain Orthodox or Catholic.
Ottoman Empire:
Ottoman rulers maintained centralized control throughout the imperial realm, prohibiting the emergence of the autonomous sites of wealth and power that were the agents of change in Europe. The sultan and his administrators rigidly enforced vertical lines of authority, denying artisans, merchants, traders, and intellectuals the ability to amass the influence and build horizontal ties needed to serve as a counterweight to the imperial apparatus. Such centralized control also partway in explaining why the ottoman realm did not experience an Islamic Reformation that could have transformed its religion and political landscape as the Protestant Reformation did for Europe.
Christianity is a religion of faith, not law and politics. Its central focus on faith is one of the main reasons that doctrinal dissent, once established led to the proliferation of competing denominations. It is also one of the main reasons that the pope consistently sought alliances with secular rulers. The church had a paramount interest not only in mediating between secular & sacred, but also in amassing the land & wealth that would augment its political power. Meanwhile the rising bourgeoisie challenged traditional institutions of authority by consistently playing emperor against pope and state against church. In Contrast, Islam is a religion faith and law in which there is no distinction between sacred & secular. The Ottoman sultan was emperor and pope, and the state was the mosque and the mosque the state. This altogether different relationship between religion and politics helps explain why merchants, artisans and other urban elites with an interest in more autonomy were unable to find the gaps in authority needed to get a firm foothold.
The sultan wielded absolute power over imperial administration. Istanbul undercut the potential challenge posed by aristocratic families in Anatolia by expropriating land and converting it to state-owned property. Land and wealth could no longer be passed from one generation to the next. Istanbul’s tight hold on power also extended to matters of commerce. The prices of goods and the flow of trade were controlled by imperial officials, in no small part to ensure that the government could secure commodities at reasonable cost. Merchants therefore unable to accumulate substantial wealth, denying them the ability to emerge as a check against state power as their counterpart did it in Europe. The centralized authority in Istanbul and socioeconomic stasis that followed would ultimately deny the ottoman realm the society vitality, economic vigor, and political and religious pluralism needed to keep pace with Europe. The Ottoman Empire finally collapsed in the early century not because center failed, rather the center unable to continue exercising centripetal force over the hub-spoke system it had long before erected. As Barky concludes, “What was left finally was a galaxy of nationalism increasingly floating free from one another”. Strength of their state became their weakness.

China:
In China the chief obstacle of growth was the state with its close-knit bureaucracy which lay across the top of Chinese society as a single, virtually unbreachable stratum.  Villagers were generally left alone to pursue their livelihood and did not face the intrusive control over production and trade exercised with the Ottoman realm. Taxation remained relatively low and the state did not cage its population as it did in Europe. Because of lack of demand for capital, as well as the tight grip of the central government, China did not develop the banking system and more advanced debt instruments that contributed to the accumulation of wealth in Europe. China lacked wealthy middleclass that was capable of pushing back against the power of imperial institutions.
India.
Muslims armies, primarily of Turkic background began invading India during the early eight century. Before these invasions, India passed through several centuries of weak and fragmented government. As during previous periods in Indian history, the absence of centralized control contributed to intellectual and economic vitality/. Muslim invaders brought this period of fragmentation to an end. The Delhi Sultanate which was established in 12-6 lasted over 300 years, relied on a highly centralized brand of rule. The court set prices for goods and required that all merchants be licensed. Agricultural taxes stood at one-half of output, preventing the accumulation of substantial wealth outside imperial institutions. Mughals, a Muslim group originally from Central Asia were the next to conquer India. India had the resources and human capital needed to emerge as a leading world power. But the rigid political and social hierarchy imposed by imperial rulers ultimately impaired its ability to keep pace with Europe as the modern era unfolded.
The rise of the rest.
In 2010, out of the top five economies in the world were parts of West. In 2050, according to Goldman Sachs, the US will be the only western power to make it into the list (2050 - China, US, India, Brazil & Russia). The collective GDP of the four leading developing countries (BRIC) is likely to match that of today’s leading western nations by 2032. World Bank predicts that US dollar will lose its global dominance by 2025 as the dollar, euro and China currency become co-equals in a ‘multi-currency’ monetary system. West’s population represents less than twenty percent of the globe’s total.
US is poised to remain the world’s premier military power for decades, but its ability to exercise superiority in disparity regional theaters will diminish as emerging powers continue to expand their fleets. And although with a considerable time lag, a more level playing field economically will ultimately translate into a world in which military power is more equally distributed. US thus appear to be following the footsteps of UK, the last global hegemony.
Three main arguments as to why rising states rather than talking the western way will follow their own developmental paths and embrace their own views about domestic governance and how best to organize the international system of the 21 century.
1. Emerging countries such as China, India and Brazil are experiencing the rise of a middle class that will to some extent play the same role that the bourgeoisie did in Europe between 1500 & 1800. But today’s rising powers are each following unique paths towards modernity based on their own political, demographic, topographic and socioeconomic conditions.
2. Cultures matters; it shapes the particular forms of modernity that evolve in different regions. In China & Russia and other capitalist autocracies, communitarian and paternalistic cultures sharply contras with the liberal traditions that are a hallmark of the West.
3. Today’s emerging power are moving up the pecking order is a very different international setting than the one that hosted the West’s rise.
Three main variants of autocracy are exhibiting considerable staying power. 

Communal autocracy entails a mutually reinforcing partnership between private sector and the state apparatus. Middle class gets what it wants - wealth- while the ruling party gets what it wants - the retention of power (China is a perfect example). 

Paternal autocracy entails a more hierarchical relationship between state and the bourgeoisie; bureaucrats and other public employees make up much of middle class, leaving the private sector and civil society small, weak and under the intimidating eye of state authorities. The broader citizenry sees the state as a caretaker of citizen, expecting economic and social benefits in return for political obedience (Russia is a perfect example). 

Tribal autocracy entails the incorporation of the middle class into a political community defined more by tribe and clan than by the state. Political order is a function mainly of tribal patronage. The sheikdoms of the Persian gulf as prime examples.
China has plenty of weakness. Absence of civil liberties, the violation of human rights, and repression of dissent are glaring black marks. Lack of political pluralism is not only a moral consequence, but also inhibits the country’s performance. China lacks the mix of venture capital and technological prowess that drives innovation in US. Rural peasants still make up between 50-60% of its population.
The rise of the West was in many respects the product of the readiness of Europeans to countenance change and welcome a religious and political diversity that overturned the economic political and ideological status quo. The reformation the rise f the middle class, the challenge these developments posed to monarchy, aristocracy and church -these were the defining developments that provided the West toward a remarkable era of progress and prosperity.
Today, such profound change is happening again, except is occurring on a global scale. New players and diverging ideologies are challenging the Western order and the traditional institutions of authority on which it resists. If the West can help deliver to the rest of the world what it brought to its several centuries ago - political and ideological tolerance coupled with economic dynamism - then the global turn will mark not a dark era of ideological contentions and geopolitical rivalry, but one in which diversity and pluralism lay the foundation for an era of global comity.

The END of leadership by Barbara Kellerman

The END of leadership by Barbara Kellerman

(Are our institutions are good
at training future leaders ? what are the changing paradigm - I like her
enriching words. She is describing a bigger problem - a gnawing, growing,
chronic problem that threatens the fabric of life in 21st century (in leadership)). 

Between man and women, it was resumed until only recently that husbands would, and should , dominate while wives would and should defer. Along similar lines, between leaders and followers, it was presumed until only recently that leaders should dominate and followers defer. Leaders were generally expected to tell followers what to do, and followers were generally expected to do as they were told. No longer. Now follower’s like wives are far sturdier than they used to be, stronger and more independent. Moreover now, ideally anyway, leaders are supposed to suggest or recommend that their followers follow not order them to do so.

Two most obvious examples are the American Revolution and the French Revolution. Both were transformational events in which followers came to the fore, while leaders came under attack.

Five types of followers according to their level of engagement.

• Isolates do not care about their leaders; 
• Bystanders do care but they make deliberate decision to stand aside to disengage from their leaders; 
• Participants some way involved; activists who feel strongly about their leaders; 
• Activists feel strongly about their leaders, one way or another
• Diehards who prepared to die for their leaders (or conversely to oust them by any means necessary?).

• Power - is defined as A’s capacity to get B to do whatever A wants, whatever B’s preference and if necessary by force.

• Authority is A’s capacity to get B to do whatever A wants, based on A’s position, status or rank. 

• Influence is A’s capacity to persuade B to go along with what A wants and intends of B’s own violation.

(Current theories of leadership are around 40) leadership development implies developing good leaders and that good leaders are both ethical and effective. Leadership is about devolution of power - from those up top to those down below.

Freud asked “is it possible that one single man can develop such extraordinary effectiveness (e.g. Hitler)? And his own answer was, “We know that the great majority of people have a strong need for authority which they can admire. And which dominates and sometimes even ill-treats them’.



Confucius was asked, “How does one qualify to govern? The master answered. “He who cultivates the five treasures and eschews the four evils is fit to govern”. What are those five treasures? “Confucius replied, “A gentleman is generous without having to spend: he makes people work without having them groan; he has ambition but no rapacity; he has authority but nor arrogance; he is stern but not fierce”. This is in contrast with his contemporaries, Plato whose definition for leader is Philosopher-king. “He is the joint product of his tyrannical nature and his despotic rule and the longer he rules, the more oppressive his tyranny’.



Both Plato & Confucius had essentially same solution: find extraordinary men and provide them an extraordinary education so they learn to lead wisely and well. Both have key characteristics in common: they approximate perfection. They crown a context that is lead-centric: In the history of leadership, therefore, they belong to a time when it was widely believed that only hero-leaders, great men of singular virtue and accomplishment, could save us from ourselves.



Like all histories, the history of leadership is one of intrusions and interruptions.  So the phenomenon of the power shift from top to bottom did not follow a linear path (for centuries the church controlled access even to Bible as Latin is only for the scholars). The first modern revolution - Glorious revolution in England which diminished the idea that kings rule by ‘divine right’_ did not happened until 1688. It transformed English state and society but also because, like all modern revolutions, it was popular, violent and divisive.  


The fact that this particular upheaval was the first that can reasonably be described as ‘popular’, the first in which relatively large numbers of followers were bound and determined to diminish their leaders, makes it a historical event important in its own right, as well as a harbinger of a future for followers that was far different from their past.



Other two revolution that followed (American and French), upended rulers in favor of the ruled. Both compelled the aristocracy to establish a semblance of a democracy and both distributed power authority and influence much more widely than they had been distributed before. Thomas Paine, author of ‘Common Sense’, which sparked the flame that lit the revolution, reflected this rage at the crown. He accused, ‘the King and his parasites’ of every evil, reminding Americans that by leaving Great Britain their ancestors had fled ‘not from the tender embraces of the mother, but from the cruelty of the monster.”.In revolutionary time resistance is a virtue and obedience a vice.



Through evolution and revolution, the balance between those who had power, authority and influence and those who did not had changed in ways that would never, could never be undone. Leaders were threatened and followers emboldened, and philosophers like Brailin Paulo Freire were heard loud and clear: “Who are better prepared than the oppressed to understand the terrible significance of an oppressive society? Who suffer the effects of oppression more than the oppressed? Who can better understand the necessity of liberation?”



We used to defer to physicians; we’d take their word as gospel and do what they told us to do. Now we pocket their instructions, and then second-guess them by getting another opinion or by getting another ten thousand opinion on WebMD. It is everywhere as we challenge our superiors, leaders and managers, emboldened to do so the spread of democracy, by the rhetoric of empowerment and the practice of participation.



Amy Vanderbilt’s Complete Book of Etiquette described the American family of its time as an orderly unit. ‘A man’s last glimpse of his wife in the morning and his first view of her at night” should be pleasant experience’. The book is a guide to gracious living (father at the top, mother in the middle and children at the bottom). 


Judith Martin’s Miss Manners generally sides not with those higher up, but with those lower down. Now it is not so much children being told to behave as it is parents being informed that ‘rudeness to children counts as it is parents being informed that’ rudeness to children counts as rudeness’. Now the home is supposed to be anything but a model of a well ordered perfection: “To keep a house in which every object, down to the smallest bibelot, is in perfect taste is in shocking taste”. 


And now parents, as opposed to being paragons of virtue in positions of authority, are advised explicitly to acknowledge their flaws and foibles and to be communal rather than controlling. Restoring to the law should be the last resort, but you should give everyone involved a gentle reminder that it is available to you..And you should keep saying it up the chain of command until you get to someone who...has the sense to get frightened”.



By the end of 20th century, leading by commanding and controlling was dead and gone, and leading by cooperating and collaborating was famously in fashion. While words and terms such as team, network, engagement, empowerment, cooperation, collaboration, participation and flattened hierarchy became touchstone in a time when power and authority were diminished and influence necessarily was shared. 


Leadership, James Kouzes and Barry Posner wrote in their book, ‘Leadership challenge’ is not a solo act, it’s a team effort. Daniel Goleman said ‘ the superiority of group decision making over that of even the brightest individuals in the group and leaders rather being aristocrats, they should now be democrats, true collaborators who work as team members rather than top-down leaders”.  He said great leaders are great listeners: they create the sense that they truly want to hear employee’s thoughts and concerns”.



Humility, authenticity and responsive leadership are the new buzzwords at the top. In fact a few experts have got to the point of concluding that leaders are dispensable altogether (Philip Selznick’s leadership in Administration). “The absence of structure, leadership and formal organization, once considered a weakness has become a major asset”.



In reality TV competition (e.g. American Idol or dancing with stars), experts are part of the proceedings - they select the talent that competes and they critique the contestants’ performances- but we are the ones with final say. It further fuels our sense of entitlement and empowerment and it further devalues those better schooled or credentialed more informed than we.  Once upon a time there was no such thing as a focus group or crowd sourcing. Now they are ubiquitous, groups of ordinary people whose opinions and attitudes are for various reasons considered significant - followers, not leaders who are driving the action. 


Teachers are graded by students at the end of the course were not heard of it in the past which is a norm now. Firms like Yelp, Zagat asks our opinion about the restaurant grading not by usual experts. These countless, relentless surveys that ask people everywhere for their opinions about everything and everyone. Our incessant need to know what ordinary people around the world think and believe and like and dislike in indicative of cumulative of followers on leaders purportedly in charge.




The converse of follower power,its necessary corollary is leader limits: formal and informal limits, political limits, professional limits and personal limits. These are limits on leaders’ capacity to wield power, exercise authority and exert influence. The only leader who is entirely free of such limits is the tyrannical leader - the leader who is willing and able to use power to coerce.



Harlan Cleveland’s Leadership and the Information revolution’ in which with precision and prescience he identified how information dissemination would affect leadership and followership. As per him Information is game changer. Unlike other resources, information expands as it is used and it leaks. Moreover it is shared not exchanged and once it’s been shared, disseminated and diffused. It has the potential for significant impact. Cleveland wrote “The tidal waves of social change in my lifetime - environmental sensitivity, civil rights for all races, the enhanced status of women,were not generated by established leaders in government, business, religion or even high education. They boiled up from the people, with the help of new, often younger leaders who had not previously been shared from”.



Despite disagreement over the level of its impact (internet), as well as over its merits and deficits, it is inarguable that the internet engages millions of people in collective conversations that before would have been impossible. In the process it diffuses and disseminates resources previously available to only an elite few - first information and then influence. This heightened sense of entitlement - of being entitled to participate - is a worldwide phenomenon.




What is exactly the right stuff? What more precisely does meritorious leadership consists of? The answer is deceptively simple, for now matter how gussied up the language, no matter how many leadership traits, skills, characteristics and capacities you can think to name, leadership is judged on only two criteria - ethical and effectiveness. It is as simple as that - which is precisely the problem. Put directly, when the contract between leaders and followers is based on merit as opposite to self-interest, the game changes. That is, if merit is perceived to be lacking, either because the leader is seen as being in some serious way inept, the contract is weakened or even abrogated altogether. This in a nutshell, explains why political America has come to be considered nearly ungovernable, and why corporate America is viewed as little short of rapacious.

Since so many leaders seem to so many followers to be inept or corrupt, hapless or greedy, Americans have changed gradually but ineffably into a nation of malcontents: unwilling to support those in charge unless they must, and unable ourselves to fix what’s broken.



What has changed is the logic of the contract. Since 21st century followers follow for only two reasons - either they have to or because they want to. This raises the question of how to learn to lead in the 21st century? When resources such as power, authority and influence are scarcer than before and when any number of followers is as likely to be resistant as deferent? How to learn to lead when the context itself is fraught with complexity and constraint?




(In 1984, 41% of the American population were centrists and only 10% identified as either very liberal or very conservative; in 2005, only 23% is centrist and the two extremes rose to 23%. 1% of population takes away 25% of the income in US and hence the fight by 99% - Occupy wall street had no hierarchy.{there’s power over, power under and power within. We’re trying to get rid of power over”. Income of the 99% grew 1.3% between 2002 & 2007 and at the same, it grew 10% for the top 1%. There is no hard evidence that the American people are prepared on any massive scale to protest capitalism in its current incarnation. But there is widespread pessimism - and a recurring refrain about the disappearing American dream).



Change in leadership account for roughly 10% of the variance in corporate profitability on average - they are not omnipotent. There are many university programs, corporate programs on leadership.



Can leadership - how to lead-be taught? The truth is, we don’t know. We don’t know if learning how to lead wisely and well can be taught, for the objective evidence is scant. What we do know, though, is that by large ‘the leadership industry is self-satisfied, self-perpetuating and poorly policed” and that by and large, these are trying times, in which ‘the leadership class has not exactly distinguished itself.



When a student asked to Confucius, “what should I do in order to make the people respectful, loyal and zealous” Confucius replied, ” Approach them with dignity and they will be respectful. Be yourself a good son and a kind father and they will be loyal. Raise the good and train the incompetent and they will be zealous”.

Leadership education divides into two categories - leadership education for the purpose of learning how to lead and leadership education for the purpose of learning about leadership. The former one is about leadership practice and the later is about leadership theory. What should be learned when learning to lead, the industry provides four answers.

• Leaders should learn certain skills such as communication skills, negotiating skills, and decision making skills.
• Leaders should acquire awareness in particular self-awareness,
• Leaders should have experience. For example, in mobilizing and managing
• Leaders should learn the difference between right and wrong - though how exactly ethics or character should be taught remains unclear.

According to Harvard University’s Center for Public Leadership, there are seven essential competencies for public leadership. They are personal, interpersonal, organizational, systemic, catalytic, contextual and theoretical.



According to Linda Hill and Kent Lineback, there are 3 imperatives for becoming a great leader. - managing yourself, managing your network, and managing your team.

According to Jeffrey Gabdz and his colleagues good leaders do five things and they are analyze the environment, formulate winning strategies, execute ‘brilliantly’, evaluate outcomes and build for the future.



According to Jim Kouzes and James Posner there are five key leadership practices and they are modeling the way, inspiring a shared vision, challenging the process, enabling others to act and engaging the heart.



We need to develop a higher level of contextual intelligence to practice as well as preach international cooperation - intergroup leadership and followership, as well as intra-group leadership and followership. We need to think of leadership as a creative art - for which leaders and followers both are educated, for which leaders and followers both are prepared over a lifetime of learning.



This book is about changing patterns of dominance and deference - and about how and why the leadership industry fallen short of what some of us had wanted and intended. What I will say is this: leadership is in danger of becoming obsolete. Not leaders - there will always be leaders - but leadership as being more consequential than followership, leadership as learning we should pay to acquire, leadership as anything better than business as usual, leadership as a solution to whatever our problems and leadership as an agreement of which merit is a component. To preclude this possibility - the possibility of its own obsolescence -- the leadership industry must at a minimum make four changes.



1. It must end the leader-centrism that constricts the conversation
2. It must transcend the situational specifics that make it so myopic
3. It must subject itself to critical analysis
4. It must reflect the object of its affection - change with the changing times.









Books referred in this book:
Betty Friedan ‘s The Feminine Mystique (so-called bible of modern women’s movement)
Stanton ‘Declaration of sentiments’ (penning list of grievances by the powerless (women) by men)
Niccolo Machivalle’s The Prince (most famous book on politics ever written)
Robert Townsend’s Up the Organization: how to stop the Corportations from Stifling people and stranglinig profits”
Amy Vanderbilt’s Complete Book of Etiquette
William H. Whyte’s Organization Man
Philip Selznick’s Leadership in Administration
Judith Martin’s Miss Manners
Ori Brafman and Rod Beckstrom’s The Star fish and spider.
Harlan Cleveland’s Leadership and the Information revolution
Deborah Rhode’s women and leadership
Nitin Nohria and Rakesh Khurana - Handbook of leadership Theory and practice

Thinking Fast and slow by Daniel Kahneman

Thinking Fast and slow by Daniel Kahneman

(Winner of Nobel Prize in economics)

[One of the best books I read on decision making - a very insightful book indeed. Talks about how people take decision and he divide them into System 1 & system 2 type of decision making]

Psychologists have been intensely interested for several decades in the two modes of thinking and will refer to two systems in the mind, System 1 & system 2. These names (system 1&2) take less space in your working memory and hence used in this way rather than saying other ways (say, automatic thinking process and effortful thinking process). Anything that occupies your working memory reduces your ability to think.

System 1 operates automatically and quickly with little or no effort and no sense of voluntary control

System 2 allocated attention to the effortful mental activities that demand it, including complex computations. The operation of System 2 is often associated with the subjective experience of agency, choice and concentration.

The highly diverse operations of system 2 have one feature in common: they require attention and are disrupted when attention is drawn away. Intense focusing on a task can make people effectively blind, even to stimuli that normally attract attention. See the http://www.youtube.com/watch?v=IGQmdoK_ZfY

System 1 continuously generates suggestions for System 2: impressions, intuitions, intentions, and feelings. If endorsed by system 2, impressions and intuitions turn into beliefs and impulse turn into voluntary actions. When all goes smoothly which is most of the time, System 2 adopts the suggestions of System 1 with little or no modifications. You generally believe your impressions and act on your desires and that is fine - usually.

When System 1 turns into difficulty, it calls System 2 to support more detailed and specific processing that may solve the problem of the moment. System 2 takes over when things get difficult and normally has the last word. One limitation of System 1 is that it cannot be turned off. One such example is Muller-Lyer Illusion. To resist the illusion, there is only one thing you can do : you must learn to mistrust your impressions of the length of lines when fins are attached to them (or similar things in other cases). To implement the rule, you must be able to recognize the illusionary pattern and recall what you know about it.

Phrases that are in this context:

“He had an impression, but some of his impressions are illusions”

“This was a pure System 1 response. She reacted to the threat before she recognized it”

“This is your System 1 talking. Slow down and let your System 2 take control”

Psychologist Hess says our pupils are sensitive indicators of mental effort - they dilate substantially when people use their brain (say multiply two numbers and they dilate more if the problems are harder than if they are easy). His observations indicated that the response to mental effort is distinct from emotional arousal. As you become skilled in a task, its demand for energy diminishes. Studies of the brain have shown that the pattern of activity associated with an action changes as skill increases Low of less effort applies to cognitive as well as physical activity.

Phrases that are in this context:

“ I won’t try to solve this while driving. This is a pupil-dilating task. it requires mental effort”

“The law of least effort is operating here. He will think as little as possible”

“She did not forget about the meeting. She was completely focused on something else when the meeting was set and she just did not hear you”

“What came quickly to my mind was an intuition from System 1. I’ll have to start over and search my memory deliberately

System1 has more influence on behavior when System 2 is busy. People who are cognitively busy are also more likely to make selfish choices, use sexist languages and make superficial judgments in social situations. Too much concern about how well one is doing in a task sometimes disrupts performance by loading short-term memory pointless anxious thoughts - self-control requires attention and effort. The nervous system consumes more glucose than most other parts of the body and effortful mental activity appears to be especially expensive in the currency of glucose.

Lazy system 2 here is simple puzzle.

A bat and ball cost $1.10. Bat costs one dollar more than the ball

How much does the ball cost? More than 50% of students in Harvard, MIT & Princeton gave the intuitive -incorrect-answer 9they said, 10 cents for the ball. If you really let System 2 the math, you will find the cost of the ball as 5 cents)

Phrases that are in this context:

“She did not have the struggle to stay on task for hours. She was in a state of flow”

“His ego was depleted after a long day of meetings. So he just turned to standard operating procedures instead of thinking through the problem”

“He did not bother to check whether what he said made sense. Does je usually have a lazy system 2 or was he usually tired?”

“Unfortunately she tends to say the first thing that comes into her mind. She probably also has trouble delaying gratification. Weak system 2”

Your think with your body, not only with your brain. The mechanism that causes these mental events has been known for a long time.: it is the association of ideas. Scottish Philosopher David Hume reduced the principle of association to three: resemblance, contiguity in time and place, and causality. An idea that has been activated does not merely evoke one other idea. It activates many ideas, which in turn activate others. Only a few of the activated ideas will register in consciousness; most of the work of associative thinking is silent; hidden from our conscious selves.

Phrases that are in this context:

“The sight of all these people in uniforms does not prime creativity”

“The world makes much less sense than you think. The coherence comes mostly from the way your mind works”

“They were primed to find flaws and this is exactly what they found”

“His system 1 constructed a story and his System 2 believed it. It happens to all of us”

“I made myself smile and I’m actually feeling better”

One of the dials measures cognitive ease, and its range is between ‘easy’ and strained. Easy is a sign that things are going well and Strained indicates that a problem exists which will require increased mobilization of System 2. For example, a sentence that is printed in a clear font, or has been repeated or has been primed will be fluently processed with cognitive ease. Conversely you experience cognitive strain when you read instructions in a poor font or in faint colors or worded in complicated language or when you are in a bad mood and even when you frown.

Phrases that are in this context:

“Let’s not dismiss their business plan just because the font makes it hard to read”

“We must be inclined to believe it because it has been repeated so often, but let’s think it through again”

“Familiarity breeds liking. This is a mere exposure effect.”

“I’m in a very good mood today and my System 2 is weaker than usual. I should be extra careful”

Psychologist Paul Bloom presented the provocative claim that our inborn readiness to separate physical and intentional causality explains the near universality of religious beliefs. He observes that “we perceive the world of objects as essentially separate from the world of minds, making it possible for us to envision soulless bodies and bodiless souls:. In bloom’s view, the two concepts of causality were shaped separately by evolutionary forces, building the origins of religion into the structure of system 1.

“Her favorite position is beside herself and her favorite sport is jumping into conclusions”

Jumping into conclusions on the basis of limited evidence is so important to an understanding of intuitive thinking and comes up so often in this book., that I will use a cumbersome abbreviation for it: WYSAITI - what you see is all there is. System 1 radically insensitive to both the quality and quantity of the information that gives rise to impressions and intuitions.

WASIATI explain a long and diverse list of biases of judgment and choice, including the following among many choices.

Overconfidence: The confidence that individuals have in their beliefs depends mostly on the quality of the story they can tell about what they see, even if they see little.

Framing effects: 90% fat free is attractive than 10% fat. The equivalence of the alternate formulations is transparent but an individual normally see only one formulation and what she sees is all there is.

Base-rate: Statistical fact almost did not show up to your mind when you when first encounter questions of that sort.

Phrases that are in this context:

“She knows nothing about the person’s management skills. All she is going to by is the halo effect from a good presentation”

“Let’s de-correlate errors by obtaining separate judgments on the issue before any discussion. We will get more information from independent assessments”

“They made that big decision on the basis of a good report from one consultant. WYSIATI- what you see is all there is. They did not seem to realize how little information they had”

“They didn’t want more info that might spoil their story. WYSIATI”

System 1 represents categories by a prototype or a set of typical exemplars; it deals well with average but poorly with sums. The size of the category, the number of instance it contains, tends to be ignored in judgment of what I will call sum-like variables. System 1 carries out many computations at any one time. Some of the routing assessments that go on continuously. Whenever your eyes are open, your brain computes a three-dimensional representation of what is in your field of vision, complete with the shape of objects, their position in space and their identity. No intention is needed to trigger this operation or the continuous monitoring for violated expectations.

Phrases that are in this context:

“Evaluating people as attractive or not is a basic assessment. You do that automatically whether or not you want to and it influence you”

“There are circuits in the brain that evaluate dominance from the shape of the face. He looks the part for a leadership role”

“The punishment won’t feel just unless its intensity matches the crime... Just like you can match the loudness of a sound to the brightness of a light”

“This was a clear instance of a mental shotgun. He was asked whether he thought the company was financially sound, but he could not forget that he likes their product”

-D Heuristic - Picture of the three men

For most of us, this impression of 3D size is overwhelming. Only visual artists and experienced photographers have developed the skill of seeing the drawing as an object on the page. For the rest of us, substitution occurs: the dominant impression of 3-D size dictates the judgment of 2-D size. The illusion is due to 3D heuristic. What happens here is a true illusion, not misunderstanding of the question. The essential step in the heuristic - the substitution of three dimensional for two-dimensional size- occurs automatically. The picture contains cue that suggest a 3D interpretation. These cues are irrelevant to the task in hand - the judgment of size of the figure on the page- and you should have ignored them, but you could not. The bias associated with the heuristic is that objects that appear to be more distant also appear to be larger on the page.

Phrases that are in this context:

“Do we still remember the question we are trying to answer? Or have we substituted an easier one?”

“The question we face is whether this candidate can succeed. The question we seem to answer is whether she interviews well. Let’s not substitute.”

“He likes the project, so he thinks its costs are low and its benefits are high. Nice example of the affect heuristic.”

“We are using last year’s performance as a heuristic to predict the value of the firm several years from now. Is this heuristic good enough? What other information do we need?”

Amos and I called “belief in the law of small numbers” and we explained, that intuitions about random sampling appear to satisfy the law of small numbers, which asserts that the law of large numbers applies to small numbers as well. Statistical intuitions with proper suspicion and replace impression formation by computation whenever possible”.

Such mistakes are mentioned in these phrases

“Yes, the studio has had three successful films since the new CEO took over. But it is too early to declare he has a bot hand”

“I won’t believe that the new trader is a genius before consulting a statistician who could estimate the like hood of his streak being a chance event”

“The sample of observations is too small to make any references. Let’s not follow the law of small numbers”

“I plan to keep the results of the experiment secret until we have a sufficiently large sample. Otherwise we will face pressure to reach a conclusion prematurely”

Anchoring effect: It occurs when people consider a particular value for an unknown quantity before estimating that quantity.

is the height of the tallest redwood more or less than 1200 feet?

What is your guess about the height of the tallest redwood?

The ‘high anchor in this experiment was 1,200 feet and people tend to give an answer for the second question in the high value due to the anchor mentioned in the first question. This is same in any negotiation and in the bazar; the initial anchor has a powerful effect. If the seller mentions an outrageous proposal, there is no meaning in outrageous counter offer from your side, creating a gap that will be difficult to bridge in further negations. Instead you should make a scene, storm out or threaten to do so, and make it clear - to yourself as well as to the other side, - that you will not continue the negotiations with that number on the table.

Phrases that are in this context:

“The firm we want to acquire sent us their business plan, with the revenue that expect. We should not let that number influence our thinking. Set it aside”

“Plans are best-case scenarios. Let’s avoid anchoring on plans when we forecast actual outcomes. Thinking about ways the plan could do wrong is one way to do it”

“Our aim in the negotiation is to get them anchored on this number”

“Let’s not make it clear that if that is their proposal., the negotiation are over. We do not want to start there”

“The defendant’s lawyers put in a frivolous reference in which they mentioned a ridiculously low amount of damages and they got the judge anchored on it”

The availability heuristic like other heuristic of judgment, substitutes one question for another: you wish to estimate the size of a category or the frequency of an event., but you report an impression of the ease with which instances come to mind. Substitutions of questions inevitably produces systematic errors. You can discover how the heuristic leads to biases by following a simple procedure: list factors other than frequency that make it easy to come up with instances

Phrases that are in this context:

“Because of the coincidence of two planes crashing last month, she now prefers to take the train. That’s silly. The risk hasn’t really challenged; it is an availability bias”

“He underestimates the risks of indoor pollution because there are few media stories on them. That’s an availability effect. He should look at the statistics”

“She has been watching too many spy movies recently., so she is seeing conspiracies everywhere”

“The CEO has had several success in a row, so failures does not come easily to her mind. The availability bias is making here overconfident”

Judging probability by representativeness has important virtues: the intuitive impressions that it produces are often more accurate than chance guesses would be. One sin of representativeness is an excessive willingness to predict the occurrence of unlikely (low base rate) events. The second sin of representativeness is insensitivity to the quality of evidence. The correct answer is that you should stay very close to your prior beliefs, slightly reducing the initially high probabilities of well-populated field and slightly raising the low probabilities of rare specialties. You should not let yourself believe whatever comes to your mind. To be useful, your beliefs should be constrained by the logic of probability. Rev.Thomas Bayes who credited with the first major contribution to a large problem: the logic of how people should change their mind in the light of evidence. Baye’s rule specifies how prior beliefs (base rate) should be combined with the diagnosticity of the evidence, the degree to which it favors the hypothesis over the alternative. In short, the essential keys to disciplined Bayesian reasoning can be summarized:

Anchor your judgment of the probability of an outcome on a plausible base rate

Question the diagnosticity of your evidence.

Phrases that are in this context:

“The lawn is well trimmed, the lobby looks competent...but this does not mean it is a well-managed company. I hope the board does not go by representativeness”

“The start-up looks as if it could not fail, but the base rate of success in the industry is extremely low. How do we know this case is different?”

“They keep making same mistake: predicting rare events from weak evidence. When the evidence is weak, one should stick with the base rate.”

“I know this report is absolutely damning. and it may be based on solid evidence, but how sure are we? We must allow for that uncertainty in our thinking.”

The word fallacy is used, when people fail to apply a logical rule that is obviously relevant. If you visit a courtroom you will observe that lawyers apply two styles of criticism: to demolish a case they raise doubts about the strongest arguments that favor it: it discredit a witness, they focus on the weakness part of the testimony. The focus on weakness is also normal in political debate.

“They constructed a very complicated scenario and insisted on calling it highly probable - it is not: it is only a plausible story”

“They added a cheap gift to the expensive gift and made the whole deal less attractive. Less i s more in this case.”

“In most situations, a direct comparison makes people more careful and more logical. Buy not always. Sometimes intuition beats logic even when the correct answer stares you in the face”.

There are two types of base rates. Statistical base rate are facts about a population to which a case belongs, but they are not relevant to the individual case. Casual base rate change your view of how the individual case came to be. Both are treated differently.

Statistical base rates are generally underweighted and sometimes neglected altogether when specific info about the case at hand is available

Causal base rates are treated as info about the individual’s cases and are usually combined with other case-specific info.

There is deep gap between our thinking about statistics and our thinking about individual cases. Statistical results with a casual interpretation have a stronger effect on our thinking than non-casual info. But even compelling casual statistics will not change long-held beliefs or beliefs rooted in personal experience. On the other hand, surprising individual cases have a powerful impact and are a more effective tool for teaching psychology because the incongruity must be resolved and embedded in a casual story.

“We can’t assume that they will really learn anything form mere statistics. Let’s show them one or two representative individual cases to influence their System 1”

“No need to worry about this statistical info being ignored. On the contrary it will immediately be used to feed a stereotype”.

Subjective confidence in a judgment is not a reasoned evolution of the probability that the judgment is correct. Confidence is a feeling, which reflects the coherence of the info and the cognitive ease of processing it. it is wise to take admission of uncertainty seriously but declaration of high confidence mainly tell you that an individual has constructed a coherent story in his mind, not necessarily that the story is true.

Errors of prediction are inevitable because the world is unpredictable and the high subjective evidence is not to be trusted as an indicator of accuracy.

Competition Neglect:

We focus on our goal, anchor on our plan, and neglect relevant base rates, exposing ourselves to the planning fallacy

We focus on what we want to do and can do, neglecting the plans and skills of others

Both in explaining the past and in predicting the future, we focus on the casual role of skill and neglect the role of luck. We are therefor prone to the an illusion of control

We focus on what we know and neglect what we do not know which makes us overlay confident in our work

[President Truman who fed up with two sides views of advise (e.g. this is recommended, but on the other-hand,... this is not practical..) asked for a ‘one-armed economist who would take a clear stand; he was sick and tired of economist who kept saying, “On the other hand...”

Bad events: The concept of loss aversion is certainly the most significant contribution of psychology to behavioral economics. This is odd, because the idea that people evaluate many outcomes as gains and losses and that losses loom larger than gains, surprises no one. Bad emotions, bad parents and bad feedback have more impact than good ones and bad info is processed more thoroughly have more impact than good ones. Bad impressions and bad stereotypes are quicker to form and more resistant to disconfirmation than good ones.

Loss aversion refers to the relative strength of two motives. We are driven more strongly to avoid losses than to achieve gains. People often adopt short-term goals that they strive to achieve but not necessarily to exceed. They are likely to reduce their efforts when they have reached an immediate goal with results that sometimes violate economic logic. Animals, including people, fight harder to prevent losses than to achieve gains. When a territory holder is challenged by a rival, the owner almost always wins the contest

The psychology of high prize lotteries is similar to the psychology of terrorism. They thrilling possibility of winning the big prize is rewarded by pleasant fantasies. Highly unlikely events either ignored or over-weighted. The great Paul Samuelson famously asked a friend whether he would accept a gamble on the toss of a coin in which he could lose $100 or win $200. His friend responded, “I won’t bet because I would feel the $100 loss more than $200 gain”. If you have the emotional discipline, you will never consider even a small gamble. The advice is not impossible to follow. Experienced traders in fin. markets live by it everyday, shielding themselves from the pain of losses by broad framing.

“He has separate mental accounts for cash and credit purchases. I constantly remind him that money is money”

“We discovered an excellent dish at that restaurant and we never try anything else, to avoid regret”

The salesperson showed me the most expensive car seat and said it was the safest and I could not bring myself to buy the cheapest car model. It felt like a taboo tradeoff”

A bad outcome is much more acceptable if it framed as the cost of a lottery ticket that did not win than if it is simply described as losing a gamble. Losses evoke stronger negative feelings than costs. The debate about whether gas stations would be allowed to charge different prices for purchase paid with cash or on credit. The credit card lobby pushed hard to make differential pricing, but it had a fallback position: the difference, if allowed would be labeled a cash discount not credit surcharge, People will more readily forgot discount than pay a surcharge. The two are economically equivalent, but they are not emotionally equivalent.

Jeremy Bentham famously said, “ Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do as well as to determine what we shall do”. An inconsistency is built into the design of our minds. We have a strong preferences about the duration of our experience of pain and pleasure. We want pain to be brief, and pleasure to last. But our memory a function of System1 has evolved to represent the most intense moment of an episode of pain or pleasure (the peak) and the feelings when the episode was at its end. A memory that neglects duration will not serve our preference for long pleasure and short pains.

Duration neglect and the peak-end rule originate in System 1 and do not necessarily correspond to the values of System 2.

Books referred in this book. `

George Polya - How to solve it

Max Bazerman - Judgement in Managerial decisionmaking

Gary Klein - Sources of Power

Philip Rosenweig - The Halo effect

Burton Malkiel - A random walk down wall street.

Philip Tetlock - Expert Political judgement: How good is it? How can we know?

Paul Meehl - Clinical vs Statistical prediction: A Theoritcal Analysis and a review of the evidence.

Robyn Dawes - The robust beauty of improper linear models in decision making”

Atul Gawande - A Checklist Manifesto

Watch Verdi’s opera La Triviata. http://www.youtube.com/watch?v=-cRTlrCYDSQ