Check out these three financial portfolio performance graphs from Mr. Nassim Taleb:
A fragile portfolio is one which is prone to getting decimated by a rare, unpredictable, event (a.k.a. a Black Swan). A robust portfolio is one which is relatively immune to the effects of a devastating Black Swan. An antifragile portfolio is one which experiences spectacular gains from a Black Swan.
Mr. Taleb asserts that the world’s financial system has been (since the 80′s when we first started bailing out banks), and still is, fragile. As long as bankers know that we, the taxpaying public, will continue to shoulder the cost when they blowup because they are too big too fail, they will continue to exhibit incompetent, reckless, risky behavior backed by bogus PhD calculations. They get their perennial bonuses before each big bust for “doing well“, but aren’t forced to give them back when they lose more money in an instant from a Black Swan than all the profits they’ve ever made previously in the history of banking. It’s a no-brainer with all upside and no downside. What a life… if you don’t have a conscience.
So, how do you construct a anti-fragile portfolio? According to Mr. Taleb, you allocate 80% of your portfolio to “cash” and 20% to wildly speculative investments. It’s called the barbell strategy – weighted investments at both ends of the risk spectrum and nothing in the middle. In the worst case, you’ll lose the full 20%, but the sky is the limit if you’re right with your speculative investment choices. The challenges are:
- To muster up the nerve to actually go against what the mindless “portfolio theory” trained herd says and reallocate your currently fragile portfolio,
- Figure out exactly what Nassim means by “cash” (no, it’s not a savings account at Citibust or Bank Of Nightmerica),
- Decide on which speculative financial instruments to invest in (gold/metals? commodities? real estate? “other”?) .
BD00 knows what these challenges are because, as an unsophisticated investor, he’s struggling to conquer them himself. WTF!
Checkout this model of a one person business:
The worker/manager/owner applies her tools, skills, and expertise to transform business ideas into outputs that a customer willingly pays for.
After composing the picture, it occurred to BD00 to attempt to explore the relationship ‘tween “Quality Of Output” (QOO) and time “Delay“. However, he drew a blank. He can’t proclaim that increasing delay generally increases QOO. Nor can he assert that decreasing delay generally decreases QOO. The only thing he can confidently state is: “since zero delay by definition means zero output, it also means zero QOO“. Well, duh!
While reflecting on my journey through professional life, I decided to generate a timeline of my travels to date:
After a seven year stint at GE, I joined Sensis (SENsor Information Systems) Corporation in 1987 as employee #13. For 20+ years, the company flourished and grew until running into financial difficulties in 2009. After choosing Sweden’s Saab AB from a list of suitors as our future parent, we were purchased in 2011 and our name was changed accordingly to Saab Sensis Corp.
Due to the funky national security complications of being a foreign-owned company that does business with the US Department of Defense, it made financial sense to split the group in two – a subgroup that conducts business with the US DoD (Saab Sensor Systems) and one that doesn’t (Saab Sensis). A functional and physical split would lift the DoD security restrictions hampering the non-DoD business efforts of the Saab Sensis group.
After expressing a personal preference to be placed at Saab Sensis, I ended up being assigned to the Saab Sensor Systems group when the split was finalized in the fall of 2013. So far, it has worked out better than I initially thought it would. The high quality of the people and the work is essentially the same between the two groups, but Saab Sensor Systems is roughly half the size of Saab Sensis (to me, the smaller the better). In addition, the near term business outlook for Saab Sensor Systems seems to hold more promise.
I’ve been a lucky bastard throughout my entire work and social lives. I’m grateful for that, and I hope my lucky streak continues.
Because of the widespread wreckage caused by the 2008 financial meltdown and the fact that not one single gov-handout-taking banker fat cat is behind bars, I harbor a deep disdain for financial institutions. Since the impeccably infallible Goldman Sux is high on my turd list, I quickly snatched up Steven Mandis’s “What Happened to Goldman Sachs: An Insider’s Story of Organizational Drift and Its Unintended Consequences” to harden my mental model of the company. One of my favorite passages in the book is:
Before this increased emphasis on quantification and accountability, people were willing to make more time for each other and help think through issues. Bankers didn’t worry about filling out time sheets or taking credit. They worried instead more about giving clients better advice. – Steven Mandis
So, if your org’s so-called leadership starts cranking up the volume on “metrics!“, “accountability!“, and/or “performance management!” in textbook MBA fashion, then beware of what the future holds. It simply broadcasts their knee-jerk cluelessness and utter lack of ideas on how to really improve your borg.
Somewhere on the road from small startup sensation to huge institutional borgdom, the oft-repeated process of “manage-ification by growth” fires up and kicks into high gear. It’s inevitable, or is it?
Check out this 20th century retro banner that BD00 stumbled upon whilst being given a tour of a friend’s new workplace:
OMG! The smug agilista community would be outraged at such a bold, blasphemous stunt! But you know what? BD00′s friend’s org is alive and well. It’s making money, the future looks bright for the business, and the people who work there seem to be content. Put that in your pipe and stoke it up.
In a 2012 slideshare deck that built a case for a hostile takeover of Blackberry maker RIM (Research In Motion), venture capitalist Robin Chan hoisted this foil of the smugly smiling C-level dudes running the show at DIM (Disaster In Motion):
To add insult to injury, Mr. Chan writes:
D’oh! C-Level infallibles don’t like being characterized as “ill equipped” and “discounted“. However, fear not for the dissed DIMwit royalty. Since DIM recently announced plans to frantically find a buyer for their struggling business, these execs will make out just fine. The golden parachutes will be doled out, they’ll hop on a plane to their next destination, glide right into the C-suites at their next gigs, and have their smiling picture taken for the next annual report. Who sez performance matters?
I love discovering people and companies that buck the current “kool and hip” trends followed religiously by the herd (mooo!). One of these motherbuckers is Evernote Inc. I’m not an Evernote user, but the app is phenomenally successful and has an enthusiastic following.
In “One Reason Everyone Has Outsourced Their Brains To Evernote | Fast Company”, Evernote CEO Phil Libin says:
We do everything native. That was actually the big decision. Right from the beginning we said, “No common denominator crap.” No HTML5. Just all native on every platform.
You would think that it makes no business sense to maintain a separate, resource-sucking team for each supported platform, but think again:
Yes, it’s really expensive. Yes, it takes a ton of developers. But it works for Evernote: As Libin says, they’ve got independent teams for every platform. They compete to make the best version, steal from each other, and leapfrog one another. Since each platform is different–BlackBerry, for instance, has that keyboard thing–the versions are tailored to them. And each fits. – FastCompany
Damn it, I hired you to get results! (… and I don’t care what means you use, so don’t give me any details) – Unknown CEO, President, SVP, VP, Director, or Manager
Some of the people who run our institutions don’t care much about “means“. Although they’ll never publicly admit it, they only care that results are achieved by whatever “means” possible. That is, until the “means” comes back to hit them where it counts – in the wallet. Even then, after the wallet has been lightened with a slap on the wrist, it’s back to business as usual. Wall St.? Investment banks? Bad ass corpocracies?