By JEROME NGASSA
The podcast currently has 48 episodes available.
How to avoid The Mistake of Using Hindsight as foresight?
Hey buddy, its Jerome- have you ever have some of these challenges: You attend expensive programs, seminars, webinars which promise meaningful outcome-which turn out not to deliver- the expected results especially when you implemented the nuts and bolts, you work hard – you took continuously take risk over and over nothing work and at worst you go bankrupt or you hear and see people who? Me too “Me too- I also went through that-when I started my new entrepreneurial and investment journey. I read books ……well narrated ………………. I went broke not because I did not know what I was doing but because did not know what I did not know.
let me give you the framework of how to think about avoiding at looking in the review mirror – with the firm conviction we are looking ahead, hence using hindsight as foresight that will allow save you by avoid tones of psychological, mental, relational and money pitfalls, worries and anxiety and most importantly generate the good ones
2-Simulate not to see what will happen- but what may happen
I went from broke to overnight in less than one year 70.0000 downloads on libsyn.This is by the way not even
3-Avoid the question what is going to change in a decade and focus on what is not going in a decade. In our 3 online businesses we have, we know that customers – want low price, vast selection and fast delivery. It is impossible to imagine 10 years from now any customer come to me and say Jerome. I would love optionalityprofits if the price were a little bite higher.
Why? well because you can build a business strategy on things that are stable in time
My whole point here is those of us who have their nose glue to the map (business or investment model) will end up mistaking the map for the territory (the real world) ,therefore Knowing what you don’t know allows you to be the captain of your own ship.
How Do You Avoid using the wrong Maps?
Those days you get disappointed, you get bog down, you get sad – you get angry, people make fun of you – you feel your sense of serenity and enthusiasm going down. How do you turn it around?
If you went from expensive courses to courses, attended webinars- seminars and most important put all the prescribe recommendations into practice by creating courses nobody buy, put videos on YouTube nobody watch them. Create blog nobody read and hosting podcasts no one is interested. Basically nothing works. We must learn how to stop using the wrong Maps. How that is what this episode is all about.
The first thing you have to be aware of since you are pursuing big Mission and purpose is: the notion of iatrogenic” is harm done by the healer to the patience – in another word iatrogenic is medicine of a decease, injury or a bad outcome- caused by the words or action of the physician.”. Yes, we are living in a fast pace world today.
Since the world has become more complex due to globalization and internet – hence very very unpredictable, this has as direct consequence the opacity of the world allows pseudo experts to hide risk and hurt others. Just as you cannot see the barrel when someone is playing Russian Roulette, more generally, some things remain opaque to us, leading to illusions of understanding
Second Big Idea Most systems show you (visible) benefits, which benefit the pseudo expert, and conflates benefits with reduced RISK or even absence of risk
3-Wrong to say "the scientific method is based on evidence"; it is based on knowing how to deal with absence of evidence. How? Well I am glad you ask: Via disconfirmation which by the way is more robust than confirmation. Pay heed to the turkey story- thousand cannot prove you right. But one day cannot wrong and consequences are beyond dead
We get closer to the truth by negative instances, not by verification. It is misleading to build general rules from observed facts
Successful traders/entrepreneurs have their mind on losses; the poor ones focus on profits
hold fast to these practical thoughts, and grip them close
I write this not for the many, but for you; each of us is enough of an audience for the other.
Why the needle comes in an increasingly larger haystack?
Consider the following experiment a company X own by John release a new product/service to the public and since the product is organic-the expected success of the service turn out to be an unexpected shamble. t
Well what went wrong? Well John contact a consultant and precisely a data analyst or you want a top-notch marketer to figure out the cause of your decadence a la French accent. Well he/she makes you an offer you cannot refuse and you end up hiring him.
After 48 hours of intensive work,He comes out with final conclusion that
1-You did not have a large list to be able to capitalize on
2-Your sale copy wasn’t compelling and therefore not well crafted
3-your product/service is more a commodity as consequence not different from others outhere
The ultimate kern of my thought is indeed we see because things happen and things do not happen because we see.so the event cause the knowledge and not the knowledge cause the event.
Here the three big take away from this blog.
1-Therefore, you cannot use any big data analytic company out there to predict socio economic event. Why? Well because the needle comes in an increasingly larger haystack.
. Two practical examples:
2-But you can use big data them to predict the extreme(s) which by the way are the most consequential. And or you can big data for targeted things.
Second big Idea: Since we live in a fast pace world, hence prone to interdependence due to Internet and globalisation. As direct consequence we are more likely to make errors.By the ay . We have never been able to predict our own errors, and things will not change any time soon Intelligence is no more about noticing things that are relevant (detecting patterns) which obviously is relevant in a world that t is stable and that doesn’t change. Intelligence consist in ignoring things that are irrelevant (avoiding false patterns)
Well consider the following practical experiment you may have went through several times. For the last 5 years Donald who is an entrepreneur or an aspiring business owner/investor you name it, has being attending high promising business programs and mega summits worth at least 5000 dollars each. Now guess what? In practical terms his Business and life has not evolved for the better. Donald start to wonder what is wrong with himself? Be careful Donald is a practical person meaning a doer and make sure to follow the guidelines prescribed by the predictors.
Well while surfing the net Donald accidentally discovers the blog of a website call optionalityprofits.com.
Surprisingly he immerses himself in the in this blog and realize. The problem wasn’t him- but the way he framed his question.
But before we that, let dig in these amazing eye-opener and profound findings:
Indeed in 2005 Prf John Ioannidis one of the world renown professional researcher in statistics proved in front of ASA – that 80% of epidemiological studies made in computer fail to replicate in real life. By the way even in psychology only 39% replicate. Since then the FDA, the Food Drug of Administration in the USA has banned any research made on the computer.
So all what I am saying is that two things are going on here:
Namely first and foremost the accuracy of models or programs that predict or foresee your ultimate damaging effect. Keep in mind you live long by not dying
-Second the doubt of the accuracy of these models, because of lack of reliable evidence of harm to guarantee your action (wasting your hard-earning money, your time of practice)
So where lies the problem of Donald? Well since we are not good at knowing, we are not good predicting, we are not good at planning. Most importantly these two alternatives are not fully comprehensive and profound.
So we can sidestep the skepticism of those who question the existence Success programs by framing risk in the most straightforward possible terms. That is we should ask; “What the correct modus operandi, meaning method or technic be, if we have no reliable programs or models? “keep in the meantime that they are two types of risks involve here- namely the risk of losing your hard earning money and time and the risk of missing an opportunity.
-Most pseudo don’t even know their error rate
-Most consultants don’t know what they don’t know and as direct consequence they cannot harvest the unknown, the unpredictable, mistake,error,change.as jeff bezos put it “If someone tries to take all failure out of a process, innovation will cease..... Failure and invention are inseparable twins.”
Since the world has become more and more complex, we in optionalityprofits are here to help you build…………………………
To prove it remember what the Founder maverick of EBay Pierre omidyar well thoughtfully put it” Build a platform- prepare for the unexpected ….you will know that you are successful when the platform you have built serves you in unexpected way” paraphrase him. Guess what take google,facebook,Instagram,youtube- you name it.
Till 2016 compete looks immune to the upheaval meaning the sudden violent change. The same team on the head of the company has run comfortably the company over a decade. Many pundits argued that compete sturdy police system which exercise tight control on its mailing list of customers, would survive the chaos and turmoil of the world due to the complexity of the era we living in undisturbed.
By the way the rise of complexity is due to globalization and internet characterize by a high increase of unpredictability and a drastic decrease of predictability
Compared with semrush.com, another web giant specialized a powerful and versatile competitive intelligence suite for online marketing, from SEO and PPC to social media and video advertising research for marketers. Compete looked positively stable, but this appearance were deceiving and were an illusion; Today compete is in cemetery – yes you hear it right in a graveyard- As of December 31, 2016, Compete.com and the Compete PRO platform have been shut down because there no way even to fight its own survival.
The most insightful question that comes to mind is: How has seemingly stable compete.com turned out to be a fragile system, whereas always-in-turmoil semrush.com has so far proved robust?
The answer is compete was exhibiting only pseudo-stability, its calm façade concealing deep structural vulnerabilities. Whereas Semrush’s chaos, paradoxically, signaled strength. More than 5 years years of continuos and never ending trial and error what served to decentralize the system and bring about a more balanced power-sharing structure. Along with semrush small size as an administrative unit, these factors added to its durability. In compete , the ruling team sought to control variability and versatility of the operating staffs , replacing the lively chaos of tinkerers with the top-down, Soviet-style structure instead of bottom up. This rigidity made compete much more vulnerable to disruption than SEMrush.
But compete’s biggest vulnerability was that it had no recent record of recovering from turmoil. Businesses that have survived past bouts of chaos tend to be vaccinated against future ones. Hence, the best indicator of your Business’s future stability is not past stability but moderate volatility in the relatively recent past.
Four big ideas to be retained from this episode
.
I write this not for the many, but for you; each of us is enough of an audience for the other." 12. Lay these words to heart
The "Evidence Based" Approach is often the Province of Statistically Pseudo-Experts incapable of grasping Absence of Evidence
Absence of Evidence
Consider the following experiment- John is founder of a hilgly successful web analytic website- and have as baseline 15.000.000 active members as entrpreneurs- aspiring entrepreurs,investors,decision makers – who are using his services.
Year one john’s membership web analytic is doing very well- year two the financial heath of the company has shifted from good to better-year three,the profitaility of the company is oustanding.
John travel the world and gives seminar about how magnificent and grandiose his company is doing until
y year 5or 6 or ,you name it: and then all of of sudden on the 7th year John’s webanalytic company faces a surprise downturn.Only after the facts (when wipeout and out of business),john seem to understand that he was conflating Emergency room for cosmetic surgery- when in reality he was sitting on a ticking time bomb.
Now john here is victim of three things
First and foremost as CEO John is using the statistical he observes – he makes his inferences and use hinsight as forsesight as direct consequence he doesn’t know he facing something unpredictable than he thinks
Second: john is fooled by the law of small number- which implies,we human have a strong tendancy to draw out conlusion very quick on a small amount of data (practical example a 3 year data set canont predict a 10 years flood)
Third john is victim of the confimation bias- which nothing more than taking seriously what you see and not taking seriously what you don’t see.After all the dark side of the Moon is difficult to be seen.
This by the way happens to a lot of onlines businesses out which are born and die everyday
What are the three big take away of this episode.Well I am glad and grateful you ask
First thing first,- with the world that has become inceasingly more complexToday therefore,we are more more prone to errors because of complexity due to globalisation and internet.So it is not what you know that makes knowledgeable and rigorous; it is in the type of mistakes that you don't make.
Second :John just like many entrepreneurs and decision makers ,investors seem to forget this logical precedence: in order to grow you have to first and foremost to be able to survive( meaning survival, is ability to handle disorder) and talking about growth without concern of fragility is like a builder like studying construction without thinking of collapses
Third:No amount of observations of steady earnings can allow the inference that the company is financilally healthy and profitable but the observation of a single upside down spike is sufficient to refute that conclusion-why?simply because volatiliy was compressed and the contribution of risk accumulated coming from jump was inceasing.Which by the way is something you can not observe in this case from the making.
Finally the risk consciuos of most experts has not improve at all.This explain why a lot of companies are born and die everyday.
Evolution is scalable: the DNA that wins (whether by luck or
survival advantage) will reproduce itself, like a bestselling book or a successful
record, and become pervasive, widespread and general. Other DNA will vanish.
Let me give you 3 practical examples that shows in a nutshell what I mean:
First example, take google control more than 80% of traffic online
Microsoft control more than 80% of PC, LAPTOPS and other device produce out there
,Facebook, twitter are the behemoth of social media with close to 90% of the lion share This by the way Is the reason why I always say – history is written by the winners, the visible, the salient
Second example: Take a marketer or a consultant who launches an online course, with 100 000 people on his/her list as base line. At the end of the course the expert will take performance of the top 10 or 20 are now very successful which here is called the survivorship bias- the rest will end up in the graveyard.
Third Example: In the arts—say the cinema—things are far more vicious. What we call
"talent" generally comes from success, rather than its opposite. A great
deal of empiricism has been done on the subject, most notably by Art De
Vany, an insightful and original thinker who single-mindedly studied wild
uncertainty in the movies – wild uncertainty is also call the complex domain or the unpredictable domain. He showed that, sadly, much of what we ascribe
to skills is an after-the-fact attribution. The movie makes the actor,
he claims—and a large dose of nonlinear luck makes the movie.
The success of movies depends severely on contagions. Such contagions
do not just apply to the movies: they seem to affect a wide range of cultural
products- such as books, online courses. It is hard for us to accept that people do not fall in love
with works of art only for their own sake, but also in order to feel that
they belong to a community. By imitating, we get closer to others—that is,
Other imitators. It fights solitude in the meantime as we hate solitude and crave society, as nature draws men to each other, so in this matter also there is an attraction which makes us desirous of friendship. When you start buying a best seller in London because you heard it hits the New York bestseller list, you are no longer independent- you are subjected to interdependence.
First: The kernel point of my thoughts is – you cannot understand a group of persons, or a nation-party by from the observation of the behaviour of a single individual. Why because the market is not driven by the average- it is driven by people plus interaction- therefore you cannot really see how things aggregate by studying individual behaviour. This is the reason why I recommend those of you who haven’t listen or watch “When lightening hit, we do not change the laws of nature” and by the way
Second, we are more likely to mistake skills with convex luck than convex luck with skills explain just as certain objects which are perfectly straight, when sunk in water appear to the watcher as bent or broken off.[15] It matters not only what you see, but with what eyes you see it; our minds are too dull of vision to perceive the truth. By the way …………. not which is the title of the next episode
For more clarity :
with skills in the Mediocrestan, you're going to be very successful, have a happy life, be upper middle class, probably, you know, you're going to definitely do very well with skills in Mediocrestan, because the link between action and reward is going to be very visible, and you know what to do.
In Extremistan, skills are often necessary but highly insufficient, you see? So if you're a writer, you need to, you know, be able to compose sentences. You need - you can have all the ingredients, yet fail because "Harry Potter" is going to take the shelf space and you're going to be, you know, out of print and people are not even going to notice your existence, you see or someone like Tony Robbins,Rich Shefren Brendon Burchard?
So because Extremistan, one person wins everything. There's a much higher dose of luck in Extremistan.
Third: Clearly people may discuss a book because 1) they heard about it, 2) their friends like it, 3) they are genuinely impressed with it. The first two are extrinsic reasons and seem to partake of general social contagion effects. The latter is intrinsic
When lightening hit, we do not change the laws of nature
Welcome to extremistan or the Non linear/or the complex Domain
Since the world has become increasingly more unpredictable, due to globalization and internet-we are witnessing the following problems- which pervade across board.
The difference between anecdote and evidence
The difference between knowledge and BS
The difference between an observation that is fake check and something you can generalise
How do you know something is safe, a turkey is fed for 1000 days by a butcher and everyday confirms to the turkey statistic department, the turkey accounting department, the turkey membership site, marketing department, Federal reserve Department– that the butcher loves the turkey with increasing statistical evidence until November, two days before thanks giving, It is never a good idea to be a turkey. The turkey will get a big surprise (the unexpected, the random) by becoming dead meat. This is by the way is in nutshell – the illustration of the consequence of inferring from the observable- or generalizing from the known to the unknown.
My point here is that, we can probably solve the problem, by figuring out in which domain these errors are consequential and in which domain these errors are not consequential.
So we are going to make a separation between two domains with this classical experiment:
The Mediocristan and extremistan
The Mediocristan is caracterise by the collection of regular,yes it is the average that dominates.In technical terms is,if you take randomnly select 1000 people and you place on the scale in term of weigh.We can figure out quickly the average weigh of the total-right.Now add to that sample -that the heaviest person you can think of in the world.Key question how much of the total the exception meaning represent to the total? Answer: well 0.3% in another words the means which here is the average weigh is closed to the to the exception.so from here we derive the properties.This is by the way call the law of large number which define as when your sample becomes large,no single observatio can impact the total-further we draw out the properties.
Without this law statistics and social science won’t exist.If you are earn money per,or dentist,or massage therapist etc... you are in mediocristan?Why because you can not store your work and scale it.You have to there to perform and it is the average of your work that dominates But?
--Now Extremistan
Take the randomnly same selected sample of 1000 people and instead of weigh,let us take wealth- and add to the sample the richest person alife today.Bill Gates- How much of the total would he represents?
Answer: 99.9999999% of the total,therefore the total is completely irrelevant and what count here is the exception- namely the outlier,the rare that dominates the most.
Now here is where lies the major problem: The procrustean bed of pseudo experts,entrepreneurs,aspiring entrepreurs and investors- in this era is- they are most likely of conflating absence of evidence for evidence of absence.Just a turkey who is fed for 1000 days by the butcher and two days before thanks giving is surprised to become a dead meat.
--- In Business life,take most recent world membership successful and renown sites compete.com -which by the way was an Online Competitive Intelligence specialised in a web traffic analysis service – guess what compete.com went bust by december 2016- main reason,there became turkey by falling victim observing continuos of profits and benefits from when variation were compressed and before they realised that – they were sitting on tons of dynamite. This is by the way the consequence of infering from the observable.
What about most online busineeses outhere who are victim of self deception and hide it to themselves?
How many membership site do you have outhere?
By the way trades and industries are at their best when they are not yet generally understood to be profitable. When seen by all so, they fall off; because many from resorting to them, the competition prevents them from being any longer lucrative. In all things, it profits to be up bedtimes
We should look to substance, not to appearance and surface of things. Yet it is incredible how much favour smooth words will bring you among men. The reason I believe to be that is everyone seems to deserve more than is really his due, and in consequence is vexed – if he sees you do not value him as he things he merits.
Here are the three big away of my thoughts
1 – We are wired to favour the visble,the tangible,the well narrated,storiesand anecdotes and we scorn the abstract,the opaque,the unknown and this the reason why optionalityprofits have been created to
2 – Most pseudo experts outhere are most likely to mistake absence of evidence for evidence of absence in another mistaking the extremistan for mediocristan.
3- What matter in is not how long successeful or unsuccessful you have been – but the magnitude or the cumulative of the rare.
4- Under complexity,the legal and the ethic don’t macth anymore and a lot of aspiring achievers are victmed for pseudo experts and con artsist are they to take advantage of you.Beware.This is the reason optionatlty profit is in cration to
Life isn't about getting predictions "right"; it is about knowing how to navigate the environment and controlling it.How?
False causality
Consider the following surprising headline:” The employee motivation leads to higher corporate profits.” What about maybe people are only motivated because the company is doing well or what about highly motivated workers working in business doing poorly?
Another one. What about female advertising cosmetic and thus many female consumers believe firmly that these products make you beautiful. Well what about those who do not use cosmetic and crown beauty queens? All what I am saying is – it is not these products that make you beautiful. Quite, simple models are born attractive and only for this reason – they are candidate fo r cosmetic advertising. Hence beauty is a factor for selection and not result. This is a second example of false causality.
By the way without this illusion, half of advertising campaigns would not work
Among many traits that multimillionaires have in common such great appetite to risk, they work hard. Well take look at the cemetery of bankruptcy – you will realise that the bankrupt people share certain extend the same attributes-namely they have great appetite to risk and they work hard. This in nutshell another example of false causality.
Finally, when I ask people about the secret of their happiness, I often hear this surprising answer. “You have to see the glass half full rather half empty”. See the glass half full I ask myself
Ask my viewers to watch the cemetery episode, the confirmation bias
The kernel point of my thoughts is we have to be careful on things we can make inference and things on which we can’t. We tend to make the mistake of overestimating our ability to find cause and effect -which has the direct consequence that cognitively we like to have causes which give us the illusion of understanding the world. By way the today, we simultaneously inhabit two – systems- namely the predictable which is linear and the unpredictable which is nonlinear if you want complex. The problem lies in the fact of conflate one environment for another. If you haven’t listen the episode about, If someone tries to trick you with "Evidence-based analysis", show him this story of the turkey
Are You Victim of the Bed of Procrustes as Your Bedrock, Via Negativa, f someone tries to trick you with "Evidence-based analysis", show him this story of the turkey
Here are the 3 big ideas from to retain from this episode.
--First and foremost, always do counterfactual which allows you not to fall victim of the confirmation bias and even debunk it
--Second always simulate, not to see what will happen- but what may happen
--Finally switch from predictive methods to non-predictive methods, stop trying to understand the world and focus on robustness by avoiding fragility
Why we are lot good at doing than knowing?
If you are professor at Harvard expert specialise in a given field. Your errors of predictions on the subject of what is going to happen -will be way higher than the one a semi ignorant. In another if you can only read and write ,your errors are inferior to someone who is specialise in the subject.
Let me explain why.if I show a blurr picture of a dog and increase the resolution of the lens by 10,you won’t be able to see the dog- because you will produce 9 or 8 theories. Now if I increase the resolution of the lens only by 3,you will see the dog immediately-yes right away. Conclusion: The more data you have- the more theory you will create. The more theories you will create and the less you will be able to see reality. Hence, once you have a theory in you mind, you will subconsciously and automatically seek what confirm your point of view meaning theory.
This is the reason why it is better to have minimum of theory. Because the theory via the confirmation bias diminish your understanding of the world. Why because sterile information is never perceived as sterile by the brain
What I am saying is the way we human think is based on confirmation. Meaning we favour the visible, the tangible, the well narrated and we scorn the abstract. And our natural tendency to believe that, we haven’t seen or don’t know doesn’t exist. “Finance, book publishing, expert, and venture capital “You must remain extremely vigilant.
How many time did you spend your hard earning in many programs and took them seriously and they never yield the expected promises? I can answer: countless
-Hence don’t study to add more knowledge- but to make your knowledge better.
-This the reason BRS is an anticipatory program rather than backward fitting one which give us the illusion of certainty (you see out there)– when beforehand they weren’t able to predict the occurrence. We are not here to retrofit the story.
The podcast currently has 48 episodes available.