
Harford argues that complex problems are not solved by expert planning but by a process of variation and selection, and that the requirements for that process are specific: generate many attempts, keep each one survivable, and be able to tell success from failure quickly enough to act.
The cases run wide. He examines the United States military's adaptation in Iraq, where field commanders including H.R. McMaster developed counterinsurgency methods that the command structure initially rejected; the Piper Alpha oil rig disaster and the Deepwater Horizon blowout as failures of decoupling in tightly coupled systems; randomised controlled trials in development aid; the Skunk Works and the Spitfire as products of protected deviant projects; the 2008 banking failure as a system where losses were not survivable; and corporate innovation portfolios. He draws on Perrow's normal accident theory, on Tetlock's expert prediction work, and on evolutionary and complexity research.
The practical prescription is what makes it useful: run experiments that are genuinely varied rather than incremental, ensure failure is survivable so the organisation can keep experimenting, and build feedback that a manager cannot ignore or explain away. Harford is honest that the third condition is the hardest, because people and organisations are structured to avoid recognising failure. The weaknesses are that the argument is assembled from case studies selected to fit, that some of the psychology cited has weakened since 2011, and that the prescriptions are easier to state than to implement in an organisation whose incentives punish visible failure.
Operators and investors designing experimentation processes who need the conditions under which trial and error actually produces learning.
Chosen by shared topics, the entries that hold them, and the people who recommended both.
The biases that distort managers' decisions, with exercises that show them.
Recommended by: Mohnish Pabrai, Charlie Munger and 1 other
How the wish for agreement in close groups led to fiascos like the Bay of Pigs.
“One of my favourite books, Groupthink by Irving Janis, breaks down how small, cohesive groups of very smart people can make very bad decisions.” — Adam Weiss
Source: Weiss naming Groupthink one of his favourite books
Recommended by: Adam Weiss, Barton Biggs
Recommended by: Mohnish Pabrai
Why megaprojects overrun, and the reference-class forecasting correction.
Recommended by: Andrew Wilkinson
Topics