Chapter 9 (173)
\nColumbia – January 21, 2003
\nChallenger memos – one person wrote an ignored memo. A minority voice was drowned out.
\n“… not much we can do about it”. (174)
\nsmall group judgments are more volatile and extreme (176)
\nconfirmation bias – we seek information that confirms that which we already believe (178)
\nsmall groups emphasize consensus over dissent
\nabsence of debate and minority opinions
\nNASA is meritocratic – but also hierarchical (182)
\nIn small group, leaders must take active role in insuring everyone speaks
\nLack of *cognitive* diversity at NASA (183)
\nA minority viewpoint improves group deliberation even if it is wrong
\nGroup polarization (189)
\nSocial comparison – if the group moves right you do too to maintain your place in the group
\nTalkativeness makes one influential – not necessarily well liked – but listened to
\nThe one who talks the most is viewed as right, although that isn’t always true
\nChapter 10 – Companies (192)
\nZara – Agile Clothing manufacturer form Spain – 10-15 days elapse from design to shelf
\nLess wasted markdowns
\nLinks from stores to designers – quick market feedback – adjust manufacturing
\nZara factories for materials and cutting
\nSmall craft shops for the actual sewing – Galicia and Northern Portugal (194)
\nCoordination happens without control because of the market.
\nWhy do corporations exist? (195)
\nReduce transaction costs – bid out, track and coordinate, evaluate, pay
\nAlso some things ate the “secret sauce” – Zara manufacturing plants were central to agility – it is not always about cost
\nIndependent films – gather – work – scatter
\nAmazon.com – used books
\nGangster examples (198)
\nClassic corporations (200)
\nMany layers power from the top down
\nCame from factory pattern where line workers were really dumb
\nLip service for decentralized decision making (202)
\nOften – lots of talk and meetings were seen as evidence of distributed decision making
\nStructure stops disagreement – someone might be a future boss or enemy – play the game (205)
\nChances of promotion improved if you did not tell the boss bad news – stay in good graces (205)
\nLack of cognitive diversity of top managers (206)
\nThe illusion of perfectibility (208)
\nTargets and bonuses (209) Pay people to lie!
\nDoes the Deli owner get more money when they “exceed expectations”?
\nIn top-down corporation – there is no incentive to reveal private information. Markets cause information to be revealed – when used in particular. WHich increases knowledge (209)
\nPeople with local knowledge are often best suited to making decisions (212)
\nLinking authority and responsibility – Chuck
\nExperiment – Problem solving with noise and a button to stop the noise.
\nCEO’s as superheros \/ saviors – common workers look to upper management as being the final word (217)
\nGary Wendt – GE Capital – Conseco (218)
\nIs it luck? Travelers leave Chicago with only one road with a gas station. Was the person who picked that road smarter?
\nBest CEOs – recognize their own fallibility. Alfred Sloan GM – Jack Welch GE
\nThey built an environment \/ ecosystem – and set values so Wisdom of Crowd could work (222)
\nChapter 11: Markets (224)
\nShort Sellers – Hated!
\nThey gain when everyone else is unhappy – so folks blame them
\nBlamed for the crash of 1929 – but it turned out to be the long buyers that whipped the prices up to the point where they were wrong and then it all popped
\nOnly 2% of the trades are short (227)
\nMassive PR all aimed at the market going up up up (227)
\nJS thinks there needs to be more, not less, short selling to reveal information
\nThe pain of loss is much greater than the joy of gain – so folks hold stocks – because if it goes back up – they avoid the pain of loss
\nStock prices jump around far more than IEM or NFL betting – and the crowd rarely flips (236)
\nChuck: Cascade effect of rare flips??
\nStock market just keeps going – we never know if we “win” or “lose”
\nLong Term Capital Management (LTCM) (237)
\nPick pairs of slow\/stable investments that track each other
\nWhen one is slightly off – buy it and sell when things rejoin
\nBuy on margin to magnify gains
\nAssumption: When prices deviate – they come back “quickly”
\nProblem: If prices don’t come back – because of the margin time runs out qiuckly
\nUltimately: Each market is too small – when LTCM wanted to sell things freaked out
\nChuck: Sometimes you need to just switch strategy – “cascade”
\nBowling (241)
\nThings went well – cascade growth – then a crash
\nSmall localized bubbles happen all the time – folks fancy something
\nBubbles don’t happen in a real economy (245)
\nWhen prices go up – usually demand does not go up
\nCoffee “shortage”
\nAustralian hurricane wipes out banana trees
\nStocks are expected to grow
\nPeople tend to pick the stocks that will grow more – not so much about intrinsic value – which feels best – like a horse race
\nBubble of the 1990’s CNBC (252)
\nA stock price would be affected within 15 seconds of being mentioned on CNBC
\nBubble creation is like riot creation (257) Needs a spark and then a bit of influential folks nearby – to make it seem like a big trend
\nChapter 12: Democracy (259)
\nVoting affirms partisan preference rather than an attempt to affect the outcome of the election (284)
\nConservatives without health insurance opposed national health care – liberals with health insurance supported health care (265)
\nGovernment is like a big cooperation problem
\nDemocracy is often not getting what you want but trusting that things will be generally OK<\/p>\n","protected":false},"excerpt":{"rendered":"
Chapter 9 (173) Columbia – January 21, 2003 Challenger memos – one person wrote an ignored memo. A minority voice was drowned out. “… not much we can do about it”. (174) small group judgments are more volatile and extreme (176) confirmation bias – we seek information that confirms that which we already believe (178) […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-598","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/posts\/598","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/comments?post=598"}],"version-history":[{"count":2,"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/posts\/598\/revisions"}],"predecessor-version":[{"id":2715,"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/posts\/598\/revisions\/2715"}],"wp:attachment":[{"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/media?parent=598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/categories?post=598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.dr-chuck.com\/csev-blog\/wp-json\/wp\/v2\/tags?post=598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}