Jeremie Averous | The Fourth Revolution Blog

Complicated is not the same as Complex – and Why this is Important

Complicated is a very different concept from Complex. Yet most of us do not distinguish them. Even more, we try to manage Complex systems with Complicated solutions. And this turns out to be a very huge problem.

A watch: a complicated system - predictable and reliable — A watch: a complicated system – predictable and reliable

A watch is complicated. It is composed of a large number of pieces; yet they are carefully engineered to fit and move together. The system is very reliable (it’s a watch!). Most engineered systems are complicated, yet reliable. The more the components fit seamlessly together, the better the reliability.

A complex system: a representation of the situation in Afghanistan

On the contrary, a complex system involves a lot of different components or contributors; they are all interconnected and inter-dependent; but they all follow a different interest, and they make the system unpredictable. The now classical slide describing the situation in Afghanistan to General McCrystal is a classical example of the depiction of a complex system.

Complex systems are unpredictable. They are what happens in real life outside what can be carefully engineered. They are what creates the unforeseen, the adventure.

Because we mix all the time those two concepts we misunderstand a lot of what is happening around us. The way to tackle and repair complicated systems is completely different from how we can influence complex systems. The way these systems fail belongs to different realms. And when a complicated system encounters unpredictable complexity, it is where our engineering capabilities are overwhelmed. It is where our certainties become shaky. It is when catastrophes like Fukushima happen.

How Many Seeds Did You Plant Today?

“Don’t judge each day by the harvest you reap but by the seeds that you plant” – Robert Louis Stevenson.

Our life is uncertain and unpredictable. We can’t know what will come out of our latest initiative, and possibly, it will look quite different from what we envisaged.

What we can do, though, is make sure we plant everyday enough seeds so that when they grow, we’ll have a few successes among the outright failures and those other seeds that won’t grow any useful products. Most of what you start will fail. It’s just a matter of starting enough stuff to succeed.

Ask yourself how many seeds you planted today: how many new people you met, how many initiatives you started or tested. That’s what should be your golden standard.

How will you double the number of seeds you plant daily, weekly?

Why our Current Political System is Reaching its Limits

Political systems (autocracy, representative democracy, etc) including the way they are implemented, have a limit: a given political system can only manage up to a certain level of complexity.

Are our current democratic institutions reaching the limits of the complexity they can manage?

When that maximum level is reached, fragility becomes a key property of the system, and the system will one day break apart. Suddenly. Completely. The Soviet political system was unable to bear the complexity driven by the Western world in the 1980’s; and to manage the inherent complexity of the modern world (as shown by the Tchernobyl accident investigation). The French political system in the 1700’s became unable to manage the increasing complexity and globalization of the world. The French Revolution and decades of instability ensued.

Sometimes (rarely), political institutions succeed in reforming themselves before reaching a critical level of fragility.

Our current representative democracies are probably the most elaborate political system, and can manage a far higher level of complexity than any of the previous political institutions. We can see everyday that autocratic regimes are overwhelmed by much lower levels of complexity. Still, the question is now, whether it can manage the level of complexity we are reaching globally?

I fear that it is not the case and that currently, we are reaching uncomfortable levels of institutional fragility. Representative democracy might need to be replaced by (or, evolve in) a new political system that will be better to deal with the current level of complexity – by choice or by default if we reach the limits before we can change. That new system needs to leverage better on networks and direct democracy. It needs to be much more global.

Let’s start now to build this new political system, before the increasing fragility of the previous one creates dramatic consequences.

Bringing the World Closer: Real-Time Audio Translation is Live

While automatic translators on internet make it easy nowadays to understand at least the sense of a text in any other language, live audio translation between languages was only something of the future.

Is that really so? In that stunning demonstration, a Microsoft executive demonstrates both live text and audio translation between English and Chinese (if you don’t have time to watch the 9 min video, watch after 6:40 for the live audio – here is the link to YouTube for that part of the video):

More information on that technology breakthrough on this TheNextWeb post: “Amazing: Microsoft turns spoken English into spoken Mandarin – in the same voice”

The world just became smaller!

Why You Should Fail More Often

Let’s come back to the financial markets as a model of complex system that can be easily measured. What are the strategies that can provide gains with limited risks and significant chance of success?

Investment is more about managing the emotions of failure than it is about being clever

Professionals will tell you that the winning strategies (provided there are winning strategies,as we now can doubt from our post on the superiority of randomness) always involve some dose of failure. The trick is to have less failures than wins, and / or smaller failures than wins. As long as you invest more on stocks that have chances of recovering, over time this strategy will provide interesting returns with a relative certainty – the larger returns being generated by the larger or more frequent number of tries.

What is interesting here is that real professionals that deal with the stock market everyday will never speak of ‘sure win’. They know they have to accept a certain amount of failure. They know there will be bad days as there will be good days – only hopefully slightly less frequently. They know they will have to deal with the emotions of failure and not let themselves be driven by them.

In our real life, that complex system, the lesson holds. We can’t succeed without a certain dose of failure. And the more often we try, the higher will be our overall success. We just need to make sure that any failure will not kill us (that we have a cut-loss soon enough) and that our successes have a bigger upside than our failures’ downside.

In complex systems, frequent failure is the key to success. So, when do you start to fail more often?

How Big Data Will not Help our Understanding of Complexity

It is not possible anymore nowadays to open a serious newspaper or a financial investment document without reading about the great prospects of “Big Data”: analyzing the troves of data progressively acquired by organizations when we surf, shop, spend money, etc., to create Value. And companies have been setup which raise money on the markets to exploit data like other exploit mines and oil wells.

Curve errors/ data size — The number of spurious correlations increase with the size of the data. Be careful when you read about discoveries from “Big Data”!

Be careful, says Taleb in his book Antifragile, lots of data also means lots of spurious correlations. The argument is detailed in the book and in this Wired Article “Beware the Big Errors of ‘Big Data’“, from which we reproduce the curve on the right (it is also in the book).

To translate the point in conventional language, the bigger the size of the data and the number of potential variables considered, the higher the probability that bullshit is produced when it comes to the identification of possible trends. From there to consider that all this “Big Data” trend is just a vast hoax, there is a step we won’t take (I don’t invest in this “Big Data” thing unless it is very focused application). However, this potentially shows that a high proportion of the ‘discoveries’ that people do analyzing “Big Data” will be spurious. Be careful next time you read about one of these new ‘discoveries’.

A further challenge: is it really possible to understand complexity through more advanced data analysis? Following Taleb, we can have high doubts about that. In particular because all data analysis tools will never consider anything than conventional statistical approaches, and will never consider those discontinuities and benefits from volatility which makes real life what it is: interesting!

Must Read: “AntiFragile” by Nassim Taleb

The latest book of Nassim Taleb, Antifragile, is an absolute must-read. It puts a lot of common wisdom on its head and provides an interesting picture of the mistakes of the society surrounding us.

The book is thick and takes some effort to read through, but it’s worthwhile to take the time. Taleb is a very unconventional thinker; his approach to complexity and predictability is absolutely brilliant.

What is Antifragile? According to Taleb it is the property to thrive in situations that are highly uncertain and volatile.

Most of the things we produce are fragile. The Industrial Age civilization, through its manufacturing standardization and search for efficiency, tends to be fragile. And actually it would seem, according to Taleb, that modern civilization is much more fragile than before. Look at how single freak events like 9/11 or other terrorist attempts fundamentally change the life of travelers and how we are ever more deeply intolerant to unexpected events.

Fundamental mistakes of our scientific approaches are denounced in the book, in particular our custom to observe averages when volatility might be an even more influential parameter; and the limits of conventional financial statistical analysis.

In summary, take the time to read AntiFragile. It gives also an insight on how our world might become when we overcome some psychological hurdles from the Industrial Age. Several posts will be posted here that will inspire themselves from the book in the next few weeks.

Analytic Decision-Making Is Worse than Random More Often Than You Think!

Scientific thought and literature sometimes contains disturbing concepts. A number of papers have shown, for example, that on financial markets, random stock picking is better than informed choices made by any “professional” investor.

Decision making: should you not throw dices instead of over-analyzing?

Here’s another fun example of such study: how Orlando the cat beat professionals in a contest. The article goes on to explain that it is not an isolated study. And that in fact, those investors which we admire because of the high return on their investment they generate, might just have been lucky (over the short period where we observe them). As the article mentions, Daniel Kahneman, Nobel prize in economics, showed over a sample that “the correlation between those fund managers who were successful in one year and those who were successful in the next year was close to zero (0.01) over eight years“.

Financial markets are the archetype of the complex system. In such a system it seems that random decision-making is better then (excessive) analysis.

When I presented this idea to a room full of engineers a few weeks ago they probably took me for a fool. Yet as the complexity of our world increases, it is not certain that the best way to take the right decisions is to enhance further our analytic models, which will be less and less representative of reality.

Have some dices in your pockets. In complex situations, throwing them might be the best decision-making method!

How Some People Become Addicted to Defy Resistance

In this blog we have often mentioned ‘Resistance’ or how our primitive brain tries to impede us to create or do anything remotely outside our comfort zone (the concept originates in the excellent “War of Art” book). It routinely tricks us into a number of behaviors designed to impede us from trying new things, like for example procrastination. We also know that Resistance is the Symptom That You Are on the Right Track.

Beyond simple Resistance that impedes us from giving our best self, some people, those that are often labelled compulsive artists, probably become so used to defy Resistance that some become addicted. And because they are addicted to meeting and overcoming Resistance, they can’t stop defying it, day-in and day-out.

This symptom can be observed in other areas that require to overcome a significant natural fear for performing the core of the activity: for example, sky-divers and all sorts of extreme sportspeople; actors; public speakers… Some of them (and probably all of those who become professional at it) definitely become so hooked to that sensation of Resistance, of stage fright, that they can’t live without it for long. They need their periodic dose of Resistance. They need to feel that thrill running in their nerves.

Once you become accustomed at identifying Resistance and adept at overcoming it; once you become familiar with Resistance to the point of being able to tame it sometimes, watch yourself. It is possible that you might even become addicted to it without being able to stop stretching yourself.

In all cases, make sure you have the right safety net around you so that you keep it safe, and enjoy every minute of playing with your ‘Resistance’ – and change yourself and the world!

Resistance is the Symptom That You Are on the Right Track

The point is made by Seth Godin in his new book, the Icarus Deception:

“The resistance is the symptom that you are on the right track“.

When your inner emergency exit sign lights up, it's possibly the message that you should stay! — When your inner emergency exit sign lights up, it’s possibly the message that you should stay!

This is so true. When I try something outside my comfort zone, or which entails a part of uncertainty and risk (in particular when it involves others), resistance has a way of wrenching my stomach, and create all sort of procrastinating activities to avoid getting me to focus on what’s really important. Now, with some experience, I know that when that happens I am probably onto something that will make a difference.

In other words, when my inner emergency sign lights up, in most cases, it means that I should stay because I have touched something important!

Thus, “ The resistance is not something to be avoided: it is something to be sought out. The artist seeks out the feeling of resistance and then tries to maximize it.”

You too should seek out the feeling of resistance. Remember, Life begins at the end of your comfort zone. Resistance will let you know when you’ll exit your usual comfort zone. Take advantage of it!

How Complexity is linked to Fragility and What it Means for the World

There is a definite trend in the literature to link complexity with fragility. Examples of books that revolve around this issue include “Antifragile: Things that Gain from Disorder” the new book by Nicholas Taleb, or more technical books on risk management in complexity such as “A new Theory of Risk and Rating” by Jacek Marczyk (that one is only recommended to risk geeks).

Fragile items just break suddenly and fully

The concept is that in a complex world, in particular when systems reach very high complexity, at the limit of what is bearable by the system, things can change abruptly. Instead of being ductile, the world then shows very fragile, brittle characteristics. The previous state is suddenly broken and is replaced by a very different condition.

Fragility is thus linked with complexity.

We would prefer to live in a world where change happens progressively, which would give us some chances to intervene. This is what engineers are always seeking when they specify that engineered materials should remain as ductile as possible across a wide range of conditions – this is to avoid the sudden, unpredictable rupture without prior deformation.

As complexity increases in a given system, it becomes more and more fragile – until it breaks suddenly, unpredictably, and is replaced by a new system that is more tolerant to complexity.

This theoretical observation has wide-ranging consequences. Our world today becomes more and more complex, interconnected. Our societies need to change before they reach the limit of complexity they can bear. Or, changes will inevitably be sudden, with lots of damages. Because, if our societies and institutions don’t change, their fragility will increase. Until they reach the breaking point.

Three Questions to Help You Define your True Aspirations

Jim Collins gives us three questions to define our aspirations (actually, he gave it in the context of a company but it does work for us personally too!):

What are your real core values and your real aspirations?
What is the truth about the outside world?
When you intersect your drive with your reality, what’s the truth about what you can distinctively contribute potentially better than anyone in the world?

Question 2 is absolutely essential to reality-check that our aspirations and core value can find resonance with the outside world (and respond to our basic needs too!). It’s certainly tough to have a clear view of the world beyond our usual bubble (and might require some help from other people with other point of view), but it’s absolutely critical.

These questions are very powerful. What’s your answers? What’s the reality check of your current aspirations like?

Quotes are from the foreword to the book The Greatest Business Decisions of All Times by Fortune Magazine editors

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