dimpledbrain

The conceptual framework for a man's search for meaning

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The Next 3 Rules

September 5th, 2012 by dimpledbrain

We have previously discussed on a number of interesting concepts like game theory (click here), randomness (click here) and various biases (click here) that we should at least be aware of, if not overcome.   

On one fine day, I was staring at the sea waves advancing like galloping white horses when the next 3 things that I would like to explore in depth came to me:

  1. Leverage– the idea behind cumulative advantage or the rich gets richer. 
    • Whenever someone says use OPM (other people’s money), it means to leverage. Even compounded interest is a distant cousin of leveraging. But, this shouldn’t just stop at investing or financing.
    • Networking is one form of leveraging. Multiplier effect (economics) is another form of leverage.
    • So my point is we better start thinking in term of leverage.
  2. Root cause analysis– Which framework is the best to conduct a root cause analysis?
    • At the end of the day, solving any problem begins by understanding what causes the problem.
    • Diagnosing the problem correctly will ensure that we are treating the root cause, not the symptom of the problem, as the saying goes.
    • One way to test this out is to ask ourselves critically, ‘Do we still have any unresolved problems?’
    • An ancillary question to this is whether a rigorous approach (scientific) or an intuitive approach is better. Which we have somehow discussed on previously. (Click here)
  3. Competitive edge – Jack Welch’s Rule #6 is ‘if you don’t have a competitive advantage, don’t compete’.
    • We may well know about this already but I am not sure if we have drilled this deep enough into our DNA. Winning on chance basically means to subject ourselves to the force of randomness. And yes, we have delved into randomness a lot now. Chance based activity doesn’t make sense at all with this notion of competitive edge.
    • There is this story about an investor and a lawyer. The lawyer offered a ‘I pay you RM5 if you ask me a question that I cannot answer’ and vice versa. The investor didn’t bother about the lawyer until the latter offered RM50 per question to the investor vs RM5 to the lawyer. Then the investor asked an out of the world question and so received RM50 from the lawyer. Frustrated, the lawyer asked back the same question only to receive RM5 from the investor. The story may sound funny, but such is the idea behind competitive edge.

Of course, if taken to the extreme, each of the above can turn ugly – over leveraging may lead to bankruptcy, over analysing may lead to analysis paralysis and over focusing on competitive edge may make us neglect other parts of life.

But I just wonder how many issues in life that we can possibly resolve by using these 3 central themes only?

Drop me a line if you have any good resources that you think I should be aware of.

 

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