Category: Notes

Stock prices will always be far more volatile than cash-equivalent holdings. Over the long term, however, currency-denominated instruments are riskier investments – far riskier investments – than widely-diversified stock portfolios that are bought over time and that are owned in a manner invoking only token fees and commissions. That lesson has not customarily been taught in business schools, where volatility is almost universally used as a proxy for risk. Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray.

– Warren Buffett, 2014 Berkshire Hathaway Annual Letter

It does not matter how frequently something succeeds if failure is too costly to bear.

– Nassim Nicholas Taleb

Thirty years ago the English scientist and novelist C.P. Snow talked of the “two cultures” of contemporary society. Management, however, fits neither Snow’s “humanist” nor his “scientist.” It deals with action and application; and its test is its results. This makes it a technology. But management also deals with people, their values, their growth and development—and this makes it a humanity. So does its concern with, and impact on, social structure and the community. Indeed, as has been learnt by everyone who, like this author, has been working with managers of all kinds of institutions for long years, management is deeply involved in spiritual concerns—the nature of man, good and evil.

Management is thus what tradition used to call a liberal art—“liberal because it deals with the fundamentals of knowledge, self-knowledge, wisdom, and leadership; “art” because it is practice and application. Managers draw on all the knowledge and insights of the humanities and the social sciences—on psychology and philosophy, on economics and on history, on the physical sciences and on ethics. But they have to focus this knowledge on effectiveness and results—on healing a sick patient, teaching a student, building a bridge, designing and selling a “user-friendly” software program.

– Peter Drucker

One person’s friction is another person’s revenue.

– Joichi Ito

A leader is best when people barely know he exists, not so good when people obey and acclaim him — worse when they despise him. But of a good leader who talks little when his work is done and his aim is fulfilled, they will say: We did it ourselves.

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In any sufficiently complex system, you can consistently assert falsehoods.

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In the beginner’s mind there are many possibilities, but in the expert’s there are few.

– Shunryu Suzuki-roshi

Planning applies established procedures to solve a largely understood problem within an accepted framework. Design inquires into the nature of a problem to conceive a framework for solving that problem. In general, planning is problem solving, while design is problem setting. Where planning focuses on generating a plan—a series of executable actions—design focuses on learning about the nature of an unfamiliar problem.

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A perfect formulation of a problem is already half its solution.

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