Have you ever had the experience of trying to solve math problems using sophisticated methods, only to end up realising that the solution can be solved by using simple algebra ?
Most of us thought that doing more results in better outcomes, but there’s a huge misunderstanding in this. In fact, I am writing this post to challenge this statement and present my view that most of the times, we can gain more by doing less.
All things being equal, the simplest solution tends to be the best one – William of Ockham
One of the greatest problem-solving principles of all time is laid out by the great philosopher, William of Ockham several hundred years ago, now popularly known as Occam’s Razor.
I’ve always been an avid reader of the Farnam Street blog, a fascinating blog which has been consistently generating sensible ideas about better decision-making and also mental models from various disciplines that can be applied to our day-to-day lives. Last week, Farnam Street wrote an excellent post about the marvels of making everything as simple as possible (but no simpler!) and gives out explanation about how our tendency to make matter complex can cause problems in our life, including stymied communication, deplorable decisions and wasting our precious time. I feel that the beauty of simplicity also applies to many fields and aspects in our lives, which has not been appreciated by most of the people. Therefore, it’s worth writing a post specifically to highlight how simplicity benefits us in ways that we never have thought of before.
In a renowned experiment, scientist and prognosticators set to determine the viability of simple models versus complex models in weather forecasting. The simple weather forecasting model comprises of only three or four variables critical for making astute predictions, for instance air pressure, temperature and air density. The complex model tries to predict the future weather condition by taking complicated variables and mathematical tools into account, such as Monte Carlo simulations and multiple regression analysis. The outcome of the experiment shows that the simple model ousted the complex model by 35% in accuracy.
As a matter of fact, the success of the simple weather prediction model mentioned above owes a great deal to the minimal number of variables it has to control. As the complex weather forecasting model has so many more variables involved to make its judgement about the future weather condition, the probability of committing errors in the input of variables is also substantially higher than those of the simple model. Similarly, in investing, the more variables you need to plug in to your financial models or valuation models, the more forecasts and predictions you need to make to feed numbers into your models. Unfortunately, neither the future interest rates, the future oil price nor the future inflation rate is predictable, because of the dynamic nature of the stock market, and thus making the occurrence of black swans highly likely in the market. To add salt to injury, a mistake in an input of your financial model will amplify the rate of errors in the other variables of the model (because they are interconnected) , forming a sort of domino effect, at last rendering your model futile.
You can see that the change in interest rates and stock market fluctuations never seem to bother Buffett and Munger. Two reasons. Primo, they know that the future is fundamentally unpredictable. Secondo, they don’t have to worry about it. Why? That’s precisely because they have a much longer time horizon than 90% of the investors in the stock market. To make things clear, possessing a long-term view of buying stocks allows them to trim many variables that are needed in the short-term, in turn lowering their chances of committing errors in their decision. Take the airline industry for example, interest rates matter a lot to airline companies in the short term as the cost of borrowing to fund expansions and buy aircrafts will influence the net income of the company in the next few quarters or one or two years. However, when we contemplate the airline business in a long term perspective, things change. Interest rates doesn’t matter as much as they do in the short term as the feasibility of its business model and efficiency of company’s management is the critical factor which determines the success of the company in the subsequent 20 years. Viewing the action of buying stocks as holding a business for years gives Buffett and Co the privilege to keep things simple and sidestep potential mistakes. That’s why I’ve always advocated holding to stocks for a medium-long period.
Most of the you may have listened to this joke before:
Person 1 to Person 2: Oh My God! I just hurt my ankle this morning.
Person 2 to Person 3: Oh My God! XXX [Person 1’s name] just broke his leg this morning.
Person 3 to Person 4: XXX just got his legs amputated this morning.
Person 4 shouted: XXX is dying soon!
Ok, the joke is of course presented in an exaggerated manner. However, the lesson and warning it gives us is timeless, and organisations should always keep this cautionary tale in mind. An overly complex hierarchical company structure will do more harm than good to a company. As the levels of hierarchy in an organisation increase, miscommunication problems arises and efficiency in communication will also decline steadily. While it seems like a tiny thorn in the flesh in the beginning, the negative effect of inefficient communication is insidious and it may bring a company down to its knees anytime.
Outside threats from competitors, cracks in product line, growing customer dissatisfaction, all these aspects that are fatal to the company are most commonly discovered first by the grassroots level in the company, i.e: salesperson and customer service employees. However, a complex hierarchical organisation structure makes it difficult for grassroots to express their concern to the management of the company as they have to go through so many levels and obstacles to convey their message to top-level management. The entire process is extremely painstaking and cumbersome, disincentivising employees to share their ideas. When executives realise that there is a huge hole in the boat allowing water to flow in and sunk the boat, it’s often too late.
Keeping the communication process as simple as it can be is more useful that you think, potentially saving your company from bankruptcy.
The Commander’s Intent
In the book Made To Stick, Dan and Chip Heath introduced a concept popularised in the military known as the “Commander’s Intent” that can guide employees to make judicious decisions under any circumstances that is aligned with the company’s core value. An excerpt from the book provides a concrete example how the Commander’s Intent can be applied to the business world:
Southwest Airlines is one of the most successful budget airlines operating in the world today. In fact, Southwest has been consistently profitable for more than thirty years.
The secret to their success? Cutting unnecessary expenses. And they’ve been doing it for decades.
In order for them to succeed at such a high level, they must coordinate with over 45 thousand employees, from their pilots to their baggage handlers. They achieve this by using a “Commander’s Intent”, a core principle, that helps guide this coordination.
The Commander’s Intent is a simple, no-nonsense statement that appears at the top of every order, specifying the plan’s goal and the desired outcome of an operation.
During an interview, Southwest Airline’s CEO, Herb Kelleher once said that I can teach you the secret to running this airline in 30 seconds. This is it: We are THE low-fare airline. Once you understand that fact, you can make any decision about this company’s future as well as I can.
Tracey, from marketing, comes into your office. She says her surveys indicate that the passengers might enjoy a light entrée on the Houston to Las Vegas flight. All we offer is peanuts, and she thinks a nice chicken Caesar salad would be popular. ‘What do you say?’
You say ‘Tracey, will adding the chicken Caesar salad make us THE low-fare airline from Houston to Las Vegas? Because if it doesn’t help us become the unchallenged low-fare airline, we’re not serving any damn chicken salad’.
Many corporations like to list out an array of mission statements and require every employee to comply to those statements whenever they are executing their tasks. While the reality is, nobody will gives a sh*t about those lengthy and dull principles while doing their job. Instead of laying out countless mission statements, emphasize on a simple statement, a Commander’s Intent, that can be the ultimate principle to refer to while making tough decisions.
Incontrovertibly, It is a fact that flat design is the mainstream in user interface design since 2014 to date. It is ubiquitous – especially on Windows and Android, the most used desktop and mobile operating systems respectively. It doesn’t take you a whole lot of observation to realise that the app icons of the IOS system has went from three-dimensional buttons and textured backgrounds to relatively simple icons and clean, very readable text. A stark comparison can be seen below :
A large part of the success of flat design can be attributed to its minimalistic design and not overcomplicating design. As the webpage design company, CommonPlaces has stated in its blog:
” The idea of Flat Design came from focusing more on usability, and less on familiarity. The philosophy is that our minds don’t need complex visual cues to understand what we are looking at. We are perfectly capable of recognising shapes and giving them meaning with minimal cues. “
In fact, overcomplicating user interface design causes unnecessary distractions that otherwise have no definitive purpose, and may only distract us from the purpose of the application. The central concept of minimalistic design is to let out brain do the interpretation work and concentrate solely on simple imagery to make icons easily understandable, while being a very simple way of adding hierarchy.
Most of the time, we make our lives more complicated than it ought to be. For your information, Bhutan is a country in Southeast Asia that is just south of China. The country is known for being really small and for being really happy. They are widely known to be the happiest people in the world.
How do they achieve this remarkable feat? That’s precisely because the minutiae in life is sufficient to make their day full of joy and ecstasy. They focus not on the the materials that they don’t have, they focus on what they already have. They don’t care whether they have ultra-fast internet speed, high resolution 4K TVs or a brand-new Iphone X. They feel thankful and fortunate because they are born in a nation which is free from catastrophes and a picturesque living environment.
Many in our society ask for countless things: they want a huge base of Instagram followers, a romantic relationship, an impeccable body shape, a healthy life, a successful business, a lucrative payslip …… The list goes on. Life do not burn us out, we burn ourselves out. I would like to clarify that I’m not discouraging any of you to stop improving yourself, I’ve always hold the view that constant learning and constant self-development is a moral obligation for everyone. In this context, I am trying to tell you that while you are on your journey to pursuing your dreams and what you want, you should always stop for a brief moment, turn your head back, and look at the trivial details in life that excites you, look at the people who have loved you and given you support. Through this, you will find that life, is so wonderful, and thank god that you grow up in such an environment.
A little piece of advice I give to all of you in order to appreciate your life more and increase your personal happiness level is to write a journal everyday. Try to write a thing or two that excites you or make you smile everyday. In the long run, you can see that there are so many things that can make your life filled with joy, and the outcomes in life doesn’t matter as much anymore, the essence of life lies in the process 🙂