living by simple rules in a complex world

Living By Simple Rules In A Complex World.

The world we interact with, the one in which we live, is complex beyond our comprehension. To solve the complexity, we rely on complex solutions; things developed by people much smarter than us, or at least more knowledgeable in a certain subject area. Just look at the fed. They’ve got the brightest PHDs on the planet churning out algorithms we can’t fathom, to solve shit we don’t know exists. Have a complex business deal? You bet some lawyer is going to come up with a complex contract to make sure everyone is protected. Beating the market, or managing its volatility; that too needs a complex solution.

But does it fucking really? The Fed, with all their ‘excellent’ models didn’t see the crash of 08 or 09 on the horizon. If you take one ‘excellent’ contract from lawyer, to another lawyer, they’ll find a ménage of arguments and baloney, out of and around that legal contract. The stock market… well besides from the blatant failures of active managers, and Buffet’s bet on the S&P 500 beating hedge fund, I will tell you that I’ve also spent a lot of time studying the market, writing algorithms, and looking for fancy cool shit that works. After hours and hours of time in front of my computer, tweaking the method, optimizing the formula and looking for something better, something that will generate a mere .1% of premium, I consistently up end back at the same simple rules use to invest in the first place. I recognize the same pattern in my personal and business life. The bottom line is complex models and solutions don’t seem to get us the solutions that we need. Simple rules lead to better results, and require less, attention and thought.
I noticed this early on in life, somewhere around 22, when my home service company was just starting to take off an launch. My employee’s were just as irrational and unpredictable as the adage says “the stock market is driven by us irrational human beings”. Suddenly these humans were now my employee’s and I got to see their irrationality and un predictability first hand, and I was responsible for their actions. In a home service business like I had just jumped into, things became even more multiplied. To keep it short, lets just say that the irrationality and unpredictability of my employees often cause scheduling delays.  In other words, customers were expecting my company to be there and get something done, but my employee’s wouldn’t be there or get it done (You know all about this as a consumer dealing with home service companies, but you have no idea how difficult it is to manage).  The list of reasons why employee’s wouldn’t get there or get it done is as endless as the stars and well just plain crazy.  The result was scheduling issues across dozens and an ensuing headache for me that caused many grey hairs.  Which appointment would get completed next?  Which projects would get delayed?  What customer would be the least dissatisfied if they were delayed?  I would spend hours working out the perfectly calculated schedule and then more unpredictable shit would happen and the process would repeat.  Realizing that their was no simple solution, I made a rule.  Always finish what has been started.  The end.  If a project was 10% complete, we do not start any new project until that one is complete. Anything else gets delayed.  If anyone is unhappy that is unfortunate – but they would be even more unhappy if their project was started, then stopped for a bit, then restarted.  It was also better for employee motivation, morale, and quality of work.  This single rule saved me hours and spared myself many grey hairs.
The more complex situations I dealt with from my company, investing, my relationships or any other aspect of life, the more I realized that complex decision making involving many inputs was useless. Turns out, I wasn’t the only person who came to the same conclusion. Kathleen Eisenhardt, whom I ran across across on Michael Covel’s podcast, has dedicated her life to this study and finds in all aspects of complex decision making simple rules consistently win..

Founder of a home service / specialty trade contracting company (think patio’s and deck) with a focus on customer experience. Quantitative investor. Data driven marketer. Runner.

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