Malcolm Gladwell on Elite Institution Cognitive Disorder [EICD]

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I had drinks with a top lawyer friend who just started her own law firm recently. She used to be a director/partner at a top big elite law firm in Pretoria.

The reason she left it is because even though the firm was top and elite, she didn’t get enough exposure with the right cases as compared to her peers in lower ranked firms.

Off-course she got paid well with very nice perks, but she could not rank higher in terms of exposure when compared to others in lower, less elite firms.

But why did she leave?

This reminded me of when I used to work for two of the top big 4 accounting firms in South Africa. These firms are top in name but as an article clerk and later manager, your exposure was always limited to few clients.

You could only do less prestigious clients such as government/public entity as clients.

We all wanted to audit or do tax work for JSE listed entities, but no matter how hard we tried, we got no exposure to top elite listed entities.

We only did public sector clients from first year to last year articles, no exposure to private sector clients.

Top private sector clients were reserved for certain elite staff members.

The fact that I worked for 2 of the top 4 firms boosted by resume, it boosted my work ethic immensely, but it meant less in terms of overall exposure.

Mostly it was smokes and mirrors.

As a result we are unable to get exposure in certain key areas in our field.

This is not a complaint whatsoever, it is just a realisation and an indication of how elite institutions sometimes messes us up.

Human beings always want the best, we want to take our kids to the best schools, best universities so that they get to work for the best firms.

Malcolm Gladwell says that sometimes our obsession with elite institutions messes up in more ways than we realise.

Sometime as human beings we tend to overstate the significance of elite institutions and grossly underestimate the cost of being at the bottom of a hierarchy. This syndrome or disorder is called Elite Institution Cognitive Disorder.

Gladwell is just a genius in our books. And Google thought so too, they invited him at come in to give a talk at their Google Zeitgeist in 2013.

And what did he talk about?

He spoke about the reason he actually accepted his invite to speak, all for zero payment.

Gladwell’s major comment was on a theory he called EICD or, Elite Institute Cognitive Disorder, something he said, we are all guilty of doing.

His explanation linked this back to the SAT scores of various students attending colleges in North America to study Mathematics and Sciences, and ultimately how those attending top institutions [such as Harvard] tend to publish less in terms of research.

Why do graduates from elite institutions publish less than their peers from less elite institutions?

They are confident enough that they are at such a renowned bastion of academics that they feel less need to publish their research.

Gladwell has some fascinating data regarding the distribution of STEM degrees depending on students’ math SAT scores at institutions of varying caliber [top college vs middle-of-the-road].

In particular his data suggests the distribution is rather stationary, that is, does not depend on the institution, although the students at the top institution are supposed to be “smarter” than the students at the not-so-well-known college.

This is why Gladwell argues that people make their decisions by comparing themselves to the people around them, and lose track of the big picture.

He talks about the syndrome called Relative Deprivation Disorder.

What is Relative Deprivation Disorder?

We all have people to whom we compare ourselves. Don’t worry, it’s natural.

But relative deprivation is when you have the perception that you are worse off than these other people you compare yourself to.

Having this feeling typically leads to frustration.

So, what does this mean?

According to Gladwell, it seems to be that most people are better off away from elite institutions.

But also that “humans underestimate the cost of being at the bottom of a hierarchy.”

Imagine a world without all of this, he says. Watch the video of his talk below – it is worth the 19 minutes.

Seven Reasons You Might Fail to Become the Best in the World.

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You run out of time (and quit).

You run out of money (and quit).

You get scared (and quit).

You’re not serious about it (and quit).

You lose interest or enthusiasm or settle for being mediocre (and quit).

You focus on the short term instead of the long (and quit when the short term gets too hard).

You pick the wrong thing at which to be the best in the world (because you don’t have the talent).

Highlights of Governor Gill Marcus’s Interest Rate Announcement: 27 March 2014

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The following are some of the key highlights from the Governor of the Reserve Bank Ms Gill Marcus speech on the interest rate announcement as made on 27 March 2014:

– The country’s economic growth threatened by advanced economies, markets, electricity supply, strikes.

– The outlook for mining sector remains bleak.

– The new vehicles sales likely to continue falling.

– Bank’s forecast average inflation rate for 2014 is 6.3 % – unchanged

– Domestic economic outlook remains fragile.

– Growth in credit extension by the banking system to the private sector maintains its weak underlying trend

– Weakening trend of household consumption continues

– Bank’s forecast for 2014 growth has been revised to 2,6% from 2.8% in 2013

– Rand exchange rate will continue to be highly sensitive

– Governor Marcus describing the #SARB’s dilemma: normalising policy amid weak growth and an uncertain global environment

– The Repo rate is kept on hold at 5.5% – Not unanimous decision‚ further hikes likely

– The South African rand pretty much unchanged after the SARB’s rate decision: bid at R10.69 to the US Dollar

Are You a Hedgehog or a Fox?

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There is a saying attributed to the Greek poet Archilochus that goes,

“The Fox knows many things, but the Hedgehog knows one great thing.”

In his famous essay. “The hedgehog and the Fox,” Isaiah Berlin divided the world into hedgehogs and foxes, based upon an ancient Greek parable: “The fox knows many things, but the hedgehog knows one big thing.” This is a cunning creature, able to devise a myriad of complex strategies for sneak attacks upon the hedgehog. Day in and day out, the fox circles around the hedgehog’s den, waiting for the perfect moment to pounce. Fast, sleek, beautiful, fleet of foot, and crafty, the fox looks like the sure winner. The hedgehog, on the other hand, is a downdier creature, looking like a genetic mix-up between a porcupine and a small armadillo. He waddles along, going about his simple day, searching for lunch and taking care of his home.

The fox waits in cunning silence at this juncture in the trail. The hedgehog, minding his own business, wanders right into the path of the fox. “Aha, I have got you now!” thinks the fox. He leaps out, bounding across the ground, lighting fast. The little hedgehog, sensing danger, looks up and thinks, “Here we go again. Will he ever learn?” Rolling up into a perfect little ball, the hedgehog becomes a sphere of sharp spikes, pointing outward in all directions. The fox, bounding toward his prey, sees the hedgehog defense and calls off the attack. Retreating back to the forest, the fox begins to calculate a new line of attack. Each day, some version of this battle between the hedgehog and the fox takes place, and despite the greater cunning of the fox, the hedgehog always wins.

Berlin extrapolated from this little parable to divide people into two basic groups: foxes and hedgehogs. Foxes pursue many ends at the same time and see the world in all its complexity. They are “scattered or diffused, moving on many levels,” says Berlin, never integrating their thinking into one overall concept or unifying vision. Hedgehogs, on the other hand, simplify a complex world into a single organising idea, a basic principle or concept that unifies and guides everything.

It is not a goal to be the best, a strategy to be the best, an intention to be the best, a plan to be the best. It is an understanding of what you can be the best at. The distinction is absolutely critical.

Just because you are capable of doing something doesn’t mean you can be the best at that thing.

Be the best in what you are capable of being the best at.

To use an analogy, consider the young person who gets straight A’s in high school maths and science and also scores high in matric maths exam, demonstrating a core competence at mathematics. Does that mean the person should become a mathematician? Not necessarily. Suppose now that this young person goes off to university, enrolls for a degree in mathematics, and continues to get A’s, yet encounters people who are genetically encoded for math. As one such student said after his experience, “It would take me three hours to finish the final exam. The there were those who finished the same exam in thirty minutes and earned an A+. Their brains are just wired differently. I could be a very competent mathematician, but I soon realised I could never be one of the best.” That young person might still get pressure from parents and friends to continue with math, saying, “But you are so good at it.” Just like our young person, never attain complete mastery and fulfillment. Suffering from the curse of competence but lacking a clear Hedgehog Concept, they rarely become great at what they do.

To go from a good company to a great company requires transcending the curse of competence. It requires the discipline to say:

“Just because we are good at it, just because we are making money and generating growth, doesn’t necessarily mean we can become the best at it”

Great companies companies understand that doing what you are good at will only make you good, focusing solely on what you can potentially do better than any other company is the only path to greatness.

Good is the enemy of great.

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…..And that is one of the key reasons why we have so little that becomes great.

We don’t have great schools, principally because we have good schools. We don’t have great government, principally because we have good government. Few people attain great lives, in large part because it is just so easy to settle for a good life. The vast majority of companies never become great, precisely because the vast majority become quite good — and that is their main problem.

Truly great companies, for the most part, have always been great. And the vast majority of good companies remain just that — good, but not great. This observation planted the seed of a question that became the basis of my new book, Good to Great: Why Some Companies Make the Leap…And other’s Don’t, Namely “Can a good company become a great company and If so, how?” Or is the disease of “just being good” incurable?

Greatness is a choice. That’s not good news but great news.

Don’t give up (you’re on the right track)

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Struggling with getting your startup to grow, wrestling with getting sales, wrestling with a project or a problem, the likeliest reason to give up is the belief that it can’t be done. What’s the point of persevering if it’s actually impossible to succeed?

“It can’t be done,” we say, throwing up our hands in the air. No “I can’t do it,” or “It’s not worth my time,” but “It can’t be done.”

In the year after Bruce Fordyce broke the comrade marathon record, the record was broken again and again by other runners after him. Once people realised it could be done, it wasn’t an impossible task any longer.

And that’s why there’s a flood of tablets on the market, many from companies that had what they needed to build the first one, but didn’t until Apple showed them the way.

Two things you might take away from this:

First: there’s solace in finding someone who has done it before, whatever “it” is you’re trying to do. Knowing that it’s possible and studying how it was done can’t help but increase the chances you’ll stick it out.

Second: huge value accrues to the few able to actually do a thing for the very first time.

Break the record, others will follow. Great value is in the first mover advantage. Don’t give up, you are on the right track

Fitting in vs. standing out

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You won’t have any trouble at all finding someone who can tell you how to fit in.

They can tell you what to wear to that restaurant or this conference or that funeral. It’s not that difficult to figure out how to fit in. We were all raised to fit in. If fitting in is your goal, you should be sure to get great advice on how to do that.

Standing out, of course, is trickier. Stand out too much and you will be made to feel like a fool by society, to feel like you are stupid.

Clothing is not the point. You have this choice to make in everything you do, from your career to the words you use in your marketing campaign.

The point: choose.

Are you doing this to fit in or stand out because whichever you choose you cant have both, you cant fit and stand out at the same time

Fitting in is a short-term strategy, standing out pays off in the long run.

The Stockdale Paradox

The Stockdale Paradox
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Retain faith that you will prevail in the end, regardless of the difficulties

AND at the same time

Confront the most brutal facts of your current reality, whatever they might be.

The Stockdale Paradox really defines the optimism that is most important in becoming a resilient person and that is, when you’re faced with a challenge or a trauma, you look at that challenge objectively. You might make the assessment, ‘I’m in really big trouble.’ You have a realistic assessment of what you’re facing. On the other hand, you have the attitude and the confidence to say, ‘But I will prevail. I’m in a tough spot, but I will prevail.’ That is the optimism that relates to resilience.

The key elements of greatness is deceptively simple and straightforward. Great leaders are able to strip away so much noise and clutter of information and just focus on the few things that would have the greatest impact. Such leaders are able to do so in large part because they operated in both sides of the Stockdale Paradox.
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Humble leaders

The moment a leader allows himself to become the primary reality, rather than reality being the primary reality, you have a recipe for mediocrity, or worse.

This is one of the key reasons why less charismatic leaders often produce better long-term results than their more charismatic counterparts.

Indeed, for those of you with a strong, charismatic personality, it is worthwhile to consider the idea that charisma can be as much a liability as an asset. Your strength of personality can sow the seeds of problems, when people filter the brutal facts from you.

You can overcome the liabilities of having charisma, but it does require conscious attention.

If you have an enemy, give him information

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At a conference recently I met this young entrepreneur, or should I say wanna-entrepreneur. She has always wanted to be an entrepreneur. She studied and researched her area of interest. She has been wanting to be an entrepreneur for a while now. She has information and more information. She has reached information overload, actually she is now into analysis paralysis mode. She might end up out-researching herself out of her business without taking one single step into launching her business.

The law of diminishing marginal returns is at play, the more information you research, go through, the more you will gain, up to a maximum point. Afterwards the more you research, the less value you derived from additional information.

Searching for a hotel in Botswana a little while ago, I drew up a shortlist of five good offers. Straight away, one jumped out at me, but I wanted to make sure I had found the best deal and decided to keep researching. I ploughed my way through dozens of customer reviews and blog posts and clicked through countless photos and videos of hotels in Gaborone. Two hours later, I could say for sure which the best hotel was: the one I had liked at the start.

The mountain of additional information did not lead to a better decision. On the contrary, if time is money, then I might as well have taken up residence at the Sheraton Hotel.

Consider the hundreds of thousands of economists, in the service of banks, think tanks, hedge funds and governments, and all the white papers they have published from 2005 to 2007, the vast library of research reports and mathematical models. The formidable reams of comments. The polished PowerPoint presentations. The terabytes of information on Times, Bloomberg, The Economists, Fortune, Reuters news services etc. The bacchanal dance to worship the god of information. It was all hot air.

The financial crisis in 2008 touched down and upended global markets, rendering all the countless forecasts and comments and reams and reams of information worthless.

Forget trying to amass all the data. Do your best to get by with the bare facts. It will help you make better decisions. Superfluous knowledge is worthless (diminishing marginal returns), whether you know it or not.

Daniel J. Boorstin put it right: ‘The greatest obstacle to discovery is not ignorance – it is the illusion of knowledge.’

And next time you are confronted by a rival, consider killing him, not with kindness but with reams of data and analysis.

Over Promise and Over Deliver

Over Promise
Under promise and over deliver is an old cliché in business that smart entrepreneurs do. This was relevant during the time when there was less competition. But in today’s crowded market, that’s a one way ticket to oblivion. If you want to achieve extreme success for your business, you must reach for the extraordinary.

Under promising does not get our attention. Boring promises are hardly worth making.

Innovative companies like Apple, Facebook and other entrepreneurs who are pushing boundaries came out of nowhere to dominate their markets. How did they scoop their bigger and wealthier competitors? It wasn’t through larger marketing budgets. It was because they kept their promises. Not just any promises, but HUGE ambitious promises. In fact, these companies overpromised to lure customers in—and then over-delivered to keep them.

Just because it’s only four words doesn’t mean it’s easy.

You Can’t Be Everything To Everyone (So Stop Trying)

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You can’t change everything or everyone, but you can change the people who matter. Marketing is about change: changing people’s actions, perceptions or the conversation.

Successful change is almost always specific, not general. You don’t have a chance to make mass change, but you can make focused change.

The challenge of mass media was how to run ads that would be seen by just about everyone and have those ads pay off. That problem is gone, because you can no longer run an ad that reaches everyone.

What a blessing. Now, instead of yelling at the masses, the marketer has no choice but to choose her audience.

Perhaps not even with an ad, but with a letter, or a website or with a product that speaks for itself. And yet, our temptation is to put on a show for everyone, to dream of bestseller lists and the big PR win.

So the first, most important question is, “who do we want to change?”

If you can’t answer this specifically, do not proceed to the rest. By who, I mean: “give me a name.” Or, if you can’t give me a name, then a persona, a tribe, a spot in the hierarchy, a set of people who share particular worldviews. People outside this group should think you’re crazy, or at the very least, ignore you.

Then, be really clear about:

What does he already believe?

What is he afraid of?

What does he think he wants?

What does he actually want?

What stories have resonated with him in the past?

Who does he follow and emulate and look up to?

What is his relationship with money?

What channel has his permission? Where do messages that resonate with him come from? Who does he trust and who does he pay attention to?

What is the source of his urgency—why will he change now rather than later?

After he has changed, what will he tell his friends?

Now that you know these things, go make a product and a service and a story that works. No fair changing the answers to the questions to match the thing you’ve already made (you can change the desired audience, but you can’t change the truth of what they want and believe).

Don’t wait for perfect.

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Test your ideas.

Learn and respond.

Don’t wait for perfect to land in your lap, and don’t let it get in the way of sharing a good idea. Be in a hurry to make mistakes and get feedback and get that next idea out there.

Waiting for perfect is never as smart as making progress.

Doing it well now is much better than doing it perfectly later. If you wait for perfect conditions, you will never get anything done.

Don’t wait for the perfect moment… Take the moment and make it perfect!