Thursday, July 23, 2009

Embracing and Harnessing Randomness and the Unknown

This morsel was too tasty not to repost...a summation of Nassim Nicolas Taleb's ideas from The Black Swan (and his thought overall) that has been clarified though much thought and rewritings of the concepts in different mediums and articles. The article is more than worth reading in its whole.
Let us go one step further. It is high time to recognize that we humans are far better at doing than understanding, and better at tinkering than inventing. But we don't know it. We truly live under the illusion of order believing that planning and forecasting are possible. We are scared of the random, yet we live from its fruits. We are so scared of the random that we create disciplines that try to make sense of the past--but we ultimately fail to understand it, just as we fail to see the future.

The current discourse in economics, for example, is antiquated. American undirected free-enterprise works because it aggressively allows us to capture the randomness of the environment--the cheap Black Swans. This works not just because of competition, and even less because of material incentives. Neither the followers of Adam Smith nor those of Karl Marx seem to be conscious of the prevalence and effect of wild randomness. They are too bathed in enlightenment-style cause-and-effect and cannot accept that skills and payoffs may have nothing to do with one another. Nor can they swallow the argument that it is not necessarily the better technology that wins, but rather, the luckiest one. And, sadly, even those who accept this fundamental uncertainty often fail to see that it is a good thing.

Random tinkering is the path to success. And fortunately, we are increasingly learning to practice it without knowing it--thanks to overconfident entrepreneurs, naive investors, greedy investment bankers, confused scientists and aggressive venture capitalists brought together by the free-market system.

We need more tinkering: Uninhibited, aggressive, proud tinkering. We need to make our own luck. We can be scared and worried about the future, or we can look at it as a collection of happy surprises that lie outside the path of our imagination.

(clicker for even


  1. I'll have to think about this and see how it affects my preconceived notions. Indeed discovering your blog is rather like the seventeenth-century logician who uses the proposition "all swans are white" as a teaching aid to his pupils---and then someone reports the Black Swan discovered in Perth, Australia (which incidentally is where I was born).

  2. If you're comparing discovering my blog to a "black swan" of sorts, I am very flattered.

  3. I'm not used to using the term black swan. but let me see:

    1. The event is a surprise.
    2. The event has a major impact.
    3. After the fact, the event is rationalized by hindsight, as if it had been expected.

    yes, could be!