• You must understand your mistakes.
Study the hell out of them. You're not going to have the chance of making the same mistake again ── you can't step into the river again at the same place and the same time ── but you will have the chance of making a similar mistake.
• It's not enough to make time for your children.
There are certain stages in their lives when you have to give them the time when they want it.
You can't run your family like a company. It doesn't work.
• The most powerful tool of all is the word no.
source:
Andy Grove: what I've learned
by MIke Sager
Jan 29, 2007
esquire.com
____________________________________
p.196
You cannot step twice into the same river, for other waters are continually flowing on.
——Heraclitus
(Quotations of wit and wisdom: know or listen to those who know / John W. Gardner & Francesca Gardner Reese, copyright © 1975, 808.882, ——, p.196)
____________________________________
The word rhei (cf. rheology) is the Greek word for "to stream", and is etymologically related to Rhea according to Plato's Cratylus.[38]
• πάντα ῥεῖ (panta rhei) "everything flows"[36]
The quote from Heraclitus appears in Plato's Cratylus twice; in 401d as:[40]
• τὰ ὄντα ἰέναι τε πάντα καὶ μένειν οὐδέν
• Ta onta ienai te panta kai menein ouden
• "All entities move and nothing remains still"
and in 402a[41]
• "πάντα χωρεῖ καὶ οὐδὲν μένει" καὶ "δὶς ἐς τὸν αὐτὸν ποταμὸν οὐκ ἂν ἐμβαίης"
• Panta chōrei kai ouden menei kai dis es ton auton potamon ouk an embaies
• "Everything changes and nothing remains still ... and ... you cannot step twice into the same stream"[42]
source: en.wikipedia.org
Heraclitus;
Heraclitus of Ephesus (Greek: Ἡράκλειτος ὁ Ἐφέσιος, Hērákleitos ho Ephésios; c. 535 – c. 475 BC).
a pre-Socratic Greek philosopher, and a native of the city of Ephesus,[2] then part of the Persian Empire, in what is now called present-day Efes, Turkey.
([ language wise, modern Greek is different from ancient Greek ])
____________________________________
• Thucydides, oft-cited history of Peloponnesian war between Sparta and Athens that “the present, while never repeating the past exactly, must inevitably resemble it. Hence, so must the future.”, p.219, Bina Venkataraman., The optimist's telescope : thinking ahead in a reckless age, 2019
____________________________________
p.255
Human history is a drama in which the stories stay the same, the scripts of those stories change slowly with evolving cultures and the stage setting change all the time. So it is that we see our 20th century selves mirrored in Shakespeare, Homer, and the Bible. So to the extent The MM-M is about people and teams, obsolesence should be slow.
(The mythical man-month : essays on software engineering, Frederick P. Brooks, Jr. -- Anniversary ed., © 1985, Software engineering, p.255 )
____________________________________
Tim Wu, The Master Switch, 2010 [ ]
p.289
In Hindu mythology, deities and demons assume different incarnations to fight the same battles repeatedly.
p.289
It is the old conflict between the concepts of the open system and the closed, between the forces of centralized order and those of dispersed variety. The antagonists assume new forms, the general change, but essentially the same battles are fought over and over again.
([ same shit, different band ])
(Wu, Tim, The master switch : the rise and fall of information empires / Tim Wu., 1. telecommunication--history., 2. information technology--history., 2010 )
(The Master Switch: The Rise and Fall of Information Empires, Tim Wu, 2010.)
____________________________________
Sebastian Mallaby., More money than god : hedge funds and the making of a new elite, 2010.
p.419
20. “Valuable as market analysis and data generation may be, money management discipline is even more important to successful speculation .... Most successful speculative derivatives traders generate more losing trades than profitable trades. They are successful only because their gains on positive trades are substantially larger than their tightly controlled losses on negative trades.”
Weymar, “Orange Juice, Cocoa, Speculation and Entrepreneurship.”
21. For example, Paul Tudor Jones began his hedge fund, Tudor, with the help of seed capital from Commodities Corporation. An official at Tudor recalled: “When we incubated young traders, when they came close to kickouts he [Paul Jones] would bring them into the office and say, ‘You've got to write an analysis on why this happened and how it's not going to happen again.’ He took that away from Commodities Corporation.”
p.419
23. Elaine Crocker, who rose to become a senior manager at Commodities Corporation and later president of Moore Capital, recalls, “The kickout forced you to liquidate your positions and get out of the market for thirty days. During this period you would plot the history of your trades in the period leading up to your losses and see whether you had violated your own trading philosophy. Most of the time, the answer would be yes. The whole system allowed traders to develop an approach to markets that would work for them, but at the same time held them accountable for sticking to it.” Elaine Crocker, interview with the author, July 30, 2008.
p.452
43. Swensen himself argued that illiquid markets offered bargains. “Success matters, not liquidity. If private, illiquid investments succeed, liquidity follows as investors clamor for shares of the hot initial public offering. In public markets, as once-illiquid stocks produce strong results, liquidity increases as Wall Street recognizes progress. In contrast, if public, liquid investment fail, illiquidity follows as investor interest wanes. Portfolio managers should fear failure, not illiquidity.” Swensen, Pioneering Portfolio Management, p.89.
p.454
33. Robert Frey explains, “Those researchers were sort of like hothouse flowers. They sit there. If they need data, the data are provided. They have no clue of the hoops you have to jump through to make sure that the data are available and clean and ready. There are tens of terabytes of data available at the touch of a button. Someone going out, who left the green house, so to speak, and went out into the cold, cruel world, I think would quickly find out that even if you could produce these simulations and do all this stuff, which isn't trivial, you wouldn't have access to the historical data. You wouldn't really know how to call up somebody and execute a trade. If you said to me, Robert you don't have a noncompete agreement and we want you to recreate Renaissance, it would probably be four or five years before you could get to a point where you could actually trade.” (Frey interview). It should be said, however, that Medallion defectors who join a rival hedge fund that has research and trading infrastructure already in place could damage Medallion in well under five years.
(More money than god : hedge funds and the making of a new elite / Sebastian Mallaby., 1. hedge funds., 2. investment advisors., HG4530.M249 2010, 332.64'524──dc22, 2010, )
____________________________________
Sebastian Mallaby., More money than god : hedge funds and the making of a new elite, 2010.
pp.131-132
Paul Tudor Jones II, the Patton aficionado and Soros friend
p.131
After studying undergraduate economics at the University of Virginia, Jones landed an apprenticeship with a cotton trader in New Orleans, then moved after two years to the New York Cotton Exchange.
p.131
1983
Still not 30, he was young to head out on his own; but he had a helping hand from Commodities Corporation, which invested $35,000 in his fund and put him in touch with a community of veterans who validated his view of the markets.
p.131
Quickly, Jones emergd as a prodigy with a distinctive style. He approached trading as a game of psychology and high-speed bluff, a kind of poker that combined sly subtlety with crazed bravado. It was not enough to look at your own cards and decide what you might bet; you had to sense what other traders were up ── whether they felt greedy or afraid, whether they were poised to go all in or were dangerously extended. You might hear bullish news for sugar, but then you had to ask yourself how others would react. If the big traders had already bought their fill, the news would scarcely budge the price; but if they there waiting to rush in, the market would take off like a rocket.4
pp.131-132
The more you watched your rival traders, the more you knew how they would play; and eventually you could get inside their heads, luring them along when they were in the mood to buy, spooking them out of the market when they were feeling fearful. If you sensed that the big traders were nervous, you could yell that you were selling and knew that they'd sell too. Then you could pivot right around and buy the hell out of the market.5
p.134
Jones was taken with Kondratiev wave theory, which held that the world moves in predictable twenty-four-year cycles. Kondratiev's teaching had helped Cilluffo to anticipate the crash of 1973, which presumably meant that the next cataclysm was not due until 1997; yet in 1987 JOnes nonetheless believed that the theory reinforced the case that “total rock and roll” was imminent.
p.134
Jones was even more enamored of Elliot wave analysis, as expounded by an investment guru named Robert Prechter. The guru asserted with great confidence that stocks would experience one last upward explosion before plunging at least 90 percent: It would be the greatest crash since the bursting of the South Sea bubble in England in 1720. Jones told one interviewer, apparently in all sincerity, “I attribute a lot of my own success to the Elliot Wave approach”.11 But Prechter's predictions of disaster were wildly overblown, and even Jones agreed that Prechter had no way of pinpointing when the crash would happen.12
pp.134-135
The truth was that Jones's trading profits came from agile short-term moves, not from understanding multidecades supercycles whose existence was dubious. Like the traders at Commodities Corporation, Jones was adept at riding market waves; he would get up on his surfboard when a swell seemed to be coming, ready to jump off quickly if the market turned against him.
p.135
“When you take a an initial position, you have no idea if you are right,” he once confessed, undermining the notion that any long-range analysis could explain his success. Rather, as he explained in his more candid moments, his method was “to write a script for the market”, setting out how it might behave; and then to test the hypothesis repeatedly with low-risk bets, hoping to catch the moment when his script became reality.13
p.135
Years later, Jones decribed the mental gymnastics that went into writing these scripts. “Every evening I would close my eyes in a quiet place in my apartment. I would picture myself in the pit. I would visualize the opening and walk myself through the day and imagine the different emotional states that the market would go through. I used to repeat that exercise every day. Then when you get there, you are ready for it. You have been there before. You are in a mental state to take advantage of emotional extremes because you have already lived through them.”14
p.430
13.
Jones also said, “I consider myself a premier market opportunist. That means I develop an idea on the market and pursue it from a very low risk standpoint until I have repeatedly been proven wrong, or until I change my viewpoint.”
14. Elaborating on how he would write a script for the market, Jones says, “I put myself in the mental position of being short the market, and I think how I would react emotionally to different events and see what it would take to get me to take my position off. And I write that down and that will be the high for the day. Because the high for the day will be the point at which the shorts capitulate. I close my eyes and imagine myself long. I say, ‘Okay, where is the point I get nervous? Where would I say,“Oh my God, I have to get out?”’ And that would be my projected low for the day. That preparation is important to try to determine great entry points to buy and to sell. You know every single high and low is going to be made in the context of these emotional extremes being hit. Execution is fifty percent of the game.” Paul Tudor Jones, interview with the author, April 23, 2009.
“”─“”‘’•“”
p.135
The crash of 1987 demonstrated the power of this sort of preparation. The moment of the S&P 500 started to head down on Friday, October 16, Jones sensed that the expected market break might at last be coming. It didn't matter that Borish's crude comparison with the 1920 had suggested that the crash was several month off; Jones never took that stuff too literally. What did matter was that Jones visualized the possibility of a crash; he understood that once the market started falling, the chances of a really monster fall were significant. Investors had been anticipating a day of reckoning for months; their confidence could crack decisively. Portfolio insurance added to the danger of a downward lurch: Falling stocks would trigger selling by porfolio insurers, which would cause stocks to fall more. Because of the way market was positioned, betting on its decline was irresistible. If the early fall on Friday petered out into nothing, Jones might lose modestly by going short; he would simply close his position and await the next opportunity. But if investor skittishness and portfolio insurance caused the market to crater, the payoff could be enormous.
p.135
The balance of risk and reward was overwhelmingly attractive.15
By Friday evening, Jones had sold armfuls of S&P 500 futures.
pp.135-136
He took off for his hunting lodge in a remote part of Virginia, together with Louis Bacon, the fellow trader and Commodities Corporation seedling, and some friends from Europe.
p.136
When the weekend was over, there were too many guests to fit on the private plane that was returning to New York.
p.136
Jones, ever chivalrous, offered the last seats to his friends. He would stay back in Virginia.
“No”, somebody said. “We know you've got a big position”.16
Jones got on the plane, and on the morning of Black Monday he was at his desk in Manhattan. If his guests had been less generous, he would have missed the largest one-day equity collapse of his lifetime.
p.136
Stocks fell sharply in the morning, then went into a bloodcurdling dive, and JOnes rode the cascade all the way down to the bottom. Frantic investors flooded brokers with phone calls, desperate to sell out of the market, and the only people who weren't panicking were the ones who just turned numb in the face of the destruction.
p.136
“I remember the time I got run over by a boat, and my backside was chewed up by the propeller. My first thought was, ‘Dammit, I just ruined by Sunday afternoon because I have to get stitched up.’ But because I was in shock, I didn't even realize how badly cut up I was until I saw the faces of my friends.”17
p.136
The crash of 1987 paralyzed some people's reactions in a similar fashion. But Jones had written a script for the market. He was mentally prepared for mayhem.
p.136
Even as he rode the market down, Jones seized a second chance to profit. He had been thinking about how the Fed would respond to the collapse, writing a script for the markets as he always did, and he had reasoned that the authorities would seek to calm everybody's nerves by pumping cash into the banks to make borrowing cheaper. Here, Jones figured, might be another asymmetrical bet: If the Fed did as he expected, the bond market would soar; but if the Fed did nothing, there was no reason to expect the market to go downward. When the bond market ticked up late on Black Monday, Jones took that as a signal that his script was coming true. He bought the largest bond position that he had ever owned, and soon it turned out to be his most profitable one.
Jones's double coup on Black Monday reportedly netted his Tudor Investment Corporation between $80 million, contributing to the 200 percent return that he racked up that year.
pp.136-137
He launched a charity, the Robin Hood Foundation, which tapped into the new hedge-fund wealth, channeling millions of dollars to New York's poorest neighborhoods.
p.137
The big three ── Soros, Steinhardt, and Robertson ── all lost heavily in the 1987 crash, but Bruce Kovner and Louis Bacon both fared well, though they made less money than JOnes did.
p.137
The big three and the junior three shared the expectation of a market reversal; they had discussed the prospect frequently among themselves, and Jones had even tried to persuade Julian Robertson to run a portforlio of stock shorts for him.18
p.137
But it was one thing to expect trouble and another to respond like lighting when it actually arrived: This is where the Commodities Corporation trio proved nimbler than the older group, which had come out of the equity tradition. A stock picker like Julian Robertson was wedded to his stocks: His Tigers had researched each of them exhaustively, and it hurt to unload them. But Jones, Kovner and Bacon had none of that baggage. Their hallmark was flexibility, and they could turn on a dime.19 They didn't care about individual stocks. They traded the whole market.
p.138
He began with the standard stock analyst's observation: The market was trading at huge multiples to its earnings. But as with Wall Street in 1987, he focused with particular passion on the way that market players were positioned.23
p.431
23. In an interview in 2000, Jones emphasized the importance of understanding how other players are positioned. “The secret to being successful from a trading perspective is to have an indefatigable and an undying and unquenched thirst for information and knowledge. Because I think there are certain situations where you can absolutely understand what motivates every buyer and seller and have a pretty good picture of what's going to happen. And it just requires an enormous amount of grunt work and dedication to finding all possible bits of information.” Paul Tudor Jones II, interview by Joel Ramin.
p.138
In the Wall Street case, porfolio insurance had created a mechanism that would exacerbate a fall, creating an asymmetrical bet for speculators. In the Tokyo case, Japan's financial culture created a similar asymmetry: Japanese savers expected their fund managers to show returns of 8 percent
(More money than god : hedge funds and the making of a new elite / Sebastian Mallaby., 1. hedge funds., 2. investment advisors., HG4530.M249 2010, 332.64'524──dc22, 2010, )
____________________________________
Theodore Modis., Prediction : society's telltale signature reveals the past and forecasts the future, 1992.
pp.156-157
Ever since I became aware of the fifty-six-year {56-year} economic cycle, my concern was not whether a Wall Street crash was around the corner but rather what must one do when faced with an immiment stock market crash. My calculations suggested a crash around 1985, and the minimum precaution to take was stay away from the stock market.
p.157
And so I did. Month after month I resisted the temptation to buy stocks.
p.157
The flares in energy prices in Figure 8.3 can be seen as banners indicating the beginning of an economic downtrend, the end of which we have not yet reached. We will have to wait until 1996 before the growth trend turns around.
pp.156-157
1985
Monday, October 19, 1987 U.S. stock market crash (U.S.)
1996
(Prediction : society's telltale signature reveals the past and forecasts the future / Theodore Modis., 1. forecasting., 2. creation (literary, artistic, etc.)., 3. science and civilization., CB 158.M63, 303.49--dc20, 1992
, )
____________________________________
• modeling of abnormal distributions was a problem largely unsolved in mathematics., pp.104-105, Sebastian Mallaby., More money than god : hedge funds and the making of a new elite, 2010.
• normal distribution, Gaussian curve, bell-shaped curve
• For non-nerds, this distribution is often called the bell-curve. For nerds, it is the normal distribution. For nerds who like to show-off, the distribution is Gaussian., Tails of the unexpected Paper by Andrew G Haldane (and) Benjamin Nelson, “The Credit Crisis Five Years On: Unpacking the Crisis”, conference held at the University of Edinburg Business School, 8-9 June 2012
• Even in the early 1960s, a maverick mathematician named Benoit Mandelbrot argued that the tails of the distribution might be fatter than the normal bell curve assumed; and Eugene Fama, the father of efficient-market theory, who got to know Mandelbrot at the time, conducted tests on stock-price changes that confirmed Mandelbrot's assertion., pp.104-105, Sebastian Mallaby., More money than god : hedge funds and the making of a new elite, 2010.
• The trouble with [Benoit] Mandelbrot's insight was that it was too awkward to live with; it rendered the statistical tools of financial economics useless, since the modeling of abnormal distributions was a problem largely unsolved in mathematics., pp.104-105, Sebastian Mallaby., More money than god : hedge funds and the making of a new elite, 2010.
• the ... hypothesis did not apply to moments of crisis., p.106, Sebastian Mallaby., More money than god : hedge funds and the making of a new elite, 2010.
• [models] do not work in crisis; rather, the models stop working.
- Self-organized criticality [SOC] might provide a possible perspective and thinking tool kit in moments of crisis
- ...
- Per Bak, How nature works, 1996 (book)
- see 1987 Per Bak, Chao Tang, and Kurt Weisenfeld
Sebastian Mallaby., More money than god : hedge funds and the making of a new elite, 2010.
• modeling of abnormal distributions was a problem largely unsolved in mathematics.
• Even in the early 1960s, a maverick mathematician named Benoit Mandelbrot argued that the tails of the distribution might be fatter than the normal bell curve assumed; and Eugene Fama, the father of efficient-market theory, who got to know Mandelbrot at the time, conducted tests on stock-price changes that confirmed Mandelbrot's assertion.
• The trouble with [Benoit] Mandelbrot's insight was that it was too awkward to live with; it rendered the statistical tools of financial economics useless, since the modeling of abnormal distributions was a problem largely unsolved in mathematics.
• the ... hypothesis did not apply to moments of crisis.
pp.104-105
The efficient-market hypothesis had always been based on a precarious assumption: the price changes conformed to a “normal” probability distribution ── the one represented by the familiar bell curve, in which numbers at and near the median crop up frequently while numbers in the tails distribution are rare to the point of vanishing. Even in the early 1960s, a maverick mathematician named Benoit Mandelbrot argued that the tails of the distribution might be fatter than the normal bell curve assumed; and Eugene Fama, the father of efficient-market theory, who got to know Mandelbrot at the time, conducted tests on stock-price changes that confirmed Mandelbrot's assertion. If price changes had been normally distributed, jumps greater than five standard deviations should have shown up in daily price data about once every 7,000 years. Instead, they cropped up about once every three to four years.
Having made this discovery, Fama and his colleagues buried it. The trouble with Mandelbrot's insight was that it was too awkward to live with; it rendered the statistical tools of financial economics useless, since the modeling of abnormal distributions was a problem largely unsolved in mathematics.
p.105
Paul Cootner, complained that “Mandelbrot, like Prime Minister Churchill before him, promises us not utopia but blood, sweat, toil and tears. If he is right, almost all of our statistical tools are obsolete ── least squares, spectral analysis, workable maximum-likelihood solutions, all our established sample theory, closed distribution functions. Almost without exception, past econometric work is meaningless.”66
p.105
To prevent itself from toppling into this intellectual abyss, the economics profession kept its eyes trained the other way, especially since the mathematics of normal distributions was generating stunning breakthroughs.
p.105
In 1973 a trio of economists produced a revolutionary method for valuing options, and a thrilling new financial industry was born. Mandelbrot's objections were brushed off.
p.105
The crash of 1987 forced the economics profession to reexamine that assertion.
p.105
To put that probability into perspective, it meant that an event such as the crash would not be anticipated to occur even if the stock market were to remain open for twenty billion years, the upper end of the expected duration of the universe,
p.106
As well as challenging the statistical foundation of financial economists' thinking, Black Monday forced a reconsideration of their institutional assumptions.
p.106
In the chaos of the market meltdown, brokers' phone lines were jammed with calls from panicking sellers; it was hard to get through and place an order.
p.106
And, most important, the sheer weight of selling made it too risky to go against the trend. When the whole world is selling, it doesn't matter whether sophisticated hedge funds believe that prices have fallen too far. Buying is crazy.
At a minimum, it seemed, the efficient-market hypothesis did not apply to moments of crisis.
pp.106-107
But the crash raised a further question too: If markets were efficient, why had the equity bubble inflated in the first place? Again, the answer seemed to lie partly in the institutional obstacles faced by speculators. In the summer of 1987, investors could see plainly that stocks were selling for higher multiples of corporate earnings than they had historically; but if the market was determined to value them that way, it would cost money to buck it.
p.293
The early options models, created among others by the two LTCM ..., RObert Merton and Myron Scholes, assumed that stock-price changes were distributed normally. The 1987 crash had demonstrated that this assumption was not merely shaky; it was dangerously wrong ── the truth was that extreme price moves happen far more frequently than the normal distribution anticipated.
(More money than god : hedge funds and the making of a new elite / Sebastian Mallaby., 1. hedge funds., 2. investment advisors., HG4530.M249 2010, 332.64'524──dc22, 2010, )
____________________________________
Theodore Rockwell., The rickover efffect : how one man made a difference / 1992,
p.3
Bob Panoff tells this one:
“He got a call late one night from one of the submarine skippers. His ship was about to head out on a long, imporant voyage, and a tiny set screw had fallen down inside the turbine. They had fished for it long and hard but hadn't found it. And time was running out. The next step would be to disassemble the turbine, which was a mammoth job and would delay the voyage. What to do?”
“The skipper decided to call Rickover. Design of turbines was not even under Rickover's cognizance. But the skipper knew better than to try to get help on something like this from the head of the turbine section. And, as he had hoped, Rickover had a simple answer: ‘At the bottom of the turbine casing you'll find a small inspection plate’, he said, ‘It was put there for just such an emergency. Take it off, and you'll find the screw sitting on it. I'll wait’, he said. They did, and it was.”
p.42
GE was approaching the project as a scientific rather than an engineering task.
“The problem is 95 percent engineering”,
He did, however, persuade GE to scale down the power level to a submarine-sized plant,
p.92
They were stunned when the Captain said bluntly, “That won't do. THe land plant will be built into a simulated life-sized submarine hull. And the hull will be under water, so we can test the effects of water on the radiation shielding design.”
p.92
The engineers howled in unison at the idea. “Let's test it first under the best possible conditions, and then, when we've proved out all the separate parts, we can squeeze the design down to fit into the ship.” This was the normal way in which such developments are carried out.
p.92
But Rickover's proposition was simple: “We don't have time to do it that way. The plant is supposed to drive a submarine and work under those conditions. I want to prove that out on land before we take it to sea. If we did it your way, it would take another step, another five years. We'll build the prototype and the shipboard plant almost simultaneously, with the shipboard plant just enough behind the prototype to let us correct mistakes and apply lessons we've learned ashore.”
p.92
Years later, when the AEC's aircraft nuclear propulsion program built a land prototype, another advantage of the Rickover approach became clear: no problem were encountered in the submarine prototype plant that were not also applicable to the ship. In the aircraft prototype, the idea of making the prototype simpler by making it different from the final model led to numerous problems unique to the prototype, problems whose solution did not contribute to the actual aircraft.
pp.170-171
air conditioning
Another example of Rickover intuition involved air conditioning. Strictly speaking, the amount of air conditioning on the ship was outside Rickover's jurisdiction. He was to suplly the power plant; all other aspects of the ship were the responsibility of other parts of the Bureau of Ships.
p.170
It was also clear that cooling the prototype plant did not require much air conditioning in the cool, dry Idaho desert air.
p.170
But Rickover knew that in 1917 the British had built some submarines with steam-powered propulsion systems, and he also knew that they proved inoperable because the heat and steam leakage make living conditions on board intolerable. So he was liberal beyond reason in specifying the amount of air conditioning to be provided.
p.170
Electric Boat had calculated that 60 tons would do the job, and that is what the company recommended. Panoff and Dunford decided to add a 100 percent safety factor, and the BuShips air-conditioning people agreed to go along.
p.170
Rickover later decided that whatever had been agreed to should be doubled, so at the last minute he ordered that the air conditioning be doubled again, to 240 tons. This caused quite a stir at the time, because it was not easy to add equipment so heavy and bulky to a submarine so late in the design process.
p.170
Today you don't hear about the Nautilus air conditioning; who would be interested in such a mundane thing?
pp.204-205
As he bent the welding rod to reach the spot, the rod broke. Normally, a welder would throw it away and get another, but people in the nuclear program are required to report any unusual event to their supervisor, and the welder knew that these rods don't usually break when they are bent. so he reported it, and the supervisor called in the welding engineer.
p.205
Within a matter of minutes, the welding engineer had stopped all nuclear welding in the shipyard. Metallurgy tests showed that the broken welding rod, or electrode, as they are called, was made of stellite, a hard and brittle material; but it had been taken from a can of electrodes marked stainless steel.
p.205
The yard personnel started radiographing cans of stainless steel electrodes and found to their dismay that several cans each had a few electrodes of the wrong material. So the problem was not just one of mislabeled cans.
p.205
Leighton reported the problem to Jack Hinchey, his counterpart at the Portsmouth Naval Shipyard, and between the two yards they uncovered wrong materials in several cans, from five different electrode manufacturers.
p.205
He called Rickover, who at first was reluctant to get into investigating quality control procedures in the entire welding electrode industry.
But he soon realized that he had no choice.
He put Harry Mandil on the problem, and Mandil was able to determine the point in the manufacturing process where the wrong materials were being introduced.
Mandil hammered out agreements with the manufacturers whereby electrodes for Naval Reactors would be manufactured in such a way as to avoid this problem.
But presumably other problems were still unknowningly vulnerable to this serious hazard ── and may stll be vulnerable to this day.
“I have often wondered”, said Leighton, “whether some of the problems of manufacture we read about in other programs may have been caused this way. We would still be in trouble if we had not been willing to go far outside our assigned area of responsibility.”
p.317
The hull plates were welded, and welding was a problem. But welds can be radiographed, and a poor weld detected and corrected. The piping, on the other hand, was not welded but brazed. Welding melts the metal to be joined, along withsimilar metal in the welding rod, and a properly welded joint is a continuous metallic structure, stronger than the adjacent parts.
Brazing, on the other hand, is a process that flows a lower-melting metal (in this case, a silver-copper alloy) into the crack between the pipe and its fitting, without melting the pipe or fitting.
There was no reliable way to check the integrity of a brazed joint, and even a perfect brazed joint was not as strong as a welded one. Although brazing also requires highly skilled workers, it is cheaper than welding and can be used to join dissimilar metals, which welding cannot.
p.317
All the shipyard were having troubles with brazed joints, and there had been some near-tragedies at sea.
p.318
The Thresher
the diving tests,
her escort vessel for the test received the routine message by underwater phone:
“Proceeding to test depth”.
The next message was a calm voice announcing, “Experiencing minor difficulties. Have positive up angle. Attempting to blow.”
That was the last intelligible message. There were one or two more, unintelligible, and then silence.
Attempts to exchange “Gertrude checks” were unsuccessful. (Gertrude checks are simple messages, one or two words, repeated on the underwater telephone to confirm communications.)
Hand granades tossed over the side in groups of three, the traditional signal for a submarine to surface, produced no response.
Finally, the escort ship radioed that the Thresher was overdue and presumed missing at sea, with 129 souls aboard.
The Thresher's loss had wide impact.
pp.318-319
The most probable scenario, the court concluded, was that the casualty began with a sea water leak in the engine room, possibly from a brazed joint, and the leak sprayed salt water across electrical equipment and shut down the reactor.
p.319
But the Admiral and his people did not find the preferred scenario convincing. Rickover, Panoff, and Leighton went over the computer analyses and discussed them with the acoustic and computer experts who had developed them.
They learned that the “most probable scenario” had in fact never been run;
p.319
Panoff got the computer people to actually run the “most probable scenario” and found that the ship did not sink under the conditions postulated! This did not reveal what had in fact happened to the ship, but it indicated that one should not credit the various speculations with great weight, despite the implied validity of all the high-precision computer analysis.
(The rickover efffect : how one man made a difference / Theodore Rockwell., 1. rickover, hyman george., 2. nuclear submarines ── united states ── history.
3. admirals ── united states ── biography., 4. united states., navy──biography,
V63.R54R63 1992, 359.3'2574'092--dc20, united states naval institute, Annapolis, Maryland, 1992 )
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HBR's 10 must reads on emotional intelligence.
1. emotional intelligence.
2. work──psychological aspects.
BF576.H394 2015
152.4─dc23
2015
Why good leaders make bad decisions 59
by Andrew Campbell, Jo Whitehead, and Sydney Finkelstein
pp.59-60
Decision making lies at the heart of our personal and professional lives. Every day we make decisions. Some are small, domestic, and innocuous. Others are more important, affecting people's lives, livelihoods, and well-being. Inevitably, we make mistakes along the way. The daunting reality is that enormously important decisions made by intelligent, responsible people with the best information and intentions are sometimes hopelessly flawed.
Consider Jürgen Schrempp, CEO of Daimler-Benz. He led the merger of Chrysler and Daimler against internal opposition. Nine years later, Daimler was forced to virtually give Chrysler away in a private equity deal. Steve Russell, chief executive of Boots, the UK drugstore chain, launched a health care strategy designed to differentiate the stores from competitors and grows through new health care services such as dentistry. It turned out, though, that Boots managers did not have the skills needed to succeed in health care services, and many of these markets offered little profit potential. The strategy contributed to Russell's early departure from the top job. Brigadier General Matthew Broderick, chief of the Homeland Security Operation Center, who was responsible for alerting President Bush and other senior government officials if Hurricane Katrina breached the levees in New Orleans, when home on Monday, August 29, 2005, after reporting that they seemed to be holding, despite multiple reports of breaches.
p.60
All these executives were highly qualified for their jobs, and yet they made decisions that soon seemed clearly wrong. Why? And more important, how can we avoid making similar mistakes? This is the topic we've been exploring for the past four (4) years, and the journey has taken us deep into a field called decision neuroscience. We began by assembling a database of 83 decisions that we felt were flawed at the time they were made. From our analysis of these cases, we concluded that flawed decisions start with errors of judgment made by influential individuals. Hence we needed to understand how these errors of judgment occur.
p.60
To put all this in context, however, we first need to understand just how the human brain forms its judgments.
pp.60-64
How the Brain Trips Up
We depend primarily on two hardwired processes for decision making. Our brains assess what's going on using pattern recognition, and we react to that information ── or ignore it ── because of emotional tags that are stored in our memories. Both of these processes are normally reliable; they are part of our evolutionary advantage. But in certain circumstances, both can let us down.
Pattern recognition is a complex process that integrates information from as many as 30 different parts of the brain. Faced with a new situation, we make assumptions based on prior experiences and judgments. Thus a chess master can assess a chess game and choose a high-quality move in as little as six seconds by drawing on patterns he or she has seen before.
([ see Daniel Kahneman writing, and, talk on youtube.com about system 1, and, system 2 thinking/ decision making process ])
([ see thinking fast, thinking slow ])
([ Malcolm Gladwell, Gary Klein, and an author which I do not recall, their writings and explanations about an expert or a novice who has studied a topic deeply for a period of time intensely, in contrast with someone who is learning and processing the subject for the first time, not ...; ... ])
([ see Gary Klein, Sources of power : how people make decision, 1998 ])
([ see Malcolm Gladwell, Blink: the power of thinking without thinking (new york: penguin books), 2005 ])
pp.60-61
But pattern recognition can also mislead us.
p.61
When we're dealing with seemingly familiar situations, our brains can cause us to think we understand them when we don't.
p.61
When happened to Matthew Broderick during Hurricane Katrina is instructive. Broderick had been involved in operations centers in Vietnam and in other military engagements, and he had led the Homeland Security Operations Center during previous hurricanes. These experiences had taught him that early reports surrounding a major event are often false: It's better to wait for the “ground truth” from a reliable source before acting. Unfortunately, he had no experience with a hurricane hitting a city built below sea level.
p.61
By late on August 29, some 12 hours after Katrina hit New Orleans, Broderick had received 17 reports of major flooding and levee breaches. But he also had gotten conflicting information. The Army Corps of Engineers had reported that it had no evidence of levee breaches, and a late afternoon CNN report from Bourbon Street in the French Quarter had shown city dwellers partying and claiming they had dodged the bullet. Brokerick's pattern-recognition process told him that these contrary reports were the ground truth he was looking for. So before going home for the night, he issued a situation report stating that the levees had not been breached, although he did add that further assessment would be needed the next day.
p.61
Idea in Brief
• Leaders make decisions largely through unconscious processes that neuroscientists call pattern recognition and emotional tagging. These processes usually make for quick, effective decisions, but they can be distorted by self-interest, emotional attachments, or misleading memories.
• Managers need to find systematic ways to recognize the source of bias ── what the authors call “red flag conditions” ── and then design safeguards that introduce more analysis, greater debate, or stronger governance.
• By using the approach described in this article, companies will avoid many flawed decisions that are caused by the way our brains operate.
pp.62-63
Emotional tagging is the process by which emotional information attaches itself to the thoughts and experiences stored in our memories. This emotional information tells us whether to pay attention to something or not, and it tell us what sort of action we should be contemplating (immediate or postponed, fight or flight [or freeze] [or play dead]). When the parts of the brains controlling emotions are damaged, we can see how important emotional tagging is: Neurological research shows that we become slow and incompetent decision makers even though we can retain the capacity for objective analysis.
Like pattern recognition, emotional tagging helps us reach sensible decisions most of the time. But it, too, can mislead us. Take the case of Wang Laboratories, the top company in the word-processing industry in the early 1980s.
p.63
These feelings made him reject a software platform linked to an IBM product even though the platform was provided by a third party, Microsoft.
p.63
Why doesn't the brain pick up on such errors and correct them? The most obvious reason is that much of the mental work we do is unconscious. This makes it hard to check the data and logic we use when we make a decision. Typically, we spot bugs in our personal software only when we see the results of ours errors in judgment. Matthew Broderick found out that his ground-truth rule of thumb was an inappropriate reponse to Hurricane Katrina only after it was too late. An Wang found out that his preference for proprietary software was flawed only after Wang's personal computer failed in the market.
p.63
Compounding the problem of high levels of unconscious thinking is the lack of checks and balances in our decision making. Our brains do not naturally follow the classical textbook model: Lay out the options, define the objectives, and assess each option against each objective. Instead, we analyze the situation using pattern recognition and arrive at a decision to act or not by using emotional tags. The two processes happen almost instantaneously.
pp.63-64
Indeed, as the research of psychologist Gary Klein shows, our brains leap to conclusions and are reluctant to consider alternatives. Moreover, we are particularly bad at revisiting our initial assessment of a situation ── our initial frame.
p.64
An exercise we frequently run at Ashridge Business School shows how hard it is to challenge the initial frame.
p.65
That's what happened to William Smithburg, former chairman of Quaker Oats. He acquired Snapple because of his vivid memories of Gatorade, Quaker's most successful deal. Snapple, like Gatorade, appeared to be a new drinks company that could be improved with Quaker's marketing and management skills. Unfortunately, the similarities between Snapple and Gatorade proved to be superficial, which meant that Quaker ended up destroying rather than creating value. In fact, Snapple was Smithburg's worst deal.
____________________________________
Adam Grant., Think again : the power of knowing what you don't know, 2021
p.1
Montana
Mann Gulch
August afternoon in 1949
Missouri River
Wagner Dodge
The flames stretch as high as 30 feet in the air.
p.2
Over the next eight minutes they traveled nearly 500 yards, leaving the top of the ridge less than 200 yards away.
p.2
With safety in sight but the fire swiftly advancing, Dodge did something that baffled his crew. Instead of trying to outrun the fire, he stopped and bent over. He took out a matchbook, started lighting matches, and threw them into the grass.
p.2
What the smokejumpers didn't realize was that Dodge had devised a survival strategy: he was building an escape fire. By burning the grass ahead of him, he cleared the area of fuel for the wildfire to feed on. He then poured water from his canteen onto his handkerchief, covered his mouth with it, and lay facedown in the charred area for the next fifteen minutes. As the wildfire raged directly above him, he survived in the oxygen close to the ground.
p.2
Tragically, twelve of the smokejumpers perished.
p.2
Why did only three of the smokejumpers survive? Physical fitness might have been a factor; the other two survivors managed to outrun the fire and reach the crest of the ridge.
p.3
We don't just hesitate to rethink our answers. We hesitate at the very idea of rethinking.
p.4
Questioning ourselves makes the world more unpredictable. It requires us to admit that the facts may have changed, and what was once right may now be wrong.
p.4
Reconsidering something we believe deeply can threaten our identities,
p.5
No one had taught Dodge to build an escape fire. He hadn't even heard of the concept; it was pure improvisation.
p.5
Many experts had spent their entire careers studying wildfires without realizing it was possible to stay alive by burning a hole through the blaze.
p.6
Just before Dodge started tossing matches into the grass, he ordered his crew to drop their heavy equipment.
p.6
running uphill on rocky ground with
Grant, Adam M., author.
Think again : the power of knowing what you don't know / Adam Grant.
Viking, 2021
includes bibliographical references and index.
subjects: thought and thinking | questioning. | knowledge, theory o. | belief and doubt.
LCC BF441.G693 2021 (print)
DDC 153.4/2--dc23
2021
Adam Grant., Think again : the power of knowing what you don't know, 2021
____________________________________
- faulty fuel tube
- faulty fuel line
- faulty fuel hose coupling
- a brown hose carrying combustible fuel had separated from its coupling.
Accidents and notable incidents:
On 28 September 2018, the first crash occurred involving a USMC F-35B near Marine Corps Air Station Beaufort, South Carolina; the pilot ejected safely.[387][388] The crash was attributed to a faulty fuel tube; all F-35s were grounded on 11 October pending a fleet-wide inspection of the tubes.[389] The next day, most USAF and USN F-35s returned to flight status following the inspection.[390]
• As a pilot was taxiing out to the runway for takeoff, a warning light went on in the cockpit indicating that there was a problem with the plane’s fuel pressure. Returning to the hangar, maintainers opened the engine-bay door to find that a brown hose carrying combustible fuel had separated from its coupling. When I asked what would have happened had the defect gone undetected before takeoff, Berke replied with the noncommittal detachment of a clinician: “I think you can easily infer that, from the fact that the fleet was grounded for six weeks, there was no question that the scenario, the outcomes, were not acceptable for flying.” What he meant, General Bogdan told me later, was that it was a very close call: “We should count our blessings that we caught this on the ground. It would have been a problem. A catastrophic problem.” (When asked about this incident, the engine’s prime contractor, Pratt & Whitney, wrote in a statement to Vanity Fair, “The engine control system responded properly when the leak occurred. The pilot followed standard operating procedures when he was alerted to the leak. The safeguards in place on the aircraft allowed the pilot to abort takeoff without incident and clear the active runway. There were no injuries to the pilot or ground crew. For clarification, the grounding was cleared three weeks after the event.”); source: http://www.vanityfair.com/news/2013/09/joint-strike-fighter-lockheed-martin
source:
wikipedia
http://www.vanityfair.com/news/2013/09/joint-strike-fighter-lockheed-martin
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Ben R. Rich and Leo Janos., Skunk works: a personal memoir of my years at Lockheed, 1994
p.138
mysterious problem
The ground crews began reporting broken rubber seals inside the engine valves and leaking pressure seals around the cockpit.
The rubber had badly oxidized in only a few weeks, leaving all of us scratching our heads.
We replaced the seals, but a few weeks later the seals leaked again.
As it turned out, the answer to the mysterious malady was revealed one day on the front page of the Los Angeles Times, just beneath the fold.
The article reported how European-made automobile tires were proving to be totally unacceptable for Los Angeles motorists. Because of our smog, the article reported, the rubber was badly oxidizing and causing “tire fatigue”, leading to flats and rapid deterioration.
The villian was ozone, a key component of our noxious smog.
U.S. tire manufacturers, aware of the smog problem, added silicone to the rubber for their tires shipped to Southern California in order to avoid this oxidation problem.
Reading that story, I almost jumped out of my chair.
The U-2 was flying at the top of the troposphere, which was heavily laden with ozone.
I mentioned the article to Dick Boehme, the U-2 program manager, who took it directly to Kelly. The fix was made quickly. All our seals were replaced with silicone and the problem vanished.
(Skunk works: a personal memoir of my years at Lockheed / Ben R. Rich and Leo Janos., 1. lockheed advanced development company ─ history., 2. rich, ben r. ─ career in aeronautics., 3. aeronautics ─ research ─ united states ─ history.,
TL.565.R53 1994, 338.7'623746'0973, 338.7623 rich, 1994, )
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