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Good Read – Example of Second level thinking and principle of Inversion

During World War II, lots of fighter planes were getting hit by anti-aircraft guns. Air Force officers wanted to add some protective armor/shield to the planes. The question was “where”?

The planes could only support a few more kilos of weight. A group of experts were called for a short consulting project. Fighter planes returning from missions were analyzed for bullet holes per square foot. They found 1.93 bullet holes/sq. foot near the tail of the planes whereas only 1.11 bullet holes/sq. foot close to the engine.

The Air Force experts thought that since the tail portion had the greatest density of bullets, that would be the logical location for putting an anti-bullet shield.

One of the experts named Abraham Wald said exactly the opposite; more protection is needed where the bullet holes aren’t – that is – around the engines.

His judgment surprised everyone. He said “We are counting the planes that returned from a mission. Planes with lots of bullet holes in the engine did not return at all”.

Einstein had said: Not everything that counts can be counted, and not everything that can be counted counts”.

😇


I got this interesting story as a forward. It is a very good example of second level thinking.

In his exceptional book, The Most Important ThingHoward Marks hits on the concept of second-order thinking, which he calls second-level thinking. Here is an interesting blog on Farnam Street on the concept. You can also read a Memo by Howard Marks on this here.

One of the important tools in second-level thinking or second-order thinking is Inversion. I briefly touched upon Inversion when I mentioned Charlie Munger’s story and quote of mathematician Jacobi. You can read the reference here.

Inversion

The above fighter plane story is another example of second-level thinking using principle of Inversion. Others were looking at planes that returned safely and trying to identify which are they should protect. Abraham Wald rightly applied the Inversion principle and thought: “We should focus on the planes that didn’t return, and think why they didn’t and protect them from getting gunned down!”

Another example of principle of Inversion which many of you would know if you are fans of Amazon founder Jeff Bezos. When asked about what is the purpose or goal of life, most people would give answers which could be summarized as follows:

  1. My goal is to be happy in life – pursuit of happiness is the purpose of life
  2. My goal is to do justice to my potential – achieve the maximum that I am capable of

Jeff Bezos was asked similar question about his goal and what motivated him to found Amazon; and his answer was very interesting. He applied principle of inversion and said: “My idea was to minimize regrets in life when I am 80 years old!” This is a “Regret Minimization” approach as opposed to “Pursuit of Happiness” approach. Jeff said that giving Entrepreneurial instincts a shot was one of his life goals. If he had failed at Amazon he would have happily gone back to his previous career and would have scaled up there. But he wouldn’t have regretted at age of 80 that he had aspirations to start his own venture but he didn’t.

This is such a novel approach! It frees you from the burden of pursuing your dreams and fearing failure and enables you to just enjoy what you want to do and not have any regrets. Many things could be turned into success if we approach life with this philosophy!

Warren Buffett has often said that his biggest mistakes in life were not errors of commission, but the errors of omission. That is, Buffett regrets the opportunities he missed far more than his investing bets that went wrong. Because, according to him, in many cases of omission he had enough knowledge, insights, wisdom to make a right decision and yet for some reason he didn’t and then the missed opportunities turned out to be multi billion dollar “errors” – which never show up anywhere in the Books of Accounts.

quote-errors-of-omission-lost-opportunities-are-generally-more-critical-than-errors-of-commission-russell-l-ackoff-82-82-37

Hope this highlights the power of second level thinking and principle of inversion as tools in thinking and decision making…

 

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Good Read: I AM NOT AN EXPERT, I AM EXPERIENCED.

I came across this post on LinkedIn and liked it; so thought of sharing here (with due credit)

leader


I AM NOT AN EXPERT, I AM EXPERIENCED.

I see so many people label themselves as a Thought Leader, Expert & Guru on LinkedIn. Lord knows how many #1 authors are on this site. Good for them! Congrats on their hard work & achieving their goals.

I am none of the above.

Write a book? I can’t even color in a coloring book. I color as if i am blind-folded. Never in the lines.

Thought leader? Naw, not me. My thoughts are my own. I’m not trying to sell my thoughts & ideas. My thoughts are what I have seen over the years & my conclusions.

Influencer? I can’t even get my daughter to clean her room. That’s how much influence I have on people.

Expert? Never will be & never want to be. To me, expert means you have decided to quit learning because you have nothing else to learn.

All I am is experienced. I have learned from bad experiences & from good experiences. All I do is write posts from all of my experiences. I do not claim to be anything but honest & realistic.

My goal with my posts is that I hope someone can take something I write about & apply it in their private and professional life.

I want to thank everyone for their support of my posts. I want to thank everyone that have agreed/disagreed with what I have written.

You are the experts, I am the student.

written by Jay Jensen (LinkedIn: https://www.linkedin.com/in/jay-jensen-45b88686 )

 

Good Read: The Power of Compounding Small Daily Decisions

If you invest in stock market you would have heard umpteen times the importance of “Power of Compounding”. It is a basic mathematical function – exponential – which leads to huge numbers as the compounding frequency increases. And the same is true about decay function, or negative compound as well. However, the world of investing is always in complete awe of power of compounding.

The principle has some value, but I think it is now one of the most misunderstood concepts. Some true stalwarts have quoted compounding, which are often used to sell the concept. For example, Albert Einstein famously said:

Einstein-Quote on Compounding.png

“The greatest shortcoming of the human race is our inability to understand the exponential function.”

— Albert Allen Bartlett

This is very true – mathematically. It is also true in case of personal finance. That is how all Mutual Funds sell their Systematic Investment Plans (SIPs).

Then the same principle is used to create “inspiring” or “most motivational” message such as follows:

compoundposter

And this is where the misunderstanding of power of compounding lies. The message says that if you give your 99% everyday – for 365 days – you would end up at 0.03. If you give 100% everyday – for 365 days – you would end up at 1 (the message doesn’t mention it, but that’s the baseline case). And if you give “a little bit extra”, 101% everyday – for 365 days – the result is staggering! You would end up at 37.8! That is 37.8 times more than what you would achieve by giving 100% everyday! Just 1% extra effort and such a huge reward! Really motivating! But only for people who don’t understanding mathematics properly.

It is all good in pure numbers, but it doesn’t work in that manner in real life. CAGR (Compounded Annual Growth Rate) is a derived number – based on what you achieved over a period of time. It is not something which you can “chase” or “set as target rate”. Most of the life happens in non-linear manner and it would be foolish to chase a rate of compounding.

Also, “giving 1% extra or 1% less everyday” is all good in theory – what does it really mean? How does it translate into actions? It doesn’t make sense. It may motivate some people to start something but not to sustain it forever.

Does it mean that the idea has no utility? Absolutely not. It helps us understand that

  1. Starting early and sustaining it for longer period has huge advantage
  2. Having a trajectory is important. Purpose of CAGR should be just as a guiding path, not as a target. You will have to continuously monitor and revise the trajectory to achieve goal. Because things don’t happen in linear manner as planned

Here is another chart that is often cited by long-term investment community and advocates of “patience” and “power of compounding”

WB Net Worth

This is how Net Worth of Warren Buffett grew exponentially, after age of 50 or so. Yes, graphically it is true. And if you have read Buffett’s letters, he would talk of CAGR of ~19-20% for 50-52 years!

But that’s the backward-looking calculation. You cannot start today and say that you would earn 19-20% returns every year. That’s plain wrong. You cannot chase target in that manner. You’ll have to earn 30-40-50% returns for many years and limit bad years to lower returns (0-3-5%) or even occasional negative return years (-5 or -10%).

So the way compounding can help is by setting some intermediate milestones, say 5-10 years and setting different compounding return targets for those milestones. Remember, it is very easy to grow $100 to $200, but extremely difficult to grow $1M to $2 million (and far more difficult to turn $1 Bln into $2 Bln).

And yet, the idea of compounding is very appealing in investment world and lot of people try to apply it in different domains. Here is one interesting article I read today:

The Power of Compounding Small Daily Decisions

Intelligent Fanatics is an interesting initiative and you can read some interesting articles on their blog. It is also available in Book format.

Another interesting website you should follow for worldly wisdom is Farnam Street run by Shane Parrish. Farnam Street is the address where Warren Buffett lives. Though it is named after Buffett’s home, the blog is largely influenced by Buffett’s partner Charlie Munger‘s concepts of mental models.

Do check some interesting articles there and share more of such resources if you know.

Books and Lectures: Economics

I am starting this “Books and Lectures” thread to write about good books and lectures that help learning new concepts, subjects. I don’t want to list pure academic books (i.e. course material) as far as possible because they are boring and difficult to read. I will try to mention resources that are interesting and/or easy to digest. So do keep in mind that these resources are good starting point – only to generate interest and curiosity for further studies.

I will write multiple blogs for different subjects. Here is the first one about Economics (and related topics).

If you want to buy only one book on Economics I would recommend The Economics Book (Big Ideas). I recently purchased hard copy of this book. The print quality is too good and the book covers all key concepts in Economics briefly and in engaging manner! It is more life a coffee table book with lots of pictures, graphics, easy-to-read text and covers evolution of Economics over last 300-400 years. It is a book you should not only read but own and keep in your bookshelf.

Economics Book

The second book I would recommend is written by IIM-A Prof. Satish Deodhar and it is “Day To Day Economics“. The book covers interesting aspect of National Budget and how to understand/interpret various terms, concepts such as Fiscal Deficit.

DayToDayEconomics.jpg

If you want to read about more entertaining and hilarious aspects of Economics, do read “The Undercover Economist” and “Dear Undercover Economist” – both written by Tim Harford. This is a new genre of book which has become very popular now. The other examples of similar books (which talk about non-technical, entertaining aspects of Economics) are “Freakonomics” or “Superfreakonomics“. “The Tipping Point” or “Outliers” by Malcolm Gladwell are not exactly Economics books, but they do try to explain certain (economic) phenomenon and touch upon behavioral economics concepts. Another interesting book on behavioral economics, but very difficult to read, is by Nobel Laureate Daniel Kahneman – “Thinking, Fast and Slow“. A new book in the same genre is “Nudge: Improving Decisions About Health, Wealth and Happiness” by Richard Thaler who won Nobel Prize for Economics in 2017. I must confess that I have not yet read Nudge, but watched some interviews of Thaler explaining the concept and read book review and articles. Also, I have not been able to complete Kahneman’s book too.

As I am writing book names, I realized that except for first couple of books which talk about core economics concepts and theories, the rest all are more on “behavioral aspects” or softer side. Also, if you look at names of last few years Nobel Awardees you would realize that their work has been more on behavioral economics, or validation of existing theories/models etc. There haven’t been many ground-breaking new Economics concepts since 1950s or so. And that is understandable given the maturity of this field (the same is true about Mathematics). In one of the interviews Richard Thaler mentioned that John Maynard Keynes could actually be called pioneer of Behavioral Economics as he did a lot of work and wrote extensively on the topic. I recently bought “Essays in Persuasion” – a collection of articles and letters by John M Keynes written during the period between Great Depression and World War II. Yet to read it…

For those who don’t like reading (I hate you!) or prefer watching videos to reading, there are few good videos on YouTube.

How The Economic Machine Works by Ray Dalio
The Monetary System Visually Explained
A four part series on Hidden Secrets of Money
Masters of Money – A documentary on John M Keynes

संस्कृत / Sanskrit: Fake supporters vs Real students

Advent of Social Media has “transformed” (Using this word sarcastically. Everything that is being done these days is Transformation!) people from “dumb and lazy” to “dumber and lazier” lot. It is so easy to click a “Like” or “Retweet” or hit “Forward” and propagate (or make “viral”) any non-sense propaganda without bothering to validate, authenticate or even proof-read.

I have thought of a Social Experiment which I will write about in detail some other day; but it essentially involves sending two slightly different messages in Social Media and then seeing how they propagate and how they traverse and come back to me 🙂 A kind of “velocity of Social Media network”. Anyways, I am digressing.

The reason for writing this blog is my intolerance for fake and bull-shit propaganda, as opposed to real, genuine and meaningful content that deserves to be viewed, read, shared and appreciated.

I get a lot of forwards which spread nonsense messages about great Hindu history, Sanskrit, its acceptance by NASA and all that. I don’t get tired of shooting down such bullshit and show how fragile and hollow such claims are. However, I also try to find good aspects of our history, things that we should cherish and spread and be proud of (although that’s a dangerous territory – to be proud of something to which we have made ZERO contribution).

So here are 3 utter nonsense videos on how or why Sanskrit is great etc.

Why Sanskrit is the most Scientific language and loved by NASA?

https://www.youtube.com/watch?v=rC-XseI-HWI

The Science of Sanskrit Language Explained by Rajiv Dixit

https://www.youtube.com/watch?v=1oQ2LMp17qs

Shri Narendra Modi speaks on Sanskrit

https://www.youtube.com/watch?v=0Cf35wQB0QU

When you do something as a show-off, all you can do is give such speech – and claim that you are doing a great service.

Smriti Irani’s speech in Sanskrit

No wonder that someone who started her career reciting someone else’s dialogues can pull off a Sanskrit speech without bothering if she would remember even one sentence after a few days. They would accuse opposition leaders of reading Hindi speech written in Roman script. This speech is worse. At least, in case of Roman Script Hindi the person would know the meaning or message (only that he/she might not know the Devnagari script). In this case, it’s the reverse. The person would at best know script – nothing more.

Such hollow talk, empty praise and false pride does nothing for the good of Sanskrit. Mostly these are false claims, blind faith and irrational pride.

However, people who really mean well, do something about it. They pursue the cause and if possible, contribute. Here are two examples (and I have intentionally chosen these examples to highlight contrast – Sanskrit scholars who happen to be Muslims)

Muslim scholar who converses in Sanskrit

https://www.youtube.com/watch?v=i1zvOEiZNFI

Vaartavali: Special interview with Sanskrit scholar Mohammad Hanif Khan Shastri

https://www.youtube.com/watch?v=OkGfvquqihU

What is the meaning of Hindu Rashtra by Dr. Hanif Khan Shastri

You don’t need Social Media propaganda, umpteen Likes and Retweets and army of fake supporters to keep Sanskrit alive, make her thrive again. All you need is real students!

By the way, the mention that there was no Sanskrit news broadcast on radio is a complete lie. It has been there since last 40 years

In fact there used to be a Sanskrit edition of kid’s magazine Chandamama (Chandoba in Marathi/ Chandrama in Sanskrit) My friend had subscribed to Sanskrit edition when we were kids (in early 90’s).

Yes, Sanskrit has declined steadily over decades/centuries; however, that is not because of “Macualay Putras”. I will write my thoughts on this in a separate blog post. Till then do watch the Muslim Sanskrit Scholars’ interviews and share if possible.

 

 

Misha Osipov – the new chess prodigy (age 4)

If you follow Charlie Munger, Warren Buffett’s partner and Vice-Chairman of Berkshire Hathaway, you would know his love for a mental model called “Inversion” or “Thinking Backwards”. Charlie quotes Jacobi (“Invert; Always Invert”) and says that a lot of problems could be solved by inversion – that is, by inverting the problem statement and answering the inverted problem, which leads to the solution of the original problem. For example, he says, if you want to be loved and respected, prepare a checklist of all qualities that put you off. And avoid them!

Munger himself tells this story: “I have a physicist son who has been trained more in the type of thinking I like. And he immediately got the right answer, and here’s the way he reasoned: It can’t be anything requiring a lot of hand-eye coordination. Nobody 85 years of age is going to win a national billiards tournament, much less a national tennis tournament. It just can’t be. Then he figured it couldn’t be chess, which this physicist plays very well, because it’s too hard. The complexity of the system, the stamina required are too great. But that led into checkers. And he thought, “Ah ha! There’s a game where vast experience might guide you to be the best even though you’re 85 years of age.” And sure enough that was the right answer. Anyway, I recommend that sort of mental trickery to all of you, flipping one’s thinking both backward and forward.”

Note: The 85-year old person Charlie was referring to was Asa Long (1904 – 1999), an American checkers player, winner of multiple US Championships, spanning more than sixty years, and a one-time World Champion.

The reason I was reminded of this anecdote about Chess was the recent news about a new child prodigy, barely 4 years old, named Misha Osipov, who played with World’s oldest Chess grandmaster, 95-year-old Yuri Averbakh – and defeated him!

There are many “WOW” aspects about this story, so let’s go slow. World’s oldest Chess grandmaster, 95-year-old Yuri Averbakh still very much active and playing chess is the first extraordinary thing – which links to Charlie’s story. Viktor Korchnoi a Soviet and Swiss chess grandmaster was considered one of the strongest players never to have become World Chess Champion. He was very active and strong chess player till he died in 2016, at age of 85. Korchnoi became the oldest player ever to win a national championship, when he won the 2009 Swiss championship at age 78. He won the national title again a few months after his 80th birthday in July 2011. So Korchnoi and Yuri Averbakh are the exceptions to what Charlie Munger said.

Now the next extraordinary thing! Misha Osipov, the young (actually an infant) child prodigy from Russia, played with former World Chess Champion Anatoly Karpov (66 years old) when he was just 3.5 years old. Though Misha lost the blitz game (5 mins game), he played very strong chess (for a 3.5 years’ old). You can watch his game here:

You can also watch a cute interview of Misha here:

But that was not enough. If playing against a Chess Grandmaster at age 3 is an amazing achievement, winning against another Chess Grandmaster at age 4, is a 1000x more amazing achievement! (In fact, a billion times…). And the Grandmaster who lost was also another marvel – 95-year old Yuri Averbakh. You can watch the video and the game here:

Chess is probably the only sport where a 4-year old can compete with a 95-year old and defeat him!

José Raúl Capablanca y Graupera (Havana, Cuba, 19 November 1888 – New York, 8 March 1942) was a Cuban chess player who was World Chess Champion from 1921 to 1927. He was also a child prodigy and started playing at very early age with his father and defeated him when he was just 4. Here is a photo of 4-year old Capablanca playing with his father (year: 1892).

Capablanca_jogando_com_o_seu_pai

That was an amazing achievement, no doubt! But see the progress the Chess world has made since then. Today Misha not only plays well at 4, he has beaten a Grand Master!

You should read Garry Kasparov’s new best-seller “Deep Thinking: Where Machine Intelligence Ends and Human Creativity Begins” (Amazon: https://www.amazon.com/Deep-Thinking-Machine-Intelligence-Creativity/dp/161039786X/ref=sr_1_1?ie=UTF8&qid=1504506916&sr=8-1&keywords=deep+thinking+garry+kasparov ). Kasparov talks about his match with IBM’s Deep Blue and the evolution of chess playing machines and what it means for humanity. Not specific to chess, but in general. When you see examples such as Misha you know that Humans are still way ahead of any programmed machines.

P.S: You should remember the 2003 game between another child prodigy (13-years then) who drew with former World Champion and one of the greatest players of all time – Garry Kasparov. Here is the video:

The 13-year old prodigy was Magnus Carlsen, today’s World Champion and one of the greatest players of all time! He was a child-prodigy too – so watch out for Misha!

 

Culture eats strategy for breakfast everyday – decoding Murthy-Sikka battle

If you were operating at or connected to the senior levels in the technology industry, the news of Sikka’s exit from Infosys would neither be shocking nor unexpected. It was a question of when – not whether – Sikka would be out of Infosys. So what went wrong ?

The History

When Sikka took charge, Infosys was in doldrums. Once an industry bellwether, Infosys stood still as industry peers like HCL and TCS grew quicker and delivered better returns. Its efforts at moving up the value chain through Infosys 3.0 came a cropper. Murthy’s second stint as CEO under those tumultuous conditions was a largely forgettable one The only positive event were Murthy’s efforts to bring in a new CEO.

The CEO search

The Infosys board envisaged what it needed in a new CEO: a successful technology executive with a global perspective and proven track record. Sikka’s academic success and credentials at SAP looked impressive: additionally, he seemed to have the depth of strategic skills and the right vision for an organization Infosys’ size. He took charge as the first non-founder CEO in 2014. All good? Not quite. Two areas simmered in the background right from beginning:

1. The very first clue comes from Infosys’s tagline: “Powered by Intellect, Driven by Values”. While Sikka’s Stanford PhD and SAP HANA success ensured his intellect stood out, his values’ fitment is unlikely to have ticked all boxes. Sikka was a global executive schooled in liberal values – diametrically opposite to te values of a traditional Infosys. Sikka’s masterful strategic skills and intelligence were an unlikely replacement for his mismatch of cultural values, especially for the top job at an organization that prided itself precisely on these very values,.

2. Sikka’s due diligence about the role of Infosys’ powerful and domineering founders presented an important potential fault line. There is a likelihood that Sikka mistook his experience in the West – where executive freedom is nearly guaranteed – as a benchmark for what to expect at Infosys. Little did he understand the true meaning of Murthy’s line “Infosys is my middle child”: Sikka, like others, might have laughed it off as parting words from a genius – not as literal words from a very possessive strong personality.

In the battle of nature vs nurture, Infosys founders expected Sikka to get nurtured by existing values whereas Sikka expected his nature to turn Infosys around. That dichotomy – as time would tell – made all the difference.

However, difference in such subtle yet vital areas rarely manifest themselves overnight: they build up overtime and blow over soon.

Enter Sikka

Sikka scored some early successes:

1. Sikka loosened the office dress code, promoted 500 employees, gave away iphones, strengthened grassroot communication and did everything to engage employees.

2. Sikka next wooed the investor fraternity and the stock markets by presenting a grand and aggressive vision of a $20 billion organization by 2020. For an organization known to under-promise and over-deliver, this was a cultural shock. The tall talk raised expectations drastically and while that enthused the stock markets in the short run, the expectations – as we now know – made it difficult for Sikka to live upto them.

3. Last, for a conservative organization known to harp on its brand but never known to pay top-of-the-line salaries, Sikka raised the salaries of his top reports to unheard-of levels.

Seen from the perspective of Infosys’ founders, these initial “successes” were not success at all: they were cultural failures, disturbing enough to lead to uneasy relationship with Sikka, but yet not alarming enough to cause a blast.

Meanwhile, Sikka brought an army of top people from SAP to change the culture and help him transition Infosys from a lumbering elephant to nimble cheetah. Unfortunately, Sikka misjudged what it would take to bring about a cultural change: if a culture of a 30 year old, hundred-thousand employee traditional organization could be changed with a handful of imported top-managers, Drucker’s powerful line “Culture eats strategy for breakfast everyday” would not have stood the test of line.

The challenges

All of the above would still have sustained but for a few areas where Sikka and the board crossed Murthy’s red line.

1. Awarding CFO Ravi Bansal a huge severance pay package raised question marks on corporate governance. Infosys prided itself on its disclosure standards. The board’s decision of not disclosing the contents of reports from an external law firm – especially when all was deemed “fine” – gave an already disenchanted founders’ team a stick to beat Sikka and the board with.

2. Within months of the Bansal episode, the board raised Sikka’s already high salary by 55%. The stick in the disturbed founders’ hands now got a poison tipping and became a lot more potent with Murthy incessantly and publicly lynching the board.

3. After some initial success, Sikka’s turnaround strategy missed its target by an embarrassing $5 billion: finally in June 2017, the board scrapped the $20 billion target.

For an organization that consistently beat investor expectations for years, this was a strategic Freudian slip and the Infosys stock – and Sikka – lost support of some of the vital institutional investors.

And for Sikka – long dismissed as a cultural misfit – who had strategic results as the last armory in his toolkit, a slipup in strategy, positioned his rhetoric as “all bark, no bite”. This was the last straw on the camel’s back.

The Exit

With a frustrated founding team led by combative Murthy, allegations of corporate governance, a failed turnaround strategy questioning the very competence of Sikka and missing investor support, Sikka had nothing to fall back on and nothing to look forward to – except a good nights sleep and the much needed peace of mind. Exiting Infosys provided him precisely those benefits – and Sikka cut his losses.

There are some really valuable lessons:

1. With the infamous Tata episode still fresh in memory, Indian founders and family business heads would do well to rethink if they really want to let go in the true sense when they hang up their boots. If all they want is to remote-control a strategically minded executive – who is tasked with the responsibilities of a CEO without the requisite authority, they should stop searching the market and instead stick to the comforts of loyal insider.

You can have loyalty or results – rarely both.

2. For prospective CEO choosing a top job at any organization – specially with powerful founders or families, it is well worth developing a thorough understanding of the cultural factors and sensitivities involved. Raw Intelligence is a necessary but not a sufficient condition to succeed – emotional intelligence provides the much-needed sufficiency. And that involves recognizing stakeholders interest before picking up the top job.

There is no point in diving in deep oceans and complaining about sharks.

The forces of nature are so strong that in the battle of nature vs nurture, nature often wins hands down. As Sikka learns that lesson and walks into the sunset, he would do well to recall Peter Drucker’s golden lines that Cyrus Mistry at TATA group learnt equally painfully:

“Culture eats strategy for breakfast everyday”.

Source: WhatsApp Forwards and long-time Infoscions

Economics by a professor – Brilliant and yet so Simple

Economics by a professor – Brilliant and yet so Simple

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing.

The fifth would pay $1.

The sixth would pay $3.

The seventh would pay $7..

The eighth would pay $12.

The ninth would pay $18.

The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.”. Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).

The sixth now paid $2 instead of $3 (33% saving).

The seventh now paid $5 instead of $7 (28% saving).

The eighth now paid $9 instead of $12 (25% saving).

The ninth now paid $14 instead of $18 (22% saving).

The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,”but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!”

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!” The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is

somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics.

For those who understand, no explanation is needed. For those who do not understand, no explanation is possible.

(Received as a forward on WhatsApp)

Elon Musk – 1 Page Resume

This resume for Elon Musk proves you never, ever need to use more than one page.

Let’s say your accomplishments vary and range from creating an electronic payments industry to invigorating the solar energy market to inventing high-performance electric cars to launching a commercial space and rocket industry.

You may think that all of that would surely need a couple of pages to explain on a resume, right?

Not at all, say the experts at online resume-writing firm Novorésumé , who believe in the less-is-more concept for writing resumes.

They created a sample resume for Musk to prove ” even a highly successful career like his can be presented in a one page resume,” cofounder Andrei Kurtuy tells Business Insider

Musk is famous for his high standards, and he has a reputation as a rough guy to work for. He once described himself as a “nano-manager,” a play-on-words meaning he’s even more controlling than a micro-manager. ( “I have OCD on product-related issues. I only see what’s wrong. I never see what’s right. It’s not a recipe for happiness,” was how he explained his management style).

Still, it proves that with the right design, you never, ever, need more than one page for a resume.

#RightResume #1PageResume #Careerists

Credits: Business Insider (from LinkedIn article)

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