Once tested and proven, insulate good ideas from reality.
Running
I recently spoke with a very successful marathon runner who commonly wins races and consistently beats his own times. I asked for his tips, and he shared two:
“The first thing I do is run faster on the uphills. Everyone else slows down because of how difficult it is, and this is a great time to gain ground. The second thing I do is run faster on the downhills. Everyone else slows down because of how fast you go anyways on the slope down, and this is a great time to gain ground.”
I was looking for actual tips and this person (not even concisely) told me it’s just about running faster.
Before passing judgment too quickly and writing off this feedback, I paused. Amusingly, the point was not to run faster, but more so, that the uphill and downhill should have no impact on how you think about the run.
You know you need to run fast, consistently, for the whole marathon.
This is a central note that cannot possibly be wrong; it is a “good idea,” and it is correct. It’s not overly useful as a tactic, but it is the rejection of the notion that the hill changes anything at all.
Regardless of these external hill stimuli, the ground truth is identical: run as fast as you can.
Business
I listened to a shareholder meeting for a tech company in the heat of the tech recession of 2023. The CFO was being questioned by the shareholders about his plan going into unstable economic conditions.
We heard questions about imminent layoffs, changes in strategy, refocusing on core business, and the list continues. The CFO (who I’m paraphrasing here) replied with a terse note:
“We will do as we have always done whether it was through the good times or the bad. We will continue with the disciplined deployment of capital, allocating resources to where it is most needed and most likely to generate substantive returns.”
Similar to the runner, I felt indignant at the fact that no real insight was shared. I was wrong again for the exact same reason.
In the natural cycles of the market, businesses and executives busy themselves with the minutia of reacting to market conditions, changing plans, adjusting strategies, and levying layoffs. In the most recent boom through the pandemic, tech companies saw extreme growth and over-hired.
When things slowed and shareholders questioned productivity, drastic changes were made yet again. Large-scale lay-offs, auxiliary services being cut, and a “year of efficiency”, are all reactionary measures to an ever-changing economic landscape.
However, in this meeting, the CFO highlighted their disregard for external stimuli and instead employed a consistently valuable (and diligent) strategy.
Regardless of these external economic stimuli, the ground truth remains identical: be disciplined in your deployment of capital.
Ideas
Ideas need maturation, and that aging process involves taking an idea and foisting it into reality where it faces friction. Weak ideas are brittle and snap, whereas strong ideas come out even stronger.
Increasingly, the swings of trends and fads are bringing massive changes to ideas and decision-making. Significant time and energy is spent focused on minute optimizations of a new process, rather than recognizing the timelessness of core ideas.
A good idea should not fluctuate with the changing weather, but should instead be insulated against it. Inside, behind thick walls and locked doors. Ready to mobilize against the world, heedless to the external stimuli that only exist in the ephemeral territory of the immediate.
Run fast. Be disciplined. Good ideas are good: now insulate them.
Are you really insulating from reality, or from recency bias?
In an industry where you can expect the most successful companies to have a monopoly that they can use to make a lot of money, a company that can raise and spend more than its competitors can grow faster. The competitor that’s disciplined in the deployment of capital doesn’t rise to the top and thus doesn’t make the most profits.
Conjecture from personal life: one reason I almost never (maybe once a year?) get noticeably/symptomatically sick may be that when I do get sick, I don’t perceive it as a reason to give myself a break, work less, skip exercise, etc. Maybe “the body learns that getting sick doesn’t pay off, so why get sick?”. There is some evidence that the onset of sickness symptoms is partially neurally mediated, so this kind of learning is at least plausible (ref).
(obviously, the law of equal and opposite advice applies here)
If strong ideas that face friction come out stronger, then why would you need to insulate them behind locked doors from external stimuli? Shouldn’t they easily vanquish external stimuli and validate themselves? Unless the point is to recognize the strength of timeless ideas. But even if an idea worked well the first 999 times, it doesn’t mean it will also do so the 1,000th time—you shouldn’t strive to crystallize tried-and-true ideas into static heuristical husks: Heuristics that almost always work can still critically fail, with black swan moments.
‘Always run faster’ can make you stumble down a hill and break your ankle. ‘Always deploy capital prudently’ can make your business miss out on bold plays, as ChristianKl commented. Since even your best ideas are fallible, the goal should be to discern which part of the idea was wheat, and which was chaff. “Run fast, but not if it’ll overexert yourself, here’s an explanation to assess when that’s about to happen.” “Deploy capital prudently, but make allowance for calculated risks, and here’s an explanation for how to assess those opportunities.”
These distinctions require active criticism ‘in the arena,’ even if—especially if, rather—it’s at the risk of swaying under new information in the ephemeral territory of the immediate. It requires a willingness to suspend an idea’s universality if a better explanation carves an edge case where it doesn’t apply, or even subverts the whole paradigm (slow and steady wins the race!). But that only happens if you’re willing to part with even your best ideas, instead of jailing them behind thick walls and padlocks—which insulates them, yes, in an echochamber.