I wrote this for CFA Institute right after I decided to come out publicly as a Transgender Woman. It was first publshed on the Enterprising Investor.
Are you working on the biggest, most interesting problem that you can think of?
If not, why not?
If you are lucky, that question — lifted from Richard Hamming’s excellent talk, “You and Your Research” — will plague you for the rest of your life. Call it fear of missing out or fear of resting easy, either way it is a powerful motivator.
Just as in the spring, the thoughts of young people turn to romance, in the fall they seem to turn to meaning. Over the past few months, I’ve had a number of conversations with friends new and old about that “M” word.
There isn’t much agreement on what it means.
Maturing is a process with steps: Those most widely agreed upon are paying taxes and making compromises. I assume there are others, and that time will make them all the more obvious. In the meantime though, it’s worth thinking in detail about the compromises in your life, both personal and professional.
Our lives are complex systems, and we need to analyze them as such. That’s not an easy thing, but you can gain a lot of insight by thinking about the different places where it is possible to intervene in a system. At best, you will identify the issue and come up with a plan at the same time.
I’m not aware of a better way of thinking across the different levels of a system than the framework offered by Donella Meadows excerpted below:
Places to Intervene in a System
(in increasing order of effectiveness)
12. Constants, parameters, numbers (such as subsidies, taxes, standards).
11. The sizes of buffers and other stabilizing stocks, relative to their flows.
10. The structure of material stocks and flows (such as transport networks, population age structures).
9. The lengths of delays, relative to the rate of system change.
8. The strength of negative feedback loops, relative to the impacts they are trying to correct against.
7. The gain around driving positive feedback loops.
6. The structure of information flows (who does and does not have access to information).
5. The rules of the system (such as incentives, punishments, constraints).
4. The power to add, change, evolve, or self-organize system structures.
3. The goals of the system.
2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.
1. The power to transcend paradigms.
Now, that’s quite a list. But think about how it can help you uncover possible issues and move toward addressing them. If you’re having trouble getting up in the morning, you could put a coffeemaker next to your bed (change a constant, number 12). Or you could take a deeper look at why the day seems unappealing.
You can try and reinvent yourself by looking at the feedback loops you’re involved in. Tweaking how you reward yourself can be powerful, but to me what’s cool about this list is that once you finish thinking about feedback loops, you are only halfway there.
The Personal Is Professional
A great thing about working at CFA Institute is that much of what I do targets numbers 1 and 2. As part of that work, I’ve spent a lot of time in the past few months thinking about our profession and its purpose in general.
In talking to people about their work, there is widespread optimism for the activity of investing, but a profound sense of ennui. The work can feel abstract, or perhaps the work is great but there are tough-to-overcome structural impediments to serving clients as fully as you would like. To a degree, CFA Institute and State Street recently quantified this with findings that suggest an association between a professional’s motivation and their performance.
I can’t help but feel that change is needed higher up the spectrum. Ultimately, the prevailing business model for investing is “We hold onto your stuff and tell you what happened to it.”
This was compelling at one time, but today diversification is not nearly as hard to achieve as it was when funds first came into vogue. We’ve continued to deliver services primarily using funds of various types though, and as a result our offerings are unexciting to many even as we innovate furiously within the form.
I would love it if you were to think for a moment on how the power to transcend paradigms might be applied in your life, whether personal or professional. In revisiting your core assumptions, can you find the place where you’re irretrievably wrong? It exists, and time spent in search of it is not wasted.
Check out these pieces if I sparked something for you:
- You really ought to read the whole essay by Donella Meadows about the places to intervene in a system. (Donella Meadows Institute)
- The same goes for “You and Your Research.” There’s even a video. (Bell Communications Research Colloquium Seminar)
- “How Will You Measure Your Life?” This is one of the more famous recent talks on the subject. (TED)
- CFA Institute has an excellent career guide. (CFA Institute)
Good Reads Closer to the Markets
- Some leading industry figures share their views of the future. (Financial Analysts Journal)
- A loss of central bank credibility took over as the biggest worry in a Two Sigma survey. (Two Sigma)
- “How a Pillar of German Banking Lost Its Way” (Der Spiegel)
- “The Weird Economics of Ikea” (FiveThirtyEight)
- “The Most Fascinating Impact Investor You’ve Never Heard Of” (We See Genius)
Why and Why Not
- Why we should remember the social — not just the scientific — predictions of H.G. Wells. (The Conversation)
- “Why the Industrial Revolution Didn’t Happen in China” (Washington Post)
- “There’s Magic in Mess: Why You Should Embrace a Disorderly Desk“ (The Undercover Economist)
- Why it’s worth mourning the death of the greatest hits album. (Pitchfork)
- “Why Words Are the New Numbers” (Chicago Booth Review)