PartnerHacker Weekend 08/13: Unseen Loss of Luck

A quick recap of the PhD from this week:

Recently published:

On reducing luck surface, or “Upside Decay”

I read a fascinating article last week about how and why some organizations find it harder and harder to get lucky or experience big upside.

It starts with lack of virtue.

No really!

When an organization begins to act unvirtuously (usually out of fear of losing control), they erode the network of "weak ties" (aka the long tail of your ecosystem).

From the article:

“Strong ties are conspicuous. Weak ties are inconspicuous but numerous, and help in unexpected ways. When weak ties are activated, they can be more helpful in aggregate than strong ties.

But weak ties will not help an unvirtuous organization! Weak tie assistance is voluntary and altruistic. This means that they only help those they think are virtuous.

Without weak ties, organizations resort to strong ties and hard assets. This leads them to adopt a mercantilist approach. Their zero-sum mindset alienates others and makes them even less virtuous, because their positive-sum actions are now viewed suspiciously by others. Left with no choice but to double down on their zero-sum approach, they’ll antagonize all their weak ties and enter upside decay.

This also explains why their good luck disappears but they don’t suffer much additional bad luck. Weak ties mostly aren’t motivated enough to hinder an unvirtuous organization, but they’ll gladly refuse to help.”

What a great way of explaining the value of an ecosystem, and especially the lost opportunity of tapping those weak ties if you engage in unvirtuous actions.

We see governments do this often - the article uses the example of China - and larger corporations fall into it as well.

But it can affect any organization of any size. Especially once some success is achieved. A protective mindset can take over, the luck surface gets reduced as weak ties no longer assist. All of this missing upside goes unseen.

That's why you can't just focus on what can be seen and measured. You've got to understand the causal relationships that lead to unseen effects too.

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. – 19th Century French Economist Frederic Bastiat

(You can substitute CEO or leader of any kind for 'economist')

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