Books: Knowing you’re wrong is more important than being right

From fish habitats to Iraqi streets, lessons for leaders in the art of adaptation.

(Photo: Anna Lisa Sang)

Nearly four decades ago, Canadian biologist John Endler noticed something interesting about guppies. Studying the fish in their native habitats in Venezuela and Trinidad, he realized the guppies that lived in the pools below waterfalls tended to have very dull coloration. Those living in pools upstream, however, were vibrant as the rainbow. The difference was environmental; the populations living below waterfalls were preyed on by pike chiclids, and had adapted by taking on a camouflaged appearance. The predators couldn’t swim upstream through the falls, however, so the guppy populations in less dangerous pools freely displayed the colourful characteristics that attract the attentions of prospective mates.

Back in the lab, Endler proved his hypothesis by creating guppy populations that over just 10 generations adapted to the different environmental challenges and advantages he introduced. His experiments, writes Tim Harford, “are a modern classic in evolutionary biology, and a striking example of how a population adapts to a new problem.”

Adapt: Why Success Always Starts with Failure (Bond Street) is the latest book from Harford, the man behind the Financial Times’ popular Dear Economist and The Undercover Economist columns. Like Alina Tugend’s Better By Mistake, another book recently featured in this column, Adapt explores the role that error plays in creating successes. But while the strength of Tugend’s book was prescriptive, Harford’s focus is broader and a touch more theoretical. Both ultimately make the argument that, as Harford puts it, “the more complex and elusive our problems are, the more effective trial and error becomes, relative to the alternatives,” but Harford makes it more obliquely than Tugend—not a problem, given that he’s one of our most gifted popular economics writers. There’s a curiosity here about the way people and organizations solve problems that’s immediate and endearing.

That curiosity leads Harford away from the business world for some of the book’s most interesting case studies. While the traditional org chart shows an idealized view of how an organization should reach decisions, with a strong leader at the top making calls informed by a unique perspective on the big picture, “the problem is that no leader can make the right decision every time,” says Harford. In a military context, that’s in evidence in the histories of every leader from Napoleon through Winston Churchill to J.F.K.; for every Cuban Missile Crisis, there’s a Bay of Pigs. As the old maxim goes, no plan survives the first contact with the enemy. “What matters,” Harford argues, “is how quickly the leader is able to adapt.”

In the Iraq War, Harford finds an argument to counter the conventional wisdom that a Washington-directed troop surge finally turned the conflict America’s way. By his reckoning, much credit is due to commanders on the ground like Colonels H. R. McMaster and Sean McFarland, who saw first-hand that the American war strategy was doomed so long as it failed to engage with and earn buy-in from the Iraqis themselves. While Washington seemed determined to remain wilfully ignorant about what was actually happening in Iraq’s streets, McMaster, McFarland and others were learning to work with the citizenry, creating lists of useful strategies and no-bunk PowerPoints that circulated virally among officers in theatre. Though the two men were eventually decorated for their roles in Iraq, their actions, in a rigid hierarchy like the U.S. military, amounted to insubordination—and they were told as much even while the medals were being pinned to their chests.

It would be simplistic to declare that a more flexible and adaptive organization would have succeeded better and faster in Iraq, but Harford makes clear there’s a lesson here. As one general resignedly tells him, “We willingly implement lessons learnt at the bottom end, because changing and adapting low-level tactics saves lives. But we rarely adapt and implement lessons learned at the top end.”

Giving people throughout the hierarchy the freedom to come up with and test new solutions is one of the keys to creating a truly adaptive organization. That doesn’t mean you’ll always love how staff exercise that freedom. In a way, the avatar for Harford’s argument is Peter Palchinsky, a 20th-century Russian engineer who lacked (or was unwilling to adopt) the political wiles to know when he shouldn’t tell his masters the truth. Consulting first for the Tsarist government, and later for the Soviets, Palchinsky was a persistent and clear-sighted critic of top-down economic planning and inefficient megaprojects like the Lenin Dam. Eventually arrested by secret police and executed, his reports and letters show he was simply aware that most problems tend to be more complicated than we realize or are willing to believe. The economic atrophy of the late Soviet period bore out the specific criticisms Palchinsky raised at the very beginning of that catastrophic experiment.

The closest Harford gets to bullet points is coining three “Palchinsky principles” that underpin Adapt’s argument: “First, seek out new ideas and try new things; second, when trying something new, do it on a scale where failure is survivable; third, seek out feedback and learn from your mistakes as you go along.” Or simply: variation, survivability and selection.

“If this was a straightforward guide to business success and personal growth,” Harford writes late in the book, “this would be the point at which the author would urge you to use the principles of adapting to gain wealth and success.… If only it was that easy.” He recognizes instead that innovation is a complex, mercurial thing, and that one of the most important conditions to foster innovation is a balance between micro and macro decision-making. It’s fine to be the scientist setting up the experiment—but it’s the guppies who actually adapt.


Executive summaries

Ticket Masters: The Rise of the Concert Industry and How the Public Got Scalped (ECW)
Dean Budnick and Josh Baron

If you’ve been to a concert in the past decade, you’ve probably cursed the list of fees that turned your $30 ticket into a $60 purchase. The concert business as a whole is unrecognizable from the industry once bossed by independent regional promoters. Live Nation Entertainment, the product of a 2010 merger between event promotion behemoth Live Nation and Ticketmaster, is a $2-billion company with control of most of North America’s big concert venues, their ticket sales and many of the big-name artists who fill them.

Editors at the live-music magazine Relix, Budnick and Baron have produced one of the most detailed accounts of how the modern concert industry came to be, service fees and all. From the birth of computerized ticketing on Broadway in the 1960s (originated by a company bankrolled by Edgar Bronfman Sr.) to the ascendancy of Live Nation, Ticket Masters manages to be both thorough and surprisingly readable—even the end notes are full of interesting concert-business anecdotes. The authors have also secured some of the most extensive interviews on record with Canadian impresario Michael Cohl, the man who showed the Rolling Stones how to make real money and invented the modern concert business along the way.

The Next Convergence: The Future of Economic Growth in a Multispeed World (Farrar, Straus and Giroux)
Michael Spence

Since sharing the 2001 Nobel Memorial Prize for Economic Science for his work on market signalling, Stern School professor Spence has been investigating how technology is compressing the time, distance and cost of economic activity, and what the long-term effects of this compression will be. That inquiry led him to years of research on developing economies, and the ways in which the economic capacities of the developed and developing worlds are—for the first time since the Industrial Revolution—converging rather than diverging.

Spence offers a broad survey of the issues surrounding this convergence. The book’s short chapters address the economic underpinnings and challenges of everything from climate change to global governance to the imbalance between savings and investment in China. That its breadth comes at the expense of depth doesn’t diminish the book’s usefulness, but Spence makes few concessions to a mainstream audience, with a writing style that betrays the years he’s spent in academia. Readers willing to accept that challenge will enjoy a primer on global economic growth from a first-rate mind.

Knowing Your Value: Women, Money, and Getting What You’re Worth (Weinstein)
Mika Brzezinski

Co-host of MSNBC’s Morning Joe, Brzezinski almost resigned from the show in 2008 after realizing how much less she was making than her male counterparts. In her second book, she explores the reasons why women so often earn lower incomes than men with comparable qualifications doing comparable jobs, and what they can do to get what they’re worth.

It’s not a work of extensive scholarship; instead, the book’s strength is anecdotes. Alongside Brzezinski’s stories about making managers appreciate (and pay for) the extra expenses professional women incur to keep up their appearance, for example, there are personal tales from the likes of Arianna Huffington, White House advisor Valerie Jarrett and Yahoo CEO Carol Bartz. Even a famously well-compensated Fortune 500 executive like Bartz admits to long having undervalued herself in salary negotiations, and she sees women who work for her apologizing when they come to her for a raise. The socialized differences between how men and women think about and assert their workplace value will take a generation or more to overcome. Meanwhile, says Bartz, if you struggle to find confidence, “you stand in front of that mirror and you practice until you are confident. You go in there and you be an actress.”