Expert Knowledge and Unforced Errors

A favorite picture from one of my first daddy-daughter trips, July 2011, just after my son was born. I took our oldest out of the country (!) so my wife could get to know her new baby.

Howard Marks’ latest had a couple of gems:

You may have to be an expert in a field in order to be able to figure out who the true experts are.

True expertise is scarce and limited in scope.

So great and always relevant to decision making.

How to use these insights?

First, ask the experts, who they rate.

It’s a bit like asking your doctor, “what would you do?” rather than, “what do you recommend?”

In finance, Buffett/Munger come up a lot. Both these guys have written a lot of material over the years. How much of it have you read? I am better off re-reading the best-of-the-best.

In your field, you’ll likely have people you rate. Outside of your field… you will be tempted to follow the advice of the same people. This will create the opportunity for unforced errors.

Quick story on that type of error. Last year I went to a conference on complexity and risk. It took a couple hours to realize that I was WAY out of my league quantitatively. Once I realized I was clueless, I grasped the implication of my cluelessness… there was NO WAY I wanted to be on the other side of a trade with these guys.

Further, I had no basis to evaluate the truth, or otherwise, of what they were telling me. By the way, there is a very profitable industry (financial gatekeepers) built on ignoring this reality.

I went to the conference to learn how-to-do but came away with a clear idea about areas where I should not venture.

That was 98% of the discussion. The other 2% of the discussion diverged into my wheelhouse. As soon as the panel strayed into my area it was clear they had no idea what they were talking about. They had forgotten Howard’s advice that true expertise is limited in scope.

The humility to limit the scope of our confidence is near impossible to remember over time.

  • Ask the experts who they rate
  • Stay in the wheelhouse of core competency

Howard ends by encouraging the reader to have…

the humility to recognize when my opinion doesn’t count.

So good, so true!

You can clearly see our collective “need to know” in children. My kids hate it when I tell them I don’t know, or I won’t play-the-game of guessing outcome.

Telling them my opinion doesn’t count creates a lot of cognitive dissonance in their minds. It does not compute.

In my job, errors can be large, time consuming and expensive to exit. As a result, I am always trying not to predict and to point out the limits of my knowledge. Makes me reliable, but a bit boring!

How to use this point.

Make a list of the key areas where you are likely to make a mistake, screw up or hurt someone.

These areas will repeat for decades, trust me, and are where you need to develop the humility to recognize your opinion doesn’t count. Here are mine:

  • Every situation that requires empathy, rather than execution
  • Every situation where I might make a quick verbal reaction in a group

Zoom meetings work great for me. The little bit of friction, to unmute my microphone, cuts my error rate substantially.

Separate from my empathy-deficit, which is balanced by my wife, I have other biases (medicine, science, memory, action over reflection) => these are addressed by remembering to involve other people in my decision making process.

To sum up, the issue isn’t having holes in our abilities.

The issue is letting pride blind us to our biases and not creating systems/teams to reduce our unforced errors, and re-learn from our past mistakes.