Often during the process of making something (be it your new start-up or slow project) there comes a point where you bump into problems. Often, this problem is actually a gap in your knowledge; you don’t know enough about something to NOT make it a problem. And it needs to be solved. But why do we define these things as problems, when what we’re actually experiencing is either a puzzel or a mystery?
Malcolm Gladwell wrote a fantastic article titled Open Secrets about the collapse of Enron, and the veracity of our belief that Jeffrey Skilling (the CEO at the time) was guilty. He goes on to discuss that actually, whereas puzzels often stem from a deliberate disequilibirum of information, a mystery actually involves ‘open secrets’ – where all the evidence is in plain sight to see. Gladwell intones that whilst you can find someone guilty for withholding information to the detriment of others, we should not have been able to convict Skilling, because Enron actually met their legal obligations to disclose all of their company information. The Enron collapse was a mystery, not a puzzle.
Recently in the Huffington Post, David Fiderer wrote an article about Goldman Sachs avoiding punishment from the S.E.C…but again, this is a similar example as Enron. As Fiderer explains…
“If you actually reviewed the performance of mortgage backed securities held by the CDO and understood how cash flow waterfalls and delinquency triggers worked, then you could see that subordinate tranches being insured for the benefit of Goldman were already worthless”
Financial collapse and boom-bust cycles will continue to occur, because we continue to believe that financial management is a ‘due’ process and that due diligence is infallible. Even Fiderer, the author of this artcile, whilst picking out that the due dilligence was a sham…still espouses checking just another metric (the mortgage backed securities held by the CDO) and making that a part of the system. Metrics are important, but it takes experience and a human who is exceptionally experienced in finance and deals to intuitively asses these sorts of deals.
Keep this in mind the next time you hear a report of ‘Corporate greed or incompetence. It’s not the corporations that are guilty, save for their instinct to consistantly push an opportunity to it’s breaking point. It’s our own fault for thinking the system is infallible. It’s time we realized the efficiency of intuition and various information sources being collaborativly pooled, so that these complex mysteries may be solved.
Our personal projects are no different. Don’t confuse the problem you’re facing as a puzzle – sometimes it’s a mystery that you won’t just be able to just crash your way through. Trust your gut and search for the intuitive answers.