Mysteries and Puzzles

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?

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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.

4 thoughts on “Mysteries and Puzzles”

  1. I recently finished reading a non fiction mystery called “The Big Short” by Michael Lewis. It follows the investors who bet the financial crash would happen.

    What separated them and the I-Banking industry before everyone was “IN” on the situation one could allude was mystery vs puzzle thinking.

    To the industry the prime mortgage bond boom was a mystery and their intuition told them they were going to keep making shit tons of money so the underlying assumptions were not questioned.

    The investor’s motivations differed from stopping injustice to outright curiosity. To them the market was a puzzle that required placing intuition and emotions aside and analyzing information.

    What was clear is that incentives dictated the path of mystery or puzzle.

    So next time we come up against a barrier or a gift with our personal projects. Maybe questioning the incentives and how we are motivated by them will address how to move forward?

  2. Thanks @Cama,

    I loved Liars Poker, by Michael Lewis – he discussed many of the same themes in that book, especially the one I remember is the understanding in the I-Banking industry that no matter what happens, they will get bailed out. He writes about the period in time when they created ‘mortgage bonds’ – which eventually underpinned the sub-prime collapse. It was fascinating to watch the things he wrote about all those years ago come true, including the consistent bailing out of the banks for the US Government.

    But I digress.

    I like how you discuss the role that incentives play in figuring out if it’s a mystery or puzzle. Do you mean that, for people who believed they were onto a ‘winner’ they were more likely to just trust their gut, rather than those who were a bit more hesitant and thus more likely to trust their heads?

  3. Hey Stevie. I’m back for take two!

    I don’t believe mystery and puzzle are mutually elusive. Our incentives dictate whether to drop into puzzle mode or leave a mystery as just that.

    If we separate people into individual vs group my premise is groups with a shared incentive (e.g. $$) gravitate towards mystery thinking and the remainder (individuals) with alternate incentives (social justice, curiosity) gravitate towards puzzle thinking.
    E.g. To the bankers involved in prime mortgage, why the market was booming was a mystery and there was no reason to question it because of the $$$.
    To the investors who shorted the market it was a puzzle to solve, each with their own reasons to do so. It so happens it ended up being hugely profitable for them.

    Hopefully, I’ve made an impact on the Mystery Puzzle dilemma😉

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