On the Dangers of Homogeneity
One of the Eight Best Investing Blogs, Value Discipline, has an excellent new post entitled “The Dangers of Homogeneous Thinking.” Diversity of thought and interpretation is an important concept.
A lack of variation within any population is a dangerous thing. An evolutionary system in which an overall sense of conservatism (carrying what has worked in the past into the future) combined with a lot of variation at the margins (sometimes in extreme and eccentric ways) has often succeeded in consistently creating truly remarkable and effective outcomes that could never have been devised by a single omniscient actor.
This is something I spend a lot of time thinking about. Unfortunately, there is a tendency for success to sow the seeds of future failure, because the greatest enemy of great new ideas is acceptable old ideas.
Major League Baseball is an extreme example of a system in which variation is surprisingly stifled. I’ll use it, because although large corporate bureaucracies display some of the same attributes (and thus outcomes), any discussion of specific corporations would be both less concrete and somewhat more controversial – because it’s closer to the topic I normally write about here.
Pitching techniques are surprisingly uniform in Major League Baseball. There’s basically no evidence to suggest that any physical constraints should cause such bizarre uniformity. Historical evidence shows that other techniques are pretty effective. Furthermore, employing an unusual technique should be especially effective during a period in which a batter is highly accustomed to pitches thrown at different angles and speeds from a different release point following from a different motion. In other words, there’s a lot of evidence to suggest that pitching counter to a batter’s overall experience and his expectations of a certain situation should (all other things being equal) work better than pitching like everyone else does and like the batter expects (both generally and in a specific situation).
Anyway, pitching techniques don’t vary a lot in the major leagues today. Try to pick a range of speeds and a range of release points that will encompass a large percentage of all the pitches thrown in the major leagues. It’s not very hard to do. The range won’t be that wide. Why is this?
I’ve come to only one good conclusion. I’m not sure if it’s the right conclusion; but, it’s the best I can come up with for this very important question – and the question really is important, because a system like professional baseball should display a lot of variation in this regard if it works the way most such systems do.
My best guess is that it doesn’t. I think the relationship between the major leagues and the minor leagues is the answer. Not all professional baseball players are doing everything they can to win. Some are doing everything they can to advance.
There’s a huge difference between those two motivations. If winning is the key to success at all levels, then techniques (however bizarre) that lead to winning will be selected by participants and you’ll see a lot of variation. However, if advancement isn’t entirely dependent on winning – and it certainly isn’t in the minor leagues – then variation will occur only to the extent that is rewarded. If it’s punished – and I think that’s exactly what may be happening – then the degree of variation will be unnaturally low.
That leads me to this question: if two minor league pitchers are equal in all other respects except one throws more like the majority of current major league pitchers and the other doesn’t, who is more likely to advance? My guess would be – and I have no evidence to back this up – it’s the guy who throws like current major leaguers.
By the way, this same principle works at lower levels too. I’m not arguing that the minor leagues are especially prone to imposing conformity – I’m just arguing that they are especially prone to imposing conformity compared to what they were like in periods in which there was a greater variety of pitching techniques in professional baseball.
Old pitchers, scientists, politicians, professors, economists, and money managers don’t learn new tricks. They die. The next generation learns the new tricks, because experience hasn’t yet conditioned them to reject simple truths and new ideas.
This is what Benjamin Graham had to say about the subject in his memoirs:
As a newcomer – uninfluenced by the distorting traditions of the old regime – I could readily respond to the new forces that were beginning to enter the financial scene. I learned to distinguish between what was important and unimportant, dependable and undependable, even what was honest and dishonest, with a clearer eye and better judgment than many of my seniors, whose intelligence had been corrupted by their experience. To a large degree, therefore, I found Wall Street virgin territory for examination by a genuine, penetrating analysis of security values.
The participants in an adaptive system should have full access to the received wisdom, the old ways, the knowledge, the traditions – whatever you want to call past experience – but, they should never be rewarded for playing the hand they are dealt “by the book”, because they need to write tomorrow’s book.
They should always be rewarded for winning. They should never be rewarded for the way they won.
No one has yet seen what they will have to face tomorrow (that’s true everyday for every one of us). That doesn’t mean they shouldn’t be prepared to see what has never been seen by knowing what came before their time – but, it does mean that if they want to be a smarter actor in a smarter system, they need to add to the accumulation of knowledge, they need to add to the experience of the next generation by experimenting today.
The really smart ones – the true geniuses – learn how to turn their own mind into such a system. They learn to be among the very few who can grow both older and smarter.
They learn to learn – it isn’t as easy as it sounds.