Methodology – Page 25 – artdiamondblog.com

Collins Says Successful CEOs Are Empirical and Disciplined

Source of book image: online version of the WSJ review quoted and cited below.

(p. A15) ‘Great by Choice” is a sequel to Jim Collins’s best-selling “Good to Great” (2001), which identified seven characteristics that enabled companies to become truly great over an extended period of time. Never mind that one of the 11 featured companies is now bankrupt (Circuit City) and another is in government receivership (Fannie Mae). Mr. Collins has a knack for analysis that business readers find compelling.

Mr. Collins’s new book tackles the question of how to steer a company to lasting success in an environment characterized by change, uncertainty and even chaos. Like his previous work, this book builds its conclusions on a framework of painstaking research, conducted over nine years and overseen by Mr. Collins and his co-author, Morten T. Hansen, a management professor at the University of California, Berkeley.
. . .
Messrs. Collins and Hansen draw some interesting and counterintuitive conclusions from their research. First, the successful leaders were not the most “visionary” or the biggest risk-takers; instead, they tended to be more empirical and disciplined, relying on evidence over gut instinct and preferring consistent gains to blow-out winners. The successful companies were not more innovative than the control companies; indeed, they were in some cases less innovative. Rather, they managed to “scale innovation”–introducing changes gradually, then moving quickly to capitalize on those that showed promise. The successful companies weren’t necessarily the most likely to adopt internal changes as a response to a changing environment. “The 10X companies changed less in reaction to their changing world than the comparison cases,” the authors conclude.
. . .
If “Great by Choice” shares the qualities that made “Good to Great” so popular, it also shares some that drew criticism. The authors’ conclusions sometimes feel like the claims of a well-written horoscope–so broadly stated that they are hard to disprove. Their 10X leaders are both “disciplined” and “creative,” “prudent” and “bold”; they go fast when they must but slow when they can; they are consistent but open to change. This encompassing approach allows the authors to fit pretty much any leader who achieves 10X performance into their analysis. Would it ever be possible, one wonders, to find a leader whose success contradicted their thesis?

For the full review, see:
ALAN MURRAY. “BOOKSHELF; Turbulent Times, Steady Success; How certain companies achieved shareholder returns at least 10 times greater than their industry.” The Wall Street Journal (Tues., OCTOBER 11, 2011): A15.
(Note: ellipses added.)

The Huge Value of Exposing Ourselves to Unexpected Evidence

Bill Bryson tells how much we learned from the remains of a man from the neolithic age, who has been called Ötzi:

(p. 377) His equipment employed eighteen different types of wood – a remarkable variety. The most surprising of all his tools was the axe. It was copper-bladed and of a type known as a Remedello axe, after a site in Italy where they were first found. But Ötzi’s axe was hundreds of years older than the oldest Remedello axe. ‘It was,’ in the words of one observer, ‘as if the tomb of a medieval warrior had yielded a modern rifle.’ The axe changed the timeframe for the copper age in Europe by no less than a thousand years.

But the real revelation and excitement were the clothes. Before Ötzi we had no idea – or, to be more precise, nothing but ideas – of how stone age people dressed. Such materials as survived existed only as fragments. Here was a complete outfit and it was full of surprises. His clothes were made from the skins and furs of an impressive range of animals – red deer, bear, chamois, goat and cattle. He also had with him a woven grass rectangle that was three feet long. This might have been a kind of rain cape, but it might equally have been a sleeping mat. Again, nothing like it had ever been seen or imagined.
Ötzi wore fur leggings held up with leather strips attached to a waist strap that made them look uncannily – almost comically – like the kind of nylon stockings and garter sets that Hollywood pin-ups wore in the Second World War. Nobody had remotely foreseen such a get-up. He wore a loincloth of goatskin and a hat made from the fur of a brown bear – probably a kind of hunting trophy. It would have been very warm and covetably stylish. The rest of his outfit was mostly made from the skin and fur of red deer. Hardly any came from domesticated animals, the opposite of what was expected.

Source:
Bryson, Bill. At Home: A Short History of Private Life. New York: Doubleday, 2010.

Confirmation Bias (aka “Pigheadedness”) in Science

(p. 12) In a classic psychology experiment, people for and against the death penalty were asked to evaluate the different research designs of two studies of its deterrent effect on crime. One study showed that the death penalty was an effective deterrent; the other showed that it was not. Which of the two research designs the participants deemed the most scientifically valid depended mostly on whether the study supported their views on the death penalty.
In the laboratory, this is labeled confirmation bias; observed in the real world, it’s known as pigheadedness.
Scientists are not immune. In another experiment, psychologists were asked to review a paper submitted for journal publication in their field. They rated the paper’s methodology, data presentation and scientific contribution significantly more favorably when the paper happened to offer results consistent with their own theoretical stance. Identical research methods prompted a very different response in those whose scientific opinion was challenged.

For the full commentary, see:
CORDELIA FINE. “GRAY MATTER; Biased but Brilliant.” The New York Times, SundayReview Section (Sun., July 31, 2011): 12.
(Note: the online version of the article is dated July 30, 2011.)

We Tend to Ignore Information that Contradicts Our Beliefs

Source of book image: online version of the WSJ review quoted and cited below.

We learn the most when our priors are contradicted. But the dissonance between evidence and beliefs is painful. So we often do not see, or soon forget, evidence that does not fit with our beliefs.
The innovative entrepreneur is often a person who sees and forces herself to remember, the dissonant fact, storing it away to make sense of, or make use of, later. At the start, she may be alone in what she sees and what she remembers. So if we are to benefit from her ability and willingness to bear the pain of dissonance, she must have the freedom to differ, and she must have the financial wherewith-all to support herself until her vision is more widely shared, better understood, and more fruitfully applied.

(p. A13) Beliefs come first; reasons second. That’s the insightful message of “The Believing Brain,” by Michael Shermer, the founder of Skeptic magazine. In the book, he brilliantly lays out what modern cognitive research has to tell us about his subject–namely, that our brains are “belief engines” that naturally “look for and find patterns” and then infuse them with meaning. These meaningful patterns form beliefs that shape our understanding of reality. Our brains tend to seek out information that confirms our beliefs, ignoring information that contradicts them. Mr. Shermer calls this “belief-dependent reality.” The well-worn phrase “seeing is believing” has it backward: Our believing dictates what we’re seeing.
. . .
One of the book’s most enjoyable discussions concerns the politics of belief. Mr. Shermer takes an entertaining look at academic research claiming to prove that conservative beliefs largely result from psychopathologies. He drolly cites survey results showing that 80% of professors in the humanities and social sciences describe themselves as liberals. Could these findings about psychopathological conservative political beliefs possibly be the result of the researchers’ confirmation bias?
As for his own political bias, Mr. Shermer says that he’s “a fiscally conservative civil libertarian.” He is a fan of old-style liberalism, as in liberality of outlook, and cites “The Science of Liberty” author Timothy Ferris’s splendid formulation: “Liberalism and science are methods, not ideologies.” The “scientific solution to the political problem of oppressive governments,” Mr. Shermer says, “is the tried-and-true method of spreading liberal democracy and market capitalism through the open exchange of information, products, and services across porous economic borders.”
But it is science itself that Mr. Shermer most heartily embraces. “The Believing Brain” ends with an engaging history of astronomy that illustrates how the scientific method developed as the only reliable way for us to discover true patterns and true agents at work. Seeing through a telescope, it seems, is believing of the best kind.

For the full review, see:
RONALD BAILEY. “A Trick Of the Mind; Looking for patterns in life and then infusing them with meaning, from alien intervention to federal conspiracy.” The Wall Street Journal (Weds., July 27, 2011): A13.
(Note: ellipsis added.)

Book reviewed:
Shermer, Michael. The Believing Brain: From Ghosts and Gods to Politics and Conspiracies—How We Construct Beliefs and Reinforce Them as Truths. New York: Times Books, 2011.

A Case for Epistemic and Technological Optimism

Source of book image: http://us.penguingroup.com/static/covers/all/5/5/9780670022755H.jpg

Horgan is well-known for writing a pessimistic book about the future of science. For him to write such a positive review of a book that reaches the opposite conclusion, is impressive (both about him and the book he is reviewing).
From Horgan’s review and the reviews on Amazon as of 8/7/11, I view the Deutsch book as potentially important and profound. (I will write more when I have read it.)

(p. 17) . . . Mr. Deutsch knocks my 1996 book, “The End of Science,” for proposing that the glory days of science–especially pure science, the effort to map out and understand reality–may be over. Mr. Deutsch equates my thesis with “dogmatism, stagnation and tyranny,” all of which, for the record, I oppose. But he makes the case for infinite progress with such passion, imagination and quirky brilliance that I couldn’t help enjoying his argument. More often than not I found myself agreeing with him–or at least hoping that he is right.
. . .
If we acknowledge our imperfections, Mr. Deutsch observes, then, paradoxically, there is no problem that we cannot tackle. Death, for instance. Or the apparent incompatibility between the two pillars of modern physics, quantum theory and general relativity. Or global warming, which Mr. Deutsch believes we can overcome through innovation rather than drastic cutbacks in consumption. He gores the sacred cow of “sustainability”: Societies are healthiest, he declares, not when they achieve equilibrium but when they are rapidly evolving.

For the full review, see:
JOHN HORGAN. “BOOKSHELF; To Err Is Progress; How to foster the growth of scientific knowledge: accept that it is limited no matter how definitive it may seem.” The Wall Street Journal (Weds., JULY 20, 2011): A17.
(Note: ellipses added.)

Source information on book under review:
Deutsch, David. The Beginning of Infinity: Explanations That Transform the World. New York: Viking Adult, 2011.

“Progress Depended on the Empirical Habit of Thought”

In the passage below from 1984 Orwell presents an underground rebel’s account of why the authoritarian socialist dystopia cannot advance in science and technology.

(p. 155) The world of today is a bare, hungry, dilapidated place compared with the world that existed before 1914, and still more so if compared with the imaginary future to which the people of that period looked forward. In the early twentieth century, the vision of a future society unbelievably rich, leisured, orderly, and efficient–a glittering (p. 156) antiseptic world of glass and steel and snow-white concrete–was part of the consciousness of nearly every literate person. Science and technology were developing at a prodigious speed, and it seemed natural to assume that they would go on developing. This failed to happen, partly because of the impoverishment caused by a long series of wars and revolutions, partly because scientific and technical progress depended on the empirical habit of thought, which could not survive in a strictly regimented society.

Source:
Orwell, George. Nineteen Eighty-Four. New York: The New American Library, 1961 [1949].

By Canadian law, 1984 is no longer under copyright. The text has been posted on the following Canadian web site: http://wikilivres.info/wiki/Nineteen_Eighty-Four

Caballero Worries about the Relevance of Mainstream Macro Modeling

In the past, I have found some of MIT economist Ricardo Caballero’s research useful because he takes Schumpeter’s process of creative destruction seriously.
In a recent paper, he joins a growing number of mainstream economists who worry that the recent and continuing economic crisis has implications for the methodology of economics:

In this paper I argue that the current core of macroeconomics–by which I mainly mean the so-called dynamic stochastic general equilibrium approach–has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one. This is dangerous for both methodological and policy reasons. On the methodology front, macroeconomic research has been in “fine-tuning” mode within the local-maximum of the dynamic stochastic general equilibrium world, when we should be in “broad-exploration” mode. We are too far from absolute truth to be so specialized and to make the kind of confident quantitative claims that often emerge from the core. On the policy front, this confused precision creates the illusion that a minor adjustment in the standard policy framework will prevent future crises, and by doing so it leaves us overly exposed to the new and unexpected.

Source:
Caballero, Ricardo J. “Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome.” NBER Working Paper # w16429, October 2010.

The paper has been published as:
Caballero, Ricardo J. “Macroeconomics after the Crisis: Time to Deal with the Pretense-of-Knowledge Syndrome.” Journal of Economic Perspectives 24, no. 4 (Fall 2010): 85-102.

“Inventors Are Sometimes Beneficiaries of Their Own Ignorance”

William Rosen gives us a thought-provoking anecdote about Edmund Cartwright, the inventor of the first power loom:

(p. 238) He was also, apparently, convinced of the practicality of such a machine by the success of the “Mechanical Turk,” a supposed chess-playing robot that had mystified all of Europe and which had not yet been revealed as one of the era’s great hoaxes: a hollow figurine concealing a human operator. Inventors are sometimes beneficiaries of their own ignorance.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

Peer Review Versus Open Review (As Inspired by Wikipedia)

“Dan Cohen, director of the Center for History and New Media at George Mason University, is among the academics who advocate a more open, Web-based approach to reviewing scholarly works.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) For professors, publishing in elite journals is an unavoidable part of university life. The grueling process of subjecting work to the up-or-down judgment of credentialed scholarly peers has been a cornerstone of academic culture since at least the mid-20th century.

. . .
“What we’re experiencing now is the most important transformation in our reading and writing tools since the invention of movable type,” said Katherine Rowe, a Renaissance specialist and media historian at Bryn Mawr College. “The way scholarly exchange is moving is radical, and we need to think about what it means for our fields.”
. . .
(p. A3) Today a small vanguard of digitally adept scholars is rethinking how knowledge is understood and judged by inviting online readers to comment on books in progress, compiling journals from blog posts and sometimes successfully petitioning their universities to grant promotions and tenure on the basis of non-peer-reviewed projects.
. . .
Each type of review has benefits and drawbacks.
The traditional method, in which independent experts evaluate a submission, often under a veil of anonymity, can take months, even years.
Clubby exclusiveness, sloppy editing and fraud have all marred peer review on occasion. Anonymity can help prevent personal bias, but it can also make reviewers less accountable; exclusiveness can help ensure quality control but can also narrow the range of feedback and participants. Open review more closely resembles Wikipedia behind the scenes, where anyone with an interest can post a comment. This open-door policy has made Wikipedia, on balance, a crucial reference resource.
Ms. Rowe said the goal is not necessarily to replace peer review but to use other, more open methods as well.
In some respects scientists and economists who have created online repositories for unpublished working papers, like repec.org, have more quickly adapted to digital life. Just this month, mathematicians used blogs and wikis to evaluate a supposed mathematical proof in the space of a week — the scholarly equivalent of warp speed.

For the full story, see:
PATRICIA COHEN. “Scholars Test Web Alternative to the Venerable Peer Review.” The New York Times (Tues., August 24, 2010): A1 & A3.
(Note: ellipses added.)
(Note: the online version of the review has the date August 23, 2010, and had the slightly shorter title “Scholars Test Web Alternative to Peer Review.”)

Government “Gave People the Crazy Juice”

“Peter J. Boettke of George Mason University is the emerging standardbearer for a revived Austrian school of economics.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B1) Peter J. Boettke, shuffling around in a maroon velour track suit or faux-leather rubber shoes he calls “dress Crocs,” hardly seems like the type to lead a revolution.

But the 50-year-old professor of economics at George Mason University in Virginia is emerging as the intellectual standard-bearer for the Austrian school of economics that opposes government intervention in markets and decries federal spending to prop up demand during times of crisis. Mr. Boettke, whose latest research explores people’s ability to self-regulate, also is minting a new generation of disciples who are spreading the Austrian approach throughout academia, where it had long been left for dead.
To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of “creative destruction.”
. . .
(p. B3) It wasn’t a lack of government oversight that led to the crisis, as some economists argue, but too much of it, Mr. Boettke says. Specifically, low interest rates and policies that subsidized homeownership “gave people the crazy juice,” he says.

For the full story, see:
KELLY EVANS. “Spreading Hayek, Spurning Keynes; Professor Leads an Austrian Revival.” The Wall Street Journal (Sat., AUGUST 28, 2010): B1 & B3.
(Note: ellipsis added.)

Google Releases Intriguing New Bibliometric Tool

Source of graphs: online version of the NYT article quoted and cited below.

(p. A1) With little fanfare, Google has made a mammoth database culled from nearly 5.2 million digitized books available to the public for free downloads and online searches, opening a new landscape of possibilities for research and education in the humanities.

The digital storehouse, which comprises words and short phrases as well as a year-by-year count of how often they appear, represents the first time a data set of this magnitude and searching tools are at the disposal of Ph.D.’s, middle school students and anyone else who likes to spend time in front of a small screen. It consists of the 500 billion words contained in books published between 1500 and 2008 in English, French, Spanish, German, Chinese and Russian.
. . .
“The goal is to give an 8-year-old the ability to browse cultural trends throughout history, as recorded in books,” said Erez Lieberman Aiden, a junior fellow at the Society of Fellows at Harvard. Mr. Lieberman Aiden and Jean-Baptiste Michel, a postdoctoral fellow at Harvard, assembled the data set with Google and spearheaded a research project to demonstrate how vast digital databases can transform our understanding of language, culture and the flow of ideas.
Their study, to be published in (p. A3) the journal Science on Friday, offers a tantalizing taste of the rich buffet of research opportunities now open to literature, history and other liberal arts professors who may have previously avoided quantitative analysis. Science is taking the unusual step of making the paper available online to nonsubscribers.
“We wanted to show what becomes possible when you apply very high-turbo data analysis to questions in the humanities,” said Mr. Lieberman Aiden, whose expertise is in applied mathematics and genomics. He called the method “culturomics.”
. . .
Looking at inventions, they found technological advances took, on average, 66 years to be adopted by the larger culture in the early 1800s and only 27 years between 1880 and 1920.

For the full story, see:
PATRICIA COHEN. “In 500 Billion Words, New Window on Culture.” The New York Times (Fri., December 17, 2010): A1 & A3.
(Note: ellipses added.)
(Note: the online version of the article is dated December 16, 2010.)