John Naisbitt wrote a pretty decent book called “Megatrend” in the early ’80’s. In his late life, he’s trying capture the mindsets that allow him to see the trend and future. The author went into 11 mind sets and 5 projected future states.

Mindsets:
1. Most Things Remain Constant: His caution is to avoid getting carried away with seeing temporary trends as permanent changes.

2. The Future Is Embedded In The Present. You only need to see the “sky” above you. You can’t see the forest for the trees and watch out for the fads that come and go.

3. Focus On The Score Of The Game. Look at the actual measures. Politicians and newsmakers try to bend our perspectives away from what’s happening. The key numbers tell the real story. For example, it was first global cooling and then global warming. What is it? Look at the data. “It’s the nature of human beings to bend information in the direction of desired conclusions.” How true!

4. Understand How Powerful It Is Not To Have To Be Right. Massive failures follow those who blindly follow a doctrine. “But only if I don’t have to be right can I imagine anything, suggesting anything.”

5. See The Future As A Picture Puzzle. Assemble your perspective by seeing how a variety of current trends fit together – not just a straight line. Einstein put together all the pieces (readily proven theories) together to formulate his theory of relativity.

6. Don’t Get So Far Ahead Of The Parade That They Don’t Know You Are In It. Don’t project ahead of what people can appreciate: otherwise, the new perspective adds no value. For example, Charles Darwin waited until the last minute to challenge God and reveal his “Origin of Species” after building up his reputation as a Geologist.

7. Resistance To Change Falls For Benefits. People will change to gain improvements, for example, shooting basketball with one hand. It’s easy to overestimate resistance, in particular, to new technology that requires us to change our habits. I think iPod is a good example, people don’t mind less direct control of the button as long as the MP3 player is elegant enough for you to carry around and don’t make you look geeky.

8. Things That We Expect To Happen Always Happen More Slowly. Remember the forecasts of everyone owning a car-plane in the 1950s? We should be all using them by now. Nestle’s Nespresso machine was used as an example. It was founded in 1986 and has just started to catch on. I don’t know if this is a good example, because I had not heard of Nespresso and I don’t think I would buy one.

9. You Don’t Get Results By Solving Problems, but by exploiting opportunities. The examples are Fedex’s Fred Smith and Dreyers Ice Cream’s T. Gary Rogers. I’m not sure you don’t get results by solving problems. Some of the best opportunities in existing problems. I think what the author was trying to say that one must think outside of the box.

10. Don’t Add Unless You Subtract. This is a practice similar to a professional sports team. The roster of team is usually fixed at a number. I like this mindset the best among all. In today’s ever-increasing complex work and family life, pruning things can add greatly to the quality of the output or life.

11. Consider The Ecology Of Technology. Evaluate technology in terms of the nontechnical constraints. The author suggested we put more “poets” than computer in our school. He’s arguing for more balance between arts and technology. “Technology is a great enabler, but only when in balance with needs and skills and our human nature… When a new technology is introduced, make it a rule to ask: What will be enhanced? What will be diminished? What will be replaced? What new opportunities does it present?”

In Part II, the author proceeded to frame the pictures of the future:

1. Videos, attractive designs, use of color, and visual imagery are replacing the written word as a key influence. For example, the slow death of newspaper is a convincing point.

2. From nation-states to economic domains. Industries are organizing globally for supply, distribution, and production rather than by nation.

3. China’s economic growth will continue, to be followed by political freedom. The nation will become a global design and branding base, rather than just a source of low-cost production labor.

4. Europe will experience slow growth (mutually assured decline), burdened with below-replacement birth rates, tough policies against immigration, and high social welfare costs.

5. The importance of new technologies will slow down while the application of technologies developed in recent years will accelerate. Although he doesn’t directly say it, biotechnology and nanotechnology are immensely slow methods of invention.

Overall, the abridged audio book was a easy listen, perhaps too easy that I had to borrow the book and catch up with some of this points. The mindsets generally make sense but not extraordinary. I guess it doesn’t take a genius to figure the future out. I also agree with the future states he painted. On the other hand, I was hoping for some controversial future states…

I read this book after reading the “Black Swan” book that was written after the success of this book, hoping to get more insight of his arguments. I was greatly disappointed, as most of the points were discussed already in “Black Swan.”

Early in the book, he told a story of Nero and John, who live next to each other. Nero is the conservative, constantly-hedging trader (not very rich) and John is the lucky, temporarily rich fools who traded high-yield bond and were on the winning/awarding streak until the market collapsed. The morale of the story: don’t think all rich people are smart – they may have been lucky and it ain’t over until it’s over (Solon’s or Yogi Bera’s advise). This may sound like sour grape but it has some truth to it. The same argument can be applied to the heroes or national leaders we worship. Are they truly that good or they happen to be at the right place at the right time. As the Chinese saying goes, it’s the era that makes the heroes.

Taleb assailed the reports for blowing things out of proportion like mad cow disease (killing hundreds) as opposed to car accidents (killing hundred thousands). The sensationalism of journalism can “divert empathy toward wrong causes, sacrificing cancer or malnutrition or other worthy causes. He concluded that journalism may be the “greatest plague we face today – as the world becomes more and more complicated and our minds are trained for more and more simplification.” I noticed this trend as well. Less and less people want to spend the time to think. “Just tell me what to do.”

Taleb mentioned many times in the book the use of Monte Carlo simulation. I was amazed how he could apply Monte Carlo to historical events and see how history might have been changed. He highlighted that there are many historical paths that were never played out and we are obsessed with only one of the historical path within a very short time horizon. He also touched on the possibility that due to randomness evolution may be fooled by randomness. In other words, not all species within a short time horizon are fittest (like John in his example), they may be just lucky enough to face no environmental obstacles. In the long run, these species will be wiped out. Is homosapien one of these species?

The author elaborated that why the statisticians are not good at predicting the future: 1) rare samples may not be included in the samples due to its rarity, 2) the population is constantly changing due to people’s rational behavior in reacting to changes (like having a mischievous boy keep adding/removing balls from the bottom of the urn while you’re sampling balls from the top of the urn). According to Taleb, “rare events are always unexpected, otherwise they would not occur.” He cites the examples of your “killer” neighbor that seems so courtly, reserved, the model of an excellent citizen until he shows up in the national newspaper. In other words, the past cannot predict the future. Sounds familiar?

On the problem of induction, Popper’s answers are there are two kinds of theories: 1) ones that are proved wrong (like Newtonian mechanics) and 2) ones that have yet to be proved wrong. No theories are ever right because we haven’t tested all the cases yet – time will tell. Our brain simply cannot handle all the random possibilities; we need to generalize and make inductive inferences. This is our human limitation. The best way is to take advantage of the statistical data in making bets but make sure you hedge your bets.

The “Millionaires next door” book suffers two major flaws, according to Taleb, 1) survivorship bias. All the interviewees were visible winners. What happened to those who practiced the same austerity and didn’t become a millionaire. 2) It ain’t over yet. Virtually all subjects enjoyed the asset appreciation. What if we have asset value crash? Watch out for the trading strategy of investing on “dogs” of the funds, as the theory of the strategy is deeply flawed in the survivorship bias – based on Taleb’s advise.

Speaking on superstitions, Taleb caught himself practicing superstitious acts after the taxicab driver dropped him off at the undesirable entrance to work and ended up having a profitable trading day the day before. “Our brains are simply not made to view things independent from each other… Our bias is simply to establish a casual link… For it is harder to act as one were ignorant than as if one were smart… We take things too seriously.” I guess one reason we are superstitious is that we want to know we’re in control, not a victim of circumstances.

People, even the best of them, are often fooled by randomness. The conservative Nero character beat the 28% chance of dying from cancer and vindicated himself of this trading strategy when all other Wall Street hotshots got poor, but he ended up dying from a helicopter crash he piloted. The “black swan” got his man.

Taleb labeled that most the corporation CEO are “empty suites” – just lucky (lucky decisions) and tall and charismatic and good at looking the part or playing “corporate politics.” “The higher up the corporate ladder, the lower the evidence of such contribution – The Inverse Rule.” To a certain extent, I agreed with him. This may explain why we had so many optional back-dating scandals and certainly Enron comes to mind. Perhaps due to the extreme luck factor, the CEOs’ salaries (or the jackpot) continue to rise – so the “expected” salary remains the same.

I like one of his afterthoughts: Randomness’ benefit – less stress. If all things are random (like subway schedule) and we all believe in them, we will most likely take things less seriously and subject ourselves to less strict schedule.

This book is a difficult read. Many times, I tried to stay awake to finish the chapters and eventually gave in to the boredom or his esoteric arguments, sometimes seem trivial. I had to read the book twice to capture the above essence from my perspectives. In a way, Taleb practices what he preaches – random thoughts.