My German Android Commercial for Google

False is true - Illusion of Truth

My former professor Brian Skurnik won a price with his latest paper on the 'Illusion of Truth' effect. Here's the abstract: "Telling people that a consumer claim is false can make them misremember it as true. In two experiments older adults were especially susceptible to this "illusion of truth" effect. Repeatedly identifying a claim as false helped older adults remember it as false in the short term, but paradoxically made them more likely to remember it as true after a three-day delay. This unintended effect of repetition comes from increased familiarity with the claim itself, but decreased recollection of the claim's original context. Findings provide insight into susceptibility over time to memory distortions and exploitation via repetition of claims in media and advertising."

Source: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=532202

Tiger Woods: a bad golfer!

Nearly everyone thinks that Tiger Woods is an exceptional golfer. If you look at the statistics you will be surprised to see that Tiger Woods is an absolutely terrible player when you look at his performance in bunkers. It appears like a contradiction to have one of the best golfers in history to practically fail in certain aspects of the sport. How can one resolve this?
When looking at the performance of athletes or business professionals one oftentimes focuses on a dualistic view, i.e. one is good or bad at something. If you are bad at something then it follows that you should improve and become good at it. A lot of resources are put into place to advance and over time eventually one moves towards becoming "good at it". And so it goes.
The real question, however is, if the property is also "important". Maybe it is just "unimportant". What does that mean? In the example with Tiger Woods one can see by looking at the PGA statistics board that the "Tiger" is bad at bunker shots. However, if you add the second dimension of "Important/Unimportant" one can grasp to understand that this is a rather unimportant skills for Tiger. Why? Quite frankly, Tiger Woods can afford to be bad at bunker shots because he doesn't need to be good at bunker shots. Tiger Woods avoids hitting bunkers altogether therefore he doesn't need to waste his time improving his bad score but rather invests his scares resource, i.e. time, in further improving his performance on the green. The following 2x2 matrix illustrates this finding:

It is obvious to avoid activities on the left side and redirect resources and efforts from points "A" and "B" towards "T".  The not so obvious point is "how" to do this. Depending on the type of the "game" played or the business situation you are in, a solution will be different. In a "looser-game" (see details in my other blog postings) one will likely have to improve the position in "B" and move towards point "T". In a "Winner-game" you have the opportunity to abandon points "A" and "B" and concentrate on improving "T". This is what Tiger Woods does! Professional Golf (unlike amateur golf!) is a Winner-Game and the statistics prove that TW is improving on "T" while abondoning the bunker quadrant. 

A corporate citizen is often confronted with a Looser-Game unlike Entrepreneurs that are more likely to be participants in a Winner-Game. This might be the reason why large corporatins accumulate many mediocre players over time while top-performers will be playing in a different game.

Moving parts & lateral brain teaser

A lateral brain teaser is a question that cannot be solved with regular logic. Here is an example:

A sun dial is the time piece with the fewest moving parts. What is the time piece with the most moving parts? Answer: an hour glass is the most common answer. I personally think that Foucault pendulum is a good answer too since the whole apparatus moves. Granted it has less parts than an hour glass.

First mover advantage

You and I play a game where we take turns rolling a die. I win if I roll a 4. You win if you roll a 5. If I go first, what’s the probability that I win? There are several answer options but I find the one below most intuitive:
This dice problem is mentally tricky because many rounds end without a winner. It would seem necessary to keep track of an infinite series to arrive at an answer. But that’s not the case. The trick is seeing that each round is really an independent sub-game. The fact that the previous round ended without a winner does not affect the winner of the current round or any future round. This means we can safely ignore outcomes without winners.

The probability of winning depends only on the features of a single round. This simplifies the problem to a more tractable one. So now, assume that one of the players did win in a round, and then calculate the relative winning percentages. In other words, calculate the probability the first player wins given the round definitely produced a winner. To do that, we look at the distribution of outcomes. In any given round, the first player can roll six outcomes, as can the second player. How many of those thirty-six outcomes produce a winner, and how many are from the first player?

This diagram illustrates the answer:

There are exactly 11 outcomes where somebody wins, of which 6 belong to the first player. Therefore, the first player wins with a 6/11 chance, or about 54.5 percent of the time. This is the same numerical answer as Monte Carlo, but we get an explanation why it works. The first-mover advantage is caused by the fact the first player wins even if both were to roll winning numbers.

Source: http://mindyourdecisions.com

Andreas Hagenkamp & Tobi

Family friend Andreas Hagenkamp came over to visit Google during his stay in Silicon Valley.

The successful entrepreneur

All it takes to start a company is about 50 bucks and a visit at the local Office Depot to pick-up some generic incorporation forms. The challenging part is to create a successful (!) company. I'm jotting down a few components that haven statistically proven to stir up a much more successful company. In fact everything you are reading has been borrowed from my former professor Greg Fairchild at Darden who has studied the significance of certain aspects.

1. "Three or more": To be successful in the long-run one should have at least three founders in the company. Sure, you always want to have an uneven number of key people to avoid voting conflicts. More importantly you think about the business differently with three or more people. If you have only two persons you will talk back and forth and hear what you already know. This helps little to advance the company in the early days. With three members you will start a dynamic that can evolve into something new and better.
2. "Sales Guy": Do have an experienced sales person on your team. Why? Well, the greatest idea is worth nothing if you can't sell it. A sales person will know what it takes to sell and pitch an idea early on. He/She will help you steer into a direction that yields cash sooner than later. Please note that you should have an experienced sales person - not a person who wants to be experienced.
3. "Serial entrepreneurs": This sounds like a contradiction but the key to success is to fail and keep trying. I'm leaving out the percentages, that I don't have with me, but your chance of ending up in a profitable business is increasing dramatically with each business in which you have failed. What does that mean? First and foremost: don't give up once you fail. Second, have realistic expectations that the next or first start-up might not be it. It would be nice but it's more likely that you will succeed in the long-run. Again, don't give up.
One little chip of information at the end. So which business yields the most millionaires? Believe it or not, and without immediate backup, I remember from my MBA class that the "Dry-Cleaning-Business" brings out the most millionaires. A surprise? :-)

OODA Loop

Example of a typical Air Combat Manoeuvre, in this case the "Lufberry":

The OODA Loop is a favorite concept of mine that comes out of the military strategy field. It was first developed by war fighters and stands for "Observe Orient Decide Act". I particularly enjoy that the dimension of "speed" plays an important role in the OODA Loop.
Wikipedia states: "How does one interfere with an opponent's OODA cycle? One of John Boyd's primary insights in fighter combat was that it is vital to change speed and direction faster than the opponent. This is not necessarily a function of the plane's ability to maneuver, rather the pilot must think and act faster than the opponent can think and act. Getting "inside" the cycle — short-circuiting the opponent's thinking processes - produces opportunities for the opponent to react inappropriately.
Another tactical-level example can be found on the basketball court, where a player takes possession of the ball and must get past an opponent who is taller or faster. A straight dribble or pass is unlikely to succeed. Instead the player may engage in a rapid and elaborate series of body movements designed to befuddle the opponent and deny him the ability to take advantage of his superior size or speed. At a basic level of play, this may be merely a series of fakes, with the hope that the opponent will make a mistake or an opening will occur. But practice and mental focus may allow one to reduce the time scale, get inside the opponent's OODA loop, and take control of the situation - to cause the opponent to move in a particular way, and generate an advantage rather than merely reacting to an accident."