My readership is scaling linearly with the craziness of my writing. You have nobody to blame for today’s piece but yourselves.
I also wanted to highlight some amazing practical work from master synthesizer Cedric Chin. He’s done a remarkable series digging into Lia DiBello’s universal model for business and management success. He also introduced me to one of the most interesting ideas I’ve discovered recently: “Strategic Rehearsals.” It’s below.
We’re also hosting a call on 9/30 with the Marvelous Mr. Dan McMurtrie on “The Playbook for the Attention Economy.” Let me know if you missed the invite.
“The View from Orbit.”
[13 minute read.]
“It’s constantly changing, the colours, the shadows, the terrain, everything is changing and all this motion, colours and light really gives you the sense that we live on a living, breathing organism... When you’re up there for months at a time you can actually see the ice breaking up in the harbour, you can see this line that represents the changing leaf colours slowly march from south to north, to north to south. And those long-term seasonal changes, when you put them together with the routine day to day changes, again give you this impression that we all live on a living, breathing organism, this living thing that we call Earth, a living biosphere”
- NASA astronaut Joseph Allen, on viewing the Earth from space.
Source: Getty Images
The “Overview Effect” is a famous mystical experience consistently reported by visitors to space. Seeing the entire world at once can catalyze a permanent shift in perspective.
Looking down from orbit, it feels like we are hurtling toward a global “phase transition.”
A phase transition describes a mysterious place in complex systems, right in between the two extremes of order and chaos. This is where we see spontaneity, adaptability, and unpredictability. It’s where water suddenly boils into vapour. Information flow accelerates. Equations break down. Infinity happens. A phase transition is a boundary, and everything interesting happens at boundaries.
Imagine watching Earth over the last century, as a glowing web of cities rapidly spreads across the planet. The whole world is suddenly spiking in interconnectedness. Energy and information is pulsing through it at an exponential rate. July was the hottest month ever recorded on Earth. Global internet traffic has increased a thousand-fold in the last twenty years. Back in 1992, the entire world’s daily internet traffic was the equivalent of 10 households watching a Netflix show for 10 hours. We’ve now connected our incomprehensibly complex brains to an infinitely interconnected network.
As always, what's true for one level of the system seems true for another. As MIT’s Andrew Lo wrote in his book Adaptive Markets:
“Immediately before and during a financial crisis, the number of statistically significant linkages between firms would double or nearly triple. Everything became much more interconnected in the run-up to a system-wide financial crisis, whether we studied the collapse of LTCM or the subprime crisis.”
In the meantime, the defining feature of our age is going to be these gargantuan pulses of energy fracturing or swelling nodes in the network. Fortunes are already being lost and won in anticipating these bottlenecks and choke-points.
What might be next?
What will happen at this seemingly-imminent transition point is surely beyond the event horizon of conventional rationality. The state of consciousness that drove us up into our stagnant fitness peak cannot be the same one that draws us back out. Evolutionary leaps are rarely predicable or linear: so if you see signs of “irrationality” all around you, it means we are actually evolving.
Theoretical biologist Stuart Kauffman describes the curious way entire systems get themselves to a phase change:
“We have to understand what it means for complex systems to come to know one another — in the sense that when complex systems coevolve, each sets the conditions of success for the others. I suspect that there are emergent laws about how such complex systems work, so that, in a global, Gaia-like way, complex coevolving systems mutually get themselves to the edge of chaos, where they're poised in a balanced state. It's a very pretty idea. It may be right, too.”
We’re all hurtling toward the edge together. We are all each other’s fitness landscapes.
The !Kung Kalahari tribespeople in Africa conduct “boiling energy” dances. A shaman dances, chants, and physically heats himself into a trance state where eventually his “heart opens” and he gains the ability to heal. The staggeringly optimistic view of the world is that this is a metaphor for our current societal trajectory.
It surely cannot be a coincidence that many of the psychedelic breakthrough treatments now capturing mainstream attention take our individual brains to the “edge of chaos.” As previously discussed, the phenomenon of Neural Annealing describes high energy states that heat our brains into new configurations to release accumulated stresses. What’s true at one level of the system… It’s weirdly analogous to our current global systemic phase change dynamic. Absurd amounts of value, healing, and chaos will result from the continued transition of altered state technologies into the mainstream.
One of the most effective frameworks for understanding today’s world remains Iain McGilchrist’s triumphant, challenging book The Master and His Emissary (my insights are here and a kind reader shared a remarkably good PDF, below). His thesis is that our minds and culture have become overly stuck in the intellectual loops of the brain’s left hemisphere. We see this clearly reflected around us in the epidemic of digital abstraction, separation from the natural world, and dominance of rational thought.
The most appealing idea, and one that might actually be true, is that the transition we’re accelerating toward is a more hemispherically-balanced society and inner life. The right question to ask is therefore: what is the character of the right hemisphere? The long answer is: it’s equally fascinating and complicated. A shorter answer is a shift towards exploration and creativity.
We are already seeing elegant evidence for this in the unexpected yet emergent transition into Web 3.0. The worlds that young people are building online are increasingly creative and collaborative. They aren’t exclusively shooting each other in multiplayer games. They are building infinite games. Games and markets are also merging fast; as Tyler Cowen wrote just last week, “the lesson is clear: if you wish to create a new economic institution, put it inside a game.”
The really interesting thing about games is that they allow for exploration within a safe container. A toddler laughs when you chase him because he knows he’s probably not going to get eaten when he’s caught. Lower consequences of failure mean more slack, which means more room for experimentation. The podcast with Lia DiBello below applies it directly to business: if you can build a safe container for strategic experimentation, you can rapidly accelerate learning. The blending of games into our world and markets is going to be yet another accelerant of our evolution. McGilchrist found our exploratory drive is primarily driven by… the right hemisphere, in necessary tension with the desire for safety from the left.
We are also witnessing the very early shift in economic value toward a new creative class. This is truly the defining trend of the current speculative bubble. Beyond their obvious irrationality, bubbles often contain the seeds for the next iteration of the world. Our current Web 2.0 paradigm has been defined by the dominant central nodes in the global digital network capturing all the value. The platform companies currently wield power and influence that’s truly unlike anything else in human history. But Web 3.0 looks like it will be about redistributing that control back to the edge of the network: creators and consumers. Blockchain, or something like it, will help individuals capture more of the value of their work. Our prior Knall/Cohen/Pence speaker Jaron Lanier has proposed a kind of digital unionization.
Andreesen Horowitz’s Chris Dixon insightfully noted recently that in Web 2.0 “your margin is my opportunity.” But in Web 3.0 “your take-rate is my opportunity.” Essentially business models might shift from using scale to destroy smaller players, to attracting users by offering better economics to the creator. For example, most social media takes 100% of the value of your data, but with NFTs artists can keep ~90% of the value of their creations. We move from being the product, back to producing it.
Digital art is now selling for literally millions of dollars. In the context of McGilchrist’s transition back to the creative, it seems especially curious that this is a unique bubble where the artists are making as much money as the speculators.
Our right hemisphere has access to literally millions of times more information than our left. It is embodied and connected to other centers of intelligence- the cardiac among them. The exact kinds of intelligence our intellects, and modern society, defensively dismiss. The left is fundamentally more competitive than the right. Yet its limitations are why intellectuals and experts have proven so staggeringly bad at predicting the future, and artists have always been so good. As McGilchrist puts it: “because the left hemisphere is drawn by its expectations, the right hemisphere outperforms the left whenever prediction is difficult.”
Despite “following your heart” being a dominant motif of our art, it hasn’t been intellectually integrated into our culture as something that is actually practical. In the deep mythological sense, an “open heart” means a reconnection to some kind of transcendent personal genius - our own individualized creativity. It probably sounds offensively fuzzy to our rational ears. But, as we noted recently, heartfelt authenticity paired with passion is a stunningly consistent characteristic of the best content. A lack of connection to the ineffable “sacred” is something the most interesting people have intuited lies at the very core of our current mental and cultural malaise (see the excellent Rebel Wisdom podcast below). A more rationalist-friendly interpretation is that it simply reflects a disembodied left hemisphere unmoored in the infinitely complex environment around us. This is itself a symptom of depression.
An individual connected to their own creativity via the right hemisphere is the Taoist sage operating in harmony with his environment. Because you are more directly connected to it, and co-creating with it. The unorthodox conclusion from our recent piece "Be The Butterfly” was that individual creative actions can have cascading effects on the whole system. A single grain of sand can collapse the entire pile. Aleksandr Solzhenitsyn and his book The Gulag Archipelago was wildly influential in bringing down the Soviet Union. In his remarkable 1970 Nobel acceptance speech he quotes Dostoevsky’s remark, “beauty will save the world.” He asks if it “was not a careless phrase but a prophecy? After all HE was granted to see much, a man of fantastic illumination. And in that case art, literature might really be able to help the world today?” Solzhenitsyn actually did it, so he would know.
Carl Jung’s autobiography describes a conversation with a Native American Chief in Taos Pueblo in 1925. The Chief says to Jung:
“How cruel the whites are: their lips are thin, their noses sharp, their faces furrowed and distorted by holes. Their eyes have a staring expression. They are always seeking something. What are they seeking? The whites always want something, they are always uneasy and restless. We do not know what they want, we do not understand them, we think that they are mad.”
I asked him why he thought the whites were all mad. “They say they think with their heads,” he replied.
“Why, of course. What do you think with?” I asked him in surprise.
“We think here,” he said, indicating his heart.”
Related Reading & Listening.
- Listen. The State of Sensemaking by Rebel Wisdom (1hr 14min podcast).
- Why listen. When the Rebel Wisdom team are good, I haven’t found anybody else quite in their league. They are particularly brilliant at synthesis of “sensemaking.” Essentially pulling all the most interesting perspectives on what’s happening at the orbital level together. While they can over-focus on “isms” and intellectual frameworks, their consistent focus on the absence of the transcendent in society is one of the absolutely key insights of our times. [Contains profanity].
- Read: “Can Economics Grasp What Ecology Says?” by Duncan Austin (38pp PDF)
- Why read: An absolutely superb recommendation from my network (thanks Chip!). It has a slightly dry title, it starts slowly and it’s 38 pages. I would not recommend something this long lightly! As you might recall, my ESG White Paper earlier in the year struck a tone of “optimistic skepticism.” I concluded that “Sustainable Investing” was probably the right long-term approach rather than trying to squeeze qualitative investments into sometimes arbitrary quantitative ESG buckets. Austin comes to a similar conclusion. But this PDF should be of broader application to anyone interested in the most important framework I’ve ever discovered. As I said recently on my guest appearance on the Infinite Loops podcast, Iain McGilchrist’s book The Master and His Emissary is the most interesting book I’ve ever read. From page 11 onwards, Austin explains why he also believes it’s one of the most important frameworks of our time. In fact I think it’s one of the only frameworks that helps us see beyond our normal paradigms. Systems thinkers should love this.
- Read/watch. The Edge of Chaos in Systems Innovation (11min read/watch).
- Why Read/Watch: a quick video/text of an article that’s a simple explainer of the edge of chaos concept.
- Listen: Lia DiBello and Cedric Chin on The Mental Model of Business (1hr 28min podcast)
- Why listen: This is one of the best business strategy podcasts I’ve heard in a long time. Cedric and I both love universal principles. Where he’s better than me is that he’s adept at assessing the practical applicability of business and investing insights. He can both launch and land the rocket.
- ----- The first alluring claim from DiBello’s work is that Every Great Business Person Has The Same Mental Model of Business (paywalled). Essentially it’s a three-legged stool where all parts have to be monitored and balanced. The three elements are supply/leadership, demand/strategy and capital/finance.
- ----- Cedric also wrote a great piece on The Importance of Cognitive Agility
(paywalled). DiBello talks about how we used to have to update our professional frameworks 12 times during our life, but now it’s likely much more than that. In my article on Bridgewater I discussed the curious discomfort of an organization dedicated to obliterating mental models in a group setting to get to better answers. DiBello’s strategy is to force a business into a simulation which can safely destroy their old mental models through direct experience of
“visceral failure.” She observes that businesses and managers that can rapidly adapt to failure tend to be most successful. Her “Strategic Rehearsals” design safe environments for repeated failure. It apparently takes about 60 reps before participants achieve something close to mastery. Your stale models break, but you don’t lose your job and house.
Finally, I was pleasantly surprised by the number of people that enjoyed the Ben Böhmer playlist from last time. Although this is unlikely to be a recurring feature, here's a pretty brilliant set I heard recently from a DJ called CRSTO. The first 40 minutes have been the soundtrack of my runs all summer. I chuckled writing this when I realized the name of the mix was “Heart Opener.”
Have a good weekend!