You're Smart. So What?

[Uccmal]

A little anecdote.  A late Friend of mine ran a couple of car dealerships in the 1970s-1990s.  He was a very bright and perceptive individual.  He was asked by the Ontario government to sit on a committee on vehicle safety, and safe driving.  He was on the committee with a few elected members of provincial parliament (MPPs).  Now these are powerful people overseeing budgets and processes in the billions. 

 

My friend's description of the process and ensuing commentary was that most of these MPPs were stupid.  But they were elected, had power, and had awesome social skills.  They seem to be idiot savants, great at smoozing, saying what people wanted to hear, and getting re-elected. 

 

My dad has had similar experiences with our federal government elected officials.  Are they smart?

[Kraven]

This thread seems to be focusing on the stereotype of a "smart" person, someone who's introverted, keeps to themselves and is deeply technical.

 

I propose there's another type of "smart" individual, the one who has social smarts.  This is the person who is able to muster all those hiding-in-the-basement-brain types to get something done.

 

I have managed teams with extremely smart people, I am by far the stupidest one on the team, yet on their own nothing would get done.  They would be happy to thrash on some intellectually challenging point constantly that is inconsequential to the delivery of the project.  The person leading isn't dumb, but they are able to differentiate details that matter and details that don't matter.

 

If book smarts ultimately mattered for success librarians and historians would be ruling the world.

 

This is a great point, very true.  Haven't people heard about those who surround themselves with people better and smarter than themselves?  I too have had many experiences with people who are technically brilliant and perhaps geniuses, yet couldn't find their way to the restroom at work. 

 

As an example, anyone who has worked with an investment bank will know that many of the people on the desks are brilliant.  If they weren't crunching numbers they'd be figuring out how to get to Mars and back before lunch.  Yet . . . they can't function.  They have no social skills.  The people with business, the ones really bringing in millions and millions know how to get things done but couldn't tell you how to figure the minutia out to save their lives. 

[Guest hellsten]

Munger's social skills are probably lacking, which is why Warren and Charlie make such a great team and relevant to this discussion.

 

Gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold – they invest in productive businesses.

~Charlie Munger

 

Anyway, I think Munger has answered this question in "A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business":

http://ycombinator.com/munger.html

 

Well, the first rule is that you've got to have multiple models—because if you just have one or two that you're using, the nature of human psychology is such that you'll torture reality so that it fits your models, or at least you'll think it does. You become the equivalent of a chiropractor who, of course, is the great boob in medicine.

 

It's like the old saying, "To the man with only a hammer, every problem looks like a nail."

 

Smart people tend to have only a limited number of models they use. What they have spent so many years on studying becomes their religion.

 

And the models have to come from multiple disciplines—because all the wisdom of the world is not to be found in one little academic department.

 

What models do we need, well Munger mentions 80-90 models including:

- mathematics

- probability

- decision trees

- psychology (EMT  ::))

- accounting

 

a mere handful really carry very heavy freight.

 

First there's mathematics. Obviously, you've got to be able to handle numbers and quantities—basic arithmetic. And the great useful model, after compound interest, is the elementary math of permutations and combinations.

 

Obviously, you have to know accounting. It's the language of practical business life.

 

But you have to know enough about it to understand its limitations—because although accounting is the starting place, it's only a crude approximation. And it's not very hard to understand its limitations. For example, everyone can see that you have to more or less just guess at the useful life of a jet airplane or anything like that. Just because you express the depreciation rate in neat numbers doesn't make it anything you really know.

 

 

And if you wrote a letter or directive in the Braun Company telling somebody to do something, and you didn't tell him why, you could get fired. In fact, you would get fired if you did it twice.

 

You might ask why that is so important? Well, again that's a rule of psychology. Just as you think better if you array knowledge on a bunch of models that are basically answers to the question, why, why, why, if you always tell people why, they'll understand it better, they'll consider it more important, and they'll be more likely to comply. Even if they don't understand your reason, they'll be more likely to comply.

 

So there's an iron rule that just as you want to start getting worldly wisdom by asking why, why, why, in communicating with other people about everything, you want to include why, why, why. Even if it's obvious, it's wise to stick in the why.

 

People avoid asking questions because it makes them look stupid.

 

I suppose the next most reliable models are from biology/ physiology because, after all, all of us are programmed by our genetic makeup to be much the same.

 

And then when you get into psychology, of course, it gets very much more complicated. But it's an ungodly important subject if you're going to have any worldly wisdom.

 

 

Personally, I've gotten so that I now use a kind of two-track analysis. First, what are the factors that really govern the interests involved, rationally considered? And second, what are the subconscious influences where the brain at a subconscious level is automatically doing these things—which by and large are useful, but which often misfunction.

 

 

I also like the GEICO story, but that's because I'm biased and invested in a similar story :P

GEICO is a very interesting model. It's another one of the 100 or so models you ought to have in your head. I've had many friends in the sick business fixup game over a long lifetime. And they practically all use the following formula—I call it the cancer surgery formula:

 

They look at this mess. And they figure out if there's anything sound left that can live on its own if they cut away everything else. And if they find anything sound, they just cut away everything else. Of course, if that doesn't work, they liquidate the business. But it frequently does work.

And GEICO had a perfectly magnificent business submerged in a mess, but still working. Misled by success, GEICO had done some foolish things. They got to thinking that, because they were making a lot of money, they knew everything. And they suffered huge losses.

 

All they had to do was to cut out all the folly and go back to the perfectly wonderful business that was lying there. And when you think about it, that's a very simple model. And it's repeated over and over again.

 

And, in GEICO's case, think about all the money we passively made.... It was a wonderful business combined with a bunch of foolishness that could easily be cut out. And people were coming in who were temperamentally and intellectually designed so they were going to cut it out. That is a model you want to look for.

 

And you may find one or two or three in a long lifetime that are very good. And you may find 20 or 30 that are good enough to be quite useful.

 

I kept reading "But it frequently does NOT work." instead of "But it frequently does work."… One of those tricks the brain plays on you.

[SharperDingaan]

"Are you implying that only introverts can be smart?"

 

Not at all. We put it to you that 'smartness' is at least a binary continuum - the 'book smart' introverted technical (stereotype), & the 'socially' smart gadfly (stereotype). We would also suggest that the earlier you are in your professional life the more extreme you are, and that 'experience' is in part - moving to a more balanced position.

 

'Book smart' & 'socially smart' don't have to be in the same person (rocket scientists managed by socially smart managers). We would also suggest that 'socially smart' is also the more valuable skill, & that it correlates with gender (female) & maturity. Who looks after the 'social stuff' in your family ? - & why is that?

 

A current BA graduate will supposedly earn an average 12% less income than if they had never gone to university; they had a great time while they were there (socially smart), but it is not a rational decision (book smart). A current NA CFA/MBA feels very smart on graduation (book smart), but ignores that you can buy the same globally standardized skill set in Asia - for 1/3 the cost (socially dumb). Both examples are young; were they 20 years older (more maturity) their choices may have been different.

 

SD

[Palantir]

Meh, this thread is just regurgitating stereotypes of "smart but lacks social skills" when in real life it is a false choice. Perhaps some are insecure.