Analog and Digital, Principles and Optimization

Posted by Robert Merrill on October 14, 2008 under Concepts | Be the First to Comment

Even though I’m on a near total news blackout (in order to conserve my emotional strength for things I can do something about), over the last couple of months I’ve learned a little bit about derivatives (the financial kind) and credit default swaps.

What were they thinking?

It reminds me of a story my father told me. My father is a Depression kid, and was a lawyer in Houston, Texas. Many of his clients were successful small business owners and investors (and probably also Depression kids). When Enron imploded, my father asked one of them, “How much money did you lose?” “None,” the client replied. “I never bought any Enron stock. I never could understand what they did to make money.”

A well-worn business adage says, “If you don’t measure it, you can’t manage it.” Measurement, and management, are about optimization–making the most of something. Now, I’m a data guy myself. I started out as a physical scientist. I crunched lots of data and did some fancy statistical modeling. As a software professional, I successfully introduced metrics-based project estimation to my previous team.

But there’s something more than measurement and management—something vital, and something easily lost in an age when we have ever-increasing data about an ever-increasing set of things.

I can imagine my father’s gruff client, when a broker shoved the Enron financials and stock price under his nose. “Not interested. I’ve studied it, and I don’t understand how they make money.” “But look at the yields!” “I don’t care. I’ve been a business man all my life, and I know lots of ways to make money. And I don’t invest in things I don’t understand.”

A principle trumped optimization. Analog trumped digital.

Principles are about things you won’t do, or will keep doing, regardless of what the data say. My father’s friend didn’t invest in firms whose business model he didn’t understand. My principles have shaped Who I Am Not, professionally.

You can’t find your principles from data. You have to find them in the old, analog world of relationships and ancestors and well-chosen friends and stories and wisdom handed down and an honest look in the mirror.

As my pastor sometimes asks, “What hill are you prepared to die on?”