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Luca Dellanna — On Survival, Signals & Success | Episode 174
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Why is hard work a form of laziness? Why should we be wary of short-term success? How can imagining parallel worlds help us make better decisions? Author, management advisor, and researcher Luca Dellanna joins us to discuss these questions and more! Important Links: - Luca’s Website - https://luca-dellanna.com - Luca’s Twitter - https://twitter.com/dellannaluca?s=21&t=vtqwBZ0zdc1S-VbrHeivzA Show Notes: 0:00:00 Intro 0:01:25 Main podcast 0:02:23 Ergodicity: survival is king 0:07:07 Why sample size matters 0:11:10 The two types of competitors 0:14:04 Teaching by signalling 0:25:46 The parallel worlds approach to decision-making 0:31:09 Racing to the bottom 0:35:19 Why working hard can be a form of laziness 0:44:34 The three things managers should prioritize 0:50:19 Why desiring change isn’t enough 0:54:06 Fighting avoidance with actionable small steps 1:06:36 “Mixed values produce mixed results” 1:09:53 Thinking by writing 1:18:15 What Luca has learned from living in multiple countries 1:22:27 Luca as Emperor of the World Books Mentioned: - Antifragile: Things that Gain from Disorder; by Nassim Nicholas Taleb - What Works on Wall Street; by Jim O'Shaughnessy - Ergodicity: Definition, Examples, And Implications, As Simple As Possible; by Luca Dellanna - The Control Heuristic: The Nature of Human Behavior; by Luca Dellanna - 100 Truths You Will Learn Too Late; by Luca Dellanna - Tao Te Ching; by Lao Tzu
Segments Timeline
The Error of Extrapolation
Luca Dellanna discusses the common mistake of extrapolating current situations into the future, emphasizing that hard work can often be a form of avoidance rather than a solution. He highlights the importance of addressing fears directly instead of overcompensating with busy work.
"[Music] we are temporal creatures we live in time and we tend to kind of extrapolate whatever's happening right now all the way into the future and that is a fundamental error I have a product that is..."
Survival Over Performance
Dellanna explains that in competitive environments, it's not the fastest who wins, but those who finish. He introduces the concept of survival as a critical factor in performance, using the example of a skier to illustrate how injuries can drastically affect outcomes in competitions.
"promoting you wrote the enemy of productivity isn't laziness but busy work okay see people who work hard as a way to overcompensate some problem that they don't want to say some skill that they don't ..."
Understanding Sample Size
In this segment, Dellanna elaborates on the significance of sample size in decision-making and performance evaluation. He warns against the naive assumption that short-term results can predict long-term success, emphasizing the dangers of hyperbolic discounting in investing.
"perfectionism is a 100 tax in other words it doesn't really exist Plato notwithstand well hello everyone it's Jim O'Shaughnessy with another episode of infinite Loops my guest today is Luca DeLana who..."
The Fallacy of Short-Term Thinking
Dellanna discusses how people often misjudge probabilities based on small sample sizes, using the example of birth rates in hospitals to illustrate the misconception. He stresses the importance of understanding the limitations of small data sets in making informed decisions.
"love the fact that you've lived in Spain Germany Kazakhstan I'm going to ask you about Kazakhstan yeah Singapore and Italy and your books a hundred truths you will learn too late uh we're going to tal..."
The Lindy Effect and Longevity
Dellanna introduces the Lindy Effect, explaining how the longevity of an idea or technology can indicate its future viability. He connects this principle to trading, emphasizing that longer successful traders are more likely to continue performing well.
"what you uh speak quite a bit about um in terms of uh where people often go wrong yes so before introducing the terms like in the in the book for example I only introduced the terms after a half and i..."
Time Horizons in Decision-Making
In this segment, Dellanna emphasizes the importance of establishing a clear time horizon for decision-making. He argues that understanding whether one is operating on a short-term or long-term basis can drastically change the approach to investments and management strategies.
"and the lesson I got from him is that it's not the fastest year who wins the race but the fastest one of those who finish the race and uh the principle will be that survival matters a lot for performa..."
Competing with the Right Strategies
Dellanna explains the distinction between reproducible and non-reproducible success strategies in investing. He advises focusing on long-term strategies that ensure survival rather than chasing short-term performance, which can lead to poor long-term results.
"cousin participates in a championship made of 10 races and he has a 20 percent of chances of winning each race but also 20 chance of breaking a leg because he is reckless and I'm asking or how many wi..."
Training for Long-Term Success
In this segment, Dellanna discusses the importance of training and communication in management. He argues that investing in these areas is crucial for long-term success, contrasting it with the short-term mindset that often neglects these aspects.
"expect and the difference is made by survival because if pack housing breaks his leg in the first race cannot participate to the following ones and he has no chance of winning them so he only has an 8..."
The Challenge of Emotional Understanding
Dellanna addresses the emotional challenges in understanding long-term strategies versus short-term gains. He highlights the difficulty in getting clients to internalize the importance of long-term thinking in investment decisions.
"important with respect to Performance and this is the mistake that a lot of people make they this they make a case value or they compare uh to people to investors over a short term and then they think..."
Learning Through Pain
Dellanna discusses how people often learn best through painful experiences. He emphasizes the need for proactive learning before facing significant losses, advocating for mentorship and exposure to those who embody long-term thinking.
"time and extrapolate them into the future thinking that the law of large numbers is going to work for them and as you know uh all of the greatest SKU comes in small sample size it's not large sample s..."
Demonstrating Values in Leadership
In this segment, Dellanna illustrates how leaders can instill values in their teams by demonstrating commitment to long-term principles. He shares an anecdote about safety in manufacturing to highlight the importance of actions aligning with stated values.
"and what that leads to are really bad results because people are forever chasing performance it's at the base of most of the mistakes that people make earnestly it's not like they're trying to do this..."
Learning Through Pain
Luca Dellanna discusses the importance of learning lessons before experiencing significant pain. He emphasizes that while painful experiences can lead to valuable lessons, it's preferable to cultivate understanding through mentorship and observation of those who embody long-term values, particularly in safety and decision-making.
"most misleading thing you could look at so there are two answers to this the first one is of course the moment that people like Sasha Summit and there is intense pain they will learn the lesson but of..."
The Costly Signal of Safety
Dellanna shares a personal anecdote from his time in manufacturing, illustrating how a CEO's costly decision to prioritize safety over performance sent a powerful message to employees. This segment highlights the significance of actions over words in establishing organizational values and trust.
"in safety for manufacturing and in particular for safety and what you see all the time is that the CEO says that is very important for our company you really need to always wear your protective equipm..."
Signaling Values in Organizations
In this segment, Luca Dellanna explores the concept of signaling within organizations. He explains how leaders can effectively communicate their commitment to values like safety and long-term thinking through concrete actions, rather than mere verbal assurances, to inspire behavioral change among employees.
"in front of of a person who truly believes in the value in this case for example some availability long-term Investments and they see that that person takes a costly action in which they say we ignore..."
Concrete Actions for Value Alignment
Dellanna advises leaders on how to instill new values within their organizations. He emphasizes the importance of defining values in concrete terms and tying them to performance metrics, ensuring that employees understand the significance of aligning their actions with the company's long-term objectives.
"um signaling becomes highly important within an organization so if everyone is giving lip service to oh we're safety is job number one and then to continue with your example jumps on the bus doesn't n..."
Ongoing Feedback for Behavioral Change
In this segment, Luca discusses the importance of continuous feedback in fostering a culture of accountability and alignment with organizational values. He contrasts traditional annual reviews with more frequent check-ins to ensure that employees remain on track with both business and ethical objectives.
"yeah so what I advise uh uh always my clients when they want to bring a new Behavior or especially a new value it could be ethics it could be long-term Focus anything what I tell them is that they sho..."
Avoiding Virtue Signaling
Dellanna addresses the issue of virtue signaling, where individuals may express support for values without taking meaningful action. He emphasizes the need for ongoing feedback and accountability to ensure that individuals genuinely embody the values they profess, rather than merely paying lip service.
"that is very costly it's it's a costly signal and that will make people understand that yes they it means it and yes I need to adapt and then if you just do that there is the problem that maybe there ..."
Internalizing Long-Term Thinking
In this segment, Luca shares strategies for individuals seeking to internalize long-term thinking in their lives. He emphasizes the importance of surrounding oneself with role models who prioritize long-term success and using parallel world scenarios to evaluate the potential outcomes of decisions.
"because and and I shipped it to people would always say to me well when do I get my review and I said your review will be ongoing and uh that that seemed to work significantly better um but you you to..."
Evaluating Choices Across Parallel Worlds
Dellanna introduces the concept of evaluating choices by imagining their outcomes in multiple parallel worlds. He explains how this approach can help individuals feel at peace with their decisions, even if the immediate results are not favorable, by assessing the long-term viability of their choices.
"thing is again make sure that your role models those that you confront yourself with those that you try to learn with are only people who care about the long term and who are using strategies that ena..."
The Importance of Holistic Success
In this segment, Luca emphasizes the significance of pursuing holistic success, not just in business but across all aspects of life. He discusses the dangers of imitating individuals who excel in one area at the expense of others, advocating for a balanced approach to personal and professional development.
"want to imitate that so for me this is the this is the number one thing and then the second thing is and always like value my choices not based on what's the return that I got in this part of the worl..."
Skin in the Game: A Litmus Test
Dellanna discusses the concept of 'skin in the game' as a critical factor in evaluating the motivations of individuals. He explains how understanding whether someone has a personal stake in their actions can help discern their true intentions and the reliability of their advice.
"synchronicity is lovely because yesterday I was talking to a teammate and he said exactly that he said I'm only interested in people who are not just successful in business I want to see that they hav..."
Racing to the Bottom: A Cautionary Tale
In this final segment, Luca warns against the dangers of participating in races to the bottom, where individuals sacrifice their values for short-term gains. He encourages listeners to seek out role models who embody a balanced approach to success, avoiding the pitfalls of extreme competition and unethical practices.
"them that's a great heuristic I think um my friend Annie Duke has a thing she calls resulting and and that is people um inherently have this idea that they equate if something if they made a bet and t..."
The Need for Abstract Thinking
In this segment, Luca emphasizes the importance of abstract thinking when evaluating life choices. He shares his personal experience of imagining different life scenarios to better understand the implications of various decisions, advocating for a thoughtful approach to decision-making.
"cannot compartment compartmentalize if you're imitating the strategy of someone who's only thinking about business who's only thinking about Fitness you will take risks which are not good for you you ..."
Hard Work vs. Smart Work
Dellanna argues that working hard is not inherently bad, but it can become a form of laziness when used to overcompensate for deeper issues. He illustrates how hard work can lead to marginal results if it distracts from addressing fundamental problems or developing necessary skills.
"think one of the reasons why we're thinking well here is that like I used to do that all the time I used to imagine myself in oh well what if I lived here or what if I did this career or what if I you..."
The Consequences of Overcompensation
In this segment, Luca shares insights on how overcompensating with hard work can lead to burnout and inefficiency. He recounts a conversation overheard about an employee whose hard work was seen as a barrier to promotion, highlighting the need for balance and skill development.
"view and actually put up on Twitter the other day and I was surprised that I didn't get more pushback which is working harder is not working better can you pick up on on on both of those themes and an..."
Understanding Promotion Criteria
Dellanna explains the criteria for promotions within organizations, emphasizing that hard work alone is insufficient. He discusses the importance of demonstrating the ability to handle increased responsibilities and the skills necessary for advancement.
"I learned this when one day I overheard my manager at the coffee machine talking about another employee of ours and he said she's a um she is very good but we cannot promote her because her solution t..."
Building Trust as a Manager
In this segment, Luca discusses the importance of trust in managerial relationships. He advises on how to build trust through meaningful actions and conversations, stressing that employees need to feel supported and understood to be receptive to feedback and growth.
"and that's a form of laziness the I I wonder about your opinion of like I think that a lot of this attitude as we evolved right historically um you know before all of our Innovations uh working hard w..."
The Role of Feedback in Growth
Dellanna emphasizes the necessity of providing both positive and negative feedback to employees. He explains that constructive feedback helps individuals improve and understand expectations, while recognition of good work reinforces motivation and commitment.
"specifically with that kind of behavior yeah so how will the suggest you and to have a conversation with her and explaining to how basically how promotion works in the company and user Network the rul..."
Concrete Clarity in Communication
In this segment, Luca stresses the importance of clarity in communication for managers. He advises against abstract language, advocating for concrete examples to ensure that employees understand expectations and ethical standards clearly.
"and so I would have that conversation with with the person and tell her like you've seen I'm very happy with you you I will say something along the lines like I'm happy that you're an employee of this..."
The Importance of Feedback Loops
Dellanna discusses the need for feedback loops in the workplace, highlighting that most employees require guidance to meet expectations. He explains how feedback should be both corrective and encouraging to foster a culture of continuous improvement.
"uh the ability to give feedback to others in a way that is helpful which means that the other person feels more motivated to continue rather than you just giving some piece of knowledge and then the o..."
Demonstrating Managerial Support
In this segment, Luca outlines how managers can demonstrate genuine support for their employees. He emphasizes that taking the time to understand employees' challenges and showing commitment to their development builds trust and enhances team dynamics.
"then they're like why even if you say the perfect words why should they listen to me and so the first thing would be to take some action that demonstrates that you have their best interest at art and ..."
Habits and Personality Development
Dellanna reflects on how habits shape personality and workplace behavior. He discusses the significance of habituating positive practices in management to create a supportive and productive work environment.
"best interests at that then they will be ready for this conversation which is much more hard and it's about their um deeply held beliefs about what it means to do great work the the uh this is uh gell..."
Lessons for Future Managers
In this concluding segment, Luca shares key lessons for aspiring managers. He emphasizes the importance of prioritizing clarity, feedback, and trust to foster an environment where employees feel valued and motivated to excel.
"actually do things and and so uh you know if if you were teaching a a class on this be it this aspect or how to prioritize or you know any of the aspects that you uh write uh so convincingly about wha..."
The Power of Clarity in Communication
Luca Dellanna emphasizes the importance of clarity in communication, advising against abstract language. He suggests that managers should be concrete in their requests, providing specific examples to ensure understanding. This segment highlights how clear communication can prevent misunderstandings and foster better relationships in a professional setting.
"Clarity feedback and Trust so the first thing is that you should be very clear about what you need from that and the number one advice would be don't be abstract be concrete for example if you tell pe..."
Feedback: The Key to Improvement
In this segment, Dellanna discusses the necessity of providing feedback in a managerial role. He explains that feedback should be both positive and negative to help employees recognize their strengths and areas for improvement. This approach not only aids in personal development but also enhances overall team performance.
"sufficient numbers the second thing you should give us feedback and that's because I know very few people which will get what you need out of them at the first try what instead is needed very often is..."
Building Trust Through Action
Dellanna outlines the critical role of trust in management. He explains that trust is built through consistent actions that align with verbal commitments. By demonstrating reliability and accountability, managers can foster a trusting environment that encourages open communication and collaboration among team members.
"and you should also give positive feedback because what happens a lot of times that people do a thing and then they don't see that anyone is noticing it and then they wonder whether it's worth doing i..."
Desiring Actions Over Outcomes
Luca Dellanna shares insights on the importance of focusing on the actions that lead to desired changes rather than fixating on the outcomes themselves. He uses the analogy of gym-goers who desire fitness but must also desire the act of exercising. This segment encourages listeners to cultivate habits that align with their goals for sustainable success.
"you mean it and these are the definition and in a way it's the consistency of giving the first two that build the third trust right um I I think that's an excellent formula you've written another thin..."
Creating Habits Through Emotional Association
In this segment, Dellanna discusses how to create lasting habits by associating positive emotional outcomes with the actions required to achieve them. He explains that understanding the emotional rewards of actions can motivate individuals to engage in behaviors that lead to their goals, thus reinforcing the habit-forming process.
"and the question is why what is the what makes them desire exercising and usually the thing is we all know we all have the knowledge of building if you exercise you get fit eventually what differentia..."
Facing Fears: Acknowledgment and Action
Dellanna addresses the universal nature of fear and the importance of acknowledging it rather than avoiding it. He provides strategies for dealing with avoidance behavior, emphasizing the need to take actionable steps that lead to overcoming fears. This segment is crucial for anyone looking to enhance their personal and professional growth.
"means yeah and um you also talk quite a bit about um you know the uh the idea that uh as one of my guests said uh perfectionism is a 100 tax in other words it doesn't really exist Plato notwithstandin..."
Setting Up for Success: Overcoming Avoidance
In this segment, Dellanna outlines a practical approach for helping individuals overcome avoidance behaviors. He suggests breaking down tasks into manageable steps and role-playing scenarios to build confidence. This method not only prepares individuals for real-life challenges but also reinforces their skills through practice.
"that's a variable you might not want to optimize on right um so so walk me through like um what you would tell somebody who I bring you in as a consultant you find somebody who's like got a lot of goo..."
Role-Playing for Real-World Confidence
Dellanna explains the effectiveness of role-playing in coaching individuals to handle difficult situations, such as customer interactions. By simulating real-life scenarios, individuals can practice their responses and build confidence, making them better prepared for actual encounters. This technique is vital for personal development and skill enhancement.
"so let's say for example that the thing that the person is avoiding is content customers for example if you tell that person you should call cast 10 customers they will not do it or they will do it in..."
Understanding Difficult Clients
In this segment, Dellanna discusses strategies for dealing with difficult clients. He emphasizes the importance of empathy and understanding the reasons behind a client's behavior. By reframing the situation and considering the client's perspective, individuals can navigate challenging interactions more effectively.
"they tried with the customer the easy customer let's say hopefully it goes well if it goes well problem 90 solved so that's that's kind of the approach so give them a concrete step which is actionable..."
Reframing Reactions to Difficult Situations
Dellanna highlights the importance of reframing one's thoughts when faced with difficult interactions. He encourages individuals to consider the potential reasons behind a client's rudeness, promoting a mindset that reduces personal offense and fosters a more constructive approach to communication.
"to do it you follow up on them and then it will work that's uh uh what I would refer to as kind of meta practice right um in terms of uh uh doing that step by step I think that's excellent advice what..."
Training for Emotional Intelligence in Business
In this final segment, Dellanna discusses the significance of emotional intelligence in business interactions. He provides insights on how to train individuals to recognize and respond to emotional cues, enhancing their ability to connect with clients and colleagues. This training is essential for building strong professional relationships.
"thing which you should also do is often while you're doing the role play to explain how you're feeling and what you're thinking because as you mentioned indeed that common reason why people don't like..."
Reframing Reactions
In this segment, Dellanna explains the concept of reframing reactions to difficult situations. He encourages listeners to consider various reasons for a person's behavior, which can help in not taking things personally. This approach fosters a mindset of empathy and understanding, allowing individuals to respond more thoughtfully rather than reactively.
"a particular client what about a situation where you know your biggest client also happens to be a real difficult person so uh in this case I would have had them understand have the difficult client f..."
Building Habits Through Reflection
Luca shares techniques for building effective habits through reflection and anticipation of obstacles. He emphasizes the importance of identifying potential challenges in advance, which can significantly increase the likelihood of following through with plans. This proactive approach helps individuals prepare mentally for setbacks and maintain their commitment to their goals.
"then now let's try it no I love that because what you're introducing it sounds like to me is you're training your the person you're coaching on on thinking not not being reactive but rather thinking o..."
The Power of Values in Decision Making
Dellanna discusses the impact of conflicting values on decision-making and personal success. He highlights that mixed values can lead to mixed results, and encourages individuals to reflect on their values to ensure alignment with their actions. This introspection can clarify motivations and enhance the effectiveness of their pursuits.
"even have to be activation right it's like this is uh this is being a successful parent this is being a successful you know fill in the blank yeah so I have a couple of uh things but they work much le..."
Writing as a Tool for Clarity
In this segment, Luca advocates for the practice of writing as a means to clarify thoughts and values. He explains how writing can reveal contradictions in beliefs and help individuals align their actions with their true priorities. This exercise not only aids in personal growth but also enhances decision-making processes.
"thing the other thing which I would um ask them is to think about very carefully about their values now let me explain what what I mean by that this starts from um I think it was an observation I I me..."
Aligning Actions with Values
Dellanna emphasizes the importance of aligning daily actions with personal values. He shares an exercise where individuals compare their schedules with their stated values, revealing discrepancies that can inform necessary changes. This alignment is crucial for achieving fulfillment and success in various aspects of life.
"there the I think that's great advice I love mixed uh mixed value sleep to mixed results um do you Advocate uh one of the things that I have found very helpful and that kind of to this idea that I spo..."
Agility in Decision Making
Luca discusses the need for agility in decision-making processes. He suggests that individuals should adopt a flexible mindset, considering multiple perspectives and time horizons when evaluating their choices. This approach allows for better adaptability and responsiveness to changing circumstances.
"to some progress and it works really well and the reason it works is because if you have two things two beliefs which are incompatible they can so they can live in your head like our head can hold inc..."
The Importance of Diverse Experiences
In this closing segment, Dellanna reflects on his experiences living in various countries and the insights gained from those diverse environments. He highlights how travel and exposure to different cultures can broaden perspectives and enhance understanding of global differences in thought and behavior.
"prioritization of things right because you'll often see I you know I I I say to people you know I a lot of people often ask me like what what should I do because of X right and and I'll say well I mea..."
Living with Dual Time Horizons
Luca Dellanna discusses his unique approach to scheduling life decisions by considering both a long-term perspective (living until 100 years old) and a short-term perspective (living only one year). He emphasizes the importance of making choices that do not jeopardize one's quality of life in the long run while still allowing for immediate actions that can lead to meaningful changes.
"get 100 years old and part of my schedule as if uh I have 20 years for example and the idea is like to think about this as in like because some point one time Horizon might make you think about some c..."
The Value of Diverse Experiences
Dellanna reflects on his experiences living in various countries, including Kazakhstan, and how these experiences broaden one's understanding of different values and perspectives. He highlights the importance of recognizing that people from different cultures can share similar core values while expressing them in diverse ways, which can lead to deeper connections and insights.
"that's very helpful and I I think it fits really nicely with your multi-world outcome analysis uh because it it gets you to understand and unlock your thinking in terms of time um and I think that tha..."
Learning from Global Perspectives
In this segment, Luca shares insights gained from living and working in countries like Italy, Germany, Kazakhstan, and Singapore. He emphasizes that understanding different ways of thinking and working can reveal that people with different backgrounds can still share the same values, leading to a richer appreciation of global diversity.
"from having lived and worked in uh you know Italy Germany Kazakhstan uh Singapore um what were the insights that you walked away was that maybe you weren't expecting or you were expecting and they con..."
The Importance of Active Listening
Dellanna discusses the significance of active listening in conversations, particularly in understanding others' challenges. He advocates for a high-level discourse in politics, urging people to genuinely listen to opposing viewpoints and recognize valid points, which can foster better communication and understanding.
"other things people how other people do different things you don't get the fact that those people they could be the your best friend they could be maybe a future spouse there would be someone you woul..."
Raising the Bar in Political Discourse
In this thought-provoking segment, Luca emphasizes the need for maintaining a high standard in political discussions. He encourages listeners to avoid lowering the level of discourse by acknowledging good points from opposing sides and striving for constructive dialogue, which can lead to more effective problem-solving.
"that's the other thing I like you you are giving what I would call excellent but practical advice that allows people to like oh I can do that um so I I very much appreciate it at the end of our podcas..."
Consultants and Practical Advice
Luca shares practical advice for evaluating consultants, suggesting that individuals should test the clarity and applicability of a consultant's advice by discussing it with their team. This approach can help identify red flags and ensure that the advice is actionable and relevant to the team's needs.
"so I think that sorry I just don't want to give any uh like any answer I think that one should be ask people what their problems are and really listen which I mean like so that you really understand w..."
Final Thoughts and Resources
In the closing segment, Luca Dellanna provides information on where to find his work, including his website and books. He reflects on the importance of actionable advice and the value of clear communication, encouraging listeners to explore his resources for further insights into effective management and decision-making.
"from our sideline to put to bring forward one of our points um to to conceal some problems on our side when um to to give bad data to or to like accept better information from our site if it brings ou..."