What Nassim Taleb Misses About Technology and Innovation
A few weeks ago, I posted an article on Forbes called Sorry Nassim Taleb, Technology Actually Does Matter in which I explained a number of ways that technology has transformed business and society.
Mr. Taleb contacted me to object that I mischaracterized his views. A few readers also commented with similar objections. I offered to correct any mistakes that he could point out, but Mr. Taleb declined to do so.
While I disagree with Mr. Taleb on this point, he’s a thinker I greatly admire and feel should be taken seriously. So I want to describe Mr. Taleb’s comments in greater detail and explain why I believe he is in error. While he claims that he is not anti-technology, his views undermine the innovation process which brings it about.
What Nassim Taleb Really Means (I Think)
Nassim Taleb became famous for writing books like Fooled By Randomness and The Black Swan that challenged conventional views about financial models and the mathematical statistics on which they are based. His new book, Antifragile, focuses on the need to build systems that become stronger with stress, rather than ones that are susceptible to collapse.
Thus, Mr. Taleb felt the need to comment on technology, an area that is obviously outside his realm of expertise. In an excerpt of the book on Salon, he recounts a dinner with friends in which the most prominent technologies, like silverware, wine, glass, chairs and even the shoes he walks to the restaurant in, haven’t substantially changed for thousands of years.
He then describes the disappointment he felt when attending technology conferences and finding that technologists seemed overly enthusiastic with “the modern for it’s own sake” and apparently found the experience so objectionable that he felt the need to invent a new term: neomania.
He continues:
But these conferences, while colorful and slick with computerized images and fancy animations, felt depressing. I knew I did not belong. It was not just their additive approach to the future (failure to subtract the fragile rather than add to destiny). It was not entirely their blindness by uncompromising neomania. It took a while for me to realize the reason: a profound lack of elegance. Technothinkers tend to have an “engineering mind” — to put it less politely, they have autistic tendencies. While they don’t usually wear ties, these types tend, of course, to exhibit all the textbook characteristics of nerdiness — mostly lack of charm, interest in objects instead of persons, causing them to neglect their looks. They love precision at the expense of applicability. And they typically share an absence of literary culture.
Overlooking the irascible ad hominem attacks, Mr. Taleb is making a rather facile argument – that most new technology never pans out and therefore technologists would be infinitely better served if they showed more reverence for what has lasted for millennia and less excitement for what is merely new. Technology is, to follow his argument, fragile rather than antifragile and therefore flawed.
I have some sympathy for Mr. Taleb’s views. He is, after all, a trader by both profession and inclination. The hordes at technology conferences must have seemed much like packs of Wall Street traders rushing to invest in the latest fad. The mass infatuation with so many bad bets obviously touched off a nerve.
Unfortunately, his tirade reveals a gross misunderstanding of how innovation works.
The Usefulness Of Useless Things
What Mr. Taleb fails to understand is that technologists are supremely aware that most of their efforts will come to nothing, but are nevertheless unbowed. They are, in fact, searching out black swans (to use Mr. Taleb’s own parlance), in full knowledge that they will spend most of their time rushing up blind alleys. As Thomas Edison once said:
If I find 10,000 ways something won’t work, I haven’t failed. I am not discouraged, because every wrong attempt discarded is another step forward.
What, I wonder, would Mr. Taleb make of Edison’s 9,999th try?
The truth is that useless things often end up very useful indeed. Modern information technology did not originate with engineers, but has its roots in an obscure academic crisis, whose major figures, such as Cantor, Frege, Russell, Wittgenstein, Gödel and others never dreamed that their work would have important practical consequences.
The truth is that innovation is a messy business and that’s exactly what Mr. Taleb encountered at those technology conferences. Lots of people running around, spouting strange acronyms and neologisms, enthralled and enraptured by the possibility that they’ve hit upon the next big thing.
And most of it will come to nothing.
What Mr. Taleb seems to miss is that these are not Wall Street hustlers living out their “master of the universe” fantasies with other people’s money, but people dedicated to following their dreams and willing to put their own skin in the game to do so.
What’s more, most of technology’s black swans are positive ones. Somewhere in there, amidst the nerdiness and lack of charm that Mr. Taleb abhors, is something that will make his life better, easier and more enjoyable as he goes about his routine of comfortable dinners and intellectual conversations.
Managing Innovation
So, despite his protestations to the contrary, Mr. Taleb espouses a profoundly anti-technological view. He seems to think (and here he becomes uncharacteristically incoherent, so it’s hard to tell), that we’d all be better off if technologists would just cut out all the newfangled talk and focus their efforts on inventing stuff that they know will work.
Sorry, but it just doesn’t work that way. As I recently wrote in the Harvard Business Review, “Innovation is a particularly sticky problem because it so often remains undefined.” You can’t simply focus on the technologies that are sure bets, but must take into account the entire matrix.
So what Mr. Taleb is saying (although he’ll probably deny it, but it is the logical consequence of his argument) is that we should remain in the upper right quadrant, where both the problem and the domain are well defined and he would presumably assign the lowest value on basic research and disruptive innovation, which have no clear applicability.
Yet it is there that we break truly new ground.
The Kahneman Principle
The trap that Mr. Taleb seems to have fallen into is something that he should be all too aware of, the tendency for experts in one field to misapply their experience to one with which they are unfamiliar. Daniel Kahneman, someone Taleb cites frequently, described the phenomenon thoroughly in his recent book, Thinking, Fast and Slow.
When he looked at the exuberant technology crowd, chasing their dreams, what he saw was but another version of the Wall Street traders that he spent a lifetime learning to despise. However, what his instincts tell him is a bug is actually a very important feature.
What he misses is that, in technology, failure is an important feedback mechanism. Not the kind of failure where your clients go broke while you take your multi-million dollar bonus and lick your wounds with expensive chardonnay, but the soul crunching variety that coincides with having the air sucked out of your dreams.
Then those “Technothinkers” which Mr. Taleb loves to denigrate begin anew, chasing the next dream, lacking “elegance,” knowing that they will likely fail again and again before they might finally get it right and become worthy of Mr. Taleb’s table conversation at cozy Manhattan cafes.
And that’s what Nassim Taleb misses about technology and innovation. Its purpose is not to entertain the delicate tastes of the chattering classes, but to improve the lives of us all.
– Greg
A solid response Greg. And reading your quote of Taleb, his statement is definitely a gross over exaggeration and lopsided ‘critique’ of the ‘startup’ world that you may find at SXSW. I have never attended the conference, but living in DC where there is a burgeoning tech scene, I can imagine what the environment is like.
That being said I feel that a point (maybe) that Taleb was getting at that was a bit clumsily addressed by his statement above is lackluster-ness that can be found at events like this. I was recently at an event here in DC http://switchpitch.com/ and what I discovered were many ‘companies/startups’ with products that I would have had to make a big mental stretch to see what the value of it was (either on an innovation level or even on a practical level). They had products which I didn’t really see the point. And additionally if the products had value (in which I couldn’t see or understand) they were terrible at marketing the value (which is understandable… they’re techies…not marketers/business people…and that’s a whole other issue). Judith Shapiro who I’ve followed her work for some time is often spot on with her posts. She wrote an interesting piece in advertising age, in which I agree with her on many of her assertions. http://bit.ly/13typf2
I think that you’re center of gravity around tech and innovation is pretty thorough and many technology ‘fanboys’ aren’t even really conceiving of what they do on the same terms or in the same way as you see and speak to it. I see the shortcomings in Taleb’s commentary…but I understand (to a point) what he is saying.
I hear you, Rasul. I do. I also understand (and share, somewhat) Taleb’s frustration. However, its still hard to take Taleb’s argument seriously or see how its productive.
Should we chastise Tiger Woods for suffering from “golfomania” or maybe Supreme Court justices for “lawomania.” Should we tell our children, “Now Johnny, don’t get too excited about your life’s ambitions, the important thing is to have elegant dinner conversation.”
It’s a bit silly and Taleb should know better. Even worse, he is a man many people take seriously (with good reason) and his comments have influence and real world effects. So I think it’s important to call him out when he’s wrong.
But, that’s just my opinion. I obviously suffer from blogomania:-)
– Greg
I hear you Greg (100%) and for the record (which will be stamped here forever on the interwebs…) if we have to bet on battles about the future and technology I’m willing to put my odds on your conversations vs. Talebs – for better or for worse ;-). What I think Taleb did (and is a part of your criticism of him) is that he doesn’t really bring a sophisticated understanding or critique to the table about SXSW. He gets stuck in what he perceives it to be vs. what it represents. With his doing that he is missing (in a significant way) an understanding of the emerging narrative that tech, digital and social are ushering in. I actually discuss this in my last post – http://www.cnvrgnc.com/journal-old/2013/2/26/birth-of-a-new-trajectory.html
…and to piggyback on your Tiger/golf analogy…I look at Taleb’s conversation as saying that golf sucks because its not like tennis. Of course they’re not the same thing (engineering and literary culture) but they both require a keen sense of perception
and understanding. They’re just different. One isn’t better or worse than the other.
Rasul,
I spoke had a little bit more discussion with Taleb and he sent me this in response: http://www.edge.org/conversation/understanding-is-a-poor-substitute-for-convexity-antifragility
So I think beyond the obvious desire to expand his “antifragile” argument, it seems that he wants to bring his favorite whipping boy, Gaussian models, into the argument as well. He seems (and I continue using that word because, to be honest, his comments on this subject make no sense to me at all) to be equating “test and learn” with trial and error.
In truth, where he does have some ground to stand on is that we should be skeptical of new technology and Kevin Kelly made a similar argument in “What Technology Wants” with his discussion of the Amish. However, I think this is one case where Mr. Taleb’s penchant for histrionics got the better of him.
The simplest explanation I can think of is that he just really didn’t think it through,
– Greg
Thanks Greg. I’ll definitely read his materials (often worthwhile).
Greg – a fantastic read as always. Like many I find Taleb’s work intriguing but his tone is too often shrill. I find it ironic that your counter-argument is the type of “stress” he espouses all systems should be better able to withstand if they’re to grow. Yet his response suggests he’s dis-inclined to apply that stress to HIS point of view.
My (infinitely less intellectual) argument is that thinking we should be investing our time in sure-bets and incrementally refining “proven” technologies would narrow, versus open up, a world of possibility. In that environment fans of Ptolemy would have run Copernicus and Galileo out of town.
I guess I should prepare myself for an onslaught of “omania” suffixes added to every business term out there.
Thanks Hilton,
This post inspired a lot of online discussion (including with Taleb himself) and I think this is just one of those things where he got ahead of himself and didn’t really think it through. Apparently, he was built quite the cult of personality around himself over the past few years (on his Facebook page they refer to themselves, and he to them, as the “Tribe”).
I think Taleb is one of those people where you take what’s valuable and leave the rest. He’s done us all a service by popularizing many of the ideas Benoit Mandelbrot formed in the 60’s, but never gained traction until the financial crises and I think he can be forgiven for some of his shrillness, sometimes, that’s what it takes.
Yet here he is clearly off base and, due to his renown, I think many have even caused some real damage.
– Greg
I’d suggest you’re highlighting a larger malady. The presumption of unequivocal genius in every “mainstream” publication that gets bestseller status. Taleb is smart but not infallible. Too often – and I’m guilty of this too – is absorbing every word as gospel and not applying judicious thinking to it. I’d suggest that, in our search for quick, easy answers to the chaos around us, few of us are patient enough to pick a solution apart and find the parts that genuinely work. Rather we apply the written solution wholeheartedly. That path is littered with good thinking – Total Quality, Six Sigma – applied as if it were a panacea. Or in Taleb parlance Welchomania, Porteromania, Aakeromania, DeBonomania. In fairness, I suffer from incurable Druckeromania.
Thanks for being patient enough to filter for the rest of us.
Yes. I think we’re all a little guilty of that from time to time:-)
Have a great weekend!
– Greg
Hi Greg:
You know I value your perspective a great deal, but I’m going to take a considerably different line here, as someone who builds technologies for a living, and someone who gets companies to think about innovation differently (and act on it) in his consulting and advisory work.
I actually think Taleb is spot on — and quite honest — about what he is saying in regard to the technoculture found at conferences like SXSW. He readily admits his discomfort as an outsider, but his point is no less salient: The engineering mindset IS incredibly myopic and self-limiting both as a way of advancing innovations, (particularly cultural ones), and as a means to arrive at more diverse solutions – or better questions – for tackling the bigger socioeconomic complexities we face.
Does he address innovation quite in this way? No. But if you read through the three books you mention, there is a pervasive theme: Using randomness or uncertainty to discover the “unknown unknowns”, and he directly applies this in his books to the notions of risk AND failure (in fact, he talks openly about his trading failures that led him to reframe his approach to portfolio strategies…).
In other words, it’s not that technocrats don’t embrace failure on multiple levels, it’s that they need to address risk and failure differently.
While Taleb’s assertions can be a bit pointy-headed, the argument you’re making here seems circular. Taleb doesn’t push his logic into a quadrant of “sustainable innovation”, but rather he is suggesting that the proxies for taking calculated risk are often random in quantifiable terms, and therefore the perceived risk itself is blunted by an abject desire to understand outcomes predicated on historical benchmarks , as well as mathematical models that reach logical thresholds almost immediately in a world of complex systems — analogous to “if the money’s on the table, it’s already too late” kind of thing.
As for the innovation theory (and grid) you’ve been writing about, if you look at network dynamics and complexity — or even more relevant, wicked problems — you will also find that the problem and domain definitions constantly shift.
Why? Because with each solution (or each innovation), comes another problem, or problem set. Mass industry is terrible at adapting to wicked problems, and so innovation buckets are a means to somehow put a band-aid on a broken leg — to effectively rationalize a behavior, as opposed to changing it. So I must contend, there is no real model for innovation… it just happens. Are there processes for it? Of course. But it also can’t be relegated to a series of quadrants.
Hence, the innovation divide you reference between Wall Street traders and Silicon Valley is a false dichotomy — it’s not an “either/or” or an “if/then” but an “other” — and the “other”, whether manifested by a black swan, a Markov chain, a statistical anomaly, or a totally differentiated method, is what’s important. It’s the asking of different questions that is important, not so much the models themselves, or what technologies do to enhance those models.
I believe that what you will soon see as we somewhat organically (organically meaning “as a by-product of evolution”) move past industrial precepts is true hybridization and a networked orientation around mathematical, linguistic and scientific disciplines that are almost entirely emergent.
To go a bit further, the next great innovator in the industrial space is Amazon, for many of the reasons you’ve cited in other posts; however, Amazon will likely reach a similar threshold to what Apple is experiencing now — and a lot quicker — if it can’t actually build new markets and sustain them, as opposed to merely disrupting or disintermediating them. This should not be surprising in that accelerated returns are directly tied to fixed variables. Fixed variables inevitably fold under their own weight in nature. Just look at what capitalism has done for us, for good and for worse.
Hence, what I take away from Taleb’s jabs at engineers or analysts who ignore literature is simply that archetypes and narratives tend to reveal a different context through which to build, create and/or “innovate”. I see this disconnect — this cognitive dissonance, if you will — every single day between the startups that build features and functions in their products without context, the investors who don’t think in longer-term contextual terms, and companies that are stifled in understanding what “innovation” even could mean because they can’t see past their balance sheets. Or, better yet, hedge funds that can’t see what real markets look like and act like.
With all that said, I am certainly aligned with your very last point, which is to say that technology’s purpose is to improve lives. Damn straight.
Gunther
Gunther,
I actually agree with you in the sense that if you read the breadth of Taleb’s work, you come away with some very good insights about how to manage risk and uncertainty and those insights can be applied to technology and innovation in a very productive way.
However, I’m not taking issue with his work as a whole, but his comments about technology and innovation specifically. As you yourself mentioned, his comments are “pointy-headed” and they are not mere slips. He continually refers back to them in “Antifragile” and then syndicated excerpts. In my opinion, his comments are not only wrongheaded, but counter productive.
They are also a bit silly. Of course tech conferences like SXSW are a bit giddy. That’s why they’re there, to garner enthusiasm. It’s like going to an actors studio and complaining that the people there are all acting weird. (Of course they are!)
Finally, as a point of clarification, my Innovation Management Matrix is not supposed to encapsulate innovation as a whole or even guide an individual who seeks to innovate. It is meant to be helpful for organizations to help differentiate between a wide array of innovation processes and help allocate resources.
– Greg
… Ah, but I am addressing his comments specifically about technology and innovation, within context. You seem to be taking an ad hominem position yourself, in that you object to the delivery rather than the substance of what Taleb is saying. Which is why the logic leading to your points on innovation feel very assumptive, if not misguided.
My point, again, on SXSW is not that it garners enthusiasm, or that it engages people in the oddball “method acting” experience, but that it represents a systemic challenge — an ignorance, really — in getting people to ask better questions. That’s the heart of Taleb’s assertions about technology and innovation.
Noted on the Innovation Management Matrix. I still think many innovation processes are misleading –and resource allocation somewhat fleeting — without operable context, but I suppose that’s a discussion for another time 😉
Anyway, all to contemplate in a good day’s conversation… Thanks for writing this.
I agree with all of Gunther’s points above. Two comments: Taleb’s work is obviously more relevant for financial risk management than technology evolution in general, but I must say I shared a few of his impressions at SXSW. I try to absorb some of the overwhelming, often shallow, conference sessions, and then contemplate on the big trends that have a hopeful impact on society, like crowd-sourced funding, and peer-to-peer share economy (see cover piece in Forbes Feb 11). Also note that Mandelbroit worked at IBM back in the good ‘ole days when we valued pure research, and I miss those days!
Sorry Gunther, that doesn’t make any sense. How can you accuse me of directing my comments to Taleb’s person when I don’t even extend my objections to the body of his work? (Most of which, I admire and say so).
Further, while I object to the tone, my comments were about the substance. Specifically:
1. Objecting to people being enthusiastic about what they do is just silly (Should we accuse Tider Woods of Golfomania? Of ESPN broadcasters of Sportsmania?)
2. He is essentially making a straw man argument. Yes, if technologists didn’t see any need to examine the consequences of their work or be skeptical about outcomes, I could see his point. Surely, some people do exist, but as you well know, these issues are very actively discussed in the technology community. Kevin Kelly, for instance, raised the issue quite intelligently in his most recent book.
3. While he scoffs that most new technologies fail, he fails to recognize that many successful tech entrepreneurs are not only painfully aware of that fact (having failed several times before eventually succeeding) but continue to persevere and overcome failure. That’s should be the subject of admiration, not scorn.
4. In a later discussion he offered a link to this article to suport his views: http://www.edge.org/conversation/understanding-is-a-poor-substitute-for-convexity-antifragility
He seems to either confuse “test and learn” with trial and error or just can’t resist returning to his favorite Gaussian whipping boy. Either way, I have never met anyone who thinks that you can develop technology by just randomly shooting in the dark. Again, there’s some truth to what Taleb says here, but it is essentially a straw man argument. He is ascribing views that technologists don’t actually hold.
Yes, I agree that formal processes can be misleading and resource allocations are fleeting. Nevertheless, people need basic principles of working together in an organization and resources must be allocated. That’s why its harder to run an effective organization than it is to work effectively yourself.
– Greg
Laura,
I agree that conferences are often shallow (in any industry). However, I think it is a bit of a stretch to extrapolate conduct at a conference to the zeitgeist of an entire industry. If Mr. Taleb actually worked in technology or even spent some time as an active investor, he would probably be in a better position to make intelligent comments.
I’m a big Mandelbrot fan myself. Although I do have hope that pure research is making a comeback. There seems to be an undercurrent of support that was absent even a few years ago, but for sure, we have a long way to go.
– Greg
In some ways Taleb’s reaction to tech reminds me of Nick Carr’s reactions – In Nick’s case he seems to deliberately seek out the devil’s advocate viewpoint.
Neophobia is as much a problem as Neophilia – striking the right dynamic and appropriate balance is the key – the old dampening and amplification of experiments with “useless things” 🙂
You might find the ideas of Neutral Biodiversity of interest “Speciation is a property intrinsic to evolution, just as all matter has gravity” – ie that diversity and new forms emerge through genetic mutation and then become subject to environmental selection – in a sense nerdiness is an essential driver for emergence of new forms that then get selected out by applicability and the dynamic between neophobes and neophiles.
You could also counter Talebs arguments with those of Kevin Kelly and the Technium – like Neutral Biodiversity the technium has its own momentum.
Given Taleb’s black swans – I would have thought he would be comfortable with the way technology emerges and evolves – maybe he is just not comfortable with those who emerge it.
I think that’s about right. Kevin Kelly does indeed have some great thoughts about this. He writes knowledgeably, but skeptically about technology, especially in his descriptions of the Amish.
I have no idea why Taleb went off on this tangent. I think he just went to a few conferences, found himself annoyed (can’t blame him for that!) and went off on a flyer.
– Greg
Hi Greg
A point you completely miss about new technology is obvious two paragraphs in on your chapter The Information Technology. You say the fisherman with mobile phones can now find out where they will find high prices. However, what you completely miss is that when every fisherman has a phone, you are at no advantage at all. Because all the fisherman turn up at the same port and the price paid for fish comes down.
Keep thinking :~)
Michael
Michael,
Yes. That would be true if all of the fisherman called to check prices at the same time from the same place, but the ocean is a big place and fisherman have no incentive to cooperate in that way.
I would urge you to read the paper I linked in from the Quarterly Journal of Economics by Robert Jensen. He got his PhD at Princeton, where did you get yours?
– Greg
Going to reply here, since the “reply” function was cut-off in our little thread above. (Forgive me, Laura 😉
“How can you accuse me of directing my comments to Taleb’s person when I don’t even extend my objections to the body of his work? ” That’s… an ad hominem position, Greg.
And how do you know that Taleb “hasn’t worked in technology or spent some time as an active investor”?
We might need to define the term ‘technology’ here, but from what I’ve read and heard, he’s worked with a good number of technologists in his day — you don’t run several funds without seeking or having that kind of competitive advantage. In fact, he’s written about it. As for active investment, his learnings about the randomness of the market (and subsequent losses) have definitely lead him to make active investments in a number of ventures outside of finance.
All of which to say — and I still maintain — that your position is a bit tough to defend 😉
Well, as a financial trader he wouldn’t really have any need to be involved with technology (most aren’t) and he’s been very vocal about his opposition to automated trading models. He’s never mentioned any particular involvement with technology in any of his writings and he specifically cited his attendance at technology conferences for forming his opinions.
So no, I don’t know for sure, just from what Taleb himself has stated as his experience and rationale.
– Greg