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When seeking improvement in teams we generally face two choices:

1. Try something new and interesting, ideally something that can be compressed into an awayday session. It's easy - we will never be short of New Sexy Ideas (NSIs); things like psychological safety, radical candour, psychometric profiling. Choose your poison.

2. Stop doing the unproductive shit that everyone knows is causing damage.

What do most people choose? In my experience, it's option 1. Why? Most NSIs are plausible and talk to real problems. And who doesn't want to feel like they are being innovative and positive – it can make the team feel good and show management we are on the ball. Probably the most important reason to pick an NSI is that it means we don't have to directly deal with the tough baked-in problems the team might be facing.

My personal take is that you'll often get more from stopping the things that erode value than from adding something new on top. In this episode of Decision Nerds, we explore Charlie Munger's exhortation to 'Invert, always invert' with Andy Evans, an industry veteran who's written an excellent note on this issue. If you haven't come across inversion before, the idea is that instead of asking how to achieve success, you ask what causes failure and try to systematically avoid those pitfalls.

We focus on one of the most challenging issues in investment management – how to make a team work effectively – covering everything from terrible incentive structures to why we promote the wrong people. Discussing teams and their problems can easily turn into a whingeathon, so we also offer some simple, practical fixes to make team life more enjoyable and effective.

Feel free to listen to this as a team, with your own 'Jeez, do we do that?' bingo card.

Andy' note can be downloaded here.

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𝐍𝐞𝐯𝐞𝐫 𝐡𝐚𝐯𝐞 𝐈 𝐞𝐯𝐞𝐫…

...heard a client say, “I’m disappointed, you made that point too easy for everyone to understand”. Unsurprisingly, anyone who works in the field of investment or consulting will have heard many complaints the other way around. You may have been the culprit, or maybe had to present with THAT colleague who is incredibly smart, but who struggles to get their point across to less sophisticated audiences.

In this episode of Decision Nerds, Joe Wiggins and I unpick this problem, why it exists and why it’s sticky. We discuss:

𝐓𝐡𝐞 ‘𝐜𝐮𝐫𝐬𝐞 𝐨𝐟 𝐤𝐧𝐨𝐰𝐥𝐞𝐝𝐠𝐞’ – once we know something, we can struggle to remember what the world was like before we knew it. This can impact everything from how decks are structured to how we answer questions in a meeting.

𝐓𝐡𝐞 𝐝𝐮𝐚𝐥 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞 𝐩𝐫𝐨𝐛𝐥𝐞𝐦 – investors and consultants often have to present to audiences with different knowledge bases. The problem is when they are both in the room at the same time. We discuss hitting the lowest common denominator vs. making a decision on who is the most important constituent.

𝐓𝐡𝐞 𝐚𝐟𝐟𝐞𝐜𝐭 𝐡𝐞𝐮𝐫𝐢𝐬𝐭𝐢𝐜 – humans process cognitively and emotionally. When we understand something well, our cognitive faculties can judge the quality of an argument. But what do people pay attention to when they don’t understand? As much as anything it is our tone, which can leave people with different impressions than hoped for.

Out of the many behavioural problems that impact investors and their clients, this should be one of the easier ones to solve. It’s just communication skills, right? Sometimes, yes, but we also discuss:

𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐯𝐬. 𝐞𝐠𝐨 – should we assume that people are always trying to communicate optimally? People may be using jargon, because they want to appear smart, or to bamboozle. If it’s this kind of driver, simply telling people to simplify their message won’t work.

𝐎𝐧𝐞 𝐭𝐫𝐚𝐜𝐤 𝐦𝐢𝐧𝐝𝐬 - 𝐭𝐢𝐦𝐞 𝐯𝐬. 𝐜𝐨𝐧𝐭𝐫𝐨𝐥 – very few people can easily go up and down the complexity curve/explain the same point in different ways, especially on the fly. Once people have ‘their story’ they can often get locked into it. This can either be a function of time (to create and learn a new story) or sometimes control – ‘this is my product, I’ll decide how it gets communicated’.

𝐄𝐦𝐩𝐞𝐫𝐨𝐫’𝐬 𝐧𝐞𝐰 𝐜𝐥𝐨𝐭𝐡𝐞𝐬 – for people to change, they need to know what the problem is. Powerful/influential people often don’t get to hear the unvarnished truth. If we want the best chance of change, we need to communicate the issue in a way that (i) reflects reality and (ii) gives the ‘offender’ a positive way forward that they can practically engage with.

You can also hear Joe’s learning moment when he (foolishly?) decided to dig into the ratings his presentation was given at an investment conference.

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Howard Marks – navigating the crisis - creed, preparation and control

What kind of mindset and organisational culture does it take to survive and to thrive in market turmoil?

Let’s be frank, there are a vanishingly small number of people who have navigated multiples crises successfully and have something interesting and reflective to say it about it.

One person who does is Howard Marks. Founder and Co-Chairman of Oaktree he is, for our (and Warren Buffet’s) money, one of the most thoughtful and experienced investors in the market today.

In the latest episode of Decision Nerds, we got to speak to him in the middle of recent market craziness. We had a fascinating chat - not about tariffs, Trump or trade wars, but the inner game; what individuals and firms need to succeed in this environment.

Joe's writing on investment decision-making is here.

You can find Paul on LinkedIn here.