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Tuesday, February 21, 2006

The Objective of Life – II

The reason for writing this part II is because part I does not explain fully my thinking.

Firstly, it leaves an impression that I don’t respect people who have succeeded in their life – people who are widely acclaimed to be amongst the top in their professions. Well, this is only partly true.

It is true in the sense that I probably don’t respect these gentlemen as much as the average person does. But it’s untrue in the sense that I do not respect them. I certainly respect these guys, these guys have done well (precisely how well, and whether actually well enough to justify the respect/money they command - thats another question).

You see there’s a huge amount of survivorship bias out there when we see at these so called ‘successful people’. The successful people are survivor's first, skills, talent etc comes later on.

Let me give an example – Imagine 2 cricketer’s (A&B) starting their career at the same time. At the end of 10 games their scores are like this:

A – 0,0,0,0,0,100,100,100,100,100
B – 100,100,100,100,100,0,0,0,0,0

Other things being the same, you cannot conclude which of the two players A or B are better – you just can’t. However how likely are you to see the scores of player A? Are they as likely to be as the scores of player B? the answer is simple ‘NO’. Player A after scoring five consecutive ducks is more likely to be dropped from the team than not and thus he never gets the opportunity to score the five consecutive centuries that he otherwise could have. While player B is overwhelmingly like to get the opportunity of scoring the 5 consecutive ducks.

Thus player B survives after game 5, while player A finds himself losing out (and recollect that we cannot definitely say which of the two is a better player - the pattern of their scores being purely down to chance).

I admit that this example is slightly exaggerated, but we see this survivorship in real life. Take cricket itself for example. A new player is selected,–he gets to play a series and if he does badly: he is dropped, else he survives to play another series. And once the player establishes himself, he can afford to have a few bad series without the risk of getting dropped (notice the difference – only if you have survived a few seasons). How many Saurav Ganguly or Marvan Attapattu’s of the world do we see in real life – not many. Both these players had pathetic starts to their careers - but they then went on to become some of the best cricketers of their time – such examples are very rare.

This logic applies to all other areas. A student has to do well in the entrance exam and if she survives that he gets entry into a good college – and even if he does badly there, that college badge ensures that he starts off his career with an advantage over a person who did badly at the entrance test but did exceedingly in the not so ‘well known’ college he went to. Same logic applies to your job, business etc…

Another problem (referred to in passing above) is that success breeds success. So given two people, one having survived for longer and another a fresher and both faced with the same situation, the survivor has a higher probability of further surviving than the fresher.

In business terms this is commonly referred to as network effect. A classic example of such is a company like Microsoft. The more windows OS it sells, the harder it becomes for its competitors to penetrate the market. However this effect is more prevalent that commonly understood.

In sports for example a bad year by an established player is passed off as bad-form, but a bad series by a lesser established player and cries for him to be dropped from the team get louder.

In business, an existing company getting into a new business has a better chance of survival than a new company entering the business world per se – simply because of the network of contacts it has developed, financial standing and credibility it commands etc. Thus even if a new company has a better product/service, it stands in a relatively unfavourable position when competing against a existing company vis-à-vis another new entrant.

Things are worse in a country like India due to its red tape and bureaucracy. The domination of large business families is a very good pointer towards it. Notice that the onset of reform process, unshackling of controls etc, paved way for more entrepreneurs entering the business space.

Children of better off parents get to go to better schools (irrespective of whether their children deserve to go their on merit), while children of financially not so better of parents are not that privileged. Indeed children of beggars don’t get to go to school at all. If your parents are successful, you have a better probability of success. Even if you are born with Einstein’s brain in a beggar’s family, there’s very little you can do about it. And of course, you don’t get to choose things like your gender, place of birth, your parents, their financial background etc – which make a hell of a lot of difference to where you end up in life. You may be born as mentally/physically challenged – that’s a stroke of chance as well.

So in conclusion, I would just like to repeat a quote which one of my professors used in one of his classes which aptly describe my views on this topic

“Success commands explanation, Failure permits none”

That’s it for now….

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