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Category Archives: Philosophy

Jared Diamond: How to Get Rich

We’re constantly asked for examples of the “multiple mental models” approach in practice. Our standard response includes great books like Garrett Hardin’s Filters Against Folly and Will Durant’s The Lessons of History.

One of the well-known examples of this brand of thinking is Guns, Germs, and Steel, a book that opened thousands of eyes to the power of leaping across the walls of history, sociology, biology, geography and other fields to truly understand the world. (If you haven’t read it yet, why are you still here? Go order it and read it!)

Jared Diamond, the book’s author, is a great master of synthesis across many fields — works like The Third Chimpanzee and Collapse show great critical thinking prowess, even if you don’t come to 100% agreement with him.

Lesser known than Guns, Germs, and Steel is a follow-up talk Diamond gave entitled How to Get Rich:

… probably most lectures one hears at the museum are on fascinating but impractical subjects: namely, they don’t help you to get rich. This evening I plan to redress the balance and talk about the natural history of becoming rich.

The talk is a great, and short, introduction to “multiple mental models” thinking. Diamond, of course, does not literally answer the question of How to Get Rich. He’s smart enough to know that this is charlatan territory if answered too literally. (Three steps to surefire wealth!)

But he does effectively answer an interesting part of the equation of getting rich: What conditions do we need to set up maximal productivity, learning, and cooperation among our groups? 

Diamond answers his question through the same use of inter-disciplinary synthesis his readers would be familiar with: As you read it, you’ll see models from biology, military history, business/economics, and geography.

His answer has two main parts: Optimal group size/fragmentation, and optimal exposure to outside competition:

So what this suggests is that we can extract from human history a couple of principles. First, the principle that really isolated groups are at a disadvantage, because most groups get most of their ideas and innovations from the outside. Second, I also derive the principle of intermediate fragmentation: you don’t want excessive unity and you don’t want excessive fragmentation; instead, you want your human society or business to be broken up into a number of groups which compete with each other but which also maintain relatively free communication with each other. And those I see as the overall principles of how to organize a business and get rich.

Those are wonderful lessons, and you should read the piece to see how he arrives at them. But there’s another important reason we bring the talk to your attention, one of methodology.

Diamond’s talk offers us a powerful principle for our efforts to understand the world: Look for and study natural experiments, the more controlled, the better.

I propose to try to learn from human history. Human history over the last 13,000 years comprises tens of thousands of different experiments. Each human society represents a different natural experiment in organizing human groups. Human societies have been organized very differently, and the outcomes have been very different. Some societies have been much more productive and innovative than others. What can we learn from these natural experiments of history that will help us all get rich? I propose to go over two batches of natural experiments that will give you insights into how to get rich.

This wonderfully useful approach, reminiscent of Peter Kaufman’s idea about the Three Buckets of Knowledge, is one we see used effectively all the time.

Judith Rich Harris used the naturally controlled experiment of identical twins separated at birth to solve the problem of human personality development. Michael Abrashoff had a naturally controlled experiment in leadership principles when he had to turn around the USS Benfold without hiring or firing, or changing ships or missions, or offering any financial incentive to his cadets. Ken Iverson had a naturally controlled experiment in business principles by succeeding dramatically in a business with massive headwinds and no tailwinds.

And so if we follow in the steps of Diamond, Peter Kaufman, Judith Rich Harris, Ken Iverson, and Michael Abrashoff, we might find natural experiments that help illuminate the solutions to our problems in unusual ways. As Diamond says in his talk, the world has already tried thousands of things: All we have to do is study them and then align with the way the world works.

The Island of Knowledge: Science and the Meaning of Life

“As the Island of Knowledge grows, so do the shores of our ignorance—the boundary between the known and unknown. Learning more about the world doesn’t lead to a point closer to a final destination—whose existence is nothing but a hopeful assumption anyways—but to more questions and mysteries. The more we know, the more exposed we are to our ignorance, and the more we know to ask.”


Common across human history is our longing to better understand the world we live in, and how it works. But how much can we actually know about the world?

In his book, The Island of Knowledge: The Limits of Science and the Search for Meaning, Physicist Marcelo Gleiser traces our progress of modern science in the pursuit to the most fundamental questions on existence, the origin of the universe, and the limits of knowledge.

What we know of the world is limited by what we can see and what we can describe, but our tools have evolved over the years to reveal ever more pleats into our fabric of knowledge. Gleiser celebrates this persistent struggle to understand our place in the world and travels our history from ancient knowledge to our current understanding.

While science is not the only way to see and describe the world we live in, it is a response to the questions on who we are, where we are, and how we got here. “Science speaks directly to our humanity, to our quest for light, ever more light.

To move forward, science needs to fail, which runs counter to our human desire for certainty. “We are surrounded by horizons, by incompleteness.” Rather than give up, we struggle along a scale of progress. What makes us human is this journey to understand more about the mysteries of the world and explain them with reason. This is the core of our nature.

While the pursuit is never ending, the curious journey offers insight not just into the natural world, but insight into ourselves.

“What I see in Nature is a magnificent structure that we can comprehend only
very imperfectly,
and that must fill a thinking person with a feeling of humility.”
— Albert Einstein

We tend to think that what we see is all there is — that there is nothing we cannot see. We know it isn’t true when we stop and think, yet we still get lulled into a trap of omniscience.

Science is thus limited, offering only part of the story — the part we can see and measure. The other part remains beyond our immediate reach.

What we see of the world,” Gleiser begins, “is only a sliver of what’s out there.”

There is much that is invisible to the eye, even when we augment our sensorial perception with telescopes, microscopes, and other tools of exploration. Like our senses, every instrument has a range. Because much of Nature remains hidden from us, our view of the world is based only on the fraction of reality that we can measure and analyze. Science, as our narrative describing what we see and what we conjecture exists in the natural world, is thus necessarily limited, telling only part of the story. … We strive toward knowledge, always more knowledge, but must understand that we are, and will remain, surrounded by mystery. This view is neither antiscientific nor defeatist. … Quite the contrary, it is the flirting with this mystery, the urge to go beyond the boundaries of the known, that feeds our creative impulse, that makes us want to know more.

While we may broadly understand the map of what we call reality, we fail to understand its terrain. Reality, Gleiser argues, “is an ever-shifting mosaic of ideas.”


The incompleteness of knowledge and the limits of our scientific worldview only add to the richness of our search for meaning, as they align science with our human fallibility and aspirations.

What we call reality is a (necessarily) limited synthesis. It is certainly our reality, as it must be, but it is not the entire reality itself:

My perception of the world around me, as cognitive neuroscience teaches us, is synthesized within different regions of my brain. What I call reality results from the integrated sum of countless stimuli collected through my five senses, brought from the outside into my head via my nervous system. Cognition, the awareness of being here now, is a fabrication of a vast set of chemicals flowing through myriad synaptic connections between my neurons. … We have little understanding as to how exactly this neuronal choreography engenders us with a sense of being. We go on with our everyday activities convinced that we can separate ourselves from our surroundings and construct an objective view of reality.

The brain is a great filtering tool, deaf and blind to vast amounts of information around us that offer no evolutionary advantage. Part of it we can see and simply ignore. Other parts, like dust particles and bacteria, go unseen because of limitations of our sensory tools.

As the Fox said to the Little Prince in Antoine de Saint-Exupery’s fable, “What is essential is invisible to the eye.” There is no better example than oxygen.

Science has increased our view. Our measurement tools and instruments can see bacteria and radiation, subatomic particles and more. However precise these tools have become, their view is still limited.

There is no such thing as an exact measurement. Every measurement must be stated within its precision and quoted together with “error bars” estimating the magnitude of errors. High-precision measurements are simply measurements with small error bars or high confidence levels; there are no perfect, zero-error measurements.


Technology limits how deeply experiments can probe into physical reality. That is to say, machines determine what we can measure and thus what scientists can learn about the Universe and ourselves. Being human inventions, machines depend on our creativity and available resources. When successful, they measure with ever-higher accuracy and on occasion may also reveal the unexpected.

“All models are wrong, some are useful.”
— George Box

What we know about the world is only what we can detect and measure — even if we improve our “detecting and measuring” as time goes along. And thus we make our conclusions of reality on what we can currently “see.”

We see much more than Galileo, but we can’t see it all. And this restriction is not limited to measurements: speculative theories and models that extrapolate into unknown realms of physical reality must also rely on current knowledge. When there is no data to guide intuition, scientists impose a “compatibility” criterion: any new theory attempting to extrapolate beyond tested ground should, in the proper limit, reproduce current knowledge.


If large portions of the world remain unseen or inaccessible to us, we must consider the meaning of the word “reality” with great care. We must consider whether there is such a thing as an “ultimate reality” out there — the final substrate of all there is — and, if so, whether we can ever hope to grasp it in its totality.


We thus must ask whether grasping reality’s most fundamental nature is just a matter of pushing the limits of science or whether we are being quite naive about what science can and can’t do.

Here is another way of thinking about this: if someone perceives the world through her senses only (as most people do), and another amplifies her perception through the use of instrumentation, who can legitimately claim to have a truer sense of reality? One “sees” microscopic bacteria, faraway galaxies, and subatomic particles, while the other is completely blind to such entities. Clearly they “see” different things and—if they take what they see literally—will conclude that the world, or at least the nature of physical reality, is very different.

Asking who is right misses the point, although surely the person using tools can see further into the nature of things. Indeed, to see more clearly what makes up the world and, in the process to make more sense of it and ourselves is the main motivation to push the boundaries of knowledge. … What we call “real” is contingent on how deeply we are able to probe reality. Even if there is such thing as the true or ultimate nature of reality, all we have is what we can know of it.


Our perception of what is real evolves with the instruments we use to probe Nature. Gradually, some of what was unknown becomes known. For this reason, what we call “reality” is always changing. … The version of reality we might call “true” at one time will not remain true at another. … Given that our instruments will always evolve, tomorrow’s reality will necessarily include entitles not known to exist today. … More to the point, as long as technology advances—and there is no reason to suppose that it will ever stop advancing for as long as we are around—we cannot foresee an end to this quest. The ultimate truth is elusive, a phantom.

Gleiser makes his point with a beautiful metaphor. The Island of Knowledge.

Consider, then, the sum total of our accumulated knowledge as constituting an island, which I call the “Island of Knowledge.” … A vast ocean surrounds the Island of Knowledge, the unexplored ocean of the unknown, hiding countless tantalizing mysteries.

The Island of Knowledge grows as we learn more about the world and ourselves. And as the island grows, so too “do the shores of our ignorance—the boundary between the known and unknown.”

Learning more about the world doesn’t lead to a point closer to a final destination—whose existence is nothing but a hopeful assumption anyways—but to more questions and mysteries. The more we know, the more exposed we are to our ignorance, and the more we know to ask.

As we move forward we must remember that despite our quest, the shores of our ignorance grow as the Island of Knowledge grows. And while we will struggle with the fact that not all questions will have answers, we will continue to progress. “It is also good to remember,” Gleiser writes, “that science only covers part of the Island.”

Richard Feynman has pointed out before that science can only answer the subset of question that go, roughly, “If I do this, what will happen?” Answers to questions like Why do the rules operate that way? and Should I do it? are not really questions of scientific nature — they are moral, human questions, if they are knowable at all.

There are many ways of understanding and knowing that should, ideally, feed each other. “We are,” Gleiser concludes, “multidimensional creatures and search for answers in many, complementary ways. Each serves a purpose and we need them all.”

“The quest must go on. The quest is what makes us matter: to search for more answers, knowing that the significant ones will often generate surprising new questions.”

The Island of Knowledge is a wide-ranging tour through scientific history from planetary motions to modern scientific theories and how they affect our ideas on what is knowable.

“As the Island of Knowledge grows, so do the shores of our ignorance.” Click To Tweet

Fun with Logical Fallacies

We came across a cool book recently called Logically Fallacious: The Ultimate Collection of Over 300 Logical Fallacies, by a social psychologist named Bo Bennett. We were a bit skeptical at first — lists like that can be lacking thoughtfulness and synthesis — but then were hooked by a sentence in the introduction that brought the book near and dear to our hearts:

This book is a crash course, meant to catapult you into a world where you start to see things how they really are, not how you think they are.

We could use the same tag line for Farnam Street. (What was that thing about great artists stealing?)

Logically Fallacious a fun little reference guide to bad thinking, but let’s try to highlight a few that seem to arise quite often without enough recognition. (To head off any objections at the pass, most of these are not strict logical fallacies in the technical sense, but more so examples of bad reasoning.)

Logical Fallacies

No True Scotsman

This one is a favorite. It arises when someone makes a broad sweeping claim that a “real” or “true” so and so would only do X or would never do Y.

Example: “No true Scotsman would drink an ale like that!”

“I know dyed-in-the-wool Scotsmen who drink many such ales!”

“Well then he’s not a True Scotsman!”

Problem: The problem should be obvious: It’s a circular definition! A True Scotsman is thus defined as anyone who would not drink such ales, which then makes them a True Scotsman, and so on. It’s non-falsifiable. There’s a Puritanical aspect to this line of reasoning that almost always leads to circularity.

Genetic Fallacy

This doesn’t have to do with genetics per se so much as the genetic origin of an argument. The “genetic fallacy” is when you disclaim someone’s argument based solely on some aspect of their background or the motivation of the claim.

Example: “Of course Joe’s arguing that unions are good for the world, he’s the head of the Local 147 Chapter!”

Problem: Whether or not Joe is the head of his local union chapter has nothing to do with whether unions are good or bad. It certainly may influence his argument, but it doesn’t invalidate his argument. You must approach the merits of the argument rather than the merits of Joe to figure out whether it’s true or not.

Failure to Elucidate

This is when someone tries to “explain” something slippery by redefining it in an equally nebulous way, instead of actually explaining it. Hearing something stated this way is usually a strong indicator that the person doesn’t know what they’re talking about.

Example: “The Secret works because of the vibration of sub-lingual frequencies.”

“What the heck are sub-lingual frequencies?”

“They’re waves of energy that exist below the level of our consciousness.”


Problem: The claimant thinks they have explained the thing in a satisfactory way, but they haven’t — they’ve simply offered another useless definition that does no work in explaining why the claim makes any sense. Too often the challenger will simply accept the follow up, or worse, repeat it to others, without getting a satisfactory explanation. In a Feynman-like way, you must keep probing, and if the probes reveal more failures to elucidate, it’s likely that you can reject the claim, at least until real evidence is presented.

Causal Reductionism

This reflects closely on Nassim Taleb’s work and the concept of the Narrative Fallacy — an undue simplifying of reality to a simple cause–> effect chain.

Example: “Warren Buffett was successful because his dad was a Congressman. He had a leg up I don’t have!”

Problem: This form of argument is used pretty frequently because the claimant wishes it was true or is otherwise comfortable with the narrative. It resolves reality into a neat little box, when actual reality is complicated. To address this particular example, extreme success on the level of a Buffett clearly would have multiple causes acting in the same direction. His father’s political affiliation is probably way down the list.

This fallacy is common in conspiracy theory-type arguments, where the proponent is convinced that because they have some inarguable facts — Howard Buffett was a congressman; being politically connected offers some advantages — their conclusion must also be correct. They ignore other explanations that are likely to be more correct, or refuse to admit that we don’t quite know the answer. Reductionism leads to a lot of wrong thinking — the antidote is learning to think more broadly and be skeptical of narratives.

“Fallacy of Composition/Fallacy of Division”

These two fallacies are two sides of the same coin: The first problem is thinking that if some part of a greater whole has certain properties, that the whole must share the same properties. The second is the reverse: Thinking that because a whole is judged to have certain properties, that its constituent parts must necessarily share those properties.

Examples: “Your brain is made of molecules, and molecules are not conscious, so your brain must not be the source of consciousness.”

“Wall Street is a dishonest place, and so my neighbor Steve, who works at Goldman Sachs, must be a crook.”

Problem: In the first example, stolen directly from the book, we’re ignoring emergent properties: Qualities that emerge upon the combination of various elements with more mundane innate qualities. (Like a great corporate culture.) In the second example, we make the same mistake in a mirrored way: We forget that greed may be emergent in the system itself, even from a group of otherwise fairly honest people. The other mistake is assuming that each constituent part of the system must necessarily share the traits of the whole system. (i.e., because Wall St. is a dishonest system, your neighbor must be dishonest.)


Still Interested? Check out the whole book. It’s fun to pick up regularly and see which fallacies you can start recognizing all around you.

The Four Tools of Discipline

“The life of wisdom must be a life of contemplation combined with action.”


Life is full of problems. We can moan about them or we can solve them. Scott Peck argues in The Road Less Traveled: A New Psychology of Love, Traditional Values and Spiritual Growth that discipline is the toolbox for solving problems.

Peck’s argument is based on the notion that most of us want to avoid problems – they are painful and often lead us to confront our humanity. They are frustrating. There are false starts. We lack consistent frameworks for improvement. They cause us to feel sad and lonely; things we’d rather avoid. The mental pain and strain often rivals physical pain. Yet Peck argues it is in this “whole process of meeting and solving problems that life has meaning.”

Problems call forth our courage and our wisdom; indeed, they create our courage and our wisdom. It is only because of problems that we grow mentally and spiritually. When we desire to encourage the growth of the human spirit, we challenge and encourage the human capacity to solve problems, just as in school we deliberately set problems for our children to solve. It is through the pain of confronting and resolving problems that we learn.

As Benjamin Franklin said, “Those things that hurt, instruct.”

This is why some of us come to welcome problems. Most of us, however, fear them.

Fearing the pain involved, almost all of us, to a greater or lesser degree, attempt to avoid problems. We procrastinate, hoping that they will go away. We ignore them, forget them, pretend they do not exist. We even take drugs to assist us in ignoring them, so that by deadening ourselves to the pain we can forget the problems that cause the pain. We attempt to skirt around problems rather than meet them head on. We attempt to get out of them rather than suffer through them.

Ultimately however the suffering from avoiding reality is more painful than reality itself. You can see where this goes right? Now we want to avoid the pseudo-reality that we created to avoid the reality. And so it builds, layer on layer.

Avoiding problems avoids the growth opportunity. Most of the time problems don’t go away, rather they grow.

This inclination to ignore problems is once again a simple manifestation of an unwillingness to delay gratification. Confronting problems is, as I have said, painful. To willingly confront a problem early, before we are forced to confront it by circumstances, means to put aside something pleasant or less painful for something more painful. It is choosing to suffer now in the hope of future gratification rather than choosing to continue present gratification in the hope that future suffering will not be necessary.

The Four Tools of Discipline

What are these tools, these techniques of suffering, these means of experiencing the pain of problems constructively that I call discipline? There are four: delaying of gratification, acceptance of responsibility, dedication to truth, and balancing.

Easy to learn and yet hard to employ. These are the tools to confront problems and thus pain.

1. Delaying Gratification

Delaying gratification is a process of scheduling the pain and pleasure of life in such a way as to enhance the pleasure by meeting and experiencing the pain first and getting it over with. It is the only decent way to live.

2. Accepting Responsibility

The extent to which we will go to avoid responsibility should come as no surprise. Accepting responsibility is emotionally uncomfortable. We often feel, incorrectly, that we can solve a problem by saying “That’s not my problem.” Other times we hope that someone else will just solve it for us.

I can solve a problem only when I say “This is my problem and it’s up to me to solve it.” But many, so many, seek to avoid the pain of their problems by saying to themselves: “This problem was caused me by other people, or by social circumstances beyond my control, and therefore it is up to other people or society to solve this problem for me. It is not really my personal problem.”

There are extremes of responsibility.

The neurotic assumes too much responsibility; the person with a character disorder not enough. When neurotics are in conflict with the world they automatically assume that they are at fault. When those with character disorders are in conflict with the world they automatically assume that the world is at fault.

Just remember …

Whenever we seek to avoid the responsibility for our own behavior, we do so by attempting to give that responsibility to some other individual, organization, or entity.

3. Dedication to Reality

This sounds a lot like Joseph Tussman’s wise advice. Most of us have problems confronting reality because it does not line up with how we want the world to work. The rise of a political figure that we don’t support baffles us because in our mind the world shouldn’t work that way.

What Peck outlines below is a version of the map and terrority problem.

Superficially, this should be obvious. For truth is reality. That which is false is unreal. The more clearly we see the reality of the world, the better equipped we are to deal with the world. The less clearly we see the reality of the world— the more our minds are befuddled by falsehood, misperceptions and illusions—the less able we will be to determine correct courses of action and make wise decisions. Our view of reality is like a map with which to negotiate the terrain of life. If the map is true and accurate, we will generally know where we are, and if we have decided where we want to go, we will generally know how to get there. If the map is false and inaccurate, we generally will be lost.

While this is obvious, it is something that most people to a greater or lesser degree choose to ignore. They ignore it because our route to reality is not easy. First of all, we are not born with maps; we have to make them, and the making requires effort. The more effort we make to appreciate and perceive reality, the larger and more accurate our maps will be. But many do not want to make this effort. Some stop making it by the end of adolescence. Their maps are small and sketchy, their views of the world narrow and misleading. By the end of middle age most people have given up the effort. They feel certain that their maps are complete and their Weltanschauung is correct (indeed, even sacrosanct), and they are no longer interested in new information. … Only a relative and fortunate few continue until the moment of death exploring the mystery of reality, ever enlarging and refining and redefining their understanding of the world and what is true.

This biggest problem isn’t that our maps are inaccurate but rather that we fail, especially as we age, to revise them. The world is always changing. As Heraclitus said, No man can step in the same river twice.

The world itself is constantly changing. Glaciers come, glaciers go. Cultures come, cultures go. There is too little technology, there is too much technology. Even more dramatically, the vantage point from which we view the world is constantly and quite rapidly changing.

When we’ve worked so hard over so many years to create a map that we believe represents the world, we tend to ignore information that would suggest we need to redraw our map. We become defensive. Often we don’t even passively ignore this information. We go further. We denounce it or crusade against it. We feel that people who listen to it are idiots and we are the only ones who see the truth. Rather than change our map, we often try to (mentally) destroy the new reality and those that subscribe to it.

Pride and ego come into play.

Truth or reality is avoided when it is painful. We can revise our maps only when we have the discipline to overcome that pain. To have such discipline, we must be totally dedicated to truth. That is to say that we must always hold truth, as best we can determine it, to be more important, more vital to our self-interest, than our comfort. Conversely, we must always consider our personal discomfort relatively unimportant and, indeed, even welcome it in the service of the search for truth.

Openness to Challenge

What does a life of total dedication to the truth mean? It means, first of all, a life of continuous and never-ending stringent self-examination. We know the world only through our relationship to it. Therefore, to know the world, we must not only examine it but we must simultaneously examine the examiner.

The only way we can ensure our map is correct and accurate is to expose it to the criticism of others. There might be a better answer than the one you have. We need an outside view, otherwise we live in a closed system. The tendency to avoid being challenged is a characteristic of human nature.

4. Balancing

Balancing is the discipline that gives us flexibility. Extraordinary flexibility is required for successful living in all spheres of activity.


To function successfully in our complex world it is necessary for us to possess the capacity not only to express our anger but also not to express it. Moreover, we must possess the capacity to express our anger in different ways. At times, for instance, it is necessary to express it only after much deliberation and self-evaluation. At other times it is more to our benefit to express it immediately and spontaneously. Sometimes it is best to express it coldly and calmly; at other times loudly and hotly. We therefore not only need to know how to deal with our anger in different ways at different times but also how most appropriately to match the right time with the right style of expression. To handle our anger with full adequacy and competence, an elaborate, flexible response system is required. It is no wonder, then, that to learn to handle our anger is a complex task which usually cannot be completed before adulthood, or even mid-life, and which often is never completed.


Balancing is a discipline precisely because the act of giving something up is painful.

The Four Tools of Discipline. Click To Tweet


The Road Less Traveled is a fascinating exploration of what it means to be human and to struggle to get better.

Ryan Holiday on Reading, What it Means to be a Stoic, and How to Take Notes

On this episode of The Knowledge Project, I talk reading and so much more with Ryan Holiday.

Ryan Holiday is the author of Trust Me I’m Lying, The Obstacle is the Way, and Ego is the Enemy.

On this episode you’ll learn how he reads, what it means to be a Stoic, the two sides of Seneca, dealing with over-work, what he learned from working with Robert Greene and his system for taking notes.




Books Mentioned:
Marcus Aurelius Meditations
Diogenes Laertius Lives of Eminent Philosophers (Stoics in Book 7)
Robert Greene The 48 Laws of Power
James Romm Dying Every Day: Seneca at the Court of Nero
Pierre Hadot The Inner Citadel
Robert Caro The Years of Lyndon Johnson


A complete transcript is available for members.

The HP Way: Dave Packard on How to Operate a Company

In 1960, David Packard gave an informal speech that wasn’t originally intended for publication. In fact the speech only surfaced again during the debate over the merger between Hewlett Packard and Compaq. At the time the leadership of HP portrayed themselves as doing exactly “what Dave Packard would have done.”

As a rebuttal to this dubious use of language, David Packard Jr. published a full-page ad in the Wall Street Journal (March 15, 2002) reprinting a wonderful speech his father gave in the ’60s to a group of HP managers. Nothing could be better evidence of the philosophy than the words, delivered on the job from his father.

The speech, which can be found in The HP Way: How Bill Hewlett and I Built Our Company, dealt with a number of subjects including why a company exists, the difference between management by objective and management by control, how to manage people, the importance of financial responsibility and more.

Packard opens his speech by saying “I think this is going to be crucial in determining whether we are able to continue to grow and keep an efficient organization and maintain the character of our company”.


When discussing why a company exists in the first place, Packard writes:

I think many people assume, wrongly, that a company exists simply to make money. While this is an important result of a company’s existence, we have to go deeper and find the real reasons for our being. As we investigate this, we inevitably come to the conclusion that a group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively which they could not accomplish separately. They are able to do something worthwhile— they make a contribution to society (a phrase which sounds trite but is fundamental).


So with that in mind let us discuss why the Hewlett-Packard Company exists. I think it is obvious that we started this company because Bill and I, and some of those working with us in the early days, felt that we were able to design and make instruments which were not as yet available. I believe that our company has grown over the years for that very reason. Working together we have been able to provide for the technical people, our customers, things which are better than they were able to get anywhere else. The real reason for our existence is that we provide something which is unique. Our particular area of contribution is to design, develop, and manufacture electronic measuring instruments.

[T]he reason for our existence and the measure of our success is how well we are able to make our product.


As for how the individual person fits into these efforts, Packard hits on the difference between management by objective and management by control:

The individual works, partly to make money, of course, but we should also realize that the individual who is doing a worthwhile job is working because he feels he is accomplishing something worthwhile. This is important in your association with these individuals. You know that those people you work with that are working only for money are not making any real contribution. I want to emphasize then that people work to make a contribution and they do this best when they have a real objective when they know what they are trying to achieve and are able to use their own capabilities to the greatest extent. This is a basic philosophy which we have discussed before— Management by Objective as compared to Management by Control.


Continuing, Packard hits on the notion of what it means to supervise someone:

In other words when we discuss supervision and management we are not talking about a military type organization where the man at the top issues an order and it is passed on down the line until the man at the bottom does as he is told without question (or reason). That is precisely the type of organization we do not want. We feel our objectives can best be achieved by people who understand what they are trying to do and can utilize their own capabilities to do them. I have noticed when we promote people from a routine job to a supervisory position, there is a tremendous likelihood that these people will get carried away by the authority. They figure that all they have to do now is tell everyone else what to do and quite often this attitude causes trouble. We must realize that supervision is not a job of giving orders; it is a job of providing the opportunity for people to use their capabilities efficiently and effectively. I don’t mean you are not to give orders. I mean that what you are trying to get is something else. One of the underlying requirements of this sort of approach is that we do understand a little more specifically what the objectives of the company are. These then have to be translated into the objectives of the departments and groups and so on down.


While Steve Jobs famously said that focus is the ability to say no, Packard approached focus from another angle:

The other objective which is complementary to this and equally important is to try to make everything we do worthwhile. We want to do our best when we take on a job. … The logical result of this is that as we concentrate our efforts on these areas and are able to find better ways to do the job, we will logically, develop a better line of general purpose measuring instruments.


Getting the product to the customer is only half the job.

In engineering, there are two basic criteria that are uppermost in the definition of what we hope to be able to do. As we develop these new instruments, we hope they will be creative in their design, and they will provide better ways of doing a job. There are many examples of this— the instruments our engineers have developed this last year give us some good examples. The clip-on milliammeter, the new wave analyzer, the sampling scope— all are really creative designs. They give people who buy them methods of making measurements they could not make before those instruments were available. However, creative design alone is not enough and never will be. In order to make these into useful devices, there must be meticulous attention to detail. The engineers understand this. They get an instrument to the place where it is about ready to go and the job is about half done. The same applies in the manufacturing end of the program. We need to produce efficiently in order to achieve our slogan of inexpensive quality. Cost is a very important part of the objective in manufacturing, but producing an instrument in the quickest manner is not satisfactory unless at the same time every detail is right. Attention to detail is as important in manufacturing as it is in engineering.


It’s not about what you sell, it’s about the problems you solve.

We certainly are not anxious to sell a customer something he does not want, nor need. You may laugh, but this has happened— in other companies of course, not ours! Also, we want to be sure that when the instrument is delivered, it performs the function the customer wanted.


Packard, ever the financial conservative, offers a timeless lesson on financial responsibility:

Financial responsibility is equally important, however different in nature. It is essentially a service function to see that we generate the resources which make it possible for us all to do our job.

These things translated mean that in addition to having the objective of trying to make a contribution to our customers, we must consider our responsibilities in a broader sense. If our main thought is to make money, we won’t care about these details. If we don’t care about the details, we won’t make as much money. They go hand in hand.


On the company’s responsibility to employees:

We are not interested only in making a better product. We feel that in asking you people to work for us, we in turn have an obligation. This is an important point and one which we ask each of you to relay to all the employees. Our first obligation, which is self-evident from my previous remarks, is to let people know they are doing something worthwhile. We must provide a means of letting our employees know they have done a good job. You as supervisors must convey this to your groups. Don’t just give orders. Provide the opportunity for your people to do something important. Encourage them.


On the contentious question of whether a manager needs to understand the realities of their people, Packard offers a clear rebuttal of the argument that management skills are sufficient.

Some say you can be a good manager without having the slightest idea of what you are trying to manage, that the techniques of management are all important. There are many organizations which work that way. I don’t argue that the job can’t be done that way but I do argue strongly that the best job can be done when the manager or supervisor has a real and genuine understanding of his group’s work. … I don’t see how a person can even understand what proper standards are and what performance is required unless he does understand in some detail the very specific nature of the work he is trying to supervise.


As to what traits management should exhibit

Tolerance is tremendously significant. Unless you are tolerant of the people under you, you really can’t do a good job of being a supervisor. You must have understanding— understanding of the little things that affect people. You must have a sense of fairness, and you must know what it is reasonable to expect of your people. You must have a good set of standards for your group but you must maintain these standards with fairness and understanding.


Lest you think Packard was a socialist, he argues that profits are the only path towards achieving the management philosophy he laid out.

I want to say that I have mentioned our primary objectives, but none of these can be accomplished unless the company makes a profit. Profit is the measure of our contribution to our customers— it is a measure of what our customers are willing to pay us over and above the actual cost of an instrument. Only to the extent that we can do something worthwhile, can provide more for the customer, will he year in and year out pay us enough so we have something left over. So profit is the measure of how well we work together. It is really the final measure because, if we cannot do these things so the customer will pay us, our work is futile.


If you liked this you’ll love:

11 Simple Rules For Getting Along With Others — More timeless advice from David Packard deepening our understanding of his philosophy on work and life.

The Four Types of Relationships and the Reputational Cue Ball — Thinking about the fundamental lesson of biology — the need to survive — offers a potent lens through which we can view our relationships.