How Good Becomes the Enemy of Great

“Good is the enemy of great” is an insight that a lot of people have stumbled upon, though I can’t trace the origin of the phrase.  It might be Jim Collins’ Good to Great, but I am not sure. A hint about the dynamics are in that book (again, an insight I’ve heard elsewhere): good people with a bad process will always beat incompetent people working with a good process.

The clue is in the word process. Process is how good becomes the enemy of great. And I mean process in its most general form, not just the rigid bureaucratic stereotype. So a specific portfolio analysis technique for picking stocks to maximize some risk/returns function, or any sort of “methodology” is a process. A 12-step program is a process. A “Maximize Your Creativity” book that deals in colorful balls and right-brained art exercises is still a process. “Be agile and improvise” is also a process. If it can be defined and written down as a prescription, with any kind of promise attached, it is a process.

Here’s why this happens. Processes (and systems) of any sort first emerge when a spectacular and undisciplined success occurs. Like a startup — XYZ Corp. say, getting wildly successful. Or the PQR basketball team racking up a string of victories. Or an actor making it big in Hollywood. First, there’s a success that attracts imitative greed. Then something very predictable happens. A “great” story is retold in ways that only capture the “good” part.

“Great” success breeds inefficiency and waste, and somebody brings order into the chaos by imposing thoughtful systems and processes based on on 20/20 hindsight. These systems and processes, if they are well-designed, codify the knowledge that is chaotically distributed in the successful non-system/growth trajectory. They eliminate certain risks and redundancies, and build in some insurance. So you get ideas and intelligence moving from the heads of creative people and into rules and procedures. If you’ve been following this blog recently, this should remind you of the idea of legibility.

This is where the problem starts. Two additional things happen (this is going to sound slightly similar to Gladwell’s Outliers and like Nicholas Nassim Taleb’s critique of The Millionaire Next Door, but I am making a somewhat different argument):

1. The people behind the original success discount the amount of luck, special conditions and randomness involved in the success, and tell stories (unconsciously or consciously) designed to minimize factors besides their own contribution. You get “How I Did It” books from the CEO of XYZ Corp., and the coach of the PQR team.
2. The codified processes undergo a further evolution and become ritualized, and you get process books like “The XYZ Way” or “The PQR Formula for Winning!” But this book, it is important to note, is not a “How to evolve systems and processes like ours” book. It is an “if I could do it again” book. It has to be, otherwise you are reduced to telling people: “to be successful, be me.” So rather than getting the unreconstructed messy story of how chaos turned into order, you get an apparently logical backward extrapolation of the final state. We get the speculative assertion that the end-state process, with its checks and protections could have emerged more efficiently with a given hypothetical storyline. To take a simple example, if you grew a successful blog, and adding an email list in year 3 helped you really get to the next level, you say something like, “if I had to do it again, I’d start growing an email list from Day 1.”

The first kind of manufactured history creates a false sense of predictability, destiny and inevitability. You get the “origin myth” type stories. The second kind of “how to” cookbook offers an improved, more efficient, repeatable formula based on a messy template. Often you’ll find both in the same book. Both types of narratives take this equation:

Great = Good + Luck

And turn it into this one, by dropping “luck.”

Great = Good

In other words, they describe “good” but call it “great.” Because it isn’t fun to admit that the difference is often just luck, and that truly “great” is actually quite rare (I don’t think, for instance, that Einstein was just a lucky Poincare). But this is where the naive can get caught in a bait-and-switch. They think they are buying a formula for “great” and end up executing in best faith and getting trapped in the merely “good.”

If you must, you could say “Openness to Luck” instead of “Luck,” and that was the point of an article I wrote a couple of years ago, The Fine Art of Opportunism. I’ve since gotten a little sadder and more realistic about the world. I still stand by that article, and the model it proposes about how “luck” operates, but I believe that not everybody is lucky enough to be in places where it is possible to manufacture your own luck by being opportunistic.

Censoring Path Depedency and Initial Condition Dependency

Here’s where it gets interesting: the two elements conspire. The self-serving history hides the special conditions (if your success can be explained by a time/place/opportunity, in the sense of Gladwell’s Outliers, there’s less autobiography to write, isn’t there? Those story elements, if they are offered, are offered as “human interest” elements rather than causal elements).  The cookbook on the other hand, creates a conservative formula that ostensibly is about “learning by example.” By promising a less messy (“learn from our mistakes”) version of XYZ’s path, without the “inefficient” twists and turns, and by promising the beautiful and efficient end state that currently exists, a path-dependent history culminating in a desirable steady state gets retold as a path-independent story. Worse, you get the suggestion that it is the end-state that contains the value, rather than the truth: most of the value was banked along the way. The end-state merely milks already-won assets efficiently.

That last point bears repeating: the end-state is not where the value is. The end-state is a hard-won and defensible value-adding position. The value was banked along the way.  The first person who climbs a mountain the hard way gets famous. If he later suggests a road building route and others can now drive to the top, they are going to get far less value. Most of the value the original climber banked was due to the path he took. There are many roads to the top of a mountain, but the view is not always the same.

See what happened here? The manufactured history removes dependency on initial conditions. The “cleaned up” process-evolution prescription removes path dependency. Value-attribution is shifted from process states to final outcome state.

A story that is neither necessary, nor sufficient to explain wild success has become both necessary and sufficient. “If you do it this way, you WILL succeed, and this is the only way you CAN succeed.” Few authors are quite that naively deterministic, but you get almost that promise.

That’s actually the definition of a process: a manufactured, self-serving history justifying a conservative, “cleaned up” necessary-and-sufficient “do-over” evolution path that ends in a promised high-value-adding state that isn’t.

Quite a nice piece of sleight of hand, isn’t it?

What actually happened: luck, special conditions, and talents conspired to create a messy story that was neither necessary nor sufficient, and led to a high-value position, with most of the value already added, and a state that efficiently milks that position for a while.

But why is this an explanation of “Good is the Enemy of Great?”

Fooling Some of the People Some of the Time

Why do even smart people get taken in by a fake necessary-and-sufficient argument?

Here’s why: even though the initial conditions and path-dependency have been hidden, simply through how imitation works, most attempts to repeat the formula will share some (but crucially, not all) of the undocumented enabling conditions. If the manufactured story and cookbook emerge out of a “real and messy” story that played out with a Chinese hero in Taiwan, well, other Chinese wannabe-greats in Taiwan are the most likely mimics. So some of the enabling conditions are repeated even if nobody acknowledges that they matter. That may be enough for many people to get to “good.”

So if you follow the “great” formula faithfully you will accidentally build walls that prevent your own bits of luck and serendipity from getting through. It is only by creating your own bloody mess that you will be responding to your own unique local conditions and environments, and the lucky breaks your unique initial conditions and unique path offer.

Because you are following the straight-and-narrow version of a tortuous original, and with blinkers on, you don’t see your opportunities. Yes, you are enjoying the benefits of starting your email list on Day 1, but so is every other imitator. But what you lose is the things you might have spotted if you’d chosen to be a little messier. A little more focused on your situation as opposed to somebody else’s playbook.

So you get “good” instead of “great” to the extent that undocumented local conditions are shared. Eventually the local conditions get saturated with formula repeaters, and people start to apply the formula too far afield, and you get failure instead of even “good.” The fad is over.

Those who drive to the top of the mountain also get a good view, though they don’t get the great view at the end of the first climb, or the fame. And of course, if too many people are driving to the top of a given mountain, the overcrowding itself ruins the view.

There’s one more twist to the tale. The probability and information theorists among you will want to dismiss this analysis as a complicated way of saying “high risk/high returns gets converted to low risks/low returns, followed by diminishing returns, as information spreads through a system.

But there’s a subtlety. “Great” stories are not merely high risk/high returns. They seem to display certain asymmetries. They are stories that are more open to good luck than bad luck compared to random stories.

The asymmetry is created by the path dependence and initial conditions. You get information out of your environment and that allows you to swing things in favorable ways. But some bad luck is blocked out by a formula. Your unique formula created by rule-breaking within an older formula.

Selective Rule Breaking

I’ve been criticizing formulas and praising “messy.” To a certain extent, I am advocating methodological anarchy.

But this does not mean “be stupid and random.”

The real secret to getting from “good” to “great” is selective rule breaking. And this “secret” isn’t a formula (that would be ironic, wouldn’t it?) because I am offering a completely non-constructive observation. I have no idea what rules you’ll need to break and how or why. I couldn’t write a “how to break rules” book. Here’s my non-formula:

1. Look for the nearest “good” formula and skeptically deconstruct and reconstruct to recover the hidden initial conditions and path dependencies
2. Check if you are close enough; if yes that’s the formula you are going to break.
3. Now selectively break the formula using every bit of special-local-conditions information you have access to.

That’s how you get the rewarding asymmetric openness to luck. It is a very rude and disrespectful process. You read the formula-books and self-serving biographies like a psychoanalyst, teasing out the special conditions and the real story that might not make the hero look so good. You map yourself to those conditions. Then you look at your exclusive information advantage and decide which rules in the formula the information allows you to ignore.

This by the way, seems to be a common characteristic of “great” as opposed to “good” imitators. “Good” imitators either try and achieve modest success, or fail, by applying formulas religiously. But the “greats” find “good” formulas to break. I haven’t completely clarified the connection to imitation theory to my satisfaction though. Perhaps the way to say this is “good is the parent of great.” Both parent and enemy.

There is no guarantee that this non-formula will work, but if you despise “good” and aspire to “great” and can accept “failure,” at least it won’t fail in the “good is the enemy of great” mode of mediocrity. You don’t know whether you can make it rich in the stock market, but you do know that keeping your savings in cash won’t make you rich.

And if there’s no formula worth breaking in your neighborhood, welcome to pioneer country. All bets are off.

This is an abstract and advanced (i.e. “overcomplicated”) version of an idea I am trying to simplify and illustrate with better examples in my book. Sign up for the book release announcement list if you haven’t already, though I think most regulars already have.