In his job as chief investment strategist at Legg Mason Capital Management, Michael J. Mauboussin has developed a healthy appreciation for complexity. Along the way—through his reports, books, teaching at Columbia Business School, and frequent conference appearances—he has become a leading exponent of how to navigate complex systems in financial markets and other aspects of life. In this edited conversation with HBR senior editor Tim Sullivan, Mauboussin talks about how his views on complexity feed into his daily practices and attitudes.
What prevents us from dealing effectively with complexity?
The biggest issue, in my mind, is that humans are incredibly good at linking cause and effect—sometimes too good. Ten thousand years ago most cause and effect was pretty clear. And our brains evolved to deal with that. But it means that when you see something occur in a complex adaptive system, your mind is going to create a narrative to explain what happened—even though cause and effect are not comprehensible in that kind of system. Hindsight’s a beautiful thing. Also, we have a tendency to think that certain causes will lead to particular effects. That’s our Yellowstone story. And we just don’t know. I think that’s the biggest single bias.
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