Jul 29 2005

More thoughts on Occam’s Paradox

I’ve been re-reading my Occam’s Paradox post as well as the comments and trackbacks (which are excellent – please click through them if you have a minute).  I fell a little short of really saying what I originally intended for the post, which was that I think that we have a tendency not only to make things more complicated than need be, but also to focus on too many things (and therefore the wrong ones).  As a result we try to assimilate too much data to make decisions (not recognizing the massive diminishing returns on this effort) and try to pay attention to too many things.  I wrote a post a while ago about trying to cram too much information into financial models that argued that more complex models are not necessarily better or more accurate.  I’m realizing now that I’m connecting the dots here that this is exactly the type of behavior I’m talking about in Occam’s Paradox. [By the way, there’s an entire post to be written about how VC’s play into this in their decision making (how many customers do we need to talk with, how many models should we run, etc before we make an investment decision?) – but I don’t think I should go there in this post].

I came across two posts that I wanted to bring your attention to that speak to this general subject area and that are both worth taking a look at. The first is “Decision Making” by my fellow VC Blogger Will Price (be sure to click through this blog to the link for the Bastardi and Shafir paper – On the Pursuit and Misuse of Useless Information).  The other, Focus is the New Black, is by Paul Kedrosky.  The title speaks for itself – it’s a great read.

Please keep the comments (both public and private) coming – I’m enjoying this thread very much.