Uncommon SenseReasoning and Problem Solving in the Real World:

Implications for Discovery and InnovationWilliam R. Brody, M.D., Ph.D.

Nanyang Technological UniversityAugust 2010

Uncommon Sense

• Undergraduate Seminar• Limited to 20 students• Stimulate thinking about how to solve real

problems in the real world

Educational Philosophy at Research Universities

1. Learning by doing2. Learning how to learn3. Learning how to think

“Common Sense is nothing but a set of misconceptions acquired by age 18”

Albert Einstein

“Congratulations you have just been accepted to Johns Hopkins University (or NTU, NUS

or Stanford, etc.) ”• If graduating from a university is so important,

why did Steve Jobs, Michael Dell and Bill Gates drop out after their freshman year?

• Why is there no correlation between grades in college and future success?

• What is the “calculus of success”?

The Calculus of Success

Success = Preparation + Opportunity

Preparation = Innate Ability + Hard Work

Opportunity = Good fortune + the ability to recognize good fortune

References• Taleb: Fooled by Randomness (also wrote

The Black Swan)• Surowiecki: The Wisdom of Crowds• Thaler: Winner’s Curse• Lewis: Moneyball• Gladwell: Outliers• Kahneman & Tversky: Judgment under

uncertainty

How observant are you?

Video: two teams of three players (white and black teams) passing basket balls

1.Look very closely at the video2. Pay attention only to the white team –

passing the ball from one member to another-Aerial passes plus bounce passes

3. Count (silently) and keep track of how many times the White team passes the basketball (bounce and aerial passes)

Videos for NTU presentation\the_monkey_business_illusion.mov

Lesson #1:We are not the objective observers we think we are

• Human Beings are heavily biased creatures– Past experience (education, training)– Spiritual, political and other beliefs– Personality

• We see only what we are expecting to see• Will you be able to spot the next gorilla?

Diagnostic Imaging began with Wilhelm Conrad Roentgen

• 1895 – Roentgen described a “new kind of ray”

• 1896 – over 1,000 articles published on use of x-rays

• 1897 Dr. Harvey Cushing arrives at Johns Hopkins

• The x-ray machine changed the face of diagnostic medicine in a revolutionary way

Heinrich Hertz

• Discovered radio waves in 1888• He generated x-rays before Roentgen but

failed to recognize he was seeing a new phenomenon

• He could have discovered x-rays, but “missed the gorilla”

• Several others, quite probably produced x-rays before Roentgen and Hertz

People who make major discoveries are the exception

• They are ‘gorilla spotters’

• They see things others could have but failed to see

Albert Szent-GiorgyiNobel Laureate 1937

“Discovery consists in seeing what everyone else has seen, and thinking what no one else has thought.”

Seeing things differently

1. Seeing the gorilla2. Recognizing that this is something new or

different3. Having the courage to stand up to the

herd…

Dr. Barry T. Marshall:Fine line between perseverence and perseverationEstablished dogma on peptic ulcer diseaseDr. Marshall’s idiotic idea…1966 Dr. Susumu Ito had peptic ulcer• biopsied his own stomach• found Helicobacter pylorii• also found same bacteria in 100% of cats so

thought they were commensalOthers also saw the ‘gorilla’ but failed to make the

association betw bacteria and peptic ulcer disease

Dr. Ito’s Biopsy: Handbook of Physiology 1967

Dr. Barry Marshall

• Lasker Prize 1995• Nobel Prize 2005• His discovery completely changed the

understanding of the etiology and treatment of peptic ulcer disease

“The greatest obstacle to knowledge is not ignorance, it is the illusion of knowledge”

-Daniel Boorstein

“it’s not what you don’t know that’ll kill you, it’s what you don’t know you don’t know” –Bill Brody

…in other words, what you think you know may not, in fact, be true…

Important lesson #2:History is characterized by a series

of “discontinuous events”•Following a major scientific discovery, the world looks different after the event than it did before

–Gallileo–penicillin, vaccines, x-rays & CT scanners, etc.

•Also true of major political events, e.g., WWII, fall of the Berlin Wall•Life rarely follows a linear trajectory

Questions

1. The world economy November 2008: a discontinuous event

2. There was a very large ‘gorilla’ in our economy -- why didn’t anyone notice?

3. The subprime debt crisis is so ‘obvious’ in hindsight, surely economists must have known the dangers lurking ahead?

Peter Schiff - 2006Videos for NTU presentation\Peter

Schiff.mov

A monkey shows up on your doorstep…

How do you separate random behavior (the ‘lucky fool’) from good performance?

1,000 NTU graduates become hedge fund managers

• Each one has at best a 50:50 chance of making money in any given year

• After five years, there will be about 30 ‘lucky fools’ who will have had five consecutive years of positive returns

Beware of the Survivorship Bias

• When Wall Street Journal rates hedge fund managers, will they list all 1,000 NTU hedge fund managers that started operations 5 years earlier?

• What happened to the ones who lost money at least 3 out of 5 years?

• A new cure for cancer…

Things often confused*

Luck----------------------SkillsRandomness-------------DeterminismProbability--------------CertaintyBelief, conjecture-------------KnowledgeCoincidence--------------CausalityLucky idiot-----------------Skilled investorSurvivorship Bias----------Market Outperformance

* From Fooled by Randomness by Nassim Taleb

Luck or Serendipity in Science

• Should not be ignored• “Chance favors the prepared mind” – Louis

Pasteur• “The harder I work, the luckier I get” -

anon.• Intuition is equally important: e.g., Blink by

Malcolm Gladwell

Areas with a high degree of randomness

• Financial Markets• Predicting which movies become

blockbusters• Baseball, cricket• Manufacturing• Medical Errors• Developing new drugs

In each of these areas, there are strategies that can reducerandom variability and improve performance

Important Lesson #3

• Don’t confuse good luck (randomness) with good performance (or vice-versa)

• Beware the monkey dressed in a three piece suit and running a hedge fund (or a molecular biology laboratory)

How to make smart choices?Here is a simple recipe…

Major International Medical Meeting on New Methods of Diagnostic Imaging

(Circa 1979)• Two presentation rooms side-by-side• Room A has an overflow crowd of more

than 100 people (Dr. Brody’s talk)• Room B has about 10-15 attendees• Which presentation should you attend?

And the answer is…

• Room A (100+ attendees): digital radiography

• Room B (10-15 attendees): Magnetic Resonance Imaging

Important lesson #4:If you want to be successful, be a

contrarian

Robert Frost: “I took the road less travelled”

Contrarian’s Corollary: “the herd is always wrong”

Forget the MBA – here is all you need to know about management

• The ‘Three Snake’ rule of management1.If you see a snake, kill it!2.Don’t waste your time trying to kill dead

snakes3.Some of the biggest opportunities in life

turn out looking like snakes

Summary

1. Look out for Gorillas: “Chance Favors the Prepared Mind”

- Louis Pasteur2. Beware of Monkeys: don’t confuse luck

with success3. Don’t follow the penguins: be a contrarian

Uncommon Sense

“Life is short, enjoy the ride”Good luck…and don’t forget to expect the

unexpected…