Iteration

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A key, and much underestimated, quality in our crazy sugar-coated world. Where you are confronted with imperfect, incomplete or conflicting information, variables that are beyond your control (children, animals, opposing ISDA negotiators), unknown unknowns — in short, complex systems — then your decision making process should be iterative.

To iterate is to build a heuristic. It is hypothesise; to guesstimate, to test; to tweak; to rerun. To accept that, since there is imperfect, incomplete information, any decision is to some extent uniformed, but since some action, probabilistically, is better than none — “doing nothing” being no more than a special case of “do something”, it has no inherent logical priority do anything other single action — your best bet is to take as informed a decision as you can, based on what you know, for now, but be ready to re-test that idea and change your action as the situation, and the information you have to hand about it, changes.

That is, you iterate. The decision process is not static, it is not preordained — it is an ongoing dynamic process.

This principle applies whether you are solving new problems, dealing with an unexpected crisis, or building out your system — the end-to-end principle allows maximum iteration. Don’t be wedded to the way you’ve been doing things — I know, I know my little eaglets, it is so hard to let go of the comfort blanket of precedent, but you must — try, and expect things to fail. Don’t commit. Scrub them out and try again.

But successful iteration is hard. The more practice you have at it, the better you will be. The more you understand the systems and subsystems comprising your environment, the better you will be at navigating them. Expertise, skill and experience matter. Your itinerant school-leaver from Bucharest might be cheap and fungible, but she won’t, from the off, be good an expert. She will only get that expertise by iterating.

Not all iterations work. The thing about tail events is they’re hard to predict. On the other hand, an iterative process will almost certainly be more effective than a chatbot. And trying something that doesn’t work still yields you information: it is a falsification: now know that that isn’t the answer. You needn’t fret about what might have been.

Iteration is effortful: You have to work at it. It is to acknowledge you have a work in progress. It can be annoying, especially to people who don’t like to admit things are a work in progress.

Everything that is not dead is a work in progress.

There will be strong impulse against iteration from people in the organisation:

• Those fearful of upsetting clients, especially on repeat business, or once a termsheet has gone out: “for god’s sake don’t change anything!”;
• Those — and they tend to be more senior people — who know what they know and like things how they are (this being the way things were that got them where they are);
• Those who believe in reasoning from settled principles. Lawyers tend to belike that. The common law is predicated on being like that.

“If it ain’t broke, don’t fix it” is the anti-iteratist’s stance.

Other articulations

• Think of the world in terms of systems, not units — Donella H. Meadows
• Prisoner’s dilemma — the payoffs are totally different if you play an indefinite-round game of prisoner’s dilemma (hence the so-called “iterated prisoner’s dilemma”). But note the impact of convexity, that can turn an iterated game into a single round.

See also

• End-to-end principle
• Doubt