The problem with problem-solving is slowly destroying the world

We’ve become unbalanced toward a narrow and linear view of the world that paradoxically means the more we try to fix things the worse they become. Perversely, it is our very attempts to dig ourselves out of the hole that are making it bigger.

Thankfully, there is a better way that is lying dormant within us. This alternative approach has the potential to improve almost every area of our lives. For investors, it also happens to be the best way to identify the businesses that have the potential to generate huge, life-changing returns.

To understand what’s at stake, let’s start with the story of Chairman Mao vs. the sparrows.

Mao’s Tragic Mistake

In the late 1950’s, China’s leader, Chairman Mao Zedong faced a challenge. China’s population was growing rapidly and China needed to boost food production so that some farmers could be freed up to go work in factories. This would be the first step on the journey to becoming a major industrial power. 

To boost food production, the government aimed to identify all the ‘problems’ that limited China’s food production, and eliminate them. One of the biggest 'problems' identified was nature itself. Sparrows—along with rats, flies, and mosquitoes—were targeted for elimination. The logic was simple: sparrows eat grain seeds, and so if we kill all the sparrows, we will have more grain.

The ‘Smash Sparrows’ campaign was stunning in its ambition and scale. Everyone from the age of five upwards was mobilised. School children built ladders to tear down their nests. Millions of people hunted sparrows with nets, guns, and sticks. Citizens were encouraged to beat pots, pans and metal drums to scare the birds from landing, forcing them to keep flying until they died from exhaustion.

Estimates are that the campaign led to the death of over a billion sparrows. Problem solved.

But sparrows don’t just eat grain. 

Sparrows also eat bugs. 

With the collapse in the sparrow population, locust numbers surged as their natural predator - sparrows - were no longer around to keep them in check. 

The locust plague that ensued was one of the major contributors to the most horrific famine in modern history. Between 1958 and 1962 China’s famine saw an estimated 20-40 million people starve to death. To call it a famine understates the horror of what happened; it is better described as an apocalypse.

Author Yang Jisheng painstakingly documented the horrors in his 500-page book, Tombstone:

"People died in the family and they didn't bury the person because they could still collect their food rations; they kept the bodies in bed and covered them up and the corpses were eaten by mice. People ate corpses and fought for the bodies. In Gansu they killed outsiders; people told me strangers passed through and they killed and ate them. And they ate their own children. Terrible. Too terrible."

This was one of humanity’s darkest moments. 

Underlying the horror was a fatal assumption. The famine was one of the most extreme examples of what can happen when we make the tragic mistake of assuming that a complex adaptive system is merely a complicated one. 

Complex, not merely complicated

This is a jet engine.

A jet engine is extremely complicated. But a jet engine is not complex. 

A complicated system has many interacting parts, but each of those parts behaves in a predictable way with a clear linear relationship between cause and effect. This allows us to predict what a complicated system will do if we change a single part. It is a miracle of engineering. 

A complex system is a whole different beast, and beast is often the best way to think of a complex system - it is more like an emergent organism in its own right than a passive and lifeless system. 

There are several characteristics that set complex systems apart. 

The relationships between the parts of a complex system are often non-linear. This means that small changes in one variable can have large and unpredictable effects across the system as a whole. This is commonly known as the butterfly effect.

Complex systems are often highly sensitive to ‘initial conditions’ and exhibit vastly different outcomes from small differences in starting points. ‘Initial conditions’ means the state of the system at the time of interaction. If this concept is not clear, try asking your toddler to stop pouring juice on their plate to ‘see how much can fit’ when they are fresh after a great night’s sleep versus when they have just been dragged screaming from the Kia Carnival after a long internment at daycare. This experiment will highlight the sensitivity of a complex system to initial conditions. 

Complex systems also typically display emergent properties that arise from the interactions of different parts, but which are not predictable from properties of the individual parts themselves. Worker ants are simple creatures individually, but at the colony level the ability to build complex structures emerges.

Complex systems are often adaptive, they evolve over time in response to changes in their environment and have feedback loops that enable them to self-organise to maintain system stability.

These characteristics combine to make a complex system inherently unpredictable, dynamic, and, in a sense, alive. 

Going through this list can make complex systems seem like something magical and special. And they kind of are. But they also are not at all. Because complex systems are all around us.

The weather is a complex system. The economy is a complex system. Your backyard is a complex system. Your dog is a complex system. Your family is a complex system. Your workplace is a complex system. Your after-work volleyball team is a complex system. Your body is a complex system. Your bloodstream is a complex system. Your eye is a complex system.

You are a complex system.

Complex systems are everywhere around us. Almost everything, and indeed everyone, that matters to us, is a complex system. 

And yet. 

And yet, we are all guilty to varying degrees of making the same mistake as Chairman Mao. We treat these complex systems, with all their vast depth of interconnectedness and emergent properties, as if they were merely complicated. 

Once we understand that the world around us is mostly complex, and not merely complicated, it becomes clear that we need to change our way of interacting with that world. 

Each type of system, complicated and complex, is best served by a different mode of attention. 

A complicated system can be accurately analysed by a narrow and focused attention on each of its individual parts. This is because a complicated system is equal to the sum of its parts.

A complex system by contrast is more than the sum of its parts, it cannot be understood by breaking it down to its parts. A complex system requires a mode of attention that is broad and open, and that looks at the relationship between parts as they connect together into an integrated whole. 

We need a narrow focused attention, but we also need a broad and open one. 

Lucky for us, nature has provided us with both.

Your forgotten brain

As outlined by Dr Iain McGilchrist in his masterful book, The Master and His Emissary, evolution has provided us with two modes of attention, a narrow focused attention that is primarily associated with activity in our brain’s left hemisphere, and a broad open attention that is primarily associated with activity in our brain’s right hemisphere.

The evolutionary driver for both forms of attention can be simply explained by our role as both predator and prey. We evolved a laser-sharp narrow focus so that we could zero in on hunting our prey. Meanwhile we also evolved a broad awareness of our environment so that we could sense danger and avoid becoming someone (or rather something) else’s lunch. 

If we used our brains as evolution intended then we would inherently understand the nature of the complex adaptive systems that surround us, and how best to interact with them.

The problem is that we, both individually and as a society, are now massively over-indexed to use our narrow left hemisphere mode of attention without engaging our broad right hemisphere mode. 

One way that this imbalance toward narrow-mode manifests itself is our adoption of a ‘problem-solving’ mentality where we focus on a single part of the system that we consider to be a ‘problem’ and attempt to eliminate that problematic part at all costs.

This was the madness of Mao’s approach.

The problem with problem-solving

If we were only dealing with complicated systems, a narrow fixation on problem-solving would be fine. 

If a jet engine has a faulty component, you remove that problematic part, and replace it with a new one. This works great. Problem solved. 

But complex systems are just built different.

The interconnected feedback loops, non-linear outcomes, emergent properties, and sensitivity to initial conditions mean that when we narrowly focus on eliminating one problem in a complex system, we almost always create another problem in another part of the system. Sometimes those other problems are small. Sometimes they are monstrously large. 

Problem-solving squeezes the balloon, only for it to bulge out somewhere else.

This problem-solving approach is failing everywhere around us. We invent a GLP1 pill to eliminate food cravings, in a system that is built to encourage people to crave processed food. We build prisons to lock up troubled youth alongside career criminals, while we leave the social structures that grew them untouched. In finance we create esoteric synthetic derivatives in an attempt to eliminate risk while laying the foundation for the next crisis.

In all these cases we are assuming a simple linear cause and effect relationship between the problematic part that we are targeting for elimination and the result we want, while ignoring that in a complex system, everything is connected to everything else.

The result is a patchwork of band-aid solutions stacked on top of band-aid solutions, as the solution to one problem creates another problem to be solved.

Even at its best, problem-solving, by its very nature, can only ever remove something we don’t want, it can’t create something we do want. 

A Whole Brain approach

There is no single answer to how to nudge a complex adaptive system towards the outcomes that we want. And that is kind of the point. Each system is both unique and itself constantly adapting and changing. 

The optimal approach requires understanding the whole system and its current state, in its own right. Like tending a garden we cannot force the system to grow in the direction we want, but with the right care we can nurture it to flourish to its highest potential. 

This system level thinking is the domain of our brain’s right-hemisphere. Millions of years of evolution gave us the broad and open mode of awareness that holds the key to building the systems that we want. 

We urgently need to return to a whole brain approach, and yet we have forgotten how. If we can do so we will have the best shot of reaching our highest potential in our lives, in our businesses, in our investing, and in our communities. 

This substack will be using investing as the lens by which to understand how we can shift to a whole brain approach in understanding the world. 

Investing is a good lens, to invest well requires understanding the most complex systems that mankind has created. Investing is also a domain that gives us loud (though noisy) feedback to tell us over time whether our understanding of reality is correct. And yet, today, finance and investing, like most of our world, is dominated by the kind of narrow linear thinking that is causing most of our troubles. We’ll be working to change that. 

For those that love investing, shifting to a whole brain approach is also the best way to identify the extreme outlier performers that I call Monsters. The small group of companies that generate insane, life-changing returns for shareholders. As Tom Morgan presented at Sohn so brilliantly, this mindset shift is the difference between analyst and PM, and between satisfactory and legendary. In future articles we’ll be digging into the practical and applied steps to implement a Whole Brain approach to understanding business and investing.

For those of you that just want to understand the world and how we can encourage its flourishing, there’ll be plenty for you too. And you might even pick up a few investing ideas along the way. 

We need a Whole Brain approach more than ever. It starts with each of us developing a holistic approach in our own thinking. This allows us to avoid Mao’s tragic mistake and begin to build the world we want. 

Let’s do this.

References:

This piece would not have been possible without the work of several others that I would strongly recommend you check out if this interested you. 

Tom Morgan

, founder of The Leading Edge has done more than anyone I know to put the hemispheric theory on the map in the world of finance. Tom’s radical openness and vulnerability has opened doors where there were only walls. 

Dr Iain McGilchrist and his incredible body of work on understanding the brain’s two hemispheres forms the foundation of much of what is discussed here and what we’ll be talking about in future articles. 

William Oliver, co-founder of InPractise. Will is an exceptional human that has helped connect so many dots for me personally and to navigate what can be a treacherous path of openness while remaining level headed.

Kat Koh

intuits the right hemisphere approach in her substack writings so well and was particularly helpful in putting this piece together.

Robert Fritz, author of Path of Least Resistance along with many other books outlines the problem with Problem Solving and structural dynamics. In future pieces we’ll be exploring how well his work integrates a whole brain approach.

Dr. Daniel Siegel’s work on integrating multiple fields resonates deeply with our Whole Brain approach. If you are looking for a path to be more Whole Brained in multiple aspects of your life, and particularly as a parent, his body of work is a must.