Reminds me of the “Skin in the game” concept by Taleb : Systems don’t learn because people learn individually. Systems learn at the collective level by the mechanism of selection, by eliminating those who are unfit and eliminated.
Now eliminate is a bit strong wording—but FTX got “eliminated” in this fashion, so we ough to be careful here. Bankrupcy is not the only outcome, neither is firing someone (as you said, many people can learn), but the important point is that there is a need for an internal structure that prevents incompetent actors from reaching the top, or at least to have ways to limit their power to do stuff unliateraly—otherwise the structure itself may be threatened.
By “incompetent”, I mean not fit for a management and leadership position (one can still be good at something else like analysis). For instance, I find myself to be incompetent when it comes to governance, management or finance. There needs to be a mechanism to prevent people like me from getting to a management position (at least, until I got much more experience).
So having good institutions and systems of governance is crucial. Poor behaviour is mostly avoided by having mechanisms that counter these behaviours- so we have a lot to learn here.
This is a very good point ! Thanks.
Reminds me of the “Skin in the game” concept by Taleb : Systems don’t learn because people learn individually. Systems learn at the collective level by the mechanism of selection, by eliminating those who are unfit and eliminated.
Now eliminate is a bit strong wording—but FTX got “eliminated” in this fashion, so we ough to be careful here. Bankrupcy is not the only outcome, neither is firing someone (as you said, many people can learn), but the important point is that there is a need for an internal structure that prevents incompetent actors from reaching the top, or at least to have ways to limit their power to do stuff unliateraly—otherwise the structure itself may be threatened.
By “incompetent”, I mean not fit for a management and leadership position (one can still be good at something else like analysis). For instance, I find myself to be incompetent when it comes to governance, management or finance. There needs to be a mechanism to prevent people like me from getting to a management position (at least, until I got much more experience).
So having good institutions and systems of governance is crucial. Poor behaviour is mostly avoided by having mechanisms that counter these behaviours- so we have a lot to learn here.