"Tacit knowledge is knowledge that cannot be captured through words alone."

"What is more important is emulation, and action — that is, a focus on the embodied feelings necessary to ride a bicycle successfully."

"tacit knowledge instruction happens through things like imitation, emulation, and apprenticeship. You learn by copying what the master does, blindly, until you internalise the principles behind the actions."

"if you ever hear someone explaining things in terms of a long list of caveats, the odds are good that you’re looking at tacit knowledge in action."

"Learning this type of complicated judgment — this instantaneous solution selection that happens to balance dozens of considerations against each other — this is what is valuable to learn. And it is almost impossible to learn it through explanation alone."

"“Yes, in principle it is possible to do so. In practice it is very difficult.” My take on this is that it is so difficult that we shouldn’t even bother"

"What many researchers found in the wake of that fad was that it is extremely difficult to encode all the possible branches and gotchas and nuances from a human expert into an expert system."

"giving people a list of procedures to execute, blindly, denies them the ability to build expertise, which in turns prevents them from doing the sorts of creative problem solving that is common amongst expert operators."

"We should act as if tacit knowledge were a fact, because it is more useful to think about ways to gain that tacit knowledge directly, instead of hoping for some breakthrough to make tacit knowledge explicit."

"I explained that deliberate practice is defined as possible only in domains with a long history of well-established pedagogy. In other words, deliberate practice can only exist in fields like music and math and chess."

"The process of learning tacit knowledge looks something like the following: you find a master, you work under them for a few years, and you learn the ropes through emulation, feedback, and osmosis — not through deliberate practice. (Think: Warren Buffett and the years he spent under Benjamin Graham, for instance). The field of NDM is focused on ways to make this practice more effective."

"Keep an eye out on NDM methods, and watch for things that focus on tacit knowledge. They are — in this writer’s opinion — the most interesting, overlooked topic in expertise today."

"CFT has two primary claims, but there are two big ideas that we must examine first, before we get into the theory proper."

"Idea One: CFT is Concerned With Ill-Structured Domains"

"The key domain feature that CFT grapples with is something that the authors call an ill-structured domain. An ill-structured domain is a domain where there are concepts, but the way those concepts are instantiated in the real world are hugely variable, and messy as hell."

"the formal definition for ‘ill-structured’ is “concept instantiation is highly variable for cases of the same nominal type”."

"Idea Two: In Ill-Structured Domains, Cases Are As If Not More Important Than Concepts"

"if concept instantiations are highly variable in an ill-structured domain, then reasoning from first principles is very difficult."

"experts in ill-structured domains reason by comparison to previous cases, not by reference to first principles."

"you can’t easily reduce cases in ill-structured domains into generalisable principles. You often have to treat the case as its whole thing."

"questions: “why is context useful?”  and “how can you expect to use pattern-matching when faced with novelty?”"

"I’ve read a lot by Munger and about Munger — and as far as I can tell … Munger spends a lot of time reasoning by analogy."

"Ideas Three and Four: The Two Claims of CFT"

"CFT makes two central claims. How do experts deal with novelty in ill-structured domains? In other words, what lies at the heart of adaptive expertise?"

"CFT tells us that experts do two things: They construct a temporary schema on the fly, by combining fragments of previous cases. They have something the authors call an ‘adaptive worldview’: meaning that they do not think there is one root cause or one framework or one model as explanation for a particular event that they observe in their domain."

"They do not reduce a concept like heart attack to just one prototype. They instead have a collection of prototypes in their heads, that they can assemble fragments from."

"If you encounter a new case, you update the concept, because the concept is only useful when you know how it is instantiated in reality."

"we take the two claims of the theory and invert them to get the pedagogical recommendations: You want to expose the student to as many cases for each concept as is feasibly possible, so they have a large collection of fragments to assemble from. You want to inculcate the adaptive worldview."

"the researchers recommend using a hypertextual system — that is, a system where you can link to other notes, or link to tags that in turn link to other notes. You get the student to store each case and ask them to highlight concepts. Concepts are backlinked. They go to other cases."

"You design a four-stage model for worldview change into the learning system. The four stages go like this — first: demonstrate to a learner that they have a reductive worldview by creating a situation that makes it salient (say, the heart attack diagnosis example, above, where you want to get the student to fail at some task). Second: show how that worldview is maladaptive (show them that the metaphor of the heart as a balloon is flawed). Third: introduce the adaptive worldview and its properties. Fourth: demonstrate the latter’s operation and then provide an activity for mastering it. (Spiro et al, 2007)"

"How do you construct a CFT hypertext system for yourself?"

"Step One: Pick a note taking app with backlinking capabilities. Backlinking is a feature where you can select a phrase, perhaps ‘scale economies’ or ‘heart attack’, and turn that phrase into a link — something that looks like [[scale economies]] or [[heart attack]]."

"Step Two: Start copying cases into your note taking app, perhaps from articles, PDFs, books or blog posts. Mark up particular passages with concepts or case features that you observe. As you do so, split up the passages into smaller segments, that will hopefully show up in your backlink interface."

"the researchers stress that there is no one ‘right way’ to turn cases into fragments."

"you must look for initial cases that are as different as possible from the ones you currently have. And it means that you should continue looking out for such rich cases until you reach diminishing returns"

"The CFT learning system is their reference; their job is to do a concept search across the entire case library until they find the relevant fragments and give their best guess answer."

"I’ve presented a 30-year old theory that explains how to learn better in ill-structured domains. We ended up at a surprising place: a note-taking learning system to accelerate expertise."

"Cognitive Flexibility Theory is a 30 year old learning theory that ends up someplace weird: it tells us that a specific type of note taking will help us learn better from history. In the process, it explicates how expertise works in ill-structured domains, it pokes holes at the primacy of first principles thinking, and it explains how to properly learn from experience."

"There’s a deceptively simple idea called the PDSA loop (‘Plan-Do-Study-Act’, alternatively named ‘PDCA’ for Plan-Do-Check-Act, alternatively named the ‘Deming cycle’), which comes from the work of American engineer and quality control pioneer W. Edwards Deming."

"And so it is one of the great ironies of my operating career that I look back on all the companies that I’ve been involved in and mostly see a graveyard of incomplete execution loops."

"But in business execution, you’ll have to be very disciplined to see your activities as a loop, much less to see a loop through to the end."

"It’s usually the Study and Act bit that’s difficult."

"Either you get distracted, mid-execution, by something else that’s shinier."

"You don’t ‘harvest’ the learnings from that project, and those months of execution go to waste."

"A more common experience, though, is that you get distracted. (It’s no accident that the last two essays on this site have been on the topic of focus)."

"SEO is taking too long to work, so you go for the endorphin rush of an attempted viral blog post."

"it’s only after a handful of these that you look back and realise you’ve created a graveyard of half-finished execution loops."

"One of the more curious things about this entire concept is that it interacts with the sunk cost fallacy in weird ways."

"The sunk cost fallacy says that you shouldn’t take into account the costs that you’ve already incurred doing some activity"

"Like most things from rational choice theory, the sunk cost fallacy assumes you can make reasonable guesses about payoffs, which isn’t as easy to do in real world business."

"PDCA (and other forms of scientific problem solving) is also known as a system for developing critical thinking."

"Toyota and other lean manufacturing companies propose that an engaged, problem-solving workforce using PDCA in a culture of critical thinking is better able to innovate and stay ahead of the competition through rigorous problem solving and the subsequent innovations."

"If you squint at the Deming cycle, you’d realise that this is essentially the scientific method as applied to business."

"But the trick to applying PDSA seems to be that there’s no trick: you somehow have to get your org to close the loops it starts."

"Once you understand that tacit knowledge exists, you will begin to see that big parts of any skill tree is tacit in nature, which means that you can go hunting for it, which in turn means you can start to ask the really useful question when it comes to expertise, which is: that person has it; that person is really good at it; how can I have it too?"

"In other words, tacit knowledge instruction happens through things like imitation, emulation, and apprenticeship. You learn by copying what the master does, blindly, until you internalise the principles behind the actions."

"When I pushed these people on their judgments, they would try to explain in terms of principles or heuristics."

"But the more I pushed, the more exceptions and caveats and potential gotchas I unearthed."

"And I realised that if you ever hear someone explaining things in terms of a long list of caveats, the odds are good that you’re looking at tacit knowledge in action."

"Over time, you learn how to head off problems, and, when you can’t, you arrive at solutions with less fumbling and more assurance."

"Learning this type of complicated judgment — this instantaneous solution selection that happens to balance dozens of considerations against each other — this is what is valuable to learn."

"My take on this is that it is so difficult that we shouldn’t even bother; assuming that you are reading this because you want to get good in your career, you should give up on turning tacit knowledge into explicit knowledge and just go after tacit knowledge itself."

"In other words, giving people a list of procedures to execute, blindly, denies them the ability to build expertise, which in turns prevents them from doing the sorts of creative problem solving that is common amongst expert operators."

"It is sometimes possible for a particularly gifted person to synthesise an entire field’s worth of tacit knowledge into an effective and explicit method of instruction."

"It means that we should start looking into the published research on tacit knowledge if we want to pursue expertise in our fields."

"In other words, deliberate practice can only exist in fields like music and math and chess."

"The process of learning tacit knowledge looks something like the following: you find a master, you work under them for a few years, and you learn the ropes through emulation, feedback, and osmosis — not through deliberate practice."

"And I think much of the world pays too much attention to deliberate practice and to cognitive bias research, and not enough to tacit knowledge acquisition."

"If tacit knowledge exists — and I believe it does — then the most useful tools about skill acquisition will come out of the fields that study it."

"Cognitive Flexibility Theory is a 30 year old learning theory that ends up someplace weird: it tells us that a specific type of note taking will help us learn better from history."

"We are often asked to improvise. We are often presented with novel situations to solve, due to the specific constraints of our business, our industry, or our customers."

"how do you train to get better at that?"

"Case One: Texas Instruments — In the late 60s, then-Texas Instruments VP Morris Chang noticed that there was a learning period in the beginning of every semiconductor manufacturing run, where they would struggle to get yields up for each new process."

"He hired a bunch of BCG consultants and told them to look into pricing the chips for volume."

"Eventually they came up with something called ‘learning curve pricing’ — TI would initially price the chips cheaply, capturing a ton of market share and driving volumes up to max capacity, which then allowed Chang and TI’s other engineering staff to rapidly climb up the learning curve in order to increase yields (and therefore margins)."

"TI would then make the chips for as long possible to recoup the initial fixed costs, helped by its dominant market share."

"“We would automatically reduce, and then continually automatically reduce the price every quarter even when the market did not demand it. This was a very successful effort, even though it was somewhat controversial. A lot of people thought we were being foolish."

"Case Two: Netflix — Netflix began ramping up its debt load in 2011, going from slightly under $1 billion dollars in 2014 to $16 billion dollars of debt in 2020 — mostly in the form of junk bonds."

"Further, Netflix had previously been down the road of original content with its Red Envelope Entertainment, and the results weren’t pretty."

"So too did it seem now that such forward integration might prove “a bridge too far.”"

"But these bold, counter-intuitive moves proved game-changing."

"Exclusive rights and originals made content, a major component of Netflix’s cost structure, a fixed-cost item. Any potential streamer would now have to ante up the same number of dollars, regardless of how many subscribers they had."

"Notice how both cases are instances of ‘scale economies’, but each case is expressed very differently."

"To wrap up, the formal definition for ‘ill-structured’ is “concept instantiation is highly variable for cases of the same nominal type”."

"But CFT challenges this view. It points out that if concept instantiations are highly variable in an ill-structured domain, then reasoning from first principles is very difficult."

"There is this tendency for novices to cling to the generalised lessons from one case, and then struggle when presented with a concept instantiation that is very different from the prototypical case they hold in their heads."

"And indeed, experts in ill-structured domains reason by comparison to previous cases, not by reference to first principles. (Source: see citations in the original CFT paper)"

"For instance, I continue to believe that first principles thinking is necessary for good problem-solution analysis. In business, you’ll often find yourself faced with an ill-structured problem to solve"

"In these situations, it’s tempting to do some lazy pattern-matching and then dive straight into plausible solutions."

"I have found that it is more useful to break things down from a ‘plausible root cause’ perspective, and then rank solutions in the order of how much information the solution might generate towards determining which set of plausible root causes might be in play."

"I read a lot of business biography because I want to become a better businessperson."

"why should we study history, given that history doesn’t repeat itself, and in an ill-structured domain like business, all experiences I have will be novel?"

"He has this thing where he says that you must have a ‘latticework of mental models’ in your head if you want to be a great stock picker."

"Pepsi cut their price per ounce by half and their sales took off, with profits doubling too. Price can be a powerful competitive tool when you have a good substitute product.”"

"“A Judas goat is the goat that they lead from one pen to another, or the slaughterhouse, that all the other animals follow. I bet if I invested, you’d have a lot of other investors that would sign up too.”"

"what lies at the heart of adaptive expertise?"

"They construct a temporary schema on the fly, by combining fragments of previous cases."

"They have something the authors call an ‘adaptive worldview’: meaning that they do not think there is one root cause or one framework or one model as explanation for a particular event that they observe in their domain."

"What an adaptive worldview means is that whenever you learn a new concept in an ill-structured domain, you know not to oversimplify — that is, to represent it as a single principle or concept."

"You want to expose the student to as many cases for each concept as is feasibly possible, so they have a large collection of fragments to assemble from."

"You want to inculcate the adaptive worldview."

"One problem with studying cases is that humans aren’t great at remembering all the ‘variegated detail’ of each case"

"and each case often has a large number of concepts interwoven into the history. So the researchers recommend using a hypertextual system — that is, a system where you can link to other notes, or link to tags that in turn link to other notes."

"You give the student an overview of the CFT mindset"

"You have the system display a mantra."

"You design a four-stage model for worldview change into the learning system."

"first: demonstrate to a learner that they have a reductive worldview by creating a situation that makes it salient"

"econd: show how that worldview is maladaptive"

"Third: introduce the adaptive worldview and its properties."

"Fourth: demonstrate the latter’s operation and then provide an activity for mastering it."

"Finally, exploring the CFT system itself inculcates the adaptive worldview. As a student explores the hypermedia system, they realise that there is huge variability in the way a single concept is instantiated in the real world."

"Step One: Pick a note taking app with backlinking capabilities."

"Step Two: Start copying cases into your note taking app, perhaps from articles, PDFs, books or blog posts."

"Step Three: So far we’ve talked about what goes into the system. But how do you use the system to learn?"

"As far as I can tell, CFT learning systems work through two modes, both of which are expressions of ‘combinatorial idea play’:"

"You give the student access to a CFT learning system, and then present them with a series of tasks to do"

"You get the student to do multiple case contrasts, in order to build complex understanding more rapidly."

"The crossroad cases will quickly become the most analysed — meaning that the student will, as part of their tasks, unpack a crossroad case in as many ways as possible, producing deep learning for that case and internalising that cases are complex and a case is not just a case of one thing, but has many possible ‘titles’ — that is, cases in ill-structured domains are cases of many things."

"Second, as crossroad cases are reused in new contexts, they quickly become ‘overlearned’. What this means is that a student will become so familiar with the crossroad case that even reading a small fragment of it will evoke the rest of the case, cognitively bringing the entire case history ‘along for the ride’."

"Finally, crossroad cases are powerful because they promote connection building between many concept instantiations. This is mostly done through the ‘case contrast’ method we covered above — each crossroad case is treated as a hub, and the student is asked to find as many connected cases on as many conceptual dimensions as possible (the spokes)."

"This is the first time I’ve seen a system that a) has a track record of implementation, b) has a coherent explanation of the underlying cognitive science of learning, and c) is able to explain how it might achieve results in a messy domain. Colour me impressed."