Many years ago I studied Neuro-Linguistic Programming (NLP).
Humans have hard wired personality tendencies which if understood allow for more effective learning, communication and control of emotions.
People will for instance favour a modality (sense) so they will be primarily auditory (what they hear) visual (what they see) or kinaesthetic (how something makes them feel) there are others and they are all used to a greater or lesser lesser extent but there is always a dominant one.
As a side bar this helps to explain why some students in a class find the teacher easier to learn from, it’s because the teacher has the same dominant modality, in effect they are talking and listening to each other in the same way.
The great writers intuitively understand that they must include within descriptions the different modalities to enable all readers to engage.
Anyway the point of the above is to highlight another hard wired difference in the way humans interact and process information.
I was always fascinated with how some people loved detail. For instance I couldn’t learn languages from a book, I found the process excruciatingly tedious and nothing stuck but others could.
However when I went to France I could pick it up quite quickly by reading the various signs, the newspaper headlines and attempting conversations.
I now understand that I struggle with things that required me to build from a foundation, a bottom up approach.
People who intuitively embrace this way of learning will usually be strong areas in such as maths, languages, science and music theory.
I however have a very top down bias, I want to see everything from Forty Thousand Feet first and then build (chunk) down.
What this means in practice is that I want a sense of the big picture before I am comfortable adding detail so I like the arts, economics, sport, philosophy, politics and playing a musical instrument (not reading or writing music).
In business the recognition of the difference between the top down and bottom up people is crucial to where they fit into the organisation.
The top downers will be in sales and marketing predominantly and the detail people in accounts, logistics and HR.
The truly gifted few that are skilled at both are business gold, ideal MD Candidates, who can think big and act small, in other words do the vision thing then implement the hell out of it.
CNBC has just celebrated 25 years of broadcasting and conducted a poll to ask who were the 25 most effective, iconic and transformatory business people of the last quarter century.
The Google guys came third, Bill Gates second and virtually everyone agreed that Steve Jobs was THE MAN!
Of the many many amazing things about Steve Jobs (and reading Walter Issacsons book is an eye opener) his ability to imagine the future was stunning, coupled with ferocious attention to detail and a fanatical drive for “insanely” good implementation made him the ultimate total package.
I suspect the Men in Black observation about Elvis also applies to Steve.
“Elvis isn’t dead , he’s just gone back to his home planet”
Some investment fund managers concentrate on the Macro (top down), they look at the business trends, the political climate, economic indicators, social changes in mass behaviour and use these as their guide posts to point to the upcoming opportunities.
The Micro manager (bottom up) will concentrate on specific quantifiable company detail. Profits, growth rates, addressable markets and barriers to entry. They believe that future change can best be divined from current circumstance extrapolated forward.
The investment bias of a fund will likely depend upon the operating system used by the particular manager (top down or bottom up).
There is no right or wrong way but as seen with Steve Jobs the truly outstanding leader or CEO possesses the ability to both think big and act small. In the case of investment management this would be someone like James Anderson at Scottish Mortgage who is focused on the big picture changes being brought by medical and technological innovation, but is then also able to analyse and determine the most attractive companies on a granular level.
When you find such an investor you have found gold and as Mr Buffett said.
“when it’s raining gold bring a bucket not a thimble”
NOTE: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of LWM Consultants. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author. This is not a recommendation to buy any product or service including any share or fund mentioned. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.