2014 Afif Say Liberation from the bell: power to outliers - P a g e | 1

Liberation from the bell: power to outliers

Afif Say, MD
Give me the fruitful error any time, full of seeds, bursting with its
own corrections. You can keep your sterile truth for yourself.
Vilfredo Pareto

As our understanding of the complexity of the nature is less filtered by our yearning of idealist harmony, we are
shifting away from a Gaussian view of events towards a Paretian world.
Comfy but boring world of mediocrity
We all know Gaussian Distribution, or Normal Distribution, with its bell shaped curve and symmetric slopes. It is
used to present probability distribution of events. It has been widely utilized in natural and social sciences. The
main take on Gaussian distribution is that there is a stable mean. As you add more samples the mean should stay
relatively stable. Added to that there is a stable, definable variance, within which the majority of events tend to
occur. Knowing this stable mean and variance, you can more or less define the characteristics of the population.
This way we can understand what is supposed to happen or what had been supposed to happen; filter out the noise
or extremes; focus on the beautiful balance and harmony of natural events, social structures, drug effects,
consumer behavior, stock market, employee performance; you name it. Armed with statistical functions and
spreadsheets we can churn raw data to spit out normalcy at the other end. When things go chaotic we can close
our eyes, shun the extremes, and safely huddle around the mean in between the 2 standard deviation borders.
Cutting your toes to fit into the shoe you chose
There are some characteristics of normal distribution which we need to pay close attention. Normal distribution
assumes total random and independent samples: like shoe sizes or height of a population, which are independent
values. As the curve slides down towards infinity on each side the tails get thinner coming close to zero. This
means on each side extremes are negligible or excluded in forced curve fitting. Also a fragment of a normal curve
doesnt show similarity to the rest of the curve i.e. lacks scale-invariance. Smaller sample size doesnt represent
the population.

Main characteristics of Normal Distribution
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Dreams of a predictable, harmonious, and linear universe
Beyond its obvious realm of complete random and totally independent events with low impact and insignificant
outliers, utilizing forced normal distribution seems like a product of an idealistic view of the universe seeking
balance and equilibrium with predictable outcomes. Just like the view of a universe revolving around the Earth, a
divine harmony. Even extremes happen, eventually everything tends to go back to a state of equilibrium, to
normalcy, to robustness. From politics to policy making, to product design, to social engineering the whole past
century reflected this idealized, simplified view of the world for the experts, managers, leaders to define, design,
scale around this myth of normalcy.
As our understanding of the chaotic and complex behavior of natural or social systems improve, we realize that
most of the presumed independent events are actually interdependent. Weather patterns, earthquakes, epidemics,
social unrests, elections, consumer behavior, employee productivity, and so on. Can we say that each sample we
pull is independent of their siblings? While assumptions of independency go away, the bell tolls for the normal
curve. Then cometh the butterfly effect, power of the individual sample: a Paretian world, where outliers are
welcomed.
Middle Eastern bazaar not a suburban shopping mall
Pareto distribution, defined by Vilfredo Pareto, is a power law distribution and nothing like the normal
distribution. It is not symmetric. It doesnt have a stable or well-behaved mean or variance. So these values
become meaningless. It has a long thick tail, allowing the presence of more extremes. It assumes that samples are
interdependent. Furthermore, like a fractal, for most parts it has scale-invariance, parts of curve show similarity to
the whole (self-similarity and self-affinity). As Mandelbrot explained fractals:
Cauliflowers exemplify a second area of great simplicity, that of shapes which appear more or
less the same as you look at them up close or from far away, as you zoom in and zoom out.
Systems that show a Paretian Distribution have interdependent, interactive, and/or self-organizing elements that
disallow linearity. The causal impacts on the system may not produce effects that are proportional: butterfly effect
on weather systems for example (proportionality of cause and effect). Likewise we cannot calculate the impact of
multiple causes acting on the system by summing them up (superposition).
Lacking stable or well-behaved mean and independent elements means that these systems do not show a trend
toward equilibrium, as the interdependent and self-organizing behavior of the elements do not allow this to
happen.

Main characteristics of Power Distribution
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Systems that have Paretian distribution, such as most natural systems, social systems, and markets, do not allow
us to develop frameworks or models to predict their behavior like Gaussian systems that show linearity and
tendency for equilibrium.
Extremes happen
What about the long thick tail of the Pareto distribution? Fatter and longer tail end of the Pareto distribution
allows more extreme values to be accepted in comparison to Gaussian distribution. Pareto distribution accepts
higher probability of very strong earthquakes, tsunamis, market crashes, or social uprisings. It does not exclude
them as outliers.
The significance of including extremes rather than sacrificing them to the gods of normal curve fitting as outliers
is the understanding and studying the low-probability/high-impact phenomena in these systems. Probability of
events like the plague epidemic in Europe in the 14
th
Century, the tsunami that destroyed Fukushima, or the sub-
prime mortgage crash, now appears in our data set rather than being cut off.
Comfort zone
We have a tendency to seek equilibrium, stability, and predictability when observing life. That is why it surprises
us every time it snows or rains too much. We are also trained to seek normalcy, means, and averages; we try to fit
our truth within the borders of variance. The Gaussian world is comforting: market crashes are very rare, big
natural disasters happen once in a million years and generally somewhere else, and the products are for normal
people. We conveniently disregard the interdependency and interactivity of elements in a system. We see every
move, strategy, and project as a controlled experiment. We expect outcomes that are predictable and
measurable. We ignore, disregard, or shun the extremes or unlikely outcomes if they happen, we justify that
they are aberrations. Also we think that if we analyze a few elements individually we can make theories to
explain the whole. All of these keep us in our comfort zone, the zone that fits in between plus/minus two standard
deviation marks on the normal distribution.

During industrialization we tried to create a world that can be standardized, measured and predicted. We built
companies, hired people, measured their performance, and expected consumer behavior, all forcing them to fit
into the normal curve within the 2 standard deviation zone. Taylorism, Total Quality Management, and Six Sigma
clergy still expect us to march with their mechanical unison tempo. But as the world globalizes, the internet, a
virtual universe - which is complex by design - connects people and thus exponentially increases the interactions,
normal curves of mediocrity started shaking.

Comfort Zone within 2S
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Wilderness of Pareto
Actual universe is complex or chaotic in behavior. Extremes happen all the time (by universe time, not our blink
of existence). The second law of thermodynamics tells us that the universe doesnt tend towards equilibrium or
balance, actually it prefers chaos. Quantum mechanics throws away our dreams of certainty. Chaos is neither
something Kronos ended, nor a boogeyman in the mouths of totalitarian politicians anymore. Evolution is not a
subject limited to biology books. The evolutionary mechanisms are being used to explain the dynamic changes in
social and natural systems these days. Linear causality and superposition are not valid for evolutionary
mechanisms. Nature and society, and related systems are all complex, messy, and unpredictable, where extremes
can happen, individual elements can eventually make big impact, and the systems may not settle in a preset
equilibrium.
Surviving outside the box
If we cannot know anything for certain, cannot predict outcomes, or cannot see what is normal, how do we live?
Actually our brains can help us survive. The human brain is the product of millions of years of evolution. It is not
a machine that performs mechanical logic operations as philosophers and scientists tried to see in the past
centuries. Like the natural processes that developed it, our brain is messy and complex - and chaotic sometimes,
as in epilepsy. Human brain is very capable of recognizing patterns and pattern violations. Gestalt theorists
recognized this in the early 20
th
century. We can perceive things holistically rather than analyzing individual parts
first. As Gary Kleins work (1998) showed that we make decisions by first-fit pattern matching based on our
direct and indirect experiences. We learn more from our failures than our successes as avoiding failure is a much
more potent drive in evolution than aiming for success.
To survive in Pareto world you pay attention to extremes, especially low-probability, high impact extremes.
Einstein was a low-probability/high impact human being, so was Hitler, they were outliers in the Gaussian world.
To survive the unpredictable world, where individual extremes can have high impact you know that you cannot
build a perfect 14 Richter earthquake proof building. You dont build for robustness, you build for resilience:
shorter buildings, better evacuation, post-earthquake survival, less dense cities, and etc.
To survive the wilderness you need to be aware of the emerging
patterns and recognize them as they do. In the African savannas I
learned to listen and watch the birds and antelope scan the
environment much more efficiently than us. Their alarm calls and
behavior or recognizing tiny brown flickers above the grass line may
save your life. Our brains are very good at recognizing these weak
signals and processing them. We constantly try to make sense of our
environment.
Planning in the power law universe isnt creating a concrete vision
and determining all the necessary steps to take us there. Outside the
comfort zone, you decide on a direction, you pay attention to the
journey. You try things, and see what patterns emerge. It is like
sailing: you set a direction, trim your sails and see how the boat
handles. You dont look for perfection but something that works. Not
failsafe but safe-to-fail. If it doesnt work, you stop doing it and try
something else. This is not trial-and-error however. You make
strategic decisions based on experience and active scanning, and
continue to gain more experience. If the wind changes you trim again.
You tack when it is necessary. If the wind gets stronger you reef, or
you go off course to avoid nasty storms. During sailing you are off
During sailing you are off track most of the time
2014 Afif Say Liberation from the bell: power to outliers - P a g e | 5
track most of the time. Instead of planning and making decisions once and then executing, you make strategic
decisions all the time with constant input from the environment.
In the complex system of nature and society elements constantly interact with and modify each other and the
system itself. Causality is not linear. Performance measurement by forced normal curve fitting kills the team
performance. Building companies, products, policies that satisfy the normal curve, hiring people that fit the
general employee profile kill the resilience and adaptive capacity of the organization. Main drive of evolution lies
in the outlier individuals, and in Pareto world outliers are welcomed.

References & Further Reading
Andriani, Pierpaolo, and Bil McKelvey Beyond Gaussian averages: redirecting international business and
management research toward extreme events and power laws, Journal of International Business Studies
(2007) 38:12121230.
Andriani, Pierpaolo, and Bil McKelvey Perspective--From Gaussian to Paretian Thinking: Causes and
Implications of Power Laws in Organizations, Organization Science, (2006) 20(6):10531071.
Kauffman, Stuart A. The Origins of Order: Self-organization and Selection in Evolution. New York: Oxford
UP, 1993.
Klein, Gary A. Sources of Power: How People Make Decisions. Cambridge, MA: MIT, 1998.
Luccio, Riccardo "Gestalt Psychology and Cognitive Psychology." Humana.Mente Journal of Philosophical
Studies (2011) 17: 95-128. Accessed 4 May, 2014.
Mandelbrot, Benot, Nassim Taleb "A focus on the exceptions that prove the rule". Financial Times (23 March
2006). Accessed 4 May 2014.
Mandelbrot, Benot, and Richard L. Hudson. The (mis)behavior of Markets: A Fractal View of Financial
Turbulence. New York: Basic (2008).
Mckelvey, Bill, and Pierpaolo Andriani. "Why Gaussian statistics are mostly wrong for strategic organization."
Strategic Organization (2005) 3(2): 219-228.
OBoyle Jr., Ernest and Herman Aguinis. "The best and the rest: revisiting the norm of normality of individual
performance." Personnel Psychology (2012) 65.1: 79-119.
Prigogine, Ilya., and Isabelle Stengers. Order out of chaos: man's new dialogue with nature. New York, N.Y.:
Bantam, 1984. Print.
Snowden, David. "Stories from the Frontier." E:CO (2006) 8(1): 85-88. Accessed 5 May 2014.
Taleb, Nassim Nicholas. The black swan: the impact of the highly improbable. New York: Random House,
2007.

2014 Afif Say Liberation from the bell: power to outliers - P a g e | 6
Afif Say is a seasoned leader, manager, and strategist with experience across multiple
organizational environments including start-ups, social enterprises, consulting firms, and
large corporations. He uses his expertise in applied information and communication
technologies to create strategies for organizational knowledge, culture and development.
He in addition to the USA he lived and worked in Africa, Middle East, and Eastern
Europe.
He is also an accomplished photographer, avid traveler, and a trained medical doctor.
Follow on twitter: @afifsay