Investing Lessons From Da Vinci and Edison, part two

Here is part two of my interview with Michael J. Gelb, expert about both Leonardo Da Vinci and Thomas A. Edison…

Although Leonardo’s principles are profoundly relevant for the development of human potential and organizational creativity the Maestro was concerned with pure truth, beauty and goodness, whereas Edison was more focused on applying creativity to generate wealth.  Edison noted, “ Anything that won’t sell I don’t want to invent.  Sales are proof of utility and utility is success.”

JAV: What are the Edison principles and which ones are most relevant to investors?

MJG: In the case of Edison we (Gelb’s co-author is Sarah Miller Caldicott, the great grand-niece of Thomas Edison) refer to “Competencies” rather than principles, and they are all important.  Each one sets the stage for the one that follows and together they form a system for innovating like Edison.

Edison’s Five Competencies of Innovation™ are:

• Solution-Centered Mindset.  Investors must maintain a primary focus on solving problems rather than being dragged down by them.

JAV: Can you give an example of a problem Edison encountered where he applied this competency?  Then, can you describe a common investor problem where this competency would help a solution to form?

MJG: Edison’s investors approached him to question why he hadn’t yet generated any results in his quest to invent an effective electric storage battery.  Edison replied, “Results.  I’ve gotten lots of results.  I know thousands of things that don’t work.”  This response demonstrates Edison’s continual focus on finding solutions and learning from things that didn’t work.  (His optimism in the face of this challenge was so compelling that his investors gave him more money and, eventually, he succeeded, generating huge profits for all involved.)  The lesson for individual investors is simple: Avoid getting bogged down by dwelling on your past mistakes, and focus instead on applying the lessons learned.

• Kaleidoscopic Thinking. Edison’s strategies for generating new ideas and finding powerful business opportunities are especially relevant for investors.

JAV: As an investor I think that the hardest thing is to generate good investment ideas, that is, things worth investigating further in the first place.  How did Edison come up with new ideas?  Is there any way to utilize these same techniques as an individual trying to improve investment returns to apply these methods?

MJG: Edison said: “If you want to get a good idea, get a lot of ideas!”  Open your mind to consider a broad and expansive range of possibilities, then focus in on the most compelling ideas.

JAV:  I like that; very simple.  Best of all, I think it takes advantage of the right brain’s ability to make interconnections, or Connessione in Da Vinci speak.

• Full-Spectrum Engagement. This competency focuses on the ability to manage complexity.  A skill that is even more important now than it was in Edison’s time.

JAV: Because understanding information, especially complex information, is one of the most difficult things for investors, could you please give us a tip on how Edison managed complexity?

MJG: Edison always sought to find simplicity in the midst of complexity.  He believed in Occam’s Razor, also known as the “law of economy.”  This is the principle that guides us to seek the simplest plausible explanation, the one that makes the fewest assumptions.  Einstein said “ Things should be made as simple as possible, not simpler.”  Edison honed his instinct for optimal simplicity.  In the complicated world of investing this is a valuable instinct to cultivate.  For example, if you can’t understand what a company does or why it’s valuable, don’t buy it!

• Master Mind Collaboration. Strategies for leveraging diverse viewpoints.

JAV:  You said that each of Edison’s competencies are important for investors to apply, but I am unclear how to apply this competency to improve my investment returns.  Could you please expound a bit more on this point?

MJG: Edison assembled a team of brilliant people from diverse and complementary backgrounds in order to create his amazing innovations.  As an individual investor one of the best things you can do is to create your own Mastermind group of advisors from diverse backgrounds.

JAV:  Or perhaps you just confer with your friends or join an investment club.

• Super-Value Creation. The holy grail of investing: how to discern opportunities for value that are outstanding in a competitive marketplace.

JAV: Undoubtedly.  The term “super-value” implies a way of measuring value, how did Edison measure value creation?  How as investors can we do the same?

MJG:  Edison measured value creation through a combination of customer satisfaction and profit.  As investors we need reliable formulae for determining when an investment is cheap.  A company can be very well run and have a great market position but if it’s over-priced then it’s not a good value.  This assessment must blend quantitative analysis with intuitive awareness.

JAV:  You, like me, consider yourself to be a conscious capitalist; something that is both a mindset and a movement.  Talk to us about what being a conscious capitalist means to you?

MJG: Corporations are the most powerful force in the world today.  If we want a better world, we need better companies.  In the course of my career I’ve aimed to help my clients think positively and creatively about all stakeholders, not just shareholders.  Recently, my friend Professor Raj Sisodia released a benchmark book entitled Firms of Endearment. Raj, a professor at Bentley Business School, makes a compelling case that organizations that focus on the welfare of their employees, customers, vendors and communities, as well as their shareholders, outperform those who focus exclusively on financial return.

JAV: For me, social consciousness does lead to good long-term investment results.  Would you agree?

MJG:  Yes.  And, it’s good to have the research that supports this more altruistic ideal.

I serve as director of Creativity and Innovation Leadership for the Conscious Capitalism Institute.

JAV: How important do you feel reflection, contemplation and meditation were to Da Vinci’s and Edison’s successes? Did they have an intentional practice of such things? How important do you feel these modes of consciousness are to ultimate investment success?

MJG: Da Vinci and Edison both took their inspiration from Nature.  Leonardo writes poetically about the Earth as a living being and Edison wrote that his purpose was to “bring out the secrets of nature for the happiness of humanity.” They didn’t sit in the Lotus position and repeat mantras but they were both deeply contemplative.  Leonardo stated that “Men of genius sometimes work best when they work least!”  Here he is expressing the importance of receptivity and deep relaxation in the process of creation.  Edison would go fishing in the middle of a workday at a nearby pond, and he would fish with a baitless hook.  Why? Because he was really “fishing” for breakthrough ideas and he knew that relaxation made him more receptive to intuitive insight.  These modes of consciousness are critically important to investment success (and success of any kind).  The key is to find your own natural rhythm-balancing intense focus and concentrated work with reflection and receptivity.

JAV: What a great answer; I completely agree.  Do you feel that Da Vinci and Edison would be investors in financial markets if they were alive today? If not, why not? If so, how do you think that they would go about investing? That is, what would their process look like?

MJG: Leonardo wouldn’t bother with investing.  He would outsource his portfolio to a good Intuitive Investment Manager.  Edison would plow all of his capital into his next business scheme and we’d be scrambling to buy shares!

JAV: How can people learn more about your work?

MJG: www.michaelgelb.com

JAV: I know you do most of your work for Fortune 500 companies.  Besides reading your books and listening to your audio programs is there a way that individuals can learn from you directly?

MJG: I will be speaking at a few public events in 2011 including:

5/16-19 Boston:  A Keynote at the Conscious Capitalism Institute Conference at Bentley U

6/13-17 Brisbane, Australia : A Keynote and Workshop at Happiness and It’s Causes

9/23-5  Las Vegas: A Keynote and Workshop at The  International Coach Federation Global Conference

JAV: Thanks Michael, this has been very valuable.  Best of success to you!

MJG: Thank you!