Weekly Thoughts

VIEW ALL POSTS

Weekly Thoughts: Misrememberance

Here is something that caught our eye this week:

Misrememberance

In the small business space, there is often a Rockwellesque view that optimal business practices should include handshake deals based on “man-to-man” conversations. Gender biases aside, we are sympathetic to this view and share a general disdain for overly bureaucratic and administratively cumbersome processes. As we have written in the past, we try to make our legal documents as streamlined as possible, with a preference for simple purchase agreements in the place of their 100+ page counterparts which have become standard in today’s more litigious environment. From an operational standpoint, we try to reduce redundant admin work in an effort to make our companies as flexible and nimble as possible while balancing the somewhat complex demands of applicable state, federal, and/or local regulations.

That said, we must also be aware of the limitations associated with old-school, documentation-lite business practices and try to bridge the gap accordingly. One such problem, which we were interested to learn more about this week, is what psychologists call “false memories.” Memory, as it turns out, is not as reliable as we think, even for perfectly healthy adults. Psychologist Chris French explains in a Scientific American article:

“Memory does not work like a video camera, accurately recording all of the details of witnessed events. Instead, memory (like perception) is a constructive process. We typically remember the gist of an event rather than the exact details… When we construct a memory, errors can occur. We will typically fill in gaps in our memories with what we think we must have experienced not necessarily what we actually did experience. We may also include misinformation we encountered after the event. We will not even be consciously aware that this has happened.”

Humans may compensate for a lack of a specific memory by, as researchers put it, “reconstructive inferential processes,” which basically means that your brain creates a false memory in place of the actual memory when trying to reconstruct a situation you can’t actually remember. Furthermore, researchers have found that a false memory can develop if one is primed with an inaccurate fact. It’s important to note that none of this is deliberate or malicious on the part of the person with the false memory, but rather an indisputable shortcoming of the human brain. To the individual, these memories feel real, despite being erroneous. Examples of false memories abound – from the seemingly inconsequential (your kids were NOT potty trained at 12 months, sorry), to the severely dire (an eye-witness of a crime falsely but convincingly identifying the perpetrator). To mitigate the risk of false memories, leading memory psychologist Elizabeth Loftus recommends a straightforward approach: independent evidence to corroborate human memories. Loftus explains further:

“The one take-home message that I have tried to convey in my writings, and classes, and in my TED talk is this: Just because someone tells you something with a lot of confidence and detail and emotion, it doesn’t mean it actually happened. You need independent corroboration to know whether you’re dealing with an authentic memory, or something that is a product of some other process.”

We recognize that false memories can affect all our operations. At our property services companies in particular, during the winter months when the working environment can be more austere (a bombogenesis makes everything a little more hazy), employees, clients, and subcontractors can all recall the same series of events differently. Problems generally arise when we (or the other party) misremember certain facts and nobody has any “independent evidence'” to prove otherwise, causing an argument at best or a lawsuit at worst. Safe to say, both of these outcomes are avoidable distractions and warrant advocacy for the certainty of the written word or the implementation of comprehensive tracking and data aggregation tools. While we don’t believe the hand-shake is dead, our experience has demonstrated that sometimes it is better earned and not offered up front.

Have a great week,

Your Chenmark Capital Team

Subscribe to Weekly Thoughts

Previous Post Next Post

Recent Posts

It’s Basically 1200 Meters

When we lived in Cambridge, we frequented all the common outdoor exercise spots — leisurely jogs along the Charles, grueling stairs in the Harvard Stadium, and heart-rate spiking intervals on the Newton hills.  As such, we enjoyed learning more about the “Tempo Loop” in the Harvard Athletic Complex. 

Read More

I Said No F*ing Brown M&Ms!

While we are more of a Smarties group, we were interested to learn this week that brown M&M's carry relevant significance despite being the worst color for a candy variety.  They are also the most notable thing about a backstage concert rider — the legal document that outlines terms for concert promoters — for Van Halen’s 1982 World Tour.

Read More

Cash Money

Our regular readers will know that our metric of choice is Free Cash Flow.  This is because the crux of our strategy relies upon our ability to purchase cash flowing businesses from retiring owners, and then, over the long-term, using the cash flows from those businesses to fund the equity requirements for growth—whether it be supporting internal growth initiatives or writing a check for our next acquisition.  Without free cash flow, our strategy stalls. 

Read More