Variant Perceptions and Betting Against the Consensus

I told [a summer intern] that ideally he should be able to tell me, in two minutes, four things: 1) the idea; 2) the consensus view; 3) his variant perception; and 4) a trigger event. No mean feat. In those instances where there was no variant perception — that is, solid growth recommendations within consensus — I generally had no interest and would discourage investing.

This is from Steinhardt’s autobiography, No Bull, as quoted in this helpful overview article on the theory of “variant perceptions” and how important it is to both, a) be in the minority with an investment thesis, and b) have a sense for when your view will become the consensus.

It’s obvious why going-against-the-grain is important in an investment context. It’s not so obvious whether it pays to be in the minority if you’re a regular guy thinking about your career.

My theory is that if your only consideration when forming opinions is to advance your own career, you should vote with the majority up to a certain point. Perhaps until you’re a middle manager. Although people like me and others love to sing about the benefits of “thinking different,” the reality is that if you routinely harbor minority views in an organization (and you’re low on the totem pole) you will be punished. Your boss will confuse your good-intentioned disagreement as low intelligence.

Once you’re a middle manager, however — once you’ve attained some level of success or profile — I believe it does begin to pay to think different. People will want to hear the profound insight that few others grasp. People will be smart enough to hear out views which differ from their own. At higher levels of management, more folks put the organization ahead of individual ego.

Of course, thinking about one’s career exclusively in terms of how best to advance it is spineless. Voice your opinion, unpopular or not. Just be aware of the consequences. Hopefully, you can be part of an organization or culture which won’t punish you for being the lone hand in the air!