“So, guys, how did the trip to Japan go? Did you get the software installed?”

“It was great! The clients loved us and are super happy about the installation! The boss even took us out for dinner the last night and we stayed out later with some of the younger guys on the team who showed us around the Ginza District. They are super happy!”

The project was a dismal failure.

The Japanese clients could not properly read the fonts that were selected for them by the young engineers from Silicon Valley. And that was the tip of the iceberg. The system simply did not offer the functionality that the client had in their old system, to say nothing of the improvements they were hoping for.

Somewhere along the line, signals were crossed and the strangers from two vastly different cultures could not find a way to communicate effectively. Even worse, both sides did not realize that they were not communicating effectively. The American team thought that the Japanese clients were happy. The Japanese clients thought that the American team understood that the project had failed.

Why is it that we often seem to misread people we don’t know well, even when we share the same culture and background? The implications of this question are far reaching and go well beyond committing a minor faux pas at a party or the failure of a software installation project. Misreading others has often been the cause of military conflicts costing thousands of human lives. Given the high stakes involved, psychologists have long searched for answers regarding how humans communicate and the pitfalls that can occur when signals are crossed and communication fails. Malcolm Gladwell, who is perhaps best known for his previous bestselling book, Outliers, has written a new book in search of answers to these vexing questions. Talking to Strangers is Gladwell’s attempt to survey the field and come up with answers, starting with the case that seems to have haunted him the most: The arrest and subsequent suicide of Sandra Bland.

The Black Lives Matter movement is only about six years old but has become a rallying cry for those who believe that our society is not acting quickly enough to address systemic racism. Gladwell opens his book with a description of what took place in Prairie View, Texas between Bland, a young African American woman, and Brian Encinia, a young Hispanic police officer. After pulling Bland over for a minor traffic violation, the situation spirals out of control when Encinia responds to Bland’s irritated demeanor by ordering her out of her vehicle. Bland resists, a physical altercation ensues, and Bland is arrested and jailed. Three days later, Bland committed suicide in jail.

Gladwell is clearly haunted by this episode and its implications. All of the stories and examples he covers in the book, from examining how longtime spies could permeate American intelligence agencies to how Neville Chamberlain could so badly misread Adolf Hitler to how Bernie Madoff could defraud investors for decades, seem to lead up to his concluding chapter revisiting the Sandra Bland tragedy.

Truth-Default Mode

One of the core insights Gladwell asserts early on is that people are not good at detecting when others are telling the truth. The core problem seems to be that we assume a greater level of transparency in other human beings than we see in ourselves:

“We think we can easily see into the hearts of others based on the flimsiest of clues. We jump at the chance to judge strangers. We would never do that to ourselves, of course. We are nuanced and complex and enigmatic. But the stranger is easy. If I can convince you of one thing in this book, let it be this: Strangers are not easy.”

But isn’t this obvious? Who thinks that strangers are easy? Very few of us, especially those of us involved in the investing field, would characterize ourselves as gullible about the intentions of others. However, Gladwell makes convincing arguments that even those who are trained to be skeptical are often lulled into a false sense of security by what he refers to as the “Default to Truth”.

The case of Ana Montes provides good evidence that most of us are likely to have serious blind spots. Montes was a longtime spy for Cuba and worked as an analyst for Defense Intelligence Agency. She fell under suspicion in 1996 when a series of events caused counterintelligence agents to focus on her activities. Scott Carmichael, a highly trained DIA counterintelligence agent, questioned her at length and she denied the allegations. Carmichael was convinced of her innocence even though, years later, he would reflect on several warning signs related to Montes’s responses and her demeanor. It turned out that Montes was a Cuban spy and had been for nearly her entire career. She had met with Cuban handlers at least 300 times. Her brother and sister both worked at the FBI and had no idea of her betrayal. Her treachery was finally detected four years after Carmichael first interviewed her — after countless other national security secrets were given to the Castro regime.

Gladwell asserts that human beings tend to default to truth – that is, we tend to view other people as relatively transparent and give them the benefit of the doubt. This approach is not without its benefits because society cannot function in an environment where there is no baseline of trust. Most people require a trigger to snap out of “truth-default” mode. In general, we fall out of truth-default mode only when the case becomes definitive. As was the case for Fox Mulder in the X-Files, most of us “want to believe”. If this tendency caused a trained DIA counterintelligence agent to explain away the fidgety demeanor and shaky story of Ana Montes, what hope do the rest of us have? Bear in mind that we are referring to the ability to detect truth in individuals within our own culture and society. The problems multiply manifold when interacting with those who we share little in common with.

Default to Skepticism?

What is the antidote to the many problems that are caused by truth-default mode? Can we train ourselves to be skeptical about others and only come to the conclusion that something is true when presented with evidence? This is the approach many of us in the investment community try to take. Perhaps the most famous recent example is the case of Harry Markopolos who was one of the very few individuals to detect Bernie Madoff’s massive fraud years before Madoff’s Ponzi scheme collapsed in 2009.

Markopolos had been watching Madoff’s activities for years and warned the Securities and Exchange Commission repeatedly starting in 2000. All warnings were ignored. Markopolos did not default to truth – he did not care that Bernie Madoff was well respected on Wall Street or that his reported results were excellent over a long period of time. Markopolos looked at the facts and they did not add up. Markopolos did not trust the system and assumed nothing.

Markopolos did not require a high threshold to be jolted out of truth-default mode. He had no threshold at all. However, Markopolos is very unusual and his distrust of the system comes at a cost. He detected the Madoff fraud but, according to Gladwell, he was constantly paranoid and on edge, insisting that his life was in danger and living in what sounds like an armed compound. It is unclear whether the kind of skepticism demonstrated by Markopolos is an innate personality trait or whether we could train ourselves to behave in that manner. In either case, however, it is not obvious that defaulting to skepticism is desirable. Doing so comes at a high cost to the individual.

Returning to the case of Sandra Bland at the end of the book, Gladwell believes that the situation escalated out of control primarily because the police attempted to adapt a policing strategy that had worked in certain locations with a high concentration of crime but was inappropriate for Prairie View. The premise behind this strategy was to train officers to overcome their default to truth and actively look for things that appeared unusual or suspicious in the conduct of others. Additionally, the police had adopted a strategy of pulling over motorists for very minor infractions in order to observe behavior and consider whether the pretext existed to search vehicles. Sandra Bland’s irritation with being pulled over, coupled with her out-of-state license plate resulted in the officer becoming suspicious of her situation. Bland refused to follow instructions, Officer Encinia forced her out of the car, and she was arrested. The outcome was tragic as a young woman with a history of depression took her own life in prison.

Gladwell’s treatment of this case is bound to cause controversy. Should police officers “default to truth”? It would be naive to suggest that police should not be skeptical and constantly aware of potential crimes. After all, law enforcement is about protecting and serving the public. However, Gladwell asserts that the tactics that work in very specific high crime areas, down to a city block, do not work well in a broader context. Ironically, although Gladwell appears to have been inspired to write this book based on the tragic case of Sandra Bland, his argument with respect to police behavior may be the least persuasive part of the book. He is much more convincing in his discussions regarding spies, Bernie Madoff, and Chamberlain’s appeasement of Hitler.

What Happened in Japan?

Back to our opening anecdote. What in the world happened in Japan? The story took place in early 1998. All of the software engineers were young men who had grown up in California and were steeped in its informal culture. This was also a time of frenzied activity in the technology industry with companies being founded and going public constantly. Success and optimism, coupled with a very direct communication style, characterized Silicon Valley technology firms during that era.

Japan, on the other hand, was a tradition-bound culture with a complex set of rules and business etiquette. Society, both in family life and in the workplace, was defined by clear hierarchies and protocols. It could hardly have been more different from the culture and ethos of Silicon Valley. However, both the Americans and the Japanese assumed transparency when interacting with their counterparts. But in addition to the problems inherent in assuming transparency in general, they were viewing their counterparts through the lens of their own culture.

In American business culture, if you have hired a consulting firm to install software for your business and the users cannot clearly see the fonts or access the expected functionality, you would most likely be very direct and make it clear that the results are unacceptable. This would be obvious through your demeanor and your words. In Japanese business culture, the cues appear to be more subtle and not at all direct. In addition, etiquette such as hosting a guest for meals or tea is a ritualized experience not necessarily dependent on how happy the host is with the visitor.

The outcome of this story is that the problems were eventually worked out, but it took much longer and cost much more than it would have had the individuals understood each other. Gladwell’s examples are all far more serious than the problems encountered by software engineers operating in a foreign culture, but the underlying principles seem to hold. We often misunderstand others and pay the price for it.

Gladwell’s book is more useful for pointing out these problems than for coming up with strategies and solutions to counteract them. Nevertheless, there is value in being aware of the hazards of talking to strangers and at least recognizing where the consequences of misunderstanding are likely to be greatest. Trusting each other, to a certain degree, is required for modern society to function at all. However, we should be aware of situations in which our tendency to default to trust could carry very high consequences if we are mistaken. A certain degree of skepticism when facing very high stakes situations is simply being prudent. We need to figure out when to emulate Harry Markopolos and, perhaps more importantly, when not to.

The Hazards of Talking to Strangers
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